Thursday March 28 2019, Weekly News Digest

structured debt

News Comments Today’s main news: Klarna launches open banking platform. SoFi re-engineers home loans. Apple’s new credit card. OakNorth secures guarantee of $133M. Qupital raises $15M to bumrush China. Today’s main analysis: Arbuthnot Banking Group audited final results for 2018. Today’s thought-provoking articles: U.S. yield curve, new fintech products. Cities with most overleveraged mortgage debtors. Household debt. Expanding access to credit […]

The post Thursday March 28 2019, Weekly News Digest appeared first on Lending Times.

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United States

SoFi Refreshes Home Loans, Making Home Buying Painless and Paperless (PR Newswire), Rated: AAA

Today, SoFi announced the refresh of its mortgage offering as SoFi Home Loans, complete with a reengineered process that helps people buy or refinance a home with an online application, no hidden fees, or prepayment penalties.

SoFi Home Loans offer competitive rates including affordable down payments, with as little as 10% down on loans up to $3MM, with no hidden fees or prepayment penalties. SoFi allows applicants to choose between four different loan terms and fixed or adjustable rates. Those interested in refinancing can choose between traditional mortgage refinancing, cash-out refinancing, and student loan cash-out refinancing. If SoFi Home Loans isn’t able to handle a loan request, SoFi provides an easy option to digitally transfer member information to its affiliate partner who may be able to help.

Apple’s new credit card keeps advisors guessing (Financial Planning), Rated: AAA

The Apple credit card is the latest offering by a Silicon Valley tech giant looking for a ready-made avenue into the financial services’ sector. While the new card mostly benefits loyal users of Apple products, it’s also an unwelcome reminder of an ever present question on the minds of wealth managers: Will the FAANG companies like Facebook, Amazon, Apple, Netflix and Alphabet continue their land grab of services historically provided by the financial services industry — and at what cost to traditional RIAs?

Ominously, a majority of investors considering switching financial services providers said they would consider banking with a tech company like Facebook, Google or Amazon if they could, according to a recent survey by Novantis.

US Yield Curve Inverts; New Products from FinTechs (PeerIQ), Rated: AAA

For the first time in 3,000 days, and with much anticipation, the 3-month and 10-year treasury curve inverted. The median time to a recession after this curve inverts is between 1 to 1.5 years. However, unprecedented interventions such as QE (and higher central bank holdings globally) make it difficult to draw hard and fast conclusions. Market participants are pricing in a 41% probability of an interest rate cut in the September meeting.

Source: PeerIQ; Bianco Research

New Products from FinTechs

FinTech innovation continues with new products from PeerStreet and Figure. PeerStreet has launched a 30-year loan to enable private investors to buy rental properties. Residential for Rent loans are targeted towards rental home operators. The rental market in the US has grown exponentially post-crisis people struggle to buy homes. The number of rental homes has grown from 36 Mn in 2006 to 43 Mn in 2017.

Source: FactTank, PeerIQ

2019’s Cities with the Most Overleveraged Mortgage Debtors (WalletHub), Rated: AAA

Buying a home represents an important milestone for most consumers. But for those who dive in to the deep end of real estate without a financial safety net, the decision could lead to buyer’s remorse in the long run. Mortgage rates are slowly falling after reaching their latest peak in November 2018, and are close to the lowest they’ve been in the past 3 decades. This makes 2019 a tempting time to buy a home. Some industry experts believe 2019 is friendlier toward buyers than sellers because of the lower rates.

Source: WalletHub

Household Debt – Mixed Signals (DBRS), Rated: AAA

The most recent Quarterly Report on Household Debt and Credit issued by the Federal Reserve Bank of New York (the Fed) and Equifax Inc. (Equifax) showed that household debt rose for the 18th consecutive period during Q4 2018 to $13.5 trillion, $869 billion higher than the peak reached in 2008. This represented the third-smallest increase (0.24%) over the 18 consecutive periods of growth, partly because of decreasing mortgage loan debt during Q4 2018 to $9.2 trillion from $9.4 trillion at the end of Q3 2018 and flat levels of auto loan debt at $1.3 trillion for both Q3 and Q4 2018.

Expanding Access to Credit in the Land of New “Halves” (Lend Academy), Rated: AAA

Credit is one of the largest, most powerful, lucrative and important industries in the world. It also is one of the best tools for wealth creation – home ownership, small business ownership and growth, and, leveraged investing.  This is readily accessible for prime consumers with more options now than ever before. But for the other half of the country that is non-prime, options are still limited and in many cases non-existent.

Early pioneers of securitizations like SoFi, the scaling of marketplace lending like Lending ClubProsper and Best Egg, and new distribution models like Greensky and Affirm have contributed towards increasing comfort of these “new asset classes” that were mostly locked up in bank’s balance sheets.

There are a lot of new “halves” in today’s world.

Amount Delivers Seamless Digital and Mobile Lending Platform to TD Bank (PR Newswire), Rated: A

Amount, a technology provider for financial institutions, today announced a strategic partnership with TD Bank. TD Bank, a top ten U.S. bank, is leveraging Amount’s platform to power the bank’s TD Fit Loan, which launched in August 2018. This initial offering allows consumers to consolidate higher-interest debt, while helping TD meet growing consumer demand for a seamless digital and mobile lending experience. Through this partnership, TD and Amount will roll out additional offerings, as well as standalone tools addressing fraud, verifications and decisioning.

5 Freebies With Your Student Loans (NerdWallet), Rated: A

1. Career coaching

Who offers it: SoFi.

SoFi members have received over 15,000 coaching sessions to date.

4. Referral bonuses

Who offers it: Multiple refinance lenders.

  • Education Loan Finance offers $400 for each successful referral, as well as $100 for the loan applicant.
  • Laurel Road lets you split its $400 bonus however you and your referral see fit.
  • Splash Financial provides $250 apiece for both parties.

5. Charitable work

Who offers it: CommonBond.

If you prefer freebies that help others, CommonBond has a one-for-one social impact mission. For each loan the lender issues, it donates an amount based on a formula that funds a child’s education in a developing country through the nonprofit Pencils of Promise. Those donations have totaled over $1 million to date.

CNote Launches Wisdom Fund to Close Lending Gap for Women (PR Newswire), Rated: A

Women are the fastest-growing group of entrepreneurs in the U.S. Yet less than 5 percent of small business lending—only $1 in $23—goes to women. CNote aims to fix this disparity with the Wisdom Fund, a new impact investment opportunity launching today.

Investors in the Wisdom Fund will earn an estimated 4 percent annual return, over a 60-month term, on a loan portfolio that’s diversified across established CDFIs. Email wisdomfund@mycnote.com to learn how you can help fund more women-owned businesses today.

Women seeking loans should contact a participating CDFI. Partners in the Wisdom Fund’s first phase include:

  • Carolina Small Business Development Fund, which provides small business loans and financial training to startups, existing businesses and community organizations in North Carolina.
  • LiftFund, a Texas-based organization that empowers underserved entrepreneurs with capital and support services in 13 states.
  • TruFund, a national nonprofit organization that provides affordable capital to small businesses and nonprofits in AlabamaLouisiana and New York.

Study Finds 70% of Americans Would Share More Personal Data for Fairer Credit Decisions (PR Newswire), Rated: A

More than half (54%) of loan applicants don’t even have a clear understanding of why they receive the interest rate they do from a lender, while a majority (70%) say it is difficult finding lenders who will look at them as something other than their credit score.

  • 7 in 10 American adults (71%) wish there was another way to prove themselves to credit lenders outside of the standard credit score.
    • Hispanics (82%) and African Americans (81%) are more likely than Whites (67%) to want lenders to look at additional factors in lending decisions.
  • 77% believe more data is better when evaluating potential borrowers’ credit.
  • 71% would be willing to share more personal data with a lender if it resulted in a fairer credit decision. The motivation is even higher among middle-class earners. 79% of people making $50,000 to $75,000 would share more personal data to prove their creditworthiness, compared to 66% of people making over $100,000.
  • 84% think their bank should use modern technology to assess their creditworthiness.
    • Specifically, about half of loan applicants (53%) would like their ideal lender to use machine learning to make fairer credit decisions.
    • More than 2 in 5 (42%) would like their ideal lender to use machine learning to make the credit for homeownership more accessible to everyone.
    • Surprisingly, older generations want newer technology even more. Baby boomers and seniors (83% and 87%, respectively) wanted their banks to use new technologies to score them, compared to 79% for Millennials and Gen Zers.

Survey: Alternative Data Sharing (Urjanet), Rated: B

Urjanet surveyed more than 300 U.S.-based adults to assess consumer sentiment around alternative data sharing in the lending process. Key findings include:

  • A majority of consumers have multiple alternative sources of payment history
  • Alternative data sharing represents a huge opportunity for lenders to drive financial inclusion
  • Most consumers (59%) are willing to share utility and telecom data to boost chances of approval

SigFig launches platform to help retail banks sell financial products (Investment News), Rated: A

SigFig, the financial technology firm that developed digital advice platforms for several large financial institutions, wants to help banks automate more than investment management.

Technology to Play Crucial Role in Preparing ABS Professionals for Next Economic Cycle (ABL Advisor), Rated: A

An overwhelming majority (90 percent) of asset-backed securities (ABS) professionals feel that adopting new technologies will be important to preparing their businesses for the next economic cycle, according to Capital One’s sixth annual survey at SFIG Vegas 2019.

The survey also revealed that ABS professionals believe the biggest risks to their businesses are uncertainty around regulatory risk and increased credit risk, both at 29 percent. However, despite regulatory risk being a top concern, the industry’s apprehension has nearly cut in half over the last two years. In 2018, 48 percent noted regulations were the biggest risk to their businesses while 58 percent thought so in 2017. Additional top-of-mind concerns for 2019 include increases in interest rates (18 percent) and increased competition (17 percent).

TrustToken’s Stablecoin Now Available On Cred’s Crypto Earning Platform (BlockTribune), Rated: A

Asset tokenization platform TrustToken has announced a strategic partnership with crypto lending platform Cred.

Founded by former PayPal financial technology veterans, Cred is a decentralized global lending and borrowing platform that allows stablecoin issuers, exchanges and wallets to provide valuable earn and lending services worldwide.

Fintech in Brief: Update on Legal Challenges to OCC Fintech Charter (JDSupra), Rated: A

On March 19, 2019, the New York State Department of Financial Services (“NYDFS”) filed a brief in opposition to the Office of the Comptroller of the Currency’s (“OCC”) motion to dismiss the NYDFS’ lawsuit challenging the OCC’s statutory authority to grant special purpose national bank charters to Fintechs (the “Fintech Charter”). The brief in opposition signals that the NYDFS will continue its opposition to the Fintech Charter under the leadership of Acting Superintendent Linda Lacewell, who replaced outgoing Superintendent Mari Vullo in February. In opposing the OCC’s motion to dismiss, the NYDFS argued that it has standing to challenge the Fintech Charter, the matter is ripe for judicial review, and its claims are not time-barred. The NYDFS also argued that the OCC’s interpretation of the “business of banking” is not entitled to Chevron deference and “should be invalidated in its entirety.”

Mortech Partners with Roostify for Enhanced Online Mortgage Experience (Business Wire), Rated: A

Today, Mortech, a Zillow Group business providing mortgage technology solutions for mortgage lenders and secondary market teams, announced a new partnership between Mortech’s product and pricing engine (PPE) and Roostify, a digital lending platform that gives customers more control of their home buying process while allowing loan officers to utilize the latest technology to more easily process loans. The strategic partnership will integrate two proven mortgage technology solutions to improve the digital mortgage experience for many industry-leading lenders.

Finastra brings community banking services outside the branch with the launch of Fusion Digital Front Office (Finastra), Rated: A

Finastra has launched Fusion Digital Front Office, an innovative tablet-based banking platform that enables community banks and credit unions to take services directly to the consumer, outside of the branch. The solution provides a simple gateway to manage account origination, sales and service, and transaction processing from any remote location.

Huobi’s US Arm Launches Institutional Group for OTC Crypto Trading (CoinDesk), Rated: A

“We’re entering the market now with a real institutional offering, we’re definitely going to be offering some new products and services,” such as token lending and over-the-counter (OTC) trading, in the coming months, he added.

Elevate Named as a Finalist for LendIt Fintech 2019’s Financial Inclusion Award (AP News), Rated: B

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, has been named as one of six finalists in the “Excellence in Financial Inclusion” category for the LendIt Fintech Industry Awards 2019. This award is given to the company that has made the biggest impact in expanding access to financial services in new and innovative ways.

J.D. Power ranks Regions among top alternative lenders for personal loans (Biz Journals), Rated: B

Birmingham’s largest bank has ranked among the top alternative lenders in the U.S. for providing personal loan satisfaction through digital applications.

United Kingdom

ARBUTHNOT BANKING GROUP (“Arbuthnot”, “the Group” or “ABG”) Audited Final Results for the year to 31 December 2018 (Morningstar), Rated: AAA

FINANCIAL HIGHLIGHTS

·      Profit Before Tax £6.8m (2017: £2.5m)

·      Underlying profit before tax £7.4m (2017: £3.2m)

·      Operating income increased by 24% to £67.9m (2017: £54.6m)

·      Negative earnings per share 134.5p (2017: positive 43.9p)*

·      Continuing earnings per share 38.0p (2017: 14.0p)

·      Underlying earnings per share 40.3p (2017: 17.6p)

·      Final dividend per share 20p (2017: 19p), an increase of 5%

·      Total full year dividend per share 35p (2017: 33p)

·      Bonus share issue to create new class of non-voting shares

·      Net assets £196m (2017: £236m)

·      Net assets per share 1283p (2017: 1547p)

·      Underlying return on deployed equity 5.6% (2017: 4.2%)

Consolidated statement of financial position

 

At 31 December

2018

2017

Note

£000

£000

ASSETS

Cash and balances at central banks

17

405,325

313,101

Loans and advances to banks

18

54,173

70,679

Debt securities at amortised cost / held-to-maturity

19

342,691

227,019

Assets classified as held for sale

20

8,002

2,915

Derivative financial instruments

21

1,846

2,551

Loans and advances to customers

22

1,224,656

1,049,269

Other assets

24

12,716

20,624

Financial investments

25

35,351

2,347

Deferred tax asset

26

1,490

1,527

Interests in associates

27

– 

83,804

Intangible assets

28

16,538

15,995

Property, plant and equipment

30

5,304

3,962

Investment property

31

67,081

59,439

Total assets

2,175,173

1,853,232

EQUITY AND LIABILITIES

Equity attributable to owners of the parent

Share capital

37

153

153

Retained earnings

38

209,083

237,171

Other reserves

38

(13,280)

(949)

Total equity

195,956

236,375

LIABILITIES

Deposits from banks

32

232,675

195,097

Derivative financial instruments

21

188

931

Deposits from customers

33

1,714,286

1,390,781

Current tax liability

236

705

Other liabilities

34

18,549

16,239

Debt securities in issue

35

13,283

13,104

Total liabilities

1,979,217

1,616,857

Total equity and liabilities

2,175,173

1,853,232

Read the full report here.

Tech Nation Lists 10 Fintech Pioneers In Future Fifty 2019 Cohort (Forbes), Rated: AAA

Revolut, Monzo, Starling Bank, Currencycloud, Aire, Blockchain, MarketInvoice, Quantexa, Nested and Salary Finance were revealed to be among the 24 most dynamic and fast-growing late-stage technology companies to be chosen to join Future Fifty’s 2019 cohort.

Tech Nation and Dealroom data has also revealed that the U.K. has attracted a whopping $7.9 billion in funding in 2018 and closed the gap for exits of venture-backed companies with the U.S. As well as this U.K. sales, IPOs and mergers were worth $40 billion – ahead of every other European country – which points to the success of the tech sector as a whole in the country.

OAKNORTH ANNOUNCES BRITISH BUSINESS BANK ENABLE GUARANTEE OF £133M (Business Leader), Rated: AAA

OakNorth has today announced its participation in the ENABLE Guarantee programme, securing a guarantee of £133m from the British Business Bank, the UK government’s economic development bank. OakNorth will use the guarantee to strengthen further its lending support to fast-growth businesses and established property developers and investors.

The ENABLE Guarantee programme is designed to encourage banks to increase their lending to smaller businesses by reducing the amount of capital required to be held against such lending. Under an ENABLE Guarantee, the UK Government takes on a portion of the lender’s risk on a portfolio of loans to smaller businesses, in return for a fee.

Inside OakNorth’s plan to take its lending technology global (Tearsheet), Rated: A

As a challenger bank, OakNorth charts a different course. While Revolut, Monzo, and N26 focus on putting their digital current accounts in the hands of millions, OakNorth doesn’t even offer a current account. While other challengers are racing to acquire banking licenses all over the world, OakNorth is happy with just a UK license.

OakNorth is also posting profits while other challengers aren’t.  The bank announced a £33.9m profit for 2018, up 220 percent from 2017.

OakNorth provides debt financing to entrepreneurs in growing businesses, lending £0.5M to £40M to profitable, scale-up, British businesses. To fund its underwriting, OakNorth offers digital savings accounts. It currently has 40,000 customers with digital savings accounts and has lend £3 billion in under four years.

Successful UK Payday Lender Western Circle Limited Begins Offering Personal Loans Online (Finger Lakes Times), Rated: A

Western Circle Limited has made a name for itself by offering responsible payday loans online. Their decision to branch out into the personal loans market through the new brand PersonalLoansNow.co.uk was well received by their customers.

Five last-minute IFISA ideas (P2P Finance News), Rated: A

THE END of the tax year is fast approaching, so if you haven’t yet taken full advantage of your £20,000 ISA allowance to make tax-free returns, now is the time. The peer-to-peer lending industry is expecting to see an uptick in inflows into Innovative Finance ISAs (IFISA) this year now that there is a much wider choice of products available and the potential for higher returns than cash with lower volatility than the stock market.

FINTECH LAUNCHES AI LOAN COMPARISON SERVICE (Business Cloud), Rated: A

Loan marketplace Monevo has launched a new platform to give consumers comparisons of pre-approved loans.

Based in Macclesfield, the business is a licensed credit broker for personal and business loans and is Europe’s largest personal loan marketplace.

An Alternative Approach (IFA Magazine), Rated: A

When it comes to asset allocation, advisers constantly face the challenge of finding real diversification in client portfolios. Sue Whitbread met with Matthew Ardron and Benedict Yung of Basset & Gold Group, to talk about their approach of offering fixed rate bonds that invest in alternative lending.

Half of Brits running out of cash before payday – pushing them to rogue lenders (Mirror), Rated: A

Exclusive research for Mirror Money shows by the end of this month, those turning to payday loans will have shelled out more than £214million – that works out at £28 per second

P2P to have strong presence at Innovate Finance Global Summit (P2P Finance News), Rated: B

FOUNDERS of the ‘big three’ peer-to-peer lenders are among the confirmed speakers at Innovate Finance Global Summit (IFGS), which takes place next month at London’s Guildhall.

Giles Andrews of Zopa, Samir Desai of Funding Circle and Rhydian Lewis of RateSetter are all participating in various sessions at the fintech industry trade body’s flagship conference on 29-30 April 2019, which marks the start of UK Fintech Week.

Other confirmed speakers from the P2P world include Zopa chief executive Jaidev Janardana, ArchOver’s Angus Dent, Ali Celiker from British Pearl and Roxana Mohammadian-Molina from Blend Network.

China/Hong Kong

Hong Kong SME financing platform raises $ 15m for China push (Finextra), Rated: AAA

Hong Kong-based online SME trade financing platform Qupital is targeting the mainland after closing a $15 million Series A funding round led by CreditEase FinTech Investment Fund.

Consumers hunger for loans, lenders popping up everywhere (Shine), Rated: AAA

Qin Shuifeng, 30, who lives in the suburban district of Jiading, went to a branch of the Postal Savings Bank of China in 2016 to seek a loan for home improvements.

The lender granted her and her husband a credit line of 1 million yuan (US$148,600), of which they drew 600,000 yuan, with an interest rate 10 percent higher than the benchmark rate.

Competition 

The central government has issued a series of policies favorable to consumer lending since the second half of 2018.

Still, risks remain. To realize sustainable development, players need to build strong operational and risk control capabilities, either by themselves or in partnership with financial technologies firms.

European Union

Klarna Launches Open Banking Platform (PR Newswire), Rated: AAA

Today, Klarna, one of Europe’s leading payment providers and the global market leader in payment initiation services, announces the launch of its own Open Banking Platform. This platform will enable access to more than 4,300 European banks through a single Access to Account (XS2A) API in line with Payment Services Directive (PSD2). Klarna’s XS2A API is the most established and proven solution that has been developed at scale across markets for almost 15 years through the Klarna Group company Sofort.

This platform provides a fully proven and mature infrastructure, superior market coverage and connectivity, with access to 99% of online banking consumers currently across 14 European markets. By opening up its own advanced technology and capabilities, Klarna is simplifying and democratising access to APIs securely. Both established and newer banks and fintechs as well as other licensed businesses, will be able to build smart and personalised offerings that meet the evolving needs of consumers across Europe. Klarna has been one of the leading proponents of the PSD2 legislation and believes high-quality APIs will drive innovation and competition but most importantly will empower consumers across Europe with increased choice, control and clarity on their finances, and ability to access better products.

International

Has Alternative Lending Seen Its VC Peak? (PYMNTS), Rated: AAA

U.S. FinTech funding reached its highest level in five years in 2018, according to CB Insights data published last month, hitting $11.89 billion. Yet at a time when analysts say VCs are focusing more on late-stage investment, alternative lenders are having a tougher time securing funding, particularly market newcomers in a crowded market.

But there is evidence that investors’ appetite for alternative lending startups is on the wane, even as overall FinTech funding continues to climb — and as the success of the alternative lending market grows, too.

eToro buys blockchain company Firmo (Fintech Futures), Rated: A

Just weeks after launching in the US, trading and investment platform eToro announced plans to purchase Copenhagen-based blockchain firm Firmo, reports Julie Muhn  at Finovate

Founded in 2017, Firmo offers a programming language called FirmoLang that runs on a sidechain. Exchanges can leverage FirmoLang to create financial instruments such as P2P lending platforms or cryptocurrency derivatives with tokens. And Firmo is versatile, allowing the tokens to be run on any blockchain.

Battlestar Capital Earns 30% Returns For Holding Crypto (ChainBits), Rated: B

Battlestar Capital, which is a blockchain staking-as-a-service company, revealed that customers could potentially earn up to 30 percent on a yearly basis when it comes to their idle crypto holdings. Here is everything about the startup’s claims in a nutshell.

In an interview, the company said that it has teamed up with crypto lending startup called Celsius Network in an attempt to launch a large-scale service capable of offering potentially high returns.

Australia

APRA Proposes Stricter Credit Risk Management Standards (Regulation Asia), Rated: AAA

The revised prudential standard enhances board oversight of credit risk and requires more intensive credit checks on borrowers. APRA also highlights the risks of P2P originated loans.

India

New modes of lending, fund raising on cards (The Asian), Rated: AAA

In a bid to change the market dynamics of the banking and financial sectors, the Reserve Bank of India (RBI) will soon come up with alternative models of lending and capital raising for the sectors.

Asia

Bukalapak partners three P2P lenders to provide loans for offline businesses (Tech in Asia), Rated: AAA

Bukalapak is teaming up with Indonesian P2P lending startups Amartha, Modalku, and PohonDana to provide loan facilities in a program called Modal Mitra. The loans are available to offline vendors who are part of the company’s Mitra Bukalapak program.

The financing offered through Modal Mitra ranges between US$70 and US$700 and can be paid back in up to six months, with weekly installments starting from US$6. It can only be used for purchases in the Mitra Bukalapak app.

Eurasia

Russian fintech launches digital bank 131 (Finextra), Rated: AAA

Bank 131, a new digital bank focused on Russian companies and entrepreneurs that work for global internet companies and/or buy from global ecommerce companies with a Russia presence, announced today they have received their banking license from authorities – the first and only new bank to do so in four years.

Canada

Shadow banking has grown, but risks to financial systems are modest (Advisor’s Edge), Rated: AAA

Canada’s shadow banking sector has grown substantially in recent years, but the overall financial system has grown even faster, keeping risks in check, suggests a new report from the Bank of Canada.

In the report, the central bank details the results of its monitoring of so-called “non-bank financial intermediation” (NBFI), also known as shadow banking. Among other things, the report finds the Canadian NBFI sector has grown by 1.7 times since 2006, driven by strong growth in investment funds, securities financing transactions and private lending.

Authors:

George Popescu
Allen Taylor

The post Thursday March 28 2019, Weekly News Digest appeared first on Lending Times.

Friday June 16 2017, Daily News Digest

Indonesia fintech

News Comments Today’s main news: SoFi wants to steal banks’ most coveted customers. Biggest online lenders don’t always check key borrower data. Fed issues FOMC statement. RateSetter puts aside George Banco partnership. Alibaba’s first fintech investment in Hong Kong. Investree enters Vietnam. Today’s main analysis: How fintech startups are transforming banking in Indonesia (A MUST-READ). Today’s thought-provoking articles: Real estate […]

Indonesia fintech

News Comments

United States

United Kingdom

China

International

Australia

India

Asia

Africa

News Summary

United States

SoFi Wants to Steal Your Most Coveted Customers (The Financial Brand), Rated: AAA

Don’t look now, but the ‘in your face’ fintech firm, SoFi, is moving from offering just student and personal loans to providing wealth management and opening checking accounts. And their target market is one of the most coveted by banking … the educated, affluent, digital-first Millennial.

In an interview with Mike Cagney, “Mad Money” host Jim Cramer said, “If Bank of America or Citi had the Internet when they were forming, this (the SoFi model) is what they would have started.” Cagney responded saying, “Absolutely. I think what’s going to happen is the banks are going to move toward our model over time. And we certainly don’t have the hubris to expect that we’re going to change all of banking, but we are going to drag them into a different kind of service model. One that’s a lot more aligned to the customer.”

The company is also developing financial planning services, which it expects to launch this summer. These include joint financial planning for couples and first-time home buying.

“If you look at SoFi, we run over 65 percent contribution margin across our three lending businesses. We’re the most profitable fintech company in the marketplace. And there’s huge opportunity to expand from that, and it comes down to cost of acquisition. If you build really strong brand, really strong evangelism, really strong what I call ‘cross-buy,’ you can drop that cost of acquisition significantly and that drives margins,” Cagney said.

When fintech meets CRA: SoFi bank bid draws activists’ ire (American Banker), Rated: A

In its early days, Social Finance made loans only to borrowers who had attended name-brand universities. Graduates of elite colleges were paying relatively high interest rates on federal student loans even though they represented a low risk, and the Silicon Valley startup saw in that mispricing a chance to make money.

SoFi CEO Mike Cagney noted in a 2013 interview that traditional banks were aware of this opportunity but were unwilling to pursue it.

Real Estate Lending: The Investment Bankers are Coming (Lend Academy), Rated: AAA

Back in 2012, I borrowed money to purchase a house I planned to fix-and-flip. I contributed 20% of the purchase price as a down payment. For the privilege of borrowing the other 80%, I paid a local “hard money lender” a 3.5% origination fee plus interest only payments at a 13% APR.

I started doing some more research into the market that was originating a majority of these types of fix-and-flip loans, which is called “hard money lending”. There were a few things that became quickly apparent to me.

  1. The market was highly-fragmented. There wasn’t a single lender that controlled any significant amount of the national market.
  2. The use of technology was virtually non-existent. The ability to apply online for a hard money loan didn’t exist. The lender I borrowed from didn’t even have a website.
  3. Capital formation was very analog. This put them in a perpetual cycle of originating new loans to keep their funds working while also raising additional capital to meet the demands of their borrower base.
  4. Hard Money Lenders, generally speaking, had a very negative reputation among the borrower community. This was in part due to the high interest rates. However, upon further digging, the real cause of dissatisfaction among borrowers was the lack of service and transparency.

Much like the early days of peer-to-peer lending, the new online real estate originators won business by providing a better borrower experience. Online applications with instant feedback on pricing and terms provided better transparency to borrowers. Quick funding decisions that are augmented by large data sets, rather than relying 100% on appraisals, allows these new lenders to provide more certainty around closing. Online dashboards where borrowers can order construction draws and make interest payments make the loan servicing experience easier for the borrower. Regardless of the financial innovation that is to follow, these technology platforms have improved the level of service provided to borrowers.

That said, the five largest online originators still only write between 5-8% of the total loan volume in the fix-and-flip market. We are still in the very early days of what is likely to be a massive consolidation of a previously fragmented market.

Biggest Online Lenders Don’t Always Check Key Borrower Data (Bloomberg), Rated: AAA

Prosper Marketplace Inc. doesn’t verify key information like income and employment for around a quarter of the loans it makes, according to documents tied to bonds that Prosper sold last month. LendingClub Corp. said it only verified income about a third of the time for one of the most popular loans it made in 2016, according to company data seen by Bloomberg. If either lender finds mistakes in a borrower’s application, such as overstated income, they may still go ahead with the loan, according to disclosures linked to bond sales from the companies, including documents for securities that LendingClub is offering now.

Online loans usually don’t have collateral, so when they go bad, investors can lose out. Traditional consumer finance companies and banks tend to check incomes and employment on closer to 100 percent of new customers before making these kinds of loans, according to industry executives. Online lending competitor Social Finance Inc. checks income on 100 percent of its borrowers, according to a report from Kroll Bond Rating Agency.

Investors in LendingClub loans earn average annual returns of around 4.3 percent, about three percentage points higher than the yield for two-year U.S. Treasuries. Those kinds of returns helped nonbank startups arrange more than $36 billion of loans in 2015, mainly for consumers, according to a report from KPMG.

LendingClub verified income on 35.6 percent of one of its most popular types of loans in 2016, according to company data obtained by Bloomberg. That figure has bounced around over time: it was 16 percent in 2008, and 47 percent in 2013.

LendingClub has had to write off a growing percentage of its loans — 8.5 percent, annualized, in the first three months, compared with 5 percent the same quarter a year ago.

Federal Reserve issues FOMC statement (Federal Reserve), Rated: AAA

Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined. Household spending has picked up in recent months, and business fixed investment has continued to expand. On a 12-month basis, inflation has declined recently and, like the measure excluding food and energy prices, is running somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1 to 1-1/4 percent.

SEC: RIAs Are Worse Than BDs at Cybersecurity (Financial Advisor IQ), Rated: A

The SEC says many financial advice firms are falling short when it comes to cybersecurity, with investment advice firms being less prepared than broker-dealers, Reuters writes.

As part of its second stage of cybersecurity exams initiated in 2014, the SEC analyzed 75 firms and found that 26% of the companies don’t conduct risk assessments on a continuous basis and 57% of the firms fail to carry out vulnerability and penetration tests with simulated attacks on critical systems, according to the newswire.

The SEC has concluded that investment advice firms have had more issues with cybersecurity than broker-dealers, according to the newswire. On the other hand, the SEC learned that almost all investment advisors practiced regular system maintenance as part of their cybersecurity process, namely by consistently installing security patches, Reuters writes.

Only 4% of the companies examined were missing essential patches or updates, according to the newswire.

Marlette Funding Depositor Trust (SEC), Rated: A

On June 2, 2017, representatives of the Company provided us with a computer-generated unsecured consumer loan data file containing data, as represented to us by the Company, as of May 24, 2017, with respect to 29,806 unsecured consumer loans (the “Statistical Loan File”).  At your instruction, we randomly selected 125 unsecured consumer loans (the “Initial Sample Loans”) from the Initial Statistical Loan File using the following criteria provided to us by the Company:
(i)
3 unsecured consumer loans with a seller identified as “Seller #1” on the Initial Statistical Loan File;
(ii)
21 unsecured consumer loans with a seller identified as “Seller #2” on the Initial Statistical Loan File;
(iii)
1 unsecured consumer loan with a seller identified “Seller #3” on the Initial Statistical Loan File;
(iv)
23 unsecured consumer loans with a seller identified as “Seller #4” on the Initial Statistical Loan File;
(v)
15 unsecured consumer loans with a seller identified as “Seller #5” on the Initial Statistical Loan File;
(vi)
62 unsecured consumer loans with a seller identified as “Seller #6” on the Initial Statistical Loan File;
In addition, on June 13, 2017, representatives of the Company provided us with a computer-generated unsecured consumer loan data file containing data, as represented to us by the Company, as of May 24, 2017, with respect to an additional 4,203 unsecured consumer loans (the “Subsequent Statistical Loan File”).  At your instruction, we randomly selected 8 unsecured consumer loans from the Subsequent Statistical Loan File with an origination date (as set forth on the Subsequent Statistical Loan File) on or before March 31, 2015 (the “Subsequent Sample Loans”).  The Initial Sample Loans and the Subsequent Sample Loans are collectively and hereinafter referred to as the “Sample Loans”

Fintech Ingo Money raising $ 12M in venture capital, plans to add up to 100 jobs (Biz Journals), Rated: A

Ingo provides risk-management services to financial institutions, such as banks and payment networks. Investors include Baltimore-based Camden Partners, Philadelphia-based MissionOG, and Bethesda, Md-based CNF Investments.

Notice of Class Action Settlement (Google AdWords Email), Rated: A

In Re Google AdWords Litigation, No. 5:08-cv-03369-EJD
U.S. District Court Northern District of California
A $22,500,000 class action settlement has been preliminarily approved by the U.S. District Court for the Northern District of California, in the case In Re Google AdWords Litigation, No. 5:08-cv-03369-EJD.  Your rights may be affected and you may be entitled to a portion of this settlement if you are an eligible Class Member.
Who Is Included in the Settlement?
You may be a Class Member if during the period of July 11, 2004 and March 31, 2008, you: 1) were a U.S. resident; 2) had a Google AdWords Account; and, 3) were charged for clicks on advertisements appearing on parked domains or error pages.
What Is This Case About?
This case alleges that Google failed to disclose to its AdWords customers that it placed ads on websites known as parked domains and error pages.  The lawsuit alleges this conduct violates California laws against unfair competition and false advertising.  Google denies these claims.
How Do I Ask for Payment?
To receive payment, you must submit a claim form no later than June 21, 2017 and have spent at least $1.00 on AdWords served on parked domains or error pages between July 11, 2004 and March 31, 2008.  You may complete the claim form online at June 21, 2017. If you do not want to stay in the Class, you must submit a request for exclusion by June 21, 2017. If you exclude yourself, you cannot get a payment from this settlement, but you will keep any rights to sue Google for the same claims in a different lawsuit. The detailed notice explains how to exclude yourself, object, and request to appear.
The Court’s Fairness Hearing.
The Court will hold a Final Fairness Hearing on July 27, 2017 at 9:00 am PST at the following location: U.S. District Court for the Northern District of California, San Jose Courthouse, Courtroom 4 – 5th Floor, 280 South 1st Street, San Jose, CA 95113.  At this hearing, the Court will consider whether: 1) the settlement is fair, reasonable, and adequate; 2) to approve the service awards to the class representatives; and 3) to approve the award of attorneys’ fees and expenses to the attorneys for the class.
Where Can I get More Information?

SEC heightens exam focus on robo advisers (Financial-Planning), Rated: A

Under newly confirmed Chairman Jay Clayton, the SEC is setting its sights on expanded protections for retail investors, planning a series of RIA sweep exams exploring areas like robo advisers and money market funds.

Slated to launch this year is an exam sweep looking at how firms are deploying robo advisers, or using automated services to augment the provision of investment advice.

Levine said that the sweep will likely run along the lines of the guidance on digital advice platforms that the SEC issued in February, when it affirmed that robo advisory services still have a fiduciary duty, and warned of potential issues around disclosure and client communications.

Also this year, the SEC is planning to launch a sweep looking at how firms that traffic in money market funds are incorporating the rules the SEC adopted to shore up that sector following the destabilizing run in 2008.

As part of a broader focus on retail investors saving for retirement, the commission is also planning to launch a sweep exam looking at how firms are adhering to the schedules laid out in the disclosures of target-date funds, and another probing the controls advisers have in place on fixed-income cross trading relating to retirement accounts.

Initiative invests $ 5M to help more educators access Landed (Landed Blog), Rated: A

Today, we’re excited to announce that the Chan Zuckerberg Initiative (CZI), has invested $5,000,000 to create a Landed down payment support fund that will make it easier for educators in the Redwood City, Ravenswood City, and Sequoia Union High School districts in California — districts which face some of the highest housing costs in the country — to buy homes.

  • Eligibility: Any district or public school employee within the boundaries of Sequoia Union High School District, Redwood City School District and Ravenswood City School District.
  • Support: Up to half of a down payment (max $120,000), for the purchase of a primary residence.
  • Terms: Participants share up to 25% of the appreciation (or loss) in the price of the home upon sale, or after 30 years, whichever is sooner. There are no monthly payments.
  • Other: Participants can choose to end their relationship with Landed at any time. Financial coaching support will also be made available to participants.

Fletcher Jones Auto Group Partners With AutoGravity To Bring Financing Of Real Time Inventory To The Smartphone (PR Newswire), Rated: A

AutoGravity, a FinTech pioneer on a mission to transform car shopping and financing, has announced the launch of real-time inventory on the Fletcher Jones Drive (FJ Drive) smartphone app powered by AutoGravity. Car shoppers now have access to the largest selection of Mercedes-Benz inventory in the nation, a seamless auto financing application and Mercedes-Benz Financial Services offer presentment – all in the palm of their hand through the AutoGravity powered FJ Drive app for iOS and Android.

AutoGravity joined forces with the Fletcher Jones Auto Group to launch FJ Drive, the nation’s first and only mobile app that allows customers to secure financing for any new Mercedes-Benz right on their smartphone. Real time inventory extends the partnership by empowering users to shop for specific vehicles sitting on the dealership lot. Guests can choose any Mercedes-Benz model and browse all available cars for their store of choice. Easy to use filters, including model year, body type and color, make finding cars simple and intuitive. Guests apply for financing and review their lease or loan offer in the app before picking up their car at the Fletcher Jones showroom.

Venture fund seeks fintech ‘workhorses’ (American Banker), Rated: A

Since its beginnings in 2015, Centana has invested in four companies, including the insurance technology company One and digital identity management firm Jumio. The New York-based limited partnership says it is hunting for other investment candidates and that it expects to put $5 million to $30 million into as many as 15 investments.

Centana is hoping to differentiate itself from other venture capital firms by pursuing “workhorses” — essentially, companies that will help incumbent companies improve on existing business models, Cukier said.

FinTech Marketplace Wealth Migrate Announces Luxury Condo Give-a-way (Benzinga), Rated: A

Wealth Migrate, an online real estate investment marketplace, announces the global opening of its #LikeAMillionaire luxury condo give-a-way. The competition, which is open to all new users who sign up on the WealthMigrate.com platform, is another example of how Wealth Migrate is putting quality real estate within reach of middle class investors throughout the globe, who typically do not have access to these types of deals.

The Zero-2-One Tower, standing 42 stories tall, is set to be the tallest building in Cape Town upon completion in 2020.

FinTech and InsurTech company IATAI Enterprises and payment solutions enabler BPP create Handy U (Crossroads Today), Rated: A

The FinTech and InsurTech company IATAI Enterprises (IATAI), which specializes in making mobile transactions, communications and other interactions quicker and easier across platforms, has joined forces with the payment solutions enabler BPP to develop Handy U, a universal and customizable payment, rewards and insurance solution for consumers, businesses and merchants.

Handy U is a reloadable Visa virtual/digital account that enables IATAI’s travel and insurance clients to instantly make and receive payments, access benefits and redeem rewards generated by their loyalty programs. Handy U is hosted on IATAI’s digital wallet, onepocket, which lets users combine several payment methods in a single transaction, both online and in-store.

First Foundation to acquire Community 1st Bank for about $ 50 mln (Reuters), Rated: B

* First Foundation – deal is valued at approximately $50.4 million in aggregate

* First Foundation – at closing, transaction is expected to be about 2.5% dilutive to co’s tangible book value per share with an estimated tangible book value earn-back period of 3.6 years

“Investing in Real Estate through Equity Crowdfunding Websites” Now On Demand (Benzinga), Rated: B

This Financial Poise webinar series explores the purchase of ownership shares in private companies via crowdfunding websites.

Episodes in the series address

  • the modes of angel investing in a company during its early stages,
  • the opportunities and perils of crowdfunding real estate investments,
  • the money-raising entity’s perspective and
  • a close look at crowdfunding options under federal and state law.

The 3rd episode of the “Equity Crowfunding” series is available now on demand! “Investing in Real Estate through Equity Crowdfunding Websites” (Register Here) features Moderator Chris Cahill of Lowis & Gellen. Chris is joined by Jordan Fishfeld of CFX Markets, Marty Coyne of Connected Investors Inc. and Lynda Davey of Avalon Net Worth.

Boston’s FinMason Announces New Fintech Accelerator Program (Crowdfund Insider), Rated: B

FinMason, a Boston-based fintech and investment analytics firm, announced on Thursday the launch of its new fintech accelerating program, FinSpring, which is described as an initiative that will provide free access to FinRiver, a set of flexible and lightning-fast investment analytics APIs.

United Kingdom

RateSetter Update: Decides to Not Go Ahead With George Banco Partnership (Crowdfund Insider), Rated: AAA

Last month, RateSetter announced it was entering a partnership with George Banco and acquiring an equity stake in the personal loan provider company. Unfortunately, RateSetter revealed earlier this month that it has decided to pull out of the partnership after all.

“We have subsequently decided not to go ahead with this new arrangement with George Banco. After further examination of the infrastructure required to do this, we concluded there were better uses of our development resources which may be deployed more effectively to source other borrowers. Therefore, we will not facilitate lending directly to George Banco’s customers, and accordingly we have updated our Principles of Lending document which sets out our lending criteria. The existing wholesale loans to George Banco will continue to be repaid in accordance with the schedule of the existing loan contracts. The total of these existing loans currently stands at £31.5 million.”

To see the updated Principles of Lending document, click here.

BTL index: Nothing to choose between Tory and Labour-voting regions (Letting Agent Today), Rated: AAA

The top ten buy-to-let postcodes in England and Wales are evenly split between locations that voted for the Conservatives or Labour.

Luton has been identified as the best buy-to-let investment location across England and Wales, with an average yield of 4.54% and rental price growth of 7.37%.

According to LendInvest, which analyses data from Zoopla and the Land Registry to compile its Buy-to-Let Index, Stevenage is the best performing buy-to-let postcode out of areas that voted Conservative last week.

The Hertfordshire town has recorded capital gains of 11.64% and rental price growth of 7.5% over the last quarter.

Luton is the top performing Labour-voting postcode.

Top 10 buy-to-let postcodes

Yield Capital gains Rental price growth Transaction volume growth
Luton 4.54% 12.83% 7.37% -10.40%
Stevenage 4.05% 11.64% 7.47% -9.40%
Rochester 4.55% 12.34% 5.45% -9.40%
Colchester 4.29% 14.14% 4.14% -11.16%
Dartford 4.37% 13.61% 3.92% -10.94%
Peterborough 4.71% 9.04% 6.98% -10.67%
Southend-on-Sea 4.30% 12.37% 3.89% -10.26%
Manchester 6.11% 7.58% 7.53% -12.41%
Canterbury 4.36% 9.34% 6.62% -11.49%
Romford 4.81% 14.42% 1.28% -11.67%

MoneyThing posts record month ahead of 2017 IFISA launch (P2P Finance News), Rated: A

MONEYTHING is on track to boost its loan origination ahead of an Innovative Finance ISA (IFISA) launch later this year, after delivering its highest new loan monthly level to date in May.

The peer-to-peer lending platform launched £7.7m of new loan opportunities last month, which marks its strongest result since it launched in February 2015, and £3.7m more than its previous record.

It now aims to roll out the tax-free wrapper by the end of the year, although the launch will not be imminent, a company representative told Peer2Peer Finance News.

Irish fintech firm Assure Hedge receives UK regulatory boost (Irish Times), Rated: A

Assure Hedge, a provider of foreign exchange technology to protect businesses from currency fluctuations, has received a boost from the UK Financial Conduct Authority under a programme aimed at drawing financial technology (fintech) under its regulatory oversight.

China

Meet Alibaba’s first fintech investment in Hong Kong (The Asset), Rated: AAA

Aiming to fix cash flow issues for companies operating in Hong Kong, Andy Chan along with his partner Winston Wong, set out on a mission to craft Hong Kong’s first invoice trading platform, Qupital.

Since its inception less than a year ago, the company has started to gain attention from companies including Chinese e-commerce giant Alibaba.

In terms of generating revenue, Chan shares that when an invoice is purchased, Qupital would take between 25-75 basis points of the total invoice value. Moreover, the company would take 20% of net gains made by funders.

With fresh capital from high-profile backers, Chan has his sights on deepening his business in Hong Kong with an eye on expansion to other markets in 2018 such as Thailand and Vietnam.

Baidu, With a Move Into Fintech, Gets Wary Credit-Ratings Look (WSJ), Rated: A

Baidu Inc. is among China’s tech giants looking to get a leg up in the competitive financial-services market. Credit-rating companies aren’t so sure it’s a good idea.

Fitch recently placed Baidu on negative watch, citing “significantly higher” business risks as it moves into making unsecured consumer loans and selling uninsured investments known as wealth-management products, which Fitch said are “part of the shadow banking system in China.”

Moody’s decided last month to place Baidu’s bond ratings on review for a downgrade, citing concerns over the firm’s short history in the financial-services business.

Baidu’s financial services, which also include its mobile payment platform, now account for about 12% of its assets, or 25 billion yuan ($3.7 billion)—representing rapid growth for a firm that formed its financial-services group only about a year ago. That has significantly changed Baidu’s credit profile, said Moody’s vice president and senior credit officer Lina Choi.

International

Transforming banking with fintech (HSBC), Rated: A

HSBC has its own tech teams designing new platforms and products, and they are absolutely brilliant. But we need to be humble and recognise that we don’t have all the answers. We invest in and work with fintech start-ups where we think they can help.

Our partnership with Tradeshift is making it easier for business customers to manage their accounts and their relationships with suppliers online, saving time and cutting down paperwork.

Retail customers in the UK can now download an HSBC SmartSave app, developed in partnership with a start-up called Pariti. It helps them save money without even having to think about it.

We have invested in a start-up which is developing technology that can sift through large amounts of financial transactions to pinpoint suspicious patterns. This will help us tackle financial crime more effectively, and, ultimately, keep our customers safer.

Australia

ZipMoney eyes profitability, partners with NAB (AltFi), Rated: A

ASX-listed fintech zipMoney has put the finishing touches on its A$260 million debt warehouse with big four bank NAB and could become one of the few all-Australian fintechs to make a profit.

The money raised will go to the “immediate refinance of $70 million of existing receivables”, ZipMoney told the ASX, resulting in lower interest rates across the board. It will also allow the company to increase volumes and hire more staff.

ZipMoney provides a ‘buy now, pay later’ service, offering shoppers loans between $1000 and $10,000 for up to eight months.

ASIC permanently bans Perth financial adviser (Professional Planner), Rated: B

An ASIC investigation found that between January 2011 and November 2012 Mr Hutchison dishonestly:

  1. banked cheques he received from his clients for advice fees directly into his personal bank account, when he knew he was obliged to remit or report them to RI Advice. Mr Hutchison then deducted additional fees from his clients’ investment platform or financial product for payment to RI Advice; and
  2. banked cheques he received from his clients for advice fees directly into his personal bank account and failed to record the receipt of the cheques on RI Advice’s payment system.

Mr Hutchison misled or deceived his clients by failing to disclose to them that they had been double charged advice fees and failed to comply with the proper process for remitting and reporting the fees. He also misled or deceived RI Advice by failing to disclose that he had deposited the advice fees into his own account and did not comply with RI Advice’s relevant fees policies and procedures.

India

SMC Capital, REPL launch Rs 1,000-crore real estate fund (India Times), Rated: A

SMC Capital and EPC developer REPL group have come together to launch a Rs 1,000-crore real estate fund, SMC IM Capital. The fund has already got commitments from global investors based in the US and Middle East and will look at a first close by end of this month.

The fund will invest between Rs 50 crore and Rs 80 crore in the middle segment affordable housing projects in tier I and II cities.

In India, real estate is the second largest employer after agriculture, and is slated to grow at 30% over the next decade. The real estate sector comprises four sub sectors — housing, retail, hospitality, and commercial.
Asia

Indonesian P2P lending site Investree to enter Vietnam, launches sharia-based service (e27), Rated: AAA

Indonesian peer-to-peer (P2P) lending startup Investree announced on Thursday that it is set to begin expansion to Vietnam in 2018, DailySocial reported.

The Jakarta-based startup said it is currently undergoing the process of setting up a joint venture with an undisclosed local financial institution.

Investree also announced that it is going to launch a sharia-based lending service in July; the startup is currently on the process of applying for certification from the National Sharia Board (DSN).

Gunadi cited strong demand from both borrowers and lenders to set up a lending practice based on the Islamic law, and by far three small businesses from Jakarta and Surabaya have agreed to join in the pilot project.

How FinTech Startups Are Transforming The Way Banks Function In Indonesia (inc42), Rated: AAA

India, November 2016. PM Modi launched a demonetisation drive to eradicate black money, fostering a new wave of digitisation in India. Consequently, there was a tremendous rise in the adoption of e-wallets, launch of new fintech startups, and the average Indian became familiar with a new financial entity, bitcoin.

From local grocery shops to petrol pumps to movie theatres, digital wallets have captured each and every day-to-day business which requires payments. Not only this, digital wallets have even seen a massive adoption for payment chores like booking air tickets or buying movie tickets or paying bills (DTH, Water, Electricity).

Be it digital payments, online lending, or remote banking, Indonesia has seen a surge of startups that have developed products to solve the current needs of the population.

At the same time, the country remains a challenging market for fintech industry to grow with only 40% of adults in the country having access to banks. 49 Mn SMEs unit are still not bankable, because of low credit score and little or no financial history.

It is estimated that only 40% of Indonesia’s 250 Mn populationcurrently have access to services provided by banks.

Secondly, Indonesia is a country of SMBs. These enterprises account for 99% of the total amount of enterprises that are operating in Indonesia and they create a total of 107.6 Mn jobs in Southeast Asia’s largest emerging economy, as per a Deloitte report. Moreover, Indonesia’s micro, small, and medium-sized companies contribute 60.6 % to Indonesia’s gross domestic product (GDP).

Thirdly, due to Indonesia’s peculiar geography, its traditional banking system suffers. The number of bank branches, which is estimated at 10 banks (branches)  per 1,000 square kilometersis far too low to serve Indonesia’s vast geography.

The major areas that startups are capturing and disrupting are payments, insurance, stock markets, investments, PoS, comparison, and online lending. Major startups in the payments sector include Mandiri, T-Cash, PayPro, IPayMu, Xenditi among others.

Digital payments have become so big in the archipelago that the total transaction value in the “Digital Payments” segment amounts to $18 Mn in 2017. Additionally, the total transaction value is expected to show an annual growth rate (CAGR 2017-2021) of 18.4 %, resulting in the total amount of $36 Mn in 2021. Popular fintech categories in Indonesia are lending platforms, capturing 17% and marketplaces for financial products that have occupied 13%.

Deposits, Lending, And Capital Raising

The online lending space is dominated by players included Modalku, Taralite, and Investree. The online lending segment has a huge market demand in the country, owing to the fact that a major population of the country has a low credit score and SMEs can benefit from these alternative services.

Taralite: Launched in 2016, the startup sanctions financial loans with relatively low interest, starting from 1%, for education, marriage, childbirth, house renovation, vehicle purchase, property & housing. It also provides loans without collateral. It recently secured $6.3 Mn from Japanese financial services provider, SBI Group.

MODALKU: Founded in 2016, it is an online lending platform, that provides loans up to IDR. 2 Bn, with relatively affordable interest. Its focus areas are SMEs looking for working capital, with minimum one year of operations.

Market Provisioning

Cekaja.com: Launched in 2013, the platform allows users to compare various financial products at one place.

Investment & Risk Management

JOJONOMIC: JOJONOMIC digitises the entire employee reimbursement process for an employee.

RajaPremi:  Founded in 2014, RajaPremi is an online insurance marketplace.

Bareksa: Founded in 2016, it is an online and integrated marketplace for mutual funds.

Digital Payments

Kudo: Launched in 2014, the startup has a website and a mobile application that enables anyone to be an online entrepreneur without having to personally stock the items.

DOKU:  A 2007 founded startup, Doku is the biggest player in the Indonesian payments scene. Functioning as an online and offline payment gateway for businesses and individuals, DOKU is an e-wallet equipped with links to credit card and electronic money.

t-cash: Founded in 2011, it is an electronic money service provided by Telkomsel (a telecom giant). Users are required to install the T-Wallet app on their mobiles and equip their mobiles with the t-cash stickers.

Ayopop: Launched in 2016, Ayopop is an app that specialises in bill payments.

POS (Point-Of-Sales Startups)

Pawoon: Launched in 2013, Pawoon is a cloud-based Point of Sales (POS) application for SMEs.

DealPOS: DealPOS is a cloud-based point-of-sale ( POS ), inventory and accounting software for business which was also launched in 2013.

A Year Ago… (LinkedIn), Rated: A

A year ago, I found myself on stage in Hong Kong, China speaking on “How Fintech Companies Can Differentiate Themselves and Build Special Competitive Advantage“.

Wondering in the halls of an incredible conference in Shanghai a few days later at LendIt Conference China, I was consumed with anxiety. Every platform I saw in China easily had 30 million plus active users. Whether it was credit, payment, insurance or investments, the conference in China was filled with eager entrepreneurs, seasoned executives and hunger investors.

Out of necessity, with a series of coincidences and a ton of luck I founded a company called MaxDecisions, Inc. with an old colleague and friend Henry Wang. We didn’t think too much of it and we didn’t really know where we will end up with it.

In the same month, I founded another company called Kuber Financial, LLC. and later Kuber Inc. with two other co-founders. Both of them left in the middle of the project, one early on and one late later year.

Fluid App came to me because I wanted to build something that’s truly different from all other platforms. A fun, mobile only, credit building product that could truly change lives of millions of young Americans. A FinTech, AdTech mesh up, that a lot of people are now starting to understand and appreciate my vision for this product.

With our 10th employee coming onboard at www.maxdecision.com next week, we’ve officially broke our first million dollars in sales.

Shenzhen – Singapore – Hong Kong Financial Technology Alliance was formally established (01Caijing), Rated: B

June 14, Shenzhen Internet Finance Association, THE FINLAB PTE LTD and the Hong Kong Internet Professional Association in the World Youth Entrepreneurship Forum officially signed a tripartite cooperation memorandum, at the same time announced at the forum, Shenzhen – Singapore – Hong Kong Financial Technology Alliance was formally established.

Africa

Payment Startups Lead Way In Africa’s Booming FinTech Scene (Forbes), Rated: AAA

Payments and remittances startups account for the majority of Africa’s over 300 fintech startups, though blockchain companies are the more likely to secure funding.

Payments and remittances is the most populated of nine sub-sectors addressed in the report, with 125 startups across the continent focused on making the process of sending and receiving money easier. Lending and financing – with 65 startups – is the next most popular category; indeed, over 60 per cent of all Africa’s fintech startups are focused on these two crucial spaces.

African blockchain startups are the most successful in percentage terms, with almost 40 per cent of the blockchain-focused startups on the continent securing funding.

The continent’s fintech startups have secured over US$92.5 million in investment since 2015, the report finds, while the data shows fintech startups are spread across the African continent. Southern Africa and West Africa are fintech leaders – with 34.2 per cent and 34 per cent respectively based in those regions respectively. South Africa has the most fintech startups (94), followed by Nigeria (74) and Kenya (56).

Authors:

George Popescu
Allen Taylor

Thursday May 18 2017, Daily News Digest

Thursday May 18 2017, Daily News Digest

News Comments Today’s main news: Lending Club increases minimum investment to open account. Consumers pay off unsecured personal loans first. American Households Return To Peak Debt, Thanks To Booming Student Loans. RateSetter sells off bad debts. Today’s main analysis: The fast lane to better small business funding. Today’s thought-provoking articles: Consumers pay off unsecured personal loans first. American Households […]

Thursday May 18 2017, Daily News Digest

News Comments

United States

United Kingdom

China

European Union

Australia

India

Middle East

News Summary

United States

Lending Club Increases Minimum Investment to Open an Account to ,000 (Lend Academy), Rated: AAA

Until today new investors at Lending Club could open an account with as little as $25. This has now changed. Going forward to open a new account at Lending Club you must deposit $1,000. The $25 minimum investment per loan still applies but you will no longer be able to start an account with less than $1,000.

The reason for this move can be explained in one word: diversification. We have written manytimes before about the importance of diversification and Lending Club has a page on their site dedicated to this topic. With $1,000 investors will be able to invest in 40 notes; while that is still not very diversified it is a lot better than investing in, say, four notes when someone starts with $100.

American Households Return To Peak Debt, Thanks To Booming Student Loans, (Buzz Feed), Rated: AAA

American households are back at peak debt, with new data showing the highest level of household debt since 2008.

Kind of.

Americans now sit on a $12.73 trillion pile of household debt, meaning mortgages, loans, credit cards, home equity lines of credit, car loans, and student debt. That figure previously peaked at $12.68 trillion in the early days of the Great Recession.

Those numbers aren’t adjusted for inflation, and $12.68 trillion 2008 dollars would be equal to more than $14.5 trillion today. And while debt number is at it’s highest ever, the economy has grown significantly in the last nine years, meaning that as a percentage of the total economy, it’s still well below its 2008 high.

“Almost nine years later, household debt has finally exceeded its 2008 peak but the debt and its borrowers look quite different today,” said Donghoon Lee, a Research Officer at the New York Fed. “This record debt level is neither a reason to celebrate nor a cause for alarm.”

The makeup of American household debt has changed in a big way. Back in 2008, people held $10 trillion in housing debt; that has fallen to $9.1 trillion today. In its place, student loan debt has boomed, and car loan and credit card debt also rose.

Home loans have become harder to come by for middle- and low-income buyers in the decade since the housing crisis began. And as the recession kicked into high gear and unemployment spiked, people poured into colleges in huge numbers, looking to weather the storm. That led to a boom in the for-profit college industry — and a soaring national student debt pile.

When household debt peaked in 2008, Americans had $610 billion in student loan debt, about 5% percent of all consumer debt and 23% percent of all non-housing debt. Today, student debt balances have more than doubled to $1.3 trillion, 11% of all consumer debt and 37% of all non-housing debt.

But people are now defaulting on those student loans at at a higher rate than any other form of debt. 11% of all student debt is now more than 90 days overdue, compared to 7.5% for credit cards and 3.8% for home loans.

“The standout, however, has been student loans—with new serious delinquency flows that deteriorated steadily between 2004 and 2014 and have remained stubbornly high since then,” the Fed researchers said.

The Fast Lane to Better Small Business Funding (Lendio Email), Rated: AAA

Consumers Place Personal Loans Atop the Credit Mountain (GlobeNewswire), Rated: AAA

When faced with the choice of which debts to pay and which to miss, consumers in financial distress tend to prioritize unsecured personal loans ahead of other credit products such as auto loans, mortgages and credit cards. These findings were released today during TransUnion’s annual Financial Services Summit, attended by more than 300 senior-level financial services executives from around the globe.

The most recent study incorporates unsecured personal loans for the first time since TransUnion began analyzing the payment hierarchy dynamic in 2010. Beyond personal loans, this most recent analysis is consistent with prior TransUnion studies in finding that consumers have historically prioritized auto loans over their mortgages and credit cards, and have done so consistently since at least the beginning of 2004.

Personal Loan Delinquencies* Consistently Remain Lower Than Other Loan Types
Delinquency* Rates for Consumers Possessing

Auto Loans, Credit Cards, Mortgage Loans and Unsecured Personal Loans

Year Personal Loan Auto Loan Mortgage Credit Card
Q4 2012 1.10% 1.86% 3.49% 3.11%
Q4 2013 1.17% 1.84% 3.13% 3.23%
Q4 2014 1.19% 1.76% 2.63% 3.05%
Q4 2015 1.26% 1.68% 2.32% 2.87%
Q4 2016 1.49% 1.75% 2.44% 3.65%

*Delinquency rates after 12 months for consumers who possess and are current on all four credit products at the beginning of the respective performance measurement period.    

Recent TransUnion data show that average term lengths are much shorter for unsecured personal loans. For loans originated in Q4 2016, unsecured personal loans had an average term of 28 months. In this same timeframe, the length of auto loans averaged 60 months and mortgages averaged 230 months.

Why Millennials Are Interested In Real Estate Investing (Forbes), Rated: AAA

RealtyShares recently teamed up with Harris Interactive to put out the Real Estate Investing Report, surveying Americans on their investment preferences. And according to the survey results, 55 percent of millennials are interested in investing in real estate, the highest percentage of all demographics questioned. Research from Fannie Mae supports these findings, reporting that 85 percent of millennials think real estate is a good investment.

According to a recent Pew report, there are 75.4 million millennials compared with 74.9 million baby boomers.

In the RealtyShares survey results, 20 percent of millennials indicated they believe real estate has performed the best since 2000. In fact, millennials were the age group with the largest percentage with that belief. The next highest group to believe real estate outperformed the stock market since 2000 is comprised primarily of Generation X (ages 35–44), 16 percent of whom chose real estate as the top performer.

Millennials, ever-vigilant on the internet, are paying heed to online financial experts. One of these experts especially popular among millennials is personal finance blogger Financial Samurai, who recently shared his preference for investing in real estate over the stock market.

While the large down payment needed to invest in real estate is the biggest reason millennials aren’t buying real estate, thanks to online real estate investing platforms, millennials can now invest in real estate without saving tens of thousands of dollars for a down payment.

Juvo Appoints Financial Services Expert Ron Suber As Strategic Advisor (Juvo Email), Rated: A

Juvo, a pioneer in mobile Identity Scoring, today announced the appointment of Ron Suber, president of Prosper Marketplace, as strategic advisor to the company. An investor in Juvo, Suber is a prolific presence in fintech and is well known as an industry influencer around the world. In his advisor role at Juvo, he will help direct the company through its global growth, ongoing product development and expansion into new markets.

Ron’s appointment helps round out the Juvo advisory team, which includes:

  • Nils Puhlmann, leads Juvo’s security and privacy efforts: former Chief Security Officer & co-founder of Cloud Security Alliance
  • Vicente Silveira, fraud and risk management advisor: head of fraud data science at Uber
  • Allison Duncan, social impact advisor: founder and CEO of Amplifier Strategies
  • Ken Laversin, enterprise software/SaaS advisor: senior vice president, worldwide sales at Jasper
  • Monica Rogati, data science advisor: equity partner at Data Collective, former VP of data at Jawbone and LinkedIn data scientist

LendingHome Hires New CFO. Receives Fannie Mae Approval to Expand Home Loans (Crowdfund Insider), Rated: A

LendingHome says it is ready to ratchet up platform growth. The marketplace lending platform that finances residential mortgages has made two announcements today.

First, the online lender has announced that former Nationstar Mortgage CFO, Robert Stiles, has been appointed to become LendingHome’s CFO.

Simultaneously, LendingHome has been approved by Fannie Mae as a seller and servicer provider which will enable  LendingHome to expand its consumer home financing business, a bit of a big deal.

By working directly with Fannie Mae, LendingHome may streamline operations and offer better loan pricing to its customers.

Is the CSBS Vision 2020 the Answer to the OCC Fintech Charter? (Crowdfund Insider), Rated: A

Earlier this week, the Conference on State Bank Supervisors (CSBS) announced their “Vision 2020” initiative.

The CSBS outlined their initial objectives:

  • Redesign the Nationwide Multistate Licensing System (NMLS). CSBS has launched a technology effort that redesigns and expands NMLS, the common platform for state non-bank regulation. The redesign will use data and analytics to provide a more automated licensing process for new applicants, streamline multi-state regulation, and shift state resources to higher-risk cases. State regulators also will ensure transparency through NMLS Consumer Access, which was viewed 3.7 million times last year.
  • Harmonize multi-state supervision. CSBS has created working groups to establish model approaches to key aspects of non-bank supervision. The groups will work to enhance uniformity in examinations, facilitate best practices, and capture and report non-bank violations at the national level. To further streamline the process, CSBS will create a common technology platform for state examinations.
  • Form an industry advisory panel. CSBS will establish a fintech industry advisory panel to identify points of friction in licensing and multi-state regulation, and provide feedback to state efforts to modernize regulatory regimes. The panel will focus on lending and money transmission, and discuss a wide range of solutions. Individual state regulators already have been engaging the fintech industry in formal dialogue.
  • Assist state banking departments. CSBS education programs will make state departments more effective in supervising banks and non-banks. Updated standards and analytics will help states determine where new expertise is most needed, identify and address weaknesses, update supervisory processes, and compare themselves to and learn from other state departments. These higher standards will be validated through an enhanced CSBS accreditation program.
  • Make it easier for banks to provide services to non-banks. CSBS is stepping up efforts to address de-risking – where banks are cautious about doing business with non-banks, due to regulatory uncertainty – by increasing industry awareness that strong regulatory regimes exist for compliance with laws for money laundering, the Bank Secrecy Act, and cybersecurity.
  • Make supervision more efficient for third parties. Banks of all sizes work with a variety of third-party service providers, including fintech companies. CSBS supports federal legislation that would allow state and federal regulators to better coordinate supervision of bank third-party service providers.

Fintech Lawyers on State Regulators’ Possible Alternative to OCC Charter Plan (Corporate Counsel), Rated: A

Lawyers who work for and with fintechs are encouraged that the state regulators at the CSBS are at least thinking about changes to the system that they believe would modernize state regulations of nonbanks or help centralize regulation among the states.

The state banking regulators’ plan for nonbanks such as fintechs outlines six ways in which it seeks to provide “a regulatory system that makes supervision more efficient and recognizes standards across state lines” by 2020, according to a press release.

Initial actions will include: redesigning the Nationwide Multistate Licensing System, harmonizing multistate supervision, forming an industry advisory panel, assisting state banking departments, making it easier for banks to provide services to nonbanks and making supervision more efficient for third parties, according to the association.

LendUp And Beneficial State Bank Announce Major Expansion Of Credit Card Partnership (PR Newswire), Rated: A

LendUp, a socially responsible lender for the emerging middle class, and Beneficial State Bank (Beneficial State), a social enterprise bank, today announced a significant expansion of the L Card, its credit card joint venture. The move is expected to quadruple the availability of L Cards, a Visa credit card product designed by LendUp and issued by Beneficial State for consumers traditionally shut out of mainstream banking due to poor credit scores or damaged credit files. The expansion builds on the firms’ partnership that extends back to the L Card pilot in April 2015.

According to the Credit Builders Alliance, a person with subprime credit pays on average $250,000 more in interest than borrowers with good credit over the course of their lifetime — and that doesn’t even include fees on financial products. In addition, according to LendUp research, many of its own customers are currently shut out of mainstream credit card products, such as rewards credit cards (98.5%) and retail rewards cards (66.5%).

In response, LendUp created a card for Beneficial State that meets borrowers’ immediate credit needs while helping to build their long term financial health. Features include:

  • Instant decisions
  • No over-the-limit fees or security deposits
  • Reporting to the three main credit bureaus
  • Affordable payments

The L Card carries an annual fee of $0$60 and APR ranging from 19.99% to 29.99%; it has a 4.8 average star review on CreditKarma.

Addepar To Buy Alternatives Data Provider AltX (Financial Advisor), Rated: A

Mountainview, Calif.-based Addepar announced on Thursday that it is purchasing AltX, an alternatives market intelligence platform.

Addepar hopes that the acquisition will boost it’s capabilities around alternative investing by enabling advisors to make better-informed decisions, said Eric Poirier, Addepar CEO, in a statement released on Thursday.

AltX’s platform uses machine learning to gather intelligence on alternative investments, incorporating reference data, public filings and news into a database of performance, holdings and key reference data for more than 17,000 funds.

Ascentium Capital Surpasses $ 3.0 Billion in Origination Volume (Ascentium), Rated: A

Ascentium Capital LLC, the top private independent finance company in the United States by new business volume, announced surpassing $3 billion in origination volume since the Company’s inception in August 2011.

Milwaukee FinTech firms aim to help consumers (Biz Times), Rated: A

The pace of FinTech disruption is increasing in the financial industry, with about $22 billion raised by FinTech startups over the past five years, Schedler said.

Northwestern Mutual has invested in two key early FinTech leaders, Betterment and Learnvest. And with its Future Ventures program, it plans to invest $50 million in series A and series B funding rounds over the next five to six years to bring in more partnership opportunities.

Bank My Biz has 13 bank partners in Wisconsin and many more across the country, he said. So if one of those banks isn’t able to extend an equipment or working capital loan of less than $100,000 to a small business, Bank My Biz may be able to do so with its financial partner, Brookfield-based national direct lender Advantage+.

Banks earn income off the term loan and Bank My Biz earns its revenue through the interest rate spread. It charges interest rates of between 9 and 13 percent.

Looking Glass buys marketplace loans on lending sites Funding Circle, LendingClub, Peerform and Prosper. Using its custom predictive analytics software, LGI evaluates and underwrites loans it has determined are unlikely to default. The alternative investment model promises investors a less volatile environment than the equity markets.

It also runs LoansOfTheDay.com, which uses big data, predictive analytics, artificial intelligence and machine learning to distribute risk and optimize returns on peer-to-peer lending sites. LGI contributes a minimum of $25 to each loan on the site.

And its newest product is LendSight, a SaaS underwriting tool banks can use to improve their profit margins by doing predictive underwriting, while allowing Looking Glass to capture more market share, Siefkes said.

Redpoint Capital Group Names Alex Dunev as Managing Partner (BusinessWire), Rated: B

Redpoint Capital Group, LLC (“Redpoint”), an alternative investment company focused on providing financing solutions to companies in the Specialty Finance and FinTech sectors, announced today that it has added Alex Dunev as a Managing Partner. Alex will be responsible for driving Redpoint’s strategic priorities, including sourcing new investment opportunities and raising capital to deploy into Redpoint’s investment strategies. Alex will also manage Redpoint’s office in Westport, Connecticut.

Alex was previously a Managing Director in the Investment Banking Division at UBS, leading the bank’s Specialty Finance efforts in the Americas. Prior to UBS Alex also covered Specialty Finance companies at Morgan Stanley and Credit Suisse.

DiversyFund, Inc. Brings New Innovations to Real Estate Crowdfunding (Digital Journal), Rated: B

Mr. Cecilio and Mr. Lewis formed DiversyFund, Inc. to create the industry’s first online crowdfunding real estate platform where the company acts as the real estate developer on all of its investment offerings in order to deliver to its investors better quality control and more detailed and robust investor reporting, including monthly construction updates on each real estate project with pictures of all work in progress.

Because DiversyFund, Inc. acts as the developer and receives a developer fee that is paid at the project level, DiversyFund does not charge any platform fees, servicing fees or other sales commissions to its investors, enabling investors to keep 100% of their investment returns.

Additionally, DiversyFund, Inc. is the only crowdfunding real estate site that focuses exclusively on strong-performing Southern California real estate markets.

United Kingdom

P2P Lender Sells Off Bad Debts Worth £2.1 Million (iExpats), Rated: AAA

A British peer-to-peer lender has become the first platform to sell non-performing debt.

RateSetter has completed a deal with undisclosed terms to 1st Credit, a debt purchasing company.

The lender says the loans were taken out between 2010 and 2015 and that the company felt borrowers were unlikely to settle the debt.

RateSetter has a £22.23 million provision fund to cover bad debts and expects to pay out £18.78 million compensation to investors.

Landbay introduces retention fee for intermediaries (P2P Finance News), Rated: AAA

LANDBAY has announced that its intermediaries will now receive a retention fee for all customer renewals.

The peer-to-peer lender, which specialises in buy-to-let mortgages, said that it introduced the 0.3 per cent fee because of its ongoing recognition of the role of intermediaries in offering advice in the retention process of customers.

Investing in the UK’s growth when it needs it most (FT Adviser), Rated: A

The notoriety and growth of crowd funding, and its variations, has gathered a great deal of attention. For good and bad. Only last year, Lord Turner warned: “The losses which will emerge from peer-to-peer lending over the next five to 10 years will make the bankers look like lending geniuses.”

While investing in VCTs has its risks, just as any investment has, these risks are for more measured and disciplined with quality offerings. Many quality VCT providers have more recently felt lumped in the same bucket as the under fire feel peer to peer (P2P) lenders and equity crowdfunders (ECFs) both of which now the subject of a clampdown by the FCA.

Despite some of the misconceptions, VCTs raised £458m in the 2015-16 tax year, making it the third highest year for VCT investment since records began in 1995. In the tax year that has just closed, most but not all were fully funded by the end of 2016-2017.

VCTs invest in small, largely unquoted, companies in the UK of up to £15m in size.

London-based VC Notion Capital has announced a new $ 80 million startup fund (Business Insider), Rated: A

Notion Capital, a London-based venture capital firm that backs startups across Europe, has announced a new $80 million (£60 million) startup fund that will be used to back later stage companies.

The VC, which focuses on backing enterprise software and cloud companies, also announced on Tuesday the final closing of a $140 million (£107 million) venture fund to back early stage startups.

Ford: Wine, watches and cars: the rise of alternative investing (Automotive World), Rated: B

As savvy investors champion alternative commodities such as wine and watches, classic Fords have proved themselves another sound investment.

For those who think there’s no money to be made from cars, think again – total growth over the past decade was 457 per cent***. This is a bigger increase than even property, which has increased in value on average 20 per cent in the last decade and 152 per cent since 2000 across Europe*****. And it’s not just new super cars such as the latest Ford GT newly on sale in excess of $450,000 that command a hefty price tag and appreciate rapidly. Among the list of top investor car makes, Ford offers among the lowest entry costs.

In March 2016, a Ford Escort Cosworth with less than 2,500 miles on the clock sold at auction for £67,580 after originally going on sale at £22,050 in 1992. The average price of a Cosworth is now more than double that original price and the Fiesta XR2 which went on sale in 1981 for £5,150, has trebled in value since 2014 to prices well in excess of £10,000, with the best advertised at close to £20,000.******

China

Alibaba Invests In Its First Fintech Company In Hong Kong (Crowdfund Insider), Rated: AAA

As reported by Forbes today, Alibaba has invested in online invoice exchange marketplace Qupital, marking the Chinese e-commerce giant’s first foray into fintech investment in Hong Kong. Qupital raised a total of $2 million in its seed round.

Qupital bills itself as Hong Kong’s first and largest online invoice discounting exchange. The company aims to solve the problem of companies not having quick access to cash by allowing them to raise funds on the site through the auctioning off of unpaid invoices, essentially securitizing their accounts receivable.

Dianrong Announces Next Technology Agreement Outside Mainland China (Military-Technologies), Rated: AAA

Dianrong today announced a new technology agreement with Maggie Ng, a leading consumer banking executive in Asia Pacific, to launch the first global fintech marketplace connecting Asian investors with high-quality, low-volatility and largely untapped asset classes, including U.S. consumer lending. The new strategic alliance combines Dianrong’s advanced technology with Ms. Ng’s extensive consumer-lending experience.

Ms. Ng and Dianrong engineers are currently completing beta testing for the new fintech platform that will provide Asian investors with an integrated solution to access U.S. marketplace lending assets. The platform will utilize multiple U.S. marketplace lenders and a single onboarding and know-your-customer process. It will also offer advanced risk modeling capabilities, added credit enhancement and structuring features, and blockchain solutions to safeguard data integrity. Investors will also have access to real-time performance monitoring, U.S. tax-exemption filing capabilities and a secondary market for liquidity.

Chinese Celebrity-Backed Fintech Firm QuantGroup Considering US IPO (Crowfund Insider), Rated: A

Fintech company QuantGroup, which was founded by several notable Chinese movie stars, is considering a US IPO, according to an article published in Bloomberg last week. The firm is looking to raise an estimated $200 million according to unnamed sources.

The Beijing-based QuantGroup is a financial services company that provides estimated credit ratings using big data.

QuantGroup joins a growing list of Chinese fintech firms in the process of launching US IPOs. Fenqile, a Chinese online shopping mall that lets customers pay in installments, is also looking to raise over $600 million through a US IPO.

LCQ5: Regulation of online crowdfunding and lending platforms (7th Space), Rated: B

Platforms for raising funds from and lending small loans to members of the public through the Internet (crowdfunding and lending platforms) have become popular in recent years. However, some financial advisers have pointed out that investors participating in crowdfunding activities are exposed to considerable risks. In this connection, will the Government inform this Council:

(1) whether it knows the number of companies currently operating local crowdfunding and lending platforms, and the number of complaints received by the authorities in the past three years concerning crowdfunding activities, with a breakdown by type of complaints;

(2) how the current legislation regulates the fundraising and lending activities conducted through crowdfunding and lending platforms;

(3) as some financial advisers have pointed out that investors provide funds through such platforms, which in turn lend the funds to borrowers, whether the authorities will, to avoid such investors breaching the law inadvertently, clarify if such investors are regarded as money lenders under the Money Lenders Ordinance (Cap. 163) and therefore are required to obtain money lender licences; and

(4) whether the authorities will conduct public education activities on the risks faced by investors participating in crowdfunding activities; if so, of the details?

Answers:

Year No. of complaints about crowdfunding No. of complaints about lending platforms
2015 0 6
2016 4 1
2017
(as at end March)
0 0

 

(2) and (3) Depending on the specific structure and features of the relevant arrangement, some types of crowdfunding activities, in particular equity crowdfunding and peer-to-peer lending, may be subject to the provisions of the Securities and Futures Ordinance (Cap.571), and/or the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32).

(4) We will ensure that investors and consumers of crowdfunding and lending platforms will receive proper protection under Hong Kong’s regulatory rules and standards. In view of the rapid development of financial technologies (Fintech), the Investor Education Centre (IEC) is working on a series of articles to introduce various Fintech services/products, associated risks and regulatory framework to the public.

European Union

Older Swiss fintech additiv gets $ 21.3 million in new capital (CNBC), Rated: AAA

A Zurich-based Swiss financial technology (fintech) firm, additiv, has today raised CHF21m Swiss Francs ($21.3m) in capital from core investors including BZ Bank, acting on behalf of its clients, and the investment vehicle Patinex.

Additiv provides systems to help with the digitalization of banks, asset managers and insurers.

Additiv’s key software product is the Digital Finance Suite (DFS). It has offices in Switzerland, Hong Kong and Singapore, as well as an international network of reselling partners and customers around the world.

Additiv’s key software product is the Digital Finance Suite (DFS). It has offices in Switzerland, Hong Kong and Singapore, as well as an international network of reselling partners and customers around the world.

Lendity: ideal marketplace lending exposure for pension funds, asset managers, family offices, private banks (Daily Fintech), Rated: A

A sea of 300 suits is what I faced last week at the first Swiss Alternative Lending conference hosted at SIX and in partnership SIX and Lendity.

Lendity is focused on developing structures that a family office, an asset manager, a pension fund, can book on their books or a private bank can list in their private debt product offering for qualified investors. And at the same time include:

o   Global exposure – US and Europe for now (USD, CHF)

o   Asset diversification – Consumer, SME, real estate etc

o   Platform diversification

o   Tax efficiency, despite the cross-border exposure

o   Regulatory compliance, despite the cross-border exposure

o   Private debt without additional counterparty risk from the issuer.

Lendity is really solving a pain point for both marketplace lending platforms and for institutional investors.

For marketplace lending platforms, Lendity acts as a marketplace that matches them with institutional capital from Financial advisors, Private Bankers, Pension funds, Family offices, and Asset managers (the 5 “investor” types).

FinTech: the influence of technology on the future of the financial sector (Lexology), Rated: A

The European Parliament’s Committee on Economic and Monetary Affairs (ECON) has published its final report on ‘ (2016/2243(INI))’.

On the other side of the coin, the report stresses the following:

  1. Financial services legislation at both the EU and national levels should be sufficiently innovation friendly.
  2. Fintech companies should continue to contribute positively to the development of financial intermediation.
  3. There is scope for improvement in the means that can be used for cross-border payments (while noting the regret of the European Parliament that there is no EU-wide European-owned credit or debit card scheme).
  4. There are no clear European rules or guidelines for outsourcing data to the could with regard to the financial sector.
  5. It is concerned about the increased use of permissionless blockchain applications for criminal activities.

See the full report here.

Australia

Retirees are riskier investors than millennials, says ASX report (Financial Review), Rated: AAA

The latest ASX Australian Investor Study found the proportion of 18 to 24-year-olds who invested in the ASX over the past five years had increased from 10 to 20 per cent. The proportion of 25 to 34-year-olds had also increased, from 24  to 39 per cent.

The survey shows that 81 per cent of 18 to 24-year-olds are seeking guaranteed or stable returns, compared to 67 per cent of 25 to 59-year-old investors and 60 per cent of retirees.

Millennials have grown to recently become the largest generational cohort in Australia, with 4.9 million people, eclipsing Gen X (4.8 million) and baby boomers (4.1 million), Roy Morgan Australia says.

According to the ASX research, 44 per cent of 18 to 24-year-old investors hold cash, 31 per cent hold shares and 25 per cent have investment properties.

The ASX survey also revealed that the proportion of 18 to 24-year-old investors using professional financial advisers was 37 per cent, but Mr Mahony said the number of people who used Google to see where they should be investing was 48 per cent.

NAB’s fintech arm brings robo-advice to home loans (AltFi), Rated: A

The fintech arm of Australian banking giant NAB, UBank, has unveiled a robo-advisor aimed at helping customers complete their home loan applications.

In a national first, “RoboChat” will offer real time help for online home loan applications available 24/7. The robot will answer FAQs, such as “what term do you offer on home loans?” and “do you offer redraws and how do they work?”, as well as stupid and unrelated questions with a sense of humour.

India

Robo advisors: Stay relaxed while getting accurate financial advice (DNA), Rated: A

Robo advisors give users access to advice by highly qualified experts who have multiple decades of financial experience with them as against serviced by a 22-25 year sales executive, or a family member. Also, since this is available online and requires minimal human intervention, it is the best and most economical way to make customised expert financial advice available to the masses.

Capacity (Who will cater to masses?): Bank relationship managers and advisors are a privilege of the rich as reduction in distributor commissions have made intermediaries vacate the low/ medium end of the market.

Robo-advisors reduce a lot of unpleasant experience of interaction. There is no pressure for you to buy right now, in addition to having the option of doing it at your own convenience. The design and UX at certain platforms are created to engage users without being too intrusive.

The unbundling of banking (CB Insights), Rated: A

Paytm, the private Indian mobile payment unicorn, is now coming for the banks.

Middle East

Abu Dhabi Global Market admits first five fintech start-ups into its Reglab sandbox (CNBC), Rated: B

Abu Dhabi Global Market (ADGM) has announced its first batch of financial technology (fintech) regulatory laboratory (Reglab) companies that will go through its new innovation center.

They are:

  • Now Money – UAE: provides mobile technology to allow low income migrant workers in the UAE to access banking and remittance services, which would otherwise be out of reach.
  • Titanium Escrow – UAE: This is an automated escrow service that aims to increase trust in counterparties and stabilize the cash cycle for small businesses.
  • CapitaWorld – India: A one-stop digital platform that automates the entire loan value chain from loan application to credit appraisal and post-disbursement credit monitoring. Rather than needing to physically visit multiple banks to apply for a loan, the CapitaWorld platform allows a borrower to submit a loan application just once online, and its platform will use analytics to carry out verification and credit risk scoring. It will then match the borrower with multiple banks that have signed onto the platform and ensure that the credit risk appetite matches the borrower’s profile.
  • Rubique – India: Rubique is an online platform that connects banks and fund seekers/borrowers via a smart financing process that links to a range of loan, credit card and financing options that attempt to bridge the gap between lenders and borrowers.
  • Finalytix -US: This is a robo-advisory platform for wealth management applications that seeks to help clients optimize their holdings, mitigate risks and costs, and identify new investment opportunities.

Authors:

George Popescu
Allen Taylor