Friday June 1 2018, Daily News Digest

Greensky financials

News Comments Today’s main news: One student saved $20K on a SoFi student loan. PayPal, Google deepen partnership. Zopa to hire a social media strategist. Ant Financial is a top 10 global bank. Today’s main analysis: Improved MPL pools are no guarantee of ABS performance. Today’s thought-provoking articles: A deeper look at GreenSky. Quants and fundamentalists. Ways to impress a lead investor. Helping […]

Greensky financials

News Comments

United States

United Kingdom

China

India

Other

News Summary

United States

‘I’m saving over $ 20,000’: Why you should consider refinancing your student loans through SoFi (Business Insider) Rated: AAA

Student debt is growing in the US and looming as a major ongoing issue. With a total of $1.48 trillion in student loan debt in the US, spread among 44 million borrowers, Americans now have more student loan debt than credit card debt, according to Student Loan Hero.

Interest rates, meanwhile, are punishing, even more so depending on the type of loan you get, and the level of education you’re paying for. According to data from the Department of Education, rates range from around 3.5% to as high as 8.5% — with most types of loans floating in the 5-7% range. That’s extraordinarily high when you consider that many auto loan rates and even mortgages are lower.

GreenSky: Clear Skies Ahead (Seeking Alpha) Rated: AAA

The company offered 38.0 million shares to the public that priced at the upper end of the range at $23. The over allotment grant added another 5.7 million shares to the total offering. Selling shareholders offered all of the shares with gross proceeds of $1 billion.

GreenSky ended the day virtually unchanged at $23.26 at a time when most IPOs trade in more volatile ranges. The stock only had a range of $22.05 to $23.36 suggesting minimal initial interest by traders.

At the current price of $26.70, GreenSky has a market value of over $5.1 billion on 190 million shares outstanding (including the 5.7 million over-allotment option) with sales on pace to likely top $400 million this year.

The numbers though suggest anything but a boring company. Transaction volume jumped 47% to $1.0 billion during the March quarter and active merchants grew equally impressive at 52%. The fintech is even profitable.

Source: GreenSky Prospectus

PayPal and Google are deepening their partnership (Business Insider) Rated: AAA

PayPal and Google are extending their payments relationship across Google’s entire ecosystem, according to Finextra and TechCrunch. The two firms have worked together for awhile, as customers are able to integrate their PayPal accounts directly into Google Pay, Google’s mobile wallet.

But now, they’re taking the partnership a step further, allowing customers to enter their PayPal credentials once and then have them available for various types of payments, including bill pay and peer-to-peer (P2P) payments, across Google offerings such as Gmail, Google Play, Google Store, and YouTube. The partnership is expected to roll out in full later this year.

Improved MPL pools no guarantee of ABS performance, says Fitch (Asset Securitization Report) Rated: AAA

Marketplace lenders such as LendingClub and Prosper have made strides in improving underwriting standards in the past year.

In a report issued Thursday, Fitch said investors should still be wary of assuming new-issue MPL securitizations are a step up in quality over previous ABS deals, even though firms such as LendingClub and Prosper have taken steps to tighten lending standards as well as pool greater concentrations of borrowers with higher credit scores into their recent ABS deals.

LendingClub (NYSE:LC), for instance, boosted the weighted average FICO of its most recent prime/near-prime consumer-loan securitizations in December to 703, compared with 692 in its first asset-backed transaction of 2017.

Source: Asset Securitization Report

LendingClub’s most recent self-sponsored transaction, Consumer Loan Underlying Bond (CLUB) Credit Trust 2018-NP1, had its base-case loss range tightened to 13.25%-15.25% by Kroll Bond Rating Agency, compared with 14%-16% in its CLUB 2017-P2 transaction. (In December, LendingClub pooled a collection of subprime loans with credit scores below 660, with a base-case loss range of 19.65%-21.65%.)

QUANTS AND FUNDAMENTALISTS UNITE! (All About Alpha) Rated: AAA

But the Bloomberg Professional Services Blog has run a piece recently on “quantamental” investing, indicating that a merger of the two approaches is underway. Darwinian pressures aren’t kind to presuppositions or to the purity of paradigms. And it is survival of the fittest that is at work here, because fitness requires on the one hand that the quants use good (human) judgment to monitor and adjust the investment process to the prevailing market conditions, while it also requires that any workable fundamental approach employ “promising aspects of technology … to reduce bias and random noise.”

“Alternative data” means what it sounds like it means: every sort of datum that one would not traditionally have expected to come up in a discussion of trades, investments, or portfolio allocations.

These sources can include (Bloomberg’s list), “social media posts, credit card accounts, online browsing activity, foot traffic and weather patterns.” Any and all of these can include clues to ongoing and future trends. The use of any such source, or any cross-referencing of sources that can produce patterns, may be novel this week, customary next week, and a bare minimum for survival in the trading jungle the week after that.

Millennials are leading an investment revolution — here’s what makes their generation different (Business Insider) Rated:AAA

Nuveen’s “Third Annual Responsible Investing Survey” of over 1,000 affluent investors found there was increased interest in working for, buying from, and investing in socially responsible companies. This is even more true among the millennials surveyed.

Some 92% of millennials agreed with the statement “I care more about having a positive impact on society than doing well financially” compared to 52% of nonmillennials.

Source: Business Insider

We interviewed a handful of millennials, asking them what makes their generation different. They answered: access to information, aligning themselves with brands on social media, and growing up in more comfortable economic circumstances than their parents and grandparents.

Source: Business Insider

New Report on the Impact of Online Lenders on Small Businesses (Lend Academy) Rated: A

Most of us are aware of the importance of small businesses in the US economy. Small businesses employ over half of private-sector workers in the US, so access to capital for small businesses is critical to their success. Fortunately, online lenders such as the ones mentioned in the report have focused on serving the needs of businesses and activity has picked up over the last few years. Both awareness of these alternative options and the amount lent on these platforms is increasing. Originations at five leading online small business lenders increased by 50% in three years, from $2.6 billion in 2015 to $3.9 billion in 2017.

Nearly $10 billion of funding was provided to 180,000 small businesses from 2015 to 2017 according to data which included leading platforms OnDeckKabbage and Lendio. This activity has generated $37.7 billion in gross output, created 358,911 jobs and $12.6 billion in wages.

Why Foreign Investors Love U.S. Commercial Real Estate, And Why More Will Follow (Forbes) Rated: A

Despite fears of trade wars and increased protectionism, foreign investment in the United States remains robust. In fact, the U.S. continues to be the single largest recipient of foreign direct investment (FDI) in the world: more than 

Better Get Your AI Game On (Prime Meridian Capital Management) Rated: A

The AI and algo game is nothing new really. A couple decades ago many called it neural networks and neural computing, and that has evolved into today’s version of AI. But what is different today and so disruptive are three elements that were not there in the early days of machine learning: computing power and cloud-based systems, a growing and global population of computer and data scientists and data. Lots of lots of data.

Those three are increasingly working together in the alternative investments markets space, enabling firms to make much more accurate, and potentially, more profitable investments. The AI topic, discussed at Lendit Fintech USA 2018 conference in San Francisco in April, revealed just how integrated it is already and where it is going in the coming months and years. Listen to the full recording HERE.

Former Amex chief backs immigrant credit score provider (Financial Times) Rated: A

The former American Express chief Ken Chenault is backing a start-up company that provides credit scores for immigrants who struggle to rent apartments and access other basic services upon their arrival in the US.

Workers on overseas postings, international students and other newcomers have long struggled to secure credit cards and other loans because American institutions hold no records on them.

Nova Credit, which is among a new breed of Silicon Valley companies seeking to shake up the financial system, aims to address the problem. It has secured funding from General Catalyst, the venture capital group that has stood behind companies including Snap, Stripe and Warby Parker.

OnDeck, Kabbage, Lendio Continue to Drive Up Their Share of Small Business Lending (Bank Innovation) Rated: A

For online lenders, small business lending continues to grow into big business. Online lenders continue to grow their originations of small business loans, according to a new study released today by Washington D.C.-based economic research firm NDP.

Emerge With An Alternative (Scotsman Guide) Rated: A

Alternative financing in the form of crowdfunding may be a trending topic, but it’s hardly new. Mozart used the idea in the 1780s to finance the composition of one of his early piano concertos, offering prospective backers copies of his manuscript in exchange for their financial support.

Why choose alternative financing? Because a lot of great deals may never get done without it. Many banks and other traditional lenders won’t finance transactions valued under $50 million because there’s simply not enough profit in it for them. And, because of the late stage of the current real estate cycle, many other lenders are feeling skittish or are simply tapped out. That leaves a big gap in the financing market — and a big opportunity for nontraditional sources of capital.

Layered Insight Snags Top CISOs As Advisors (PR Newswire) Rated: B

Layered Insight announced today that Tim McKnight, EVP & Chief Information Security Officer at Thomson Reuters, and Richard Seiersen, SVP & Chief Information Security Officer at Lending Club, have joined Layered Insight’s Advisory Board.

Renew Financial Elevates Financial Services Veteran Kirk Inglis to CEO (PR Newswire) Rated: B

Renew Financial, the inventor of Property Assessed Clean Energy (PACE) financing and a leading provider of financing for home improvements, today announced that Kirk Inglis, currently Renew Financial’s Chief Financial Officer (CFO), will succeed Cisco DeVries as Chief Executive Officer (CEO) of the company. Mr. Inglis brings more than 20 years of experience in financial services and technology with a deep expertise in consumer lending. His career includes senior finance and operating roles with Calypso Technology, Prosper Marketplace and Providian Financial Corporation. Mr. DeVries will become the company’s Chief Innovation Officer to focus on key growth opportunities and to help innovate new financing tools for clean energy. DeVries will continue to serve on Renew Financial’s board of directors.

United Kingdom

Zopa to hire first social media executive to broaden customer focus (Peer2Peer Finance) Rated: AAA

ZOPA is hiring its first-ever social media executive in an effort to broaden its customer base.

The peer-to-peer lending platform is currently advertising for a person who can “translate the brand and social media strategy into tangible plans which encompass day to day content, product content and campaign content”.

The role will involve working with the wider marketing and product team, as well as analysing and optimising performance by channel.

LendInvest Debuts First Official BTL Legal Panel Six Months After Product Launch (Crowdfund Insider) Rated: A

LendInvest announced on Thursday it has named firms JMW Solicitors LLP and Lightfoots Solicitors as its first official panel of solicitors for its Buy-to-Let product. According to the online lender, JMW Solicitors is one of the North West’s leading full-service law firms, with significant experience in handling a range of real estate finance cases for both institutional and private lenders. Lightfoots are experts in complex property finance cases and have over 30 years experience providing legal services to mortgage lenders. Both firms are experienced in dealing with introducer-led business, offering dual representation and coverage across England and Wales.

Allianz leads £40m funding round in Moneyfarm (Fintech Futures) Rated: A

Digital wealth manager Moneyfarm has got £40 million in a Series B funding round – meaning it has secured close to £60 million in capital so far.

Moneyfarm calls this the “largest funding round by a European digital wealth manager to date” and the company, which launched a personal pension (SIPP) in March this year, will use the capital to launch solutions and expand its investment strategy.

The round was led by Allianz Asset Management, the investment arm of global insurer Allianz, which first invested in Moneyfarm in September 2016.

SME funding platform partners with Hiscox (Peer2Peer Finance) Rated: B

SWOOP, a new small- and medium-sized enterprise (SME) funding platform, has partnered with Hiscox on the insurer’s business accelerator portal.

Swoop, which is a re-brand of BizFly, connects businesses in need of finance with over 400 lenders including peer-to-peer platforms such as Funding Circle and Growth Street.

Ashley Finance appoints bridging regional sales director (Bridging & Commercial) Rated: B

Ashley Finance has appointed Sam Cousins (pictured above) as a bridging regional sales director.

Sam began his career in finance in the P2P sector focusing on bridging and business loans.

He also spent two years at P2P lending platform Lendy, where he worked on bridging cases and building up a network.

China

Ant Financial is Now a Top 10 “Bank” Globally (Lend Academy) Rated: AAA

Source: Lend Academy

It had been rumored for some time now. Ant Financial, the Chinese financial behemoth, was raising a very large funding round that would value the company at $150 billion. It has been reported extensively today that this funding round has in fact closed. Ant Financial has raised $10 billion at a $150 billion valuation.

For a brief primer on Ant Financial there is a decent summary on their English language websitebut for a deeper understanding I recommend you read Chris Skinner’s new book, Digital Human (the Kindle version is available now). This has a 30,000 word case study that not only shares the history of Ant Financial but also why they are one of the world’s most forward thinking companies. And if you think they are just a Chinese story, think again. Ant Financial embodies the future of financial services and they will, in my opinion, shape the future of financial services more than any other fintech company on the planet.

Dianrong to land on distributed ledger Corda (Tech Node) Rated: A

Dianrong (点融), a leading Chinese online P2P lending service provider today announced cooperation with R3, a global platform specializing in distributed data technology. The Chinese fintech company’s supply chain finance solutions will land on Corda, R3’s open-source distributed ledger.

Dianrong hopes the cooperation will enable the company’s end-to-end service through a comprehensive supply chain and increase efficiency by ensuring transparency. The company’s initiative is to allow micro and small businesses to access credit and financial services.

Australia

Neo lender increases loan limits (Australian Broker) Rated: AAA

As of this week, Wisr will increase its personal loan limit from $35,000 up to $50,000, with a comparative interest rate up to 5% p.a. lower than the four major banks.

Loans will be available for any worthwhile purpose over three or five years, with a comparison rate of 9.36% p.a. for borrowers with a strong credit rating. The neo-lender also offers no early repayment or exit fees.

Analysis of new mortgage lending shows the slump in Auckland home sales has affected all types of buyers (Interest) Rated: A

The report analyses the number of mortgages taken out in the 12 month periods to the end of March from 2014 to March 2018, and breaks them into borrower types – first home buyers, investors, people moving house, those staying put but refinancing and those buying a second home.

According to Real Estate Institute of New Zealand figures, Auckland property sales peaked in their current cycle in the 12 months to March 2016, when 30,631 homes were sold.

That number has steadily declined and in the 12 months to March this year had slumped to 21,628, a decline of 29.4%.

India

Ways to Impress a Leading Investor for Your First Venture Capital Fund (Entrepreneur) Rated: AAA

Today’s investors are undoubtedly looking at technology-driven startups with a difference. The best illustration here is Flipkart which managed to introduce the right technology-driven models at a time when people had to wait endlessly to buy products of their choice. With Walmart now having acquired majority stakes in Flipkart, more technology-driven models could potentially come to the fore.

Mobikwik plans to turn around biz with UPI and loans: But is it too late? (EnTrackr) Rated: A

The digital wallet company finally integrated its platform with government-owned unified payment interface (UPI) last week. A week later, numbers related to UPI have popped up that has reached a 5 million mark via @ikwik handles, a VPA (Virtual payment address) handle for UPI, according to an ET report.

The platform is also planning to partner with NBFCs to disburse loans to small businesses in the range of Rs 20,000 up to Rs 5 lakh.

Asia

Helping SMEs build their business with P2P financing (Tech Wire) Rated: AAA

In Malaysia, regional P2P digital financing platform Funding Societies has announced an alliance with United Overseas Bank (UOB), to provide P2P lending to small businesses.

Using the Funding Societies platform, small businesses banking with UOB Malaysia can raise up to MYR500,000 (US$125,720) in capital directly from investors.

Funding Societies is the first P2P financing service introduced in Malaysia. Based in Singapore, the company also has a presence in Indonesia, where it’s known as Modalku.

Africa

Meet Piggybank.ng, The Nigerian FinTech Startup That Just Raised $ 1.1million (Forbes) Rated: AAA

A two-year old Nigerian fintech start-up this week announced that it has raised a $1.1M Seed Fundraise, to grow its online savings platform, 

SA’s Crossfin, Investec to back early-stage fintech startups (Disrupt Africa) Rated: A

South African investment fund Crossfin has concluded a deal with banking and asset management group Investec that will see the two companies identify early-stage fintech startups in which to invest through Crossfin’s angel funding arm Blue Garnet Investments.

The Crossfin fund, which has a particular focus on fintech startups, was formed in June of last year after South Africa-based private equity and venture capital firm Capital Eye and the Multiply Group signed a strategic investment partnership.

Capital Eye manages a portfolio of investments spread primarily across Sub-Saharan Africa, including South African fintech company wiGroup, which Investec has also invested in.

MENA

Fundbox Wins The Prestigious Israeli Atlas Award For Best Fintech Startup (The Virginian Pilot) Rated: A

Today, Fundbox, the small business growth company, announced that the company has won the coveted Israeli Atlas Award for Best Fintech Start-Up. For a third year in a row, the 2018 Israeli Atlas Award event was held in cooperation with the Ayn Rand Center, The Marker and such leading partners as, BDI, IVC, Bank Hapoalim and Israel Aerospace Industries. The prize is awarded to those Israeli startups that have created a technology, idea or product of exceptional value in Israel over the past year.

Authors:

George Popescu
Allen Taylor

6 Blockchain-Based Crypto Lenders Changing P2P Lending

ETHLend

The integration of blockchain technology into multiple facets of our world could greatly streamline many industries that affect our day-to-day lives, and financial lending is the ideal forum. A natural progression of P2P lending, blockchain application can make the entire lending process more seamless and greatly reduce the amount of time the process takes. Here […]

ETHLend

The integration of blockchain technology into multiple facets of our world could greatly streamline many industries that affect our day-to-day lives, and financial lending is the ideal forum. A natural progression of P2P lending, blockchain application can make the entire lending process more seamless and greatly reduce the amount of time the process takes.

Here are a few of the players in the early days of this promising technology.

SALT (Secured Automated Lending Technology)

According to its website, SALT is the only platform built to facilitate loans secured by blockchain assets.

“Distributed ledgers represent a paradigm shift in the storage and transfer of assets and, for the first time in history, there is a perfect form of collateral: blockchain assets,” the website reads.

Basing loans on blockchain assets makes creditworthiness no longer an issue. Writing for Forbes, Roger Aitken reported that SALT asserts that, by focusing on the borrower’s assets instead of their credit score, it is able to “dramatically reduce the complexity and cost of the loan process.” SALT seeks to streamline every step of the loan process, facilitating a new blockchain-backed lending market.

The investor retains the value of their holdings, with any earnings or losses that occur to the wealth during the process reverting completely to the borrower.

Among the potential assets to blockchain-based coin lending are that it is a realm where crypto wealth is recognized. Company CEO Shawn Owen, speaking with Forbes, said “if you’re a holder of blockchain assets, a lot of your financial wealth is not being recognized by lenders.” This technology is poised to open those funds to be leveraged and also break down geographic constraints while bringing the potential for the unbanked and underbanked into the financial world.

SALT offers three value tiers and products.

  1. The basic membership package affords one up to $10k in term financing, paid only in USD; terms go from three to 24 months
  2. The premier package offers up to $100K in term financing with a line of credit. This can be paid in USD, Euro, GBP, JPY, and RMB. Term lengths are anywhere from one hour to 36 months.
  3. The enterprise package provides access to over $1M of term financing and a line of credit to be paid in an ad hoc currency selection, dictated by metered terms. This package offers two benefits that the premier package doesn’t–API integration and cold storage enterprise wallets.

All three packages offer no pre-payment penalties, market data and educational resources, and loan management web portals. The premier package offers access to the SALT hardware wallet, customizable loan terms, and early access to new products. These are not offered with the basic membership package.

All member lenders are Regulation D accredited investors, and while credit checks are not done on borrowers, SALT undertakes full Anti-Money Laundering (AML) and Know Your Customer (KYC) verification checks.

The loans, which sport interest rates in the 10 to 15 percent range, are not transferable via the blockchain, as they become securities and are thus transferable through existing financial channels.

EthLend

EthLend is an Estonian-based fully decentralized P2P lending platform on the Ethereum blockchain for lending Ether as tokens for collateral. The platform uses any ERC20 token. All lending on the platform is facilitated through the use of smart contracts, a feature unique the Ethereum blockchain.

The company’s Twitter feed from January 3 reports that it has reached nearly $600K USD in lending volume. The company offers address-to-address loans that are sent within minutes, with no middle men, assuring that no one, not even EthLend, can stop one’s lending or borrowing.

With a roadmap that goes into Q4 2019, the company seems to have a well-plotted vision. Included in that roadmap are:

  • Q1 2018—Plans for a Decentralized Credit Rating (DCR), which will draw on Credit Tokens (CRE) and previous loans on EthLend to create a decentralized credit rating that can be used for other Decentralized Applications (DAPPs) as well
  • Q2 2018—The addition of bitcoin to the DAPP
  • Q2 2018—CRE from third party services, such as uPort and Civic, which can be used when the borrower doesn’t have enough previous loans
  • Q4 2018—the incorporation of the lending of other altcoins and tokens
  • Q3 2019—expansion beyond Ethereum to other distributed ledger networks

Rating the company, CrushCrypto.com says “use cases may seem limited for now, but we believe as tokenization of real assets becomes more prevalent, EthLend has a good chance to become a market lender in this space.”

A pre-ICO lasting from September 25th to October 25th of last year sold 62.5 million LEND available at a sale price of 1 ETH = 25K LEND. The ICO, which ran from November 25-30, saw the company raise $17.86M USD, essentially 100% of the $17.9M goal.

In Q4 2107, the company opened up to USD-based loans and installments.

The platform is not without some aspects that may cause concern for some industry insiders. Certain functions are only accessible with LEND tokens, such as featured loan listings and email marketing for new loan requests. Also, EthLend is currently only available through the Eidoo ICO search engine.

On the upside, only dealing with crypto-to-crypto borrowing means there will be fewer regulation restrictions when those start to be handed down. Also, some insiders fear that other blockchain lending platforms that deal in fiat currencies might be swallowed by the banks, as they do open their transactions to become securities.

ICO Bench rates EthLend at 4.4 out of 5.

Celsius

Celsius is a New York-based NPO based on the Ethereum blockchain, which extends instant credit through a decentralized P2P network. The network is akin to a membership organization that consists of both lenders and borrowers. Members must complete a Celsius profile to join.

Celsius touts itself as the “first crypto wallet that allows users to earn interest (7%) on their held coins” and allows borrowers to use cryptocurreny as collateral to gain access to USD loans. Using a token called a DEG, Celsius deals in BTC, ETH, and USD and uses smart technology to bind the lender/borrower relationship.

Borrower’s metrics are ascertained by using the Celsius Score, a digital credit score calculated by using various traditional metrics, such as FICO scores and mortgage history, as well as non-traditional ones such as Uber and Amazon histories. Lenders choose their borrowers using this score to determine risk.

An NPO acting in the best interests of its users through lower fees and no hidden fees, Celsius’s ultimate goal is to give credit to large blocks of the public who are underserved by banks.

ICO Bench rates Celsius at 2.8 out of 5. The central reason for the less than stellar mark centers around the company being long on marketing, but less so in technology terms.

Some Other Players

Fusion LenderComm

Seven banks, including BNP Paribas, HSBC, ING, BNY Mellon and State Street, have joined forces with R3 and Finastra to develop a blockchain-powered marketplace for syndicated loans. The first pilots have already been successfully completed.

With the early support of seven global banks (two of which do not yet wish to be named), the platform will cover 10% of the syndicated loan market when live next year.

Inspeer

An expansion under the Russian LightFin.ru brand, Inspeer deals in crypto and fiat. The company serves three million regional customers and processed 200,000 loans in its first year.

LendingBlock

For those who like to be in the know a little earlier, there is LendingBlock, a securities lending platform for crypto and digital assets. Users can lend and borrow cryptocurrencies against collateral of other cryptocurrencies in a completely decentralized and private manner. Watch for a Q1 token presale and a Q3 launch. LendingBlock is not currently working with fiat currencies.

 

Conclusion

The business of cryptocurrency lending is looking like the Wild West. There are some promising players to consider, and more if you look. SALT has Erik Voorhees associated with it, who founded Coinapult and gambling site SatoshiDice. He is a long-time cryptocurrency and blockchain advocate.

Do your own homework to make informed choices, but if crypto lending is in you future, start your research with these platforms.

Author:

Written with Paul Keenan.

Allen Taylor

Friday November 3 2017, Daily News Digest

p2p lending volumes

News Comments Today’s main news: Kabbage sued over true lender doctrine. Orchard to launch online lending industry page on Bloomberg terminal. KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2017-6. DBRS assigns provisional ratings to SoFi Consumer Loan Program 2017-6. RateSetter changes approach to property loan defaults. Lendy breaks another record. MarketInvoice enters business loan market. Today’s main analysis: FT Partners’ […]

p2p lending volumes

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Africa

News Summary

United States

Small Business Borrower Sues Kabbage (PYMNTS), Rated: AAA

A small business (SMB) in Massachusetts borrowing funds via marketplace lender Kabbage has sued the platform, igniting new debate in the conversation over the definition of a “true lender,” according to reports in the National Law Review on Tuesday (Oct. 31).

The small business that sued the parties is reportedly arguing that Celtic let Kabbage “rent” that bank charter to originate loans with excessive interest rates, despite Kabbage being the “true lender,” because Kabbage, not Celtic, bears the risk of loss. The plaintiffs are using state usury and consumer protection statutes, the publication said, as well as the federal RICO statute and Lanham Act.

Orchard to Launch Online Lending Industry Page on the Bloomberg Terminal (PR Newswire), Rated: AAA

Orchard Platform’s online lending industry data and insights will be made available to Bloomberg terminal subscribers, providing a wealth of information on an asset class that offers a number of potential investment opportunities.

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2017-6 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by SoFi Consumer Loan Program 2017-6 (“SCLP 2017-6”). This is a $591 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2017-6

Class Preliminary Rating Initial Class Principal
A-1 AA+ (sf) $315,000,000
A-2 AA+ (sf) $175,000,000
B A (sf) $75,000,000
C BBB (sf) $26,000,000

DBRS Assigns Provisional Ratings to SoFi Consumer Loan Program 2017-6 LLC (DBRS), Rated: AAA

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes issued by SoFi Consumer Loan Program 2017-6 LLC (SCLP 2017-6):

— $315,000,000 Class A-1 Notes at AA (sf)
— $175,000,000 Class A-2 Notes at AA (sf)
— $75,000,000 Class B Notes at A (sf)
— $26,000,000 Class C Notes at BBB (sf)

FinTechs Taking Larger Share of Personal Loan Market While Increasing Portfolio Risk-Return Performance (Globe Newswire), Rated: AAA

FinTech lenders continue to gain market share in the personal loan space while maintaining their portfolio risk-return performance. Results from TransUnion’s “Fact versus Fiction: FinTech Lenders” study were released today during the Digital Lending + Investing Conference in New York.

To better understand the personal loan market, TransUnion studied unsecured personal loan originations over the past several years, as well as more detailed portfolio performance between 2014 and 2016. The analysis differentiated between those loans issued by banks, credit unions, FinTechs and traditional finance companies to compare performance across lender types. The study found that the balance share of these loans originated by FinTechs had dramatically risen in recent years. At the end of 2016, FinTechs represented 30% of all personal loan balances, up from about 4% in 2012 and less than 1% in 2010. This trend continued through the first six months of 2017, with FinTechs now representing 32% of personal loan balances.

Share of Originated Personal Loan Balances

Timeframe/Lender Banks Credit Unions FinTechs Traditional Finance
2017 (Through June) 29 % 24 % 32 % 15 %
Full year 2016 26 % 23 % 30 % 21 %
Full year 2015 27 % 22 % 28 % 23 %
Full year 2012 35 % 32 % 4 % 29 %

As part of this study, TransUnion developed a coarse risk-return metric*. While loans provided by FinTechs experienced higher delinquencies than competitors, specifically within the lower credit risk tiers, TransUnion’s study found that they generated effective portfolio risk-return ratios that exceeded those of banks and credit unions. As of Q2 2017, FinTechs averaged an 8.7% return compared to 6.7% for banks and 6.3% for credit unions. Traditional finance companies average the highest return at 11.5%.

The study demonstrated how FinTechs focus their originations in the near prime and prime risk tiers.  As of Q4 2016, 59% of FinTech balances originated were in those two risk tiers. This is slightly higher than the 57% rate in Q1 2014.

Personal Loans Continue to Grow

The study also observed general personal loan trends. Personal loan total balances and consumer participation have both grown considerably. As of Q2 2017, 16.1 million consumers possessed a personal loan, compared to 14.8 million in Q2 2016 and 13.1 million in Q2 2015. Just five years ago in Q2 2012, approximately 9.8 million consumers had a personal loan. Total outstanding balances have risen from about $45 billion in Q2 2012 to $106 billion in Q2 2017.

While conventional wisdom holds that personal loan borrowers fall in the subprime risk bucket, TransUnion data through Q2 2017 show that personal loan adoption is greatest in the near prime (26%) and prime and above (49%) risk levels. Subprime constituted only 25% of such loans.

The most recent TransUnion data show that the number of lenders issuing personal loans has decreased in recent years from 7,245 in 2012 to 6,896 in 2015 and 6,680 in 2016. However, the number of lenders issuing large volumes of personal loans (at least 10,000 annually) has nearly doubled in the last 5 years from 68 in 2012 to 128 in 2016.

FT Partners’ CEO Monthly Alternative Lending Market Analysis (FT Partners), Rated: AAA

October was another very active month for the FT Partners team as we announced seven significant FinTech transactions. We are pleased to announce our role advising:

  • Source: FT Partners

    Download the full report here.

    6th Avenue Capital Secures $ 60 Million Commitment For Merchant Cash Advance Funding (AltFi), Rated: A

    6th Avenue Capital, LLC (“6th Avenue Capital”), a provider of small business financing solutions, announced today its securement of a $60 million commitment from a large institutional investor. The investor made their commitment based on 6th Avenue Capital’s industry-leading underwriting, compliance standards and processes. 6th Avenue Capital will draw from this commitment to offer merchant cash advances to small businesses through its nationwide network of Independent Sales Organizations (“ISOs”) and other strategic partnerships, such as banks and small business associations.

    Success of CFPB data-sharing guidance relies on how it is enforced (American Banker), Rated: A

    This month, the Consumer Financial Protection Bureau took an important step toward making that potential a reality with its release of consumer-authorized data-sharing and aggregation principles. In the principles, the bureau reiterated consumers’ right to share data, recognizing that connectivity is the underlying magic fueling the consumer fintech revolution. The guidelines will promote innovation, competition and consumer control.

    Data sharing often requires consumers to provide their bank account usernames and passwords to third parties. In the guidance, the CFPB clarified that granting consumers access to their data does not necessarily mean sharing login credentials. At the same time, the bureau made it equally clear that if banks and others want to prevent the sharing of credentials, they need to find another, more secure way to provide access. Both banks and data aggregators should have an incentive to eliminate the use of credentials.

    Third, banking regulators could update their third-party vendor risk management guidelines to clarify the kinds of due diligence banks are required to conduct on parties with whom they share data.

    Elevate Credit Third Quarter 2017 Earnings Release Available on Its Investor Relations Website (CNBC), Rated: A

    Elevate Credit, Inc. (NYSE:ELVT) (“Elevate” or the “Company”), today announced financial results for the third quarter ended September 30, 2017. Elevate has posted its third quarter earnings release to its Investor Relations webpage at 

    Fintech Brokerage Robinhood Launches Spotify-Like Web Platform (Benzinga), Rated: A

    Robinhood, the fintech brokerage that offers commission-free trading through a mobile app, announced Wednesday it’s launching a web platform.

    Bhatt says the web trading platform is primarily geared towards informing people who are interested in investing about the stock market. However, the company faces an interesting product design challenge, in that about half of its users have invested previously on another platform.

    LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q3 2017 (Business Insider), Rated: A

    LendingTree®, the nation’s leading online loan marketplace, today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the third quarter of 2017. The list features the top lenders in multiple loan product categories, including Mortgages, Personal Loans, Business Loans and Auto Loans, all of which are included in LendingTree’s online loan marketplace.

    Mortgage Category

    #1 Winner:
    Busey Bank

    Personal Loans Category

    #1 Winner:
    Best Egg

    Auto Loans Category

    #1 Winner:
    RefiJet

    Online lenders shrug off scandals to increase US market share (Financial Times), Rated: A

    The online lenders set up to upend US retail banking in the wake of the financial crisis are still expanding in spite of scandals and setbacks at some of the biggest names in the business.

    Financial technology groups originated $15bn of personal loans in the first half of the year, according to figures published on Thursday by TransUnion, the credit bureau whose database covers the borrowing habits of 220m consumers.

    That was almost a third of the total US market for new personal loans — a bigger share than banks or credit unions or other traditional consumer finance companies — and compares with just 4 per cent in 2012 and 28 per cent in 2015.

    R3 to take on Ripple with cross-border payments blockchain (American Banker), Rated: A

    R3 is working with 22 of its member banks to build a real-time, cross-border payments solution on Corda, the consortium’s “blockchain inspired” distributed ledger.

    The banks include U.S. Bank, TD Bank, Barclays, BBVA, CIBC, Commerzbank, DNB, HSBC, Intesa, KBC, KB Kookmin Bank, KEB Hana Bank, Natixis, Shinhan Bank and Woori Bank, R3 said Tuesday.

    What type of data is fair in credit models? (American Banker), Rated: A

    It’s long been a mantra in the fintech community: Traditional underwriting models that rely heavily on conventional credit scores leave out people who haven’t built up a credit history. A percentage of these people are creditworthy, but without a history to go on, the credit bureaus haven’t created profiles of them yet.

    To assess whether unscored people can repay loans, lenders are increasingly looking at “alternative data” — information that comes from someplace besides a traditional credit bureau that can help predict how a potential ….

    Foundation Capital Leads CoverWallet Series B Financing (Foundation Capital), Rated: A

    Which is why we’re excited to have led the Series B for CoverWallet, an online insurance broker for small businesses which is upending the industry.

    Small-to-medium business (SMB) insurance is a profitable, but highly fragmented $100 billion/year market. At the present, SMB insurance is sold through 40k+ brick-and-mortar insurance brokers, which employ 500k+ agents and move 99% of premiums. The typical SMB insurance application has 27 pages, and is completed while having “the talk” with the agent, which will include many upsell & cross-sell attempts. The typical SMB insurance quote takes 7-10 days. For SMB owners, this process is time consuming and painful.

    Affirm Now on Apple and Android (NewsCenter.io), Rated: A

    Affirm, a popular web service that allows users to buy online and pay off their purchases in fixed monthly payments, has launched their Android and iPhone app.

    Remitly Raises up to $ 115M in Series D Funding (FINSMES), Rated: A

    Remitly, a Seattle, WA-based independent digital remittance company, is to raise up to $115m in Series D funding.

    The financing – subject to applicable third party and regulatory approvals – will be led by Naspers’ fintech investment division PayU, a global online payment service provider, with participation from existing investors Stripes Group, DFJ, and DN Capital. In conjunction with the funding, Laurent le Moal, PayU CEO, will join Remitly’s board of directors.

    New, New Real Estate Crowdfunding Platform (Business Insider), Rated: A

    When you see prominent investors such as George SorosLarry Silverstein and Goldman Sachs participating in the real estate crowdfunding business – it means something. So, let’s follow the smart money. The real estate crowdfunder that everyone is talking about now is CityVest, which claims a top pedigree of founders and investors. And CityVest.com is living up to its mission – Smarter Real Estate Investing.

    CityVest provides wealthy individuals with online access to institutional real estate funds and the higher rates of return they generate.

    Which States Do Home Buyers Want to Move to—and From? (Realtor.com), Rated: A

    Prospective home buyers overwhelmingly want to head south, according to a recent LendingTree analysis. The online loan marketplace looked at the 1.5 million mortgage requests it received from October 2016 to October 2017 to come up with the results.

    Which state do home buyers most want to move to?

    But of all the Southern states, which was the most desirable? Drumroll please … that would be Florida. The Sunshine State was the top destination for folks from 18 states, or about 9.14% of those looking at loans on LendingTree.

    Which state do home buyers most want to leave?

    Vermont residents were the most likely to want to hightail it out of the Green Mountain State. Despite its popular ski resorts, only about 76% of locals were looking for in-state mortgages.

    Which state do home buyers most want to stay in?

    Texans were the most happy of any state’s residents to stay put. About 92.5% of folks looking for potential mortgages wanted to stay within Texas, according to LendingTree’s report.

    Real Estate Investing For The Tech-Minded (Forbes), Rated: A

    So as a techie, how does one go about evaluating not just the real estate but also the platform offering the investment?

    That’s why it’s critical for real estate investing platforms to be willing and able to answer questions from prospective investors — even those would-be investors without a ton of prior real estate knowledge. These companies should take a page out of Amazon’s book and develop a customer obsession.

    Be leery of any cliché claims of leveraging big data to automate underwriting. Underwriting is as much science as it is intuition/experience, and the best commercial real estate professionals have a carefully tailored mix of both.

    In the long run, the track records of the platforms will speak loudest.

    Steven Dupree was SoFi’s first marketing executive and VP of marketing for 3 years. He and his growth-oriented team took SoFi from originating 10 loans a day to over 1000.

    The three most basic ingredients for being able to succeed in FinTech are:

    1) “Good enough” technology

    2) Tremendous capital markets expertise

    3) Some sort of customer acquisition strategy

    Companies like Experian and Equifax know if you have loan balances, and specifically they know if you have student loan balances. We sent pre-screened offers to prospects with outstanding student loan debt through physical mail about how SoFi could help them with those loans.

    Plan Would Take Payday Lending Interest Rates From As High As 600% to 28% (StateNews.org), Rated: A

    Several community groups rallied to show their support for a bipartisan bill they think is needed reform against predatory lending.

    The bill would cap the interest rate of payday lenders at 28% and close any loopholes around that cap.
    <

    Filene, QCash Financial, CFSI Offer Free Webinar on the Benefits of Small-Dollar Lending (BusinessWire), Rated: A

    QCash Financial, a CUSO providing automated, cloud-based, omni-channel small-dollar lending technology for financial institutions, announces it will co-host a free webinar with Filene Research Institute and the Center for Financial Services Innovation to discuss the opportunities for credit unions in offering small-dollar lending on November 14.

    During the webinar, QCash Financial will address our industry’s impact and opportunity to deliver small dollar loans. QCash Financial, the Center for Financial Services Innovation and Filene will collaborate to discuss the omni-channel lending solution that serves members in search of small, short-term unsecured loans.

    Registration information can be found at filene.com. The webinar is scheduled from 2 p.m. CST / 12 p.m. PST until 3 p.m. CST / 1 p.m. PST.

    Ken Rees, CEO of Elevate, to Speak at Dallas Techweek Conference (BusinessWire), Rated: A

    Ken Rees, Chief Executive Officer at Elevate, a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, will speak on a panel session at Dallas Techweek on Thursday, November 2, at 9:15am CT. The panel will focus on data intelligence, breaking down the hype around data science, and exploring ways companies can turn that hype into actionable business intelligence.

    Rees will be joined by local tech talent and founders, including Clarisa Lindenmeyer, Chief of Strategy/Partnerships at Launch DFW; Sravan Ankaraju, President of Divergence.Academy, CEO of Divergence.AI; Dave Copps, CEO of Brainspace; and Steve Hebert, Co-Founder & CEO of Nimbix, Inc.

    Elizabeth Warren Warns: Navient Deal A Danger To Student Loan Borrowers (International Business Times), Rated: A

    U.S. Sen. Elizabeth Warren warned Wednesday that the nation’s largest student loan servicer has positioned itself to stealthily strip consumer protections from unwitting borrowers across the country. In an interview with International Business Times, she also said the loan servicer, Navient, should not be permitted to be a government contractor handling student loans on behalf of the U.S. Department of Education.

    The Massachusetts Democrat was sounding an alarm about Navient’s recent acquisition of online lender Earnest. She said the transaction opened up the possibility that the company will try to boost its profits by selling debtors on refinancing their current federal student loans with the company’s own private loans — the kind that she said to do not necessarily permit income-based repayment options.

    BrightPlan Launches ‘Hybrid-Robo’ Advisory Service (Plan Adviser), Rated: B

    A new robo-advisory platform has hit the market, under the moniker BrightPlan.

    Important to note, according to the firm, clients are not required to invest through BrightPlan in order to receive financial planning advice. They can manually input external account balances or link external accounts from more than 10,000 financial institutions to BrightPlan, which will monitor goal progress and provide advice to stay on track.

    Will a robot take your job? These startups hope so (PitchBook), Rated: B

    Avant wants to replace loan officers

    Avant has created an online lending platform that uses Big Data and machine learning algorithms to streamline the loan decision process helping borrowers consolidate debt through personal loans. The company, led by CEO and co-founder Al Goldstein (pictured), raised $325 million in Series E financing back in September 2015, with General Atlantic leading a round at a $2 billion valuation.

    Avant isn’t alone, with competitors like publicly traded Lending Club (NYSE: LC) and VC-backed Kabbage using a similar strategy: automating the credit creation process.

    Dreiling and Stamets join Attune (Royal Gazette), Rated: B

    Two new appointments have been made at data-enabled platform Attune, the company jointly created last year by American International Group, Hamilton Insurance Group and Two Sigma Investments.

    Martha Dreiling takes on the role of head of analytics and corporate operations, while Richard Stamets has been appointed head of underwriting strategy.

    United Kingdom

    RateSetter changes approach to property loan defaults (P2P Finance News), Rated: AAA

    RATESETTER is changing the way it deals with defaulted property development loans, which could involve taking control of the project and completing it itself.

    The peer-to-peer lender said on Wednesday that if a property development is only partially completed and has gone into default, it will now examine whether maximum value would be delivered via an immediate sale or by completing the development and then selling it.

    Lendy Update: Breaks Previous Monthly Loan Repayment Record; Recovers £20 Million in October 2017 (Crowdfund Insider), Rated: AAA

    UK-based peer-to-peer property platform Lendy announced on Thursday it has broken all previous records for loan repayments generated in any one month, recovering £20 million in total in October 2017 alone. The online lender reported that this exceeds its previous September 2016 high of £14.5 million. The record figure includes repayments on P2P loans on three caravan parks in Christchurch, Dorset, totaling £7.6 million and a Manchester mill of £1.35 million.

    This UK fintech is taking on big banks with business loans — and one key EU law is driving it (CNBC), Rated: AAA

    A digital invoice finance platform in the U.K. will provide business loans to its customers for the first time, it was announced Wednesday.

    The firm said it would expand into the business lending market, pitting it against established players such as U.S. listed peer-to-peer lender LendingClub and Britain’s Funding Circle. The latter raised £82 million ($100 million) in funding from venture capital investors earlier this year.

    CEO and co-founder Anil Stocker told CNBC that MarketInvoice will take advantage of an incoming European Union regulation called the Second Payment Services Directive (PSD2), which forces banks to open up data about their customers to third party companies.

    Citigroup Bets Millions on U.K. Mortgage Lender (Bloomberg), Rated: A

    Brexit may be roiling Westminster and inflating prices on supermarket shelves, but don’t tell that to financial institutions eyeing the U.K.’s burgeoning online-lending industry.

    In the latest sign of confidence in the sector, Citigroup Inc. has agreed to provide a fintech firm called LendInvest Ltd. with funding for mortgages, the startup said in a statement Wednesday.

    Citi Provides Warehouse Facility to LendInvest in Buy to Let Expansion (Crowdfund Insider), Rated: A

    LendInvest, a Fintech marketplace platform for property finance, has agreed a long-term warehouse facility with Citi boosting its entry into the UK’s £40 billion buy-to-let (BTL) market.

    The perils and profits of of peer-to-peer lending (The Spectator), Rated: AAA

    ‘We’re taking business from the banks, from the invoice discounters and from the traditional suppliers of finance, in ever larger amounts,’ says Angus Dent, chief executive of ArchOver, a P2P lender that launched in September 2014. ‘We only lend to companies with strong balance sheets and we only lend against accounts receivable (ARs). We will loan up to 80 per cent of the value of the ARs. Once the loan is made the ARs must be maintained at 125 per cent of the value of the loan, monitored by us on a monthly basis. This provides a quickly realisable asset for our investors in case the borrower gets into difficulties over repaying for the loan.’ The minimum amount that ArchOver expects clients to invest is £1,000 per project.

    For Anil Stocker, chief executive and co-founder of MarketInvoice, P2P lending against receivables (amounts owed to a business) offers a particularly interesting investment class ‘because it’s of short duration, a liquid product, with invoices typically taking 45 to 50 days to be paid.

    Source: The Spectator

    Lenders must help brokers meet specialist challenge – LendInvest (Mortgage Solutions), Rated: A

    IMLA found that lending by specialists has grown by an average of 19% each year from 2009 to 2016, with a total of almost £17bn lent last year. That’s enormous growth from a sector that was particularly badly dented by the effects of the financial crisis.

    Even with these enormous annual increases in lending, the market share of these specialists remains modest. According to IMLA it has grown from 3.5% in 2009 to 6.8% in 2016, and that still lags significantly below the levels seen before the onset of the financial crisis.

    UK fintechs take market share from dominant high-street banks (Financial Times), Rated: A

    Britain’s leading financial technology start-ups are celebrating a record-setting week as they accelerate their push to take market share from high-street banks in areas such as payments and lending.

    TransferWise will on Thursday announce that it has collected $280m from investors, a record fundraising round for a UK fintech, to finance expansion of its cross-border payments service into more countries around the world.

    Meanwhile, Funding Circle has for the first time outstripped net new lending by the major high-street banks to UK small businesses, according to figures released by the Bank of England this week and data provided by Europe’s largest peer-to-peer lender to SMEs.

    Britain’s small businesses bank on alternative finance options (Finextra), Rated: A

    Of 1000 small biz owners quizzed by WorldPay, more than half say that they are planning for growth in 2018, yet 52% admit to being concerned that the traditional routes to finance, such as bank loans, are not going to be as easily available in the coming year.

    While 21% of business owners aged 44 or under say they’re still most likely to apply for a bank loan when looking for funding, nearly as many respondents (17%) say they’re more likely to look at crowd-funding, while 11% prefer P2P lending, and six per cent say they favour business cash advance.

    HSBC unveils robo-advisor plans (Business Insider), Rated: A

    HSBC’s head of retail wealth, Dean Butler, provided his perspective on automated advice, and the bank’s plans for new products in the area, at the UK Robo-Advice Innovation Forum on Wednesday, attended by BI Intelligence.

    Source: Business Insider

    Landbay & Buy to Let Club Complete Lending to New Southgate Building in Less Than Two Months (Crowdfund Insider), Rated: A

    Earlier this week, Landbay and Buy to Let Club completed lending to a new building in Southgate, a suburban area of north London, in under two months. The initial case was reportedly submitted on the broker portal by Buy to Let Club on August 24th.

    Fintech firm MarketInvoice enters business loans market (Asset Finance International), Rated: A

    Fast-growing fintech firm MarketInvoice has launched a new business loans service that expands its solutions beyond invoice finance.

    Businesses will now be able to obtain unsecured business loans from £10,000 to £100,000 over a 12-month term, with no early repayment fees.

    By expanding into the £35 billion business loans sector, MarketInvoice aims to increase support for businesses which need working capital around their invoice finance requirements.

    Natural evolution (P2P Finance News), Rated: A

    Stuart Lunn, co-founder and chief executive of Edinburgh-based P2P business lender LendingCrowd, sees the benefits of both.

    “For P2P investing to become truly mainstream, it’s essential to simplify the products on offer and enable greater comparability between opportunities,” he asserts.

    “Passive products force greater diversification and I think that will benefit the sector as a whole.”

    Funding Circle and RateSetter make LinkedIn’s ‘Top 25’ companies list (P2P Finance News), Rated: A

    Funding Circle and RateSetter have been placed at number eight and number 21, respectively, in the ‘LinkedIn Top 25 Companies – Startups’ list, which was released on Thursday morning.

    Funding Circle was the highest-ranking P2P platform, and it was praised for funding more than 28,800 companies over the past seven years, with more than £2.8bn allocated to borrowers.

    CEO switch for online lender Patch of Land (AltFi), Rated: A

    Jason Fritton returns to his former post as CEO, as Paul Deitch steps down.

    P2P firm Assetz continues profitability (AltFi), Rated: A

    Assetz Capital notches seven figure pre-tax profit during the six months from April to September 2017.

    Durham’s Atom Bank named by LinkedIn as one of UK’s top 25 start-ups (ChroncleLive), Rated: A

    A North East company has been named by social media site LinkedIn as one of the country’s 25 most disruptive companies.

    Durham ’s Atom Bank, which is shaking up the banking world with its mobile-based app and personalised services, is named alongside companies including Deliveroo, Uber and Airbnb, on a list of start-ups which LinkedIn says are changing the UK business landscape.

    Online retailer Asos offers buy now pay later option with Klarna (Finextra), Rated: B

    Today, leading European payments provider Klarna has announced a UK partnership with ASOS – one of the world’s leading destinations for fashion loving 20-somethings.

    The news means that UK customers with the iOS or Android ASOS app can now use Klarna’s ‘Pay later’ solution to pay for their items up to 30 days later – with no interest or fees.

    Alternative lender Sancus announces new managing director (AltFi), Rated: B

    The alternative finance services firm has announced that Dan Walker will take over from current MD Caroline Langron in January 2018.

    The group is part of GLI Finance, which acquired peer-to-peer lending platform FundingKnight in 2016. Earlier this year, FundingKnight was moved into Sancus BMS Group, was awarded full FCA authorisation in July.

    China

    Chinese Listed Banks still create more profits than BAT (Xing Ping She), Rated: AAA

    In recent years, with the rise of Internet financial and the change of macroeconomic environment, the traditional commercial banks did go through a “severe winter”. Since 2011, banking climate index has been down all the way. It is not until 2017 that the new season of spring is coming.We selected 38 listed Chinese Banks in exchange of Shanghai, Hong Kong and Shenzhen as the performance comparison samples, and analyzed their comprehensive profitability based on the financial data of the first half of 2017.During this time, the total net profit of the 38 banks selected in this paper was 823.93 billion RMB, up 4.14 percent from the same period last year. The chart below described the profit data of all the 38 banks in the first half of 2017.


    Profitability Banks Ranking
    Among the 38 listed banks, we can also find the Top10 earning banks as follows, including 5 large-scale commercial banks and 5 joint-equity commercial banks. In addition, the net profit of Ping An Bank and Beijing Bank has reached the threshold of 10 billion RMB.


    Chinese listed banks VS internet giants in profitability
    According to the total value and earning data of the selected 38 listed banks as follow, their total market capitalization is about 10 trillion RMB, and the total net profit was 823.93 billion RMB. That means the net profit ratio was about 0.082.

    As for the BAT giants which are closely watched in the Internet industry, the three Internet companies are worth about 6.5 trillion RMB in total for the first half of 2017, and the net profit reached 52 billion RMB. That means their net profit ratio was just 0.008, much lower than the listed banks. Obviously, Banks still have an advantage over emerging Internet companies in terms of profit creation.

    In fact, research shows that the rise of the Internet financial companies has little impact on the profitability of large commercial Banks and rural commercial Banks, while has a great influence on city commercial Banks, and Joint-stock commercial Banks have been promoted instead because they can seize the Internet financial opportunities. In general, though the development of Internet finance has brought adverse effects on the profitability of commercial Banks, and also forced it to actively adjust the profit model and promote the diversified development of the profit structure.

    Data resource: Wind Database

    Another Chinese P2P lender! Senmiao Technology files for a $ 20 million IPO (NASDAQ), Rated: A

    Senmiao Technology, a early-stage Chinese marketplace for peer-to-peer lending, filed on Monday with the SEC to raise up to $20 million in an initial public offering.

    China pours millions into facial recognition start-up Face++ (Financial Times), Rated: A

    Chinese facial recognition start-up Megvii Face++ has raised $460m in an investment round led by a government fund, as the country pours money into efforts to become an artificial intelligence superpower to rival the US.

    The Beijing-based Face++ said on Wednesday that it had raised money from China State-Owned Venture Capital Fund and the China-Russian Investment Fund, which is backed by the sovereign wealth funds of both countries. Private investors including Alibaba’s payments affiliate Ant Financial also participated.

    Chinese listed company transferred shares of Wei Dai Network, making over 1B RMB (Xing Ping She), Rated: A

    On October 17, Handing Yuyou(300300.SZ), a listed company that was suspended from trading, began to transfer its assets of internet finance continuously. On October 30th, the company announced that it would transfer a 2 percent stake in the Wei Dai Network for 170m RMB, and then they announced to transfer a 1.5 percent stake in the Wei Dai Network for 127.5 million RMB. Through the two deals, Handing Yuyou(300300.SZ) will receive nearly 300 million RMB in cash. Deducting the previous investment costs, Handing Yuyou(300300.SZ) won over 100 million RMB in less than half a year. In the past three years, according to the company’s history of the investment in Wei Dai Network, we can find that the company has earned at least 10 times to the original investment.

    The transferee of this transaction is Beijing Qianshan Xinyuan Investment Management co., LTD. According to the public information, Beijing Qianshan Xinyuan Investment Management co., LTD. was established in 2015 with the registered capital of 10 million RMB. Its parent company, Qianshan Capital Management co., LTD is a private company registered in 2016. The parent company also have the other several subsidiary corporations, including Qianshan Venture Investment Management co., LTD., Beijing Qianshan Wealth Management co., LTD., etc. Currently, the parent company has a total capital size of 1 billion RMB.

    European Union

    Mintos Scraps Secondary Market Fees (P2P-Banking), Rated: AAA

    Starting from today, November 1, 2017, we have removed the 1% fee for selling loans on the secondary market of the Mintos marketplace. This means from now on, there are absolutely no fees for investing through Mintos.

    Source: P2P-Banking

    Orange is the new bank? Telecoms giant ventures into lending (Business Insider), Rated: A

    Telecoms giant Orange launches its own bank on Thursday, aiming to win 25 percent of France’s online banking market by capitalizing on the rising use of smartphones to steal share from established lenders with inferior technology.

    Orange is starting from a small base – Coisne says it has 25,000 customers have expressed interest ahead of the launch, a tiny fraction of the company’s 21 million mobile clients. But the timing of its entry gives some room for optimism.

    In France, 793.4 million online banking e-payments were made last year according to the European Central Bank, up from 586.2 million in 2014.

    INFOGRAPHIC: FINTECH AND THE FUTURE (Irish Tech News), Rated: A

    The GetLine Network  a decentralized P2P lending platform, recently reached out to us with one of their infographics on FinTech, and we thought it was appropriate and timely for our audience.

    Financing and loans are even being re-thought of with new forms of capital raising, such as ICOs, crowdsourcing/crowdfunding, and P2P lending, making banks and legacy financial institutions even less needed.

    Source: Irish Tech News
    International

    Lendio Gives supports Kiva borrowers (Bankless Times), Rated: AAA

    Small business loan marketplace Lendio announced it has provided more than $25,000 in loans to over 1,200 small business owners in 75 countries around the world through its employee-based Lendio Gives program in partnership with Kiva.

    The top five sectors supported by Lendio’s funding are agriculture, food, retail, clothing, and services. Of the loans Lendio has funded, 86 percent have gone to women or women’s groups. The top countries Lendio has supplied funding to include Zimbabwe, Peru, Haiti, the Democratic Republic of Congo, Ecuador, the Philippines, Kenya, El Salvador, and Senegal.

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

    Thincats reached the milestone of 250 million GBP loans originated since launch.

    This month I added Bolden.

    Source: P2P-Banking

    Fintech and Cross-Border Payments (IMF), Rated: AAA

    To gauge the IMF’s most recent analysis: A speech last month, at the Bank of England, by the IMF’s Managing Director—Christine Lagarde—analyzed potential challenges posed by fintech innovations to central banking.

    In my remarks here today—focusing on implications of fintech for cross-border payments—I’ll explore three broad areas: [1]

    • First, a sketch of the economic framework on how fintech applications will affect financial services and the market structure.
    • Second, the current landscape of cross-border payments, and the possible evolution of cross-border payment systems; and
    • Third, the role of central banks, themselves, and the possible reasons for them to issue their own digital currencies.

    Alternatives assets such as P2P loans to double in volume by 2025 (AltFi), Rated: B

    Alternative asset classes – in particular, real assets, private equity and private debt – will more than double in size, reaching $21.1trn by 2025, accounting for 15 per cent of global AuM as investors diversify to reduce volatility and target specific return and risk outcomes, according to research by PwC.

    Zelle adds major tech partners to roster (Banless Times), Rated: B

    Zelle – a new, real-time payments network from bank-owned Early Warning Services – has added ACI Worldwide, CGI, D3 Banking Technology, and IBM to its growing list of technology partners.

    India

    One Size Fits All? Regulating Peer-To-Peer Lending Platforms (India Corporate Law), Rated: A

    Briefly, as per the Master Directions:

    • It is now mandatory for entities proposing to undertake this business to be registered as ‘NBFC-P2P Lending Platforms’ with the RBI (NBFC-P2P). To ensure business continuity, existing players have been given a period of three months to apply for this licence. Applicants will be scrutinised for scalable and secure technological capabilities, financial standing as well as fit and proper management.
    • Fundamentally, the NBFC-P2P is expected to operate only as an intermediary and not undertake any lending activities itself or hold any funds of its participants (lenders or borrowers) on its books. Towards this end, an escrow mechanism for movement of funds has also been envisaged.
    • The exposure of each lender and loans (not exceeding a three year maturity period) availed by each borrower across all NBFC-P2Ps has also been capped at INR 10 lakhs, with each borrower not permitted to avail more than INR 50,000 per lender.
    • In addition, directions also prescribe that NBFC-P2Ps adopt minimum standards of transparency, disclosure requirements and fair practices.

    Impact on Aggregators

    • To the extent P2P lending platforms are servicing individuals and/or unregulated entities, there is merit in regulating such operators to contain any systemic risks. However, there are existing players in the market who primarily service regulated financial institutions (viz. banks and NBFCs) as lenders. The Master Directions fail to recognise this distinction.
    • Separately, banks and NBFCs today use distribution channels including web-based loan aggregators.

    SBI partners with Primechain Technologies and Intel to adopt blockchain-driven KYC (The Times of India), Rated: A

    PrimechainTechnologies announced on Wednesday that the country’s largest bank, State Bank of India (SBI), will adopt blockchain technology to manage the mandatory Know Your Customer (KYC) details in its system. Intel Corporation will act as a technology provider to facilitate the implementation.

    Asia

    P2P lender PeopleFund aims to change landscape (The Investor), Rated: A

    Korea’s accumulated peer-to-peer lending reached 1.47 trillion won (US$1.31 billion) by end-September as more and more borrowers are embracing the new, more convenient platforms for connecting with investors.

    Considering that the figure accounts for only 60 members of the Korea P2P Finance Association among the industry estimates of 130 lenders, the market is actually bigger. It also reflects a sharp upward trend; back in June 2016, when the association first began compiling data, accumulated loans granted by 22 members stood at just 152 billion won.

    Against this background, Kim founded PeopleFund in March 2015. Since then, the bank has been on a roll. On Nov. 1, its accumulated loans stood at 121 billion won, compared to 19 billion won in February. It’s the No. 3 player in the local industry.

    Africa

    SME failure rate set to spike unless funding issue is addressed (Engineering News), Rated: AAA

    The South African SME sector is set for a major crisis unless access to adequate business funding can be ensured as a matter of urgency. This was the key takeout from the just-released Key Funding Challenges for South African SMEs 2017 report developed by online lenderLulalend.

    “76% of respondents to our national survey of SMEs said they had undergone a tedious months-long paperwork-heavy process in applying for businessfunding from traditional lenders, only to have their applications denied.

    Considering access to credit was the #1 business challenge for nearly three out of every five SMEs surveyed, this disconnect between the needs of business owners and the lenders that have traditionally supported them is creating conditions of high risk and volatility.”

    Authors:

    George Popescu
    Allen Taylor

Friday October 6 2017, Daily News Digest

Funding Circle lending

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

Funding Circle lending

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

News Summary

United States

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Bureau has spent five years developing this rule.

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

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

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

Read the full complaint here.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: Snopes

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

United Kingdom

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

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

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

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

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

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

Source: Funding Circle

September industry news

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

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

Source: Funding Circle

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Some of the most popular include:

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

Robo-advice on mortgages

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

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

Saving by app

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

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

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

The top 10 buy-to-let postcodes

Source: Bridging & Commercial

The bottom 10 buy-to-let postcodes

Source: Bridging & Commercial
China

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

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

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

European Union

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

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

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

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

International

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Australia

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

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

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

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

Source: Stuff

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

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

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

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

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

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

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

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

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

India

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

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

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

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

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

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

Read more on the guidelines here.

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

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

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

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

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

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

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

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

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

Existing investor Blume Ventures also participated in the round.

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

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

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

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

When: 6th October

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

Time: 2 pm-5pm

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

When: 11th October

Where: 91 Springboard, 8th Block Koramangala, Bengaluru

Time: 2 pm-5pm

Authors:

George Popescu
Allen Taylor

Friday May 26 2017, Daily News Digest

Friday May 26 2017, Daily News Digest

News Comments Today’s main news: Bank Q1 earnings increase by 13% to $44B while loan origination slows down. SoFi co-founder Dan Macklin exits company. OnDeck extends $100M credit facility. Prosper closes $495M securitization transaction. RateSetter confirms IPO. BBVA launches open API market. Today’s main analysis: Alt finance in Americas grows to $352B last year. Today’s thought-provoking articles: China Rapid […]

Friday May 26 2017, Daily News Digest

News Comments

United States

United Kingdom

China

European Union

  • BBVA launches open API market. GP:”Very interesting. BBVA is pioneering what we think all banks will eventually have to do by law or to remain competitive. “AT: “Initially open only to Spanish businesses, but eventually to be rolled out internationally.”

International

Australia/New Zealand

Asia

News Summary

United States

Bank 1Q earnings jump to $ 44B, while loans fall: FDIC (FDIC Press Release), Rated: AAA

  • FDIC-Insured Institutions Earn $44 Billion in First Quarter 2017
  • Community Bank Net Income Rises to $5.6 Billion
  • Quarterly Net Income Is 12.7 Percent Higher than a Year Earlier
  • Community Bank Net Income Rises 10.4 Percent from a Year Ago
  • Annual Loan Growth Rate Slows to 4 Percent, On Par With Nominal GDP Growth
  • “Problem Bank List” Falls to 9-Year Low

“Revenue and net income growth were strong, asset quality improved, and the number of unprofitable banks and ‘problem banks’ continued to fall,” Gruenberg said. “Community banks reported another quarter of solid revenue and net income growth.”

Gruenberg continued: “In the past two quarters, the industry has seen a slowdown in loan growth that is broad-based across major lending categories. This slowdown has occurred as the economy approaches the end of the eighth year of a relatively modest expansion. Still, loan growth has remained at or above nominal GDP growth.

Highlights from the First Quarter 2017 Quarterly Banking Profile

Quarterly Industry Net Income is 12.7 Percent Higher than a Year Earlier: Quarterly earnings were 12.7 percent higher than in the first quarter of 2016 due to growth in net operating revenue. Net operating revenue – the sum of net interest income and total noninterest income – was $183.6 billion, an increase of $10.9 billion (6.3 percent) from a year earlier. Loan-loss provisions totaled $12 billion, a decline of $541 million (4.3 percent) compared to first quarter 2016. Noninterest expenses of $109.2 billion were $4.5 billion (4.3 percent) higher than a year earlier, as a 2 percent year-over-year increase in employment was reflected in higher payroll expenses. The improvement in revenue also caused the average return on assets to rise to 1.04 percent from 0.97 percent a year earlier.

Community Bank Net Income Rises 10.4 Percent from a Year Ago: The 5,401 insured institutions identified as community banks reported a $522.9 million (10.4 percent) increase in net income in the first quarter. Net operating revenue was $1.5 billion (7 percent) higher, as net interest income was up $1.2 billion (7.1 percent), and noninterest income rose by $304.4 million (6.8 percent). Loan-loss provisions increased by $32.7 million (5.2 percent), while noninterest expenses were $721.9 million (5 percent) higher.

Annual Loan Growth Rate Slows to 4 Percent: Total loan and lease balances increased $358.1 billion (4 percent) during the 12 months ended March 31, compared with a 5.3 percent growth rate over the 12 months ending in March 2016. The slowdown in loan growth occurred across all major loan categories. During the first three months of 2017, total loan balances declined by $8.1 billion (0.1 percent) from the fourth quarter, as borrowers reduced their credit card balances by $43.7 billion (5.5 percent). Community banks increased their loan balances by $16.7 billion (1.1 percent) during the quarter and by $109.9 billion (7.7 percent) over the past 12 months. Still, loan growth has remained at or above nominal GDP growth.

“Problem Bank List” Falls to 9-Year Low: The number of banks on the FDIC’s Problem Bank List fell from 123 to 112 during the first quarter. This is the smallest number of problem banks since March 31, 2008, and is down significantly from the post-crisis peak of 888 in the first quarter of 2011. Total assets of problem banks fell from $27.6 billion to $23.7 billion during the first quarter.

Deposit Insurance Fund’s Reserve Ratio Remains at 1.20 Percent: The Deposit Insurance Fund (DIF) balance increased $1.8 billion during the first quarter to $84.9 billion at March 31, largely driven by assessment income, including surcharges on large banks. Estimated insured deposits increased 2.3 percent in the first quarter. The DIF reserve ratio remained unchanged from year-end 2016 at 1.20 percent, due in part to strong insured deposit growth.

SoFi co-founder Dan Macklin is leaving the company (TechCrunch), Rated: AAA

Another one of the co-founders of online lending startup SoFi is leaving the company, the company has confirmed to TechCrunch. Dan Macklin, who served as VP of Community and Member Success at SoFi, announced internally that he’ll be stepping down from his position on June 6th.

Most recently, Macklin was charged with managing the community and customer success at SoFi, which sees its member meetups and community events as a key differentiator against more traditional financial services businesses. Prior to that, he served as the company’s first VP of Business Development.

After six years, SoFi now has more than 300,000 members and has underwritten more than $20 billion in loans, according to a person familiar with the business. It’s also raised nearly $2 billion in outside funding and has about 1,000 employees.

Of course, it’s not unusual for founders to leave after a period of several years, but Macklin’s departure leaves Cagney as the last remaining co-founder at the company.

OnDeck Announces Extension of $ 100 Million Credit Facility with SunTrust Bank (PR Newswire), Rated: AAA

OnDeck® (NYSE: ONDK) announced today that it had extended its current asset-backed revolving credit facility with SunTrust Bank.

As a result of the transaction, OnDeck extended the maturity date of its $100 million credit facility with SunTrust Bank to November 2018 and decreased funding cost by 50 basis points.

Loans will continue to be made to Receivable Assets of OnDeck, LLC, or RAOD, a wholly-owned subsidiary of OnDeck, to finance RAOD’s purchase of small business loans from OnDeck. The revolving pool of small business loans purchased by RAOD serves as collateral under the SunTrust facility.  OnDeck is acting as the servicer for those small business loans.

Prosper Closes $ 495 Million Securitization Transaction (BusinessWire), Rated: AAA

Prosper, a leading marketplace lending platform for consumer loans, today announced the closing of the first securitization from the Prosper Marketplace Issuance Trust, Series 2017-1, “PMIT 2017-1.”

Approximately $495 million of notes were issued, increasing from an initial $450 million. Credit Suisse Securities (USA) LLC and Jefferies LLC served as joint bookrunners on the transaction, which was rated by Fitch Ratings, Inc. and Kroll Bond Rating Agency, Inc.

LendingTree Launches Life Insurance Comparison Platform Powered by PolicyGenius (Marketwired), Rated: A

LendingTree, the nation’s leading online loan marketplace, announced a new partnership today with PolicyGenius, a fast-growing consumer insurance startup, that will bring PolicyGenius’ term life insurance comparison shopping platform to millions of LendingTree customers.

Since the launch of its intuitive insurance shopping platform in 2014, PolicyGenius has helped hundreds of thousands of customers shop for over $100 billion in term life insurance coverage. The companies both plan to use the partnership to continue to bring choice, transparency and convenience to a traditionally convoluted and complex shopping process.

PolicyGenius empowers customers with accurate quotes, side-by-side comparison of insurance policies from dozens of the country’s top-rated insurance providers, and independent advice. The company’s proprietary tech delivers the most accurate quotes available online by evaluating a shopper’s health and lifestyle factors and matching to insurers’ underwriting rules.

The LendingClub iOS mobile app has  arrived (LendingClub Email), Rated: A

We are excited to announce that we have launched the LendingClub Invest app on iOS.

We’ve heard the feedback from our investors and have been hard at work building out a mobile experience. You can download our new iOS app here.

With our new app, you’ll be able to:

  • check your account summary
  • invest in Notes
  • move money back and forth
  • adjust Automated Investing strategies and more

LendingClub, ex-CEO must face U.S. shareholder litigation (Reuters), Rated: A

A federal judge on Thursday rejected efforts by LendingClub Corp (LC.N) and former Chief Executive Officer Renaud Laplanche to dismiss shareholder litigation accusing them of concealing material weaknesses in the online lender’s ability to monitor its operations.

The decision by U.S. District Judge William Alsup in San Francisco lets shareholders pursue most of their claims over the contents of LendingClub’s registration statement for its December 2014 initial public offering.

With $ 25 million in funding, Prumentum Group is building a “hybrid robo” wealth manager (TechCrunch), Rated: A

A new wealth management startup called Prumentum Group is coming to market with a unique value proposition, looking to combine the technology chops of a roboadvisor with the human touch of a registered investment advisor. To do so, the company has built a tech platform, raised $25 million in funding, and acquired a minority stake in a financial advisory firm.

On the one hand, the company has been working on a tech platform called BrightPlan, which is set to compete with the likes of Wealthfront and Betterment in the robo-advisory game. That platform was built by a team comprised of former employees from Silicon Valley firms like Salesforce and Cisco.

According to Prumentum co-founder and CEO Marthin De Beer, the company has taken an initial 40 percent stake in Plancorp, with the option to purchase up to 100 percent of the company through an equity exchange later.

Robo-adviser takes a stake in Plancorp (Investment News), Rated: A

Financial advice firm Plancorp has attracted a novel investor. The 34-year-old advisory firm is now partially owned by a fintech firm launching a digital advice platform later this year.

The St. Louis, Mo.-based registered investment advisory firm, which has $3.6 billion in client assets, will become the live adviser component for the hybrid robo to be known as BrightPlan.

Plancorp, which has 55 employees, has a $5,000 annual fee minimum for clients. It was one of the nation’s first fee-only advisory firms when it was founded in 1983 by Jeff Buckner, who is still one of the firm’s 14 employee shareholders that control the other 60% of Plancorp.

A Look Back at Lending Club’s 10 Years as an Online Lender (Lend Academy), Rated: A

Lending Club launched a marketing campaign and website celebrating their 10-year anniversary and outlining the major milestones for the company. What started out as a Facebook application has morphed into one of the largest online consumer lenders in the US.

In 2008, Lending Club entered a quiet period where it worked with the SEC to come up with a path to move forward. Coming out of the quiet period Lending Club began to offer its loans as securities and remains one of the few platforms open to retail investors.

The company had its first $10 million origination month in 2010. The company now originates nearly $2 billion per quarter. To put the growth into perspective, the company reviewed on average four loans per day in 2007 and it took two weeks to facilitate their first $100,000 in loans. The company now reviews around 1,700 loans daily and facilitates $100,000 in loans every six-and-a-half minutes. Originations now top $26 billion.

Other major milestones include the IPO in December of 2014 as well as product expansions into small business loans and more recently, auto refinance. As of Q1 2017 the company has successfully brought a significant amount of banks on the platform which now represent 40% of loan funding.

Venture Funds Flood Startups With Cash (WSJ), Rated: A

Investors injected $14.5 billion into U.S. venture-backed startups in the first quarter, up 37% from the previous period, according to data from Dow Jones VentureSource.

Recipients of venture funding included financial services, which saw a 15% bump in investment to $913.1 million, compared with the $792.4 billion raised in the prior quarter. Fintech startup Social Finance Inc. hauled in a big chunk of that in the latest round, raising $500 million in the period.

After a cooling period the past year, information-technology investment edged higher, hitting $3.05 billion in the quarter, up 13% from the $2.7 billion in the prior period. A slice of that, investments in software, returned to favor as well, as investors put to work $2.14 billion, up about 13% from the $1.9 billion unlocked in the previous quarter.

Understanding Online Real Estate Lending As An Investment Strategy (Forbes), Rated: A

I’ve been working in the field of online real estate investing for several years now, and the good news is that today’s technological innovations have made investing in real estate online a newly viable way to access secure, short-term investments.

For first-time investors, you should be looking for the following in any platform you consider investing your money in:

  • Lower investment minimums: In this era of peer-to-peer lending and crowdfunding, online lending platforms provide investors with access to investments at minimums as low as $1,000.
  • Risk management through quality underwriting: Before a loan is listed, online platforms should run detailed underwriting reviews on the loan offering by looking at borrower bank statements, running credit checks, reviewing asset purchase contracts, underwriting the renovation budget, etc.
  • Secure monthly income: Lending money on house flips typically comes with a lien on an asset.
  • Investment management: Online platforms don’t just help get access to investments, but also manage the same for individual investors.

A few important points to consider:

  • Illiquid investment: There doesn’t exist a secondary market today where individuals may liquidate an online investment, at will.
  • Limited correspondence with borrower: Online platforms create a barrier to direct communication with the borrower.
  • Industry maturity: The biggest unknown today is how the young industry’s underwriting guidelines will hold, should there be an economic correction.

PeerStreet partners with top-tier originators across the country and makes their loans available to registered investors. What makes PeerStreet unique is its ability to onboard partners who underwrite deal flow, allowing PeerStreet to serve as a liquidity portal for originators.

AlphaFlow is another interesting platform that diversifies a $10,000 investment from an investor across 75-100 loans originated by other platforms in the space, yielding returns from 8-10%.

Since its founding in 2004, BiggerPockets has turned into the LinkedIn for real estate investing.

Five Technology Tools And Apps That Are Reshaping The Real Estate Industry (Forbes), Rated: B

Streak CRM is a Chrome app that integrates into Gmail. This makes it a seamless integration with your existing email, which eliminates all the data entry overhead that kills your flow when you’re working your lead funnel.

RealTelligence is launching a mobile app that scores all real estate agents based on their probability of success for home sellers and buyers in their area of town and price range.

Wholesaledealslist.com is a brand new web and app platform where real estate investors can find and sell wholesale deals.

Keep an eye out for Point. They’re trying to disrupt the home mortgage by offering to buy equity in a home.

MoneyLion enhances product line to help consumers manage and improve their financial health (MoneyLion Email), Rated: B

Mobile personal finance and consumer lending platform, MoneyLion, today launched new features designed to make the financial goals of its 1 million-plus users easier to achieve. As part of the launch, MoneyLion also redesigned its website and mobile app.

MoneyLion is launching its new features to address the financial challenges consumers face today. A Federal Reserve study showed that 46 percent of Americans don’t have $400 saved for an emergency, and two-thirds of Americans were unable to pass a financial literacy test according to another study. MoneyLion’s new features have been designed to help users overcome these challenges by simplifying their day-to-day relationship with money and making it easier to build positive, sustainable financial habits.

MoneyLion has introduced the following new app features in a refreshed interface to help reduce the friction consumers face when it comes to their finances:

  • Simple, data-driven advice, wherever you go: From the moment users open the MoneyLion mobile app, they receive personalized recommendations that encourage positive financial behaviors based on their individual spending habits and credit profile. These recommendations are refreshed daily with the user’s latest data to ensure they remain aligned to their current financial situation and objectives.
  • Streamlined borrowing experience: MoneyLion’s personal loan process has been streamlined to improve speed, convenience and lower the cost of borrowing. Customers can receive a loan offer in as little as 15 seconds, access funds as quickly as the same business day, and now have even more options for reducing their interest rates.
  • New ways to improve credit health: In addition to the free credit score already available to every user, MoneyLion now offers full credit reports from TransUnion® and Equifax, and access to credit counseling and repair options. Customers can also avoid credit surprises with expanded push notifications alerting them to changes to their credit.

These latest updates build on the financial progress and behavioral changes users have already made with MoneyLion. According to data collected in 2016, MoneyLion has helped its users improve their financial health in the following ways:

  • Customers have earned over $5 million in savings via MoneyLion’s rate reduction and rewards program, which enables users to earn points for demonstrating good financial behavior.
  • Loan takers who make use of the platform’s free credit monitoring tools were 28 percent less likely to default.
  • MoneyLion’s platform and products have helped customers save on average about $46 per month on overdraft fees. It’s estimated that these fees cost American consumers about $11 billion every year according to Banks.org.
  • Users enrolled in MoneyLion’s credit health tools were 6 times more likely to see an increase in credit score than a decrease.

MoneyLion is available on Android and iPhone from Google Play and the App Store.

SimpleLoanGuide Helps People Find the Best Loan Solution (Digital Journal), Rated: B

SimpleLoanGuide (simpleloanguide.com) is based in Starkville, Mississippi. They offer matching services only but are not in any way acting as a representative or agent of their partner companies. Except for Arkansas, New York, Vermont, and West Virginia, other states may avail of their services. Completing an online form on the website does not guarantee a successful match with a lender, an offered loan with satisfactory rates or terms, or granting of the loan amount requested. Partner lenders may still verify information and compare it with national databases. A user who sends their information on the website signifies their compliance to credit check and verification.

Distributed Ledger Consortium R3 Closes Record $ 107 Million Funding Round (Coindesk), Rated: B

Global banking consortium R3 has closed the largest funding round in the history of distributed ledger technology.

Revealed today at Consensus 2017, over 40 financial institutions participated in the $107m round, including top member investors SBI Group, Bank of America Merrill Lynch and HSBC. Additional major investors include ING, Banco Bradesco, Itaú Unibanco, Natixis, Barclays, UBS and Wells Fargo, plus more from around the globe.

The funds are expected to be deployed as part of plans for global technological development and, eventually, a push to bring what the firm calls Corda Enterprise to institutions around the world.

United Kingdom

RateSetter boss confirms IPO hopes and plans to increase asset-based finance (P2P Finance News), Rated: AAA

RATESETTER’S chief executive Rhydian Lewis (pictured) has confirmed the peer-to-peer platform is eyeing an initial public offering (IPO) as a pivotal step to solidify its position as an “investor brand”.

He also said the business and consumer lender would not expect or be interested in any takeover approaches from banks as it focuses on floating the business.

Meanwhile, the firm said it is looking to step up its asset-based lending, increasing the portion of loans that are secured against tangible assets or other type of securities as opposed to personal guarantees.

Zopa to revamp peer-to-peer lending model (Financial Times), Rated: AAA

Zopa, the world’s first peer-to-peer lending company, plans to revamp its offering to investors as it launches its new Isa.

The company currently offers investors access to a “safeguard fund”, a pool of cash intended to protect investors partially from loan defaults, but will jettison this as part of its new Innovative Finance Isa offering.

The new product, to be made available from June — more than a year since the government legislated for the new Isa structure — makes it possible for investors to hold their peer-to-peer loans within a tax-efficient Isa wrapper. Investors will be offered a target return of 3.9 per cent after fees, compared to the 3.7 per cent offer on Zopa’s current “classic” investment product.

UK businesses turning to alternative finance as Brexit tightens credit conditions (The Investment Observer), Rated: A

UK businesses are turning to alternative finance to seek funding for expansion, as credit conditions tighten in the face of Brexit uncertainty.

With the UK in the early stages of Brexit and now facing a General Election, new research conducted by RateSetter Business Finance found that 32 percent of SMEs that had considered raising finance said that it was now harder than six months ago.

Peer-to-peer lending services are becoming the go-to choice for many small businesses seeking finance.

Secondary Markets Bring Promise of Efficient Markets (AltFi), Rated: A

Private transactions, both private equity and debt, have been inefficient and littered with information asymmetry due to the way the transactions have been made. The emergence of public distribution of information on private transactions seeks to change that and the quickly arriving secondary markets for private transactions can bring liquidity and efficiency to typically cumbersome asset classes.

Recently Seedrs announced the establishment of a secondary market for equity crowdfunding transactions in the UK. Private companies are among the most inefficient as an asset class, given the apparent lack of information, information asymmetry and long lock in periods. The situation in the US is no different, where private companies are even more private compared to the UK with publicly reported information even on private companies.

Private equity is however not the only sector that benefits from liquidity. From private loans in peer-to-peer markets, a liquidity offer through a secondary market offers shorter cycles in the market and more trust in the underlying asset class. Many peer-to-peer or marketplace lenders globally run internal secondary markets, as yet there is no overarching liquidity destination for the sector. Both Lending Club and Prosper have offered secondary markets in the US, but only Lending Club’s remains open for business. Last October Prosper announced the closing of its secondary market, which the company said was underutilized by investors.

City slickers (P2P Finance News), Rated: A

Institutional money already dominates the US peer-to-peer lending market and now it’s making waves in the UK. Is this a natural evolution or is it eroding the true essence of P2P?

There was a time when marketing peer-to-peer lending was straightforward – the solid certainty of a mass of consumers standing on both sides of a P2P platform was enough to make its bank-disruption mission a success story.

People lending to people was a healing and redeeming message at a time when banks were still cleaning up the mess they had scattered around the globe by mixing consumers’ savings and investors’ bets.

But then the idealism of youth needs to make room for the pragmatism of maturity, and an insidious realisation started to cloud P2P’s coming of age: retail money alone is not enough to keep the ball rolling and let platforms become believable competitors of traditional lenders.

However, justifying such a shift in the UK may prove a tougher job, as the P2P sector here is still split by the burdensome dilemma of whether to welcome money from institutional investors with open arms or relegate it to a ‘diversification allowance’ pot.

The largest US P2P lender was running a 70 per cent ratio of institutional funds when its corporate governance scandal started to unfold.

According to an industry source, the mix-up of retail and institutional money could be the main hurdle standing between some of the UK’s largest platforms and Financial Conduct Authority (FCA) approval.

In the not-so-distant future, regulators could go as far as requiring a clear separation of retail and institutional investments through P2P platforms, the source says.

It’s time to stop robo-advice mislabelling (Citywire), Rated: A

It is time that we question robo-advice. Not the concept, but the name which has been used to describe any company that offers something related to investment management, online.

The label ‘robo-advice’ is misleading for a number of reasons. There are no robots who give advice, but also, most of the firms that have been described as such do not even offer advice.

‘We prefer online or digital wealth manager,’ said Ella Rabener, UK co-founder at Scalable Capital.

Meanwhile, Nutmeg CEO Martin Stead, echoing Rabener, said: ‘We prefer to call ourselves an “online investment manager”, rather than a “robo-adviser”. We find the term robo-advice to be misleading. It evokes images of robots offering face-to-face advice and making decisions for people.

Robo-advice is a term that came out of the US and unfortunately, because of the differences in how the advice market actually functions, while it makes sense to use it there, it does not in the UK.

Talking Heads: Are you warming up to P2P? (Professional Adviser), Rated: B

Peer to peer (P2P) lending is often considered risky business, but as the industry and regulation have moved on, have advisers become more willing to recommend the products to clients?

In March, Orca CEO Iain Niblock said there has been “virtually no uptake” by financial advisers since the products were brought under the regulatory investment advice rules. At the same time he estimated 2.7 million people would be investing in the booming market by 2020.

“We Infrequently Recommend P2P To Clients” – Dennis Hall, managing director, Yellowtail Financial Planning

‘We Want It To Be Protected Under The Compensation Scheme’ – Patrick Connolly, financial planner, Chase de Vere

“An Area We Have No Intention Of Getting Into” – Ricky Chan, director, IFS Wealth and Pensions

China

China Rapid Finance Reports Unaudited First Quarter 2017 Financial Results (PR Newswire), Rated: AAA

China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE: XRF), a leading online consumer lending marketplace in China, today reported its unaudited financial results for the quarter ended March 31, 2017. The Company will hold a conference call at 8 a.m. Eastern Time on May 25, 2017, or 8 p.m. China Time on May 25, 2017. Dial-in details are provided at the end of this release.

First Quarter 2017 Financial Highlights

  • Total gross billings on transaction and service fees[1] in the first quarter of 2017 increased by 13.1% to US$16.8 million from US$14.8 million in the prior year period.
  • Gross billings from consumption loans increased by 336.8% to US$6.7 million in the first quarter of 2017 from US$1.5 million in the prior year period. Gross billings from consumption loans increased to 39.9% of total gross billings on transaction and service fees in the first quarter of 2017 from 10.3% in the prior year period.
  • Gross billings from lifestyle loans were US$10.1 million in the first quarter of 2017, as compared with US$13.3 million in the prior year period. Gross billings from lifestyle loans were 60.1% of total gross billings on transaction and service fees in the first quarter of 2017, as compared with 89.7% in the prior year period.

First Quarter 2017 Operating Highlights

  • Number of new borrowers added in the first quarter of 2017 was approximately 545,000. As of March 31, 2017, the Company had reached approximately 2.0 million unique borrowers on its marketplace since inception, and the total number of loans facilitated on the Company’s platform grew to approximately 15.0 million.
  • Total loan volume facilitated on the Company’s marketplace in the first quarter of 2017 increased to US$485.0 million, primarily driven by the rapid expansion of consumption loans, which accounted for US$405.0 million of the total loan volume, while lifestyle loans accounted for US$80.0 million.
  • Total number of consumption loans facilitated in the first quarter of 2017 was 4.0 million, while total number of lifestyle loans facilitated was 6,000.
  • Repeat borrower rate[2] on the Company’s marketplace accounted for 73% of the total borrowers as of March 31, 2017.

Ant gold clothing announced to the insurance industry to open the first “auto insurance points” (01Caijing), Rated: B

May 25, the ant gold clothing announced to the insurance industry to open the first “auto insurance points”, the mass “from people” information through artificial intelligence and other technologies to dig, the owner of the portrait and risk analysis, quantify the 300-700 And so on to enhance the risk identification ability of the insurance industry.

The first batch of insurance companies, including human security, PICC Property Insurance, China Life Insurance, China Union, Taiping property insurance, land insurance, sunshine property insurance and Huaan property insurance, Ansheng balance auto insurance, follow- , The ability to use car insurance to enhance the risk of identification of the company open.

China Merchants Bank announced the use of annual profit of 1% set up Fintech special fund to support in vitro incubation (01Caijing), Rated: B

Recently, China Merchants Bank, an internal innovation fund has been in place, the amount of 790 million yuan, for the internal business units and all employees apply for financial technology innovation projects.The scope of innovation includes mobile interconnection, large data, cloud computing, artificial intelligence, security control and block chain and other fields.

According to the relevant person in charge of China Merchants Bank, “pre-tax profit of 1% of the fund is entirely incremental, for in vitro incubation, and will not squeeze the original investment in science and technology investment.”

European Union

BBVA launches Open API marketplace (Finextra), Rated: AAA

BBVA is making eight of its APIs commercially available to companies, startups, and developers worldwide, enabling the integration of customer banking data with third party products and services.

The launch of BBVA API Market comes after the Spanish bank spent more than a year working with developers and businesses to fine-tune the way the Open API service would be delivered. During this time, over 1500 businesses and developers registered with the experimental portal.
Initially only Spanish customers of BBVA will be able to benefit from the market – but the bank intends to roll the programme out to its US customers later this year, before expanding it further to include Turkey, Mexico, Latin America and beyond.
The bank says companies will be able to use the APIs to create new value added services, deliver better user experiences by improving conversion and onboarding processes, manage payments, verify identities, forward notifications or analyse consumer habits and commercial behavior, among other things.
International

Americas Alternative Finance Grows to $ 35.2 Billion in 2016 (Crowdfund Insider), Rated: AAA

The Cambridge Centre for Alternative Finance (CCAF) and the Polsky Center for Entrepreneurship and Innovation and Booth School of Business Booth School of Business at the University of Chicago have revisited the alternative finance market once again with a benchmark study. The research which covers the United States, Canada, Latin America and the Caribbean (LAC) showed continued growth in alternative finance across the region as total market volume rose to $35.2 billion in 2016 – an increase of 23% versus year prior. The report noted that the prior Americas benchmarking report had been adjusted down due to changes in the research methodology. While total volume grew the pace of growth and entry of new platforms both slowed during the year.

The research found that the United States continues to be one of the world’s top markets for Fintech including online alternative finance channels and instruments. The 2016 US market volume of $34.5 billion marked a 22% year-on-year increase from 2015. The US sector was dominated by online lending both Marketplace and Balance sheet iterations.

LAC alternative finance markets grew by 209% to $342.1 million in 2016. LAC, collectively as a regional market, surpassed Canada’s national market in 2016. The growth was mainly led by high volume markets in Mexico, Chile, and Brazil.

Canada’s alternative finance market increased 62% to $334.5 million driven by both organic growth and expanded survey coverage included in the research.

Among the key findings of the report:

  • The US, Marketplace/P2P Consumer Lending continued to account for the largest share of market volume with $21 billion recorded in the US in 2016 (up 17%).
  • Balance Sheet Business Lending became the second largest model in the US in 2016 with $6 billion originated, surpassing Balance Sheet Consumer Lending which had $3 billion.
  • Equity crowdfunding in the US, not including real estate, declined marginally in 2016 versus 2015.
  • For LAC, Marketplace/P2P Business Lending remained the largest alternative finance market segment with $188.5 million registered in 2016, an increasing of 239% over 2015.
  • In Canada, Donation-based Crowdfunding remained the top alternative finance model with $105.9 million, but balance sheet business lending became a close second, rising at a rate of 282% to $103.3 million in 2016.

See the full report here.

Australia/New Zealand

RateSetter matches investors with borrowers for clean energy (The Sydney Morning Herald), Rated: AAA

Investors will be able to lend to residents to install clean energy in their homes, such as solar panels, after a tie-up between peer-to-peer lender RateSetter and the government’s Clean Energy Finance Corporation.

He expects rates for investors and borrowers in the green loan marketplace to be around 7 per cent a year for loan terms of between three and seven years.

Loans facilitated through RateSetter will fund individual and business loans for a wide range of “green” purposes, including the purchase of solar panels and battery systems.

Government invests $ 20m in P2P RateSetter’s green lending initiative (Finder), Rated: AAA

Australian peer-to-peer (P2P) lender RateSetter has today announced the launch of a Green Loan lending market which will allow investors to fund the purchase and/or installation of clean energy products.

The Clean Energy Finance Corporation (CEFC), an Australian government body, has invested $20 million in the market to help kickstart the project.

Green Loan lending market (RateSetter), Rated: A

Lending market summary

  • Investment amount: From $10
  • Indicative term: 7 years, though loans may be 3 – 7 years in term
  • Purpose: finance for purchase of Approved Green Products
  • Loan repayment profile: monthly repayments of principal and interest

Invest through the Green Loan lending market to finance the purchase of:

  • Solar panels and batteries
  • Solar water heaters
  • Energy efficient lighting
  • Energy efficient air conditioning
  • Low emission cars and trucks
  • Air source heat pumps
  • Power factor correction
  • Variable speed and frequency drives

Five tech trends changing financial advice (Bluenotes), Rated: B

While many financial advisers have already embraced it, the use of the “cloud” will continue to expand as advisers seek to have more of their business operations and applications hosted there.

Automation has already begun to reshape financial services. Especially in the areas of regulation, financial risk management and compliance, automation is going to have a big impact. Imagine an automated program that could identify and explain alterations in risk exposure and calculate business-related and data-related causes for such changes.

With advisers holding sensitive data as well as increasing regulation around the security of customer data and communicating breaches, maintaining data security will remain a growing priority and focus.

Roboadvisers have had a contentious start in Australia, though they’re unlikely to fade away as technology advances. In fact, according to BI Intelligence, it is predicted by 2020 roboadvisers will manage around 10 per cent of the total global assets under management, equating to around $A8 trillion.

Today consumers have access to almost the same information as advisers, and in real-time from almost anywhere.

No longer are investors bound to advisers for financial information as they once were and do-it-yourself investing is becoming more popular.

This means advisers have to continue to add value by providing expert analysis and advice.

Asia

Indonesia: Govt extends P2P lending license application deadline (e27), Rated: AAA

OJK extends P2P lending license application deadline

The Indonesian Financial Services Authority (OJK) announced that it has extended the deadline for P2P lending startups to apply for a license, from the previous deadline of June 29.

Secured P2P Lender Silver Bullion Reports Topping S$ 30 Million in Loans (Crowdfund Insider), Rated: A

Silver Bullion reports it has now facilitated S$30 million in peer to peer loans secured by precious metals like gold and silver. The Singapore-based platform expects to pay out S$1 million in interest as the loans mature.

Lenders are receiving an average return of 3.83% p.a for SGD loans and 4.1% p.a for USD loans. Tenures of loans range from 1 month to 24 months. Silver Bullion reports there have been zero defaults to date.

Japan Lender Mizuho to Launch Fintech Venture (US News), Rated: A

Japan’s Mizuho Financial Group will start a venture next month to create new businesses using “fintech,” an executive said, joining a global race in financial technology that threatens to unsettle traditional players.

Japan’s second-largest lender by assets said there were already 20 projects in the pipeline for the venture, utilizing blockchain technology and artificial intelligence programs in areas such as farming and travel.

For that reason, he said the bank would limit its stake in the yet-to-be named venture to less than 15 percent, though Yamada would be its president and the bank would send staff.

Yamada did not elaborate on the projects in the pipeline but said the venture planned to conduct an export trade transaction next month using blockchain technology, allowing all parties to exchange necessary documents online instead of waiting for hard copies.

Authors:

George Popescu
Allen Taylor

Monday May 8 2017, Daily News Digest

Lending Club expenses revenues

News Comments Today’s main news: Experian legislative update. P2P platforms predicted to shift to hybrid models. Millennials spend over 1/3 of take home pay on rent. WeChat Pay enters U.S.market. Today’s main analysis: Lending Club’s lost year (and a half). Alternative return metrics (Cash on Cash Returns). Today’s thought-provoking articles: Record number of banks want to partner with LC. Q1 […]

Lending Club expenses revenues

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

MENA

News Summary

United States

Legislative Update 158 (Experian Email), Rated: AAA

Highlights this issue:

  • On April 14 the CFPB’s Office of Fair Lending and Equal Opportunity issued its annual report on fair lending. The report provides an overview of the work that the Bureau has done over the past year to provide oversight and enforcement of the fair lending laws under its jurisdiction.
  • In March, US Senate Banking Committee Chairman Mike Crapo (R-Idaho) and Ranking Member Sherrod Brown (D-Ohio) announced that they were seeking legislative proposals to promote economic growth. Proposals were due to the Committee on Friday, April 14. Experian worked closely with the CDIA and Chamber of Commerce to ensure that our policy priorities were included in their letters. CDIA’s comment letter recommended that the Committee take up and pass CROA reform, credit score competition and legislation to cap class action damages under the FCRA.
  • On April 19, GAO released a report on fintech and marketplace lending. The report was intended to provide an overview of fintech, as well as the potential benefits and challenges for consumers and small businesses.
  • Texas, H.B. 2333 would require a business that accepts a credit card or debit card for payment and retains any data related to the card, other than a confirmation number, for the transaction, to secure the retained information against a breach of system security. If a breach of system security occurs in which credit card or debit card information is compromised, the business shall notify the attorney general within 24 hours.

See the full report here.

Lending Club’s Lost Year (And A Half) (Seeking Alpha), Rated: AAA

One year later, the question hangs in the air: Has Lending Club recovered?

Source: Lending Club & Seeking Alpha

Meanwhile, G&A expenses ballooned as the company increased spending in compliance, retention, and recruiting. Despite only releasing one product, relative engineering costs also increased significantly during the same period. The company spent $35M in non-adjusted engineering costs, an increase of $11.5M from a year prior. Why have costs expanded, even though the company hasn’t grown?

Following the Jefferies incident (and even in the months leading up to it), one of the concerns that was brought up in 2016 was regarding Lending Club’s underwriting, both in its efficacy and in its efficiency. Many institutions temporarily halted their investments on the platform during the second quarter to do more due diligence, specifically on the concern that additional loans may have had their details changed.

This issue was recognized in the first quarter of 2016, when Lending Club stated that it had begun eliminating high-risk populations from its credit policy. The company announced several more cuts to its underwriting throughout 2016, most recently eliminating another 6% of borrowers from its credit policy. Cumulatively, approximately 17% of borrowers who formerly qualified for loans were cut from the credit policy.

Source: Lending Club

Why is credit deteriorating? Lending Club noted these deteriorating credit trends early in 2017:

“Throughout 2016 and into 2017 we have continued to observe the same trends on the Lending Club platform: indicators suggest a strong U.S. economy, but some borrowers are not offering appropriate levels of risk adjusted return.”

The delinquency rates for grades D-G do seem to be flat/trending down over the course of 2016, but delinquency rates for 36-month loans grades A-C are flat/trending up over the same period.

While not a perfect corollary, S&P/Experian consumer credit default indices also show an increase in bank card defaults over the past six months, which suggests that the increasing level of charge-offs is not limited to Lending Club.

Source: Lending Club

Lending Club also noted that it is spending a significant amount more on in-house collection efforts. Servicing and Origination expenses increased $2M from 4Q 2016 to 1Q 2017.

Lending Club noted that, although its servicing portfolio balance only increased 8% year over year, the revenue collected on its servicing portfolio has increased 34%.

Source: Lending Club

If we tally up our score card, we have:

  1. Revenue has not recovered (but the company has guided investors to growth in 3Q and 4Q).
  2. Relative spend has increased in 3 out of 4 expense categories.
  3. Bad debts will continue to impact note investor portfolios while the 2016 vintages progress through their hazard curves, although there are signs that the increase in loan charge-offs is slowing down and/or reversing for high-risk borrowers.

Alternative Return Metrics: Cash on Cash Return (PeerIQ), Rated: AAA

As evidenced from Prosper’s annualized return calculation methodology, the return calculation can be complicated, involving several moving parts. Marketplace institutional investors appreciate the complexity and diversity of return calculations.  At PeerIQ, we have had numerous conversations in the past with our clients and developed the “Cash-on-Cash Return” metric as one of several tools to monitor portfolio performance.

It varies from Prosper’s Estimated IRR by only considering realized cashflow information. Unlike Annualized Return, it eliminates complication springing from annualizing simple returns. In short, CoCR utilizes few readily available loan and pool level data points and summarizes the historical return of the investment on monthly basis.

Source: PeerIQ
Source: PeerIQ

The disadvantage of the CoCR metric is that returns are not forward-looking. Also, the declining cash-on-cash return performance (a typical characteristic of installment loan portfolios) can create confusion or frustration for retail investors. Retail investors experience strong net annualized returns in the early periods, only to experience returns consistently decline as loans season.

Record Number of Banks Want to Partner with Lending Club (Bank Innovation), Rated: AAA

Banks made up a “record” 40% of the lender’s almost $2 billion originations for the quarter, up from 31% last quarter, according to Lending Club CEO Scott Sanborn.

Bank participation hit its lowest (for the past 12 months) in the third quarter of 2016 — 13% of the total $1.9 billion originations — and has been on a steady increase ever since.

Source: Lending Club

Online lenders feel the pinch (Crain’s Chicago Business), Rated: A

Data glitches are bad for any company. But they are especially terrible for online lenders that trumpet having high-quality data as a main selling point.

And now comes Prosper Marketplace, which said on Thursday that it told investors their returns were inflated because of a systems error. Annual returns for some investors were cut in half, while others declined by 2 percentage points or less.

For example, take a look at a recent securitization by Avant, the Chicago-based online lender that cut its staff by about 30 percent last year and whose loan default rates had been higher than expected. To attract investors to the nearly $220 million deal, Avant had to materially improve the underlying creditworthiness of loans by reducing their length and the amount financed and increasing their risk-adjusted yield, according to PeerIQ.

Data provider Orchard Platform said the average return on online consumer loans was 3.95 percent last year, which doesn’t seem sufficient unless the default rate was extremely low, especially compared with average returns of 6.93 percent in 2015.

The U.S. economy will slow at some point, leading to a reduction in loans and higher defaults. And eventually, all lending will be done online.

LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q1 2017 (PR Newswire), Rated: A

LendingTree®, a leading online loan marketplace, today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the first quarter of 2017. The list features the top lenders in multiple loan product categories, including Mortgages, Personal Loans, Business Loans and Auto Loans, all of which are included in LendingTree’s online loan marketplace.

Lender rankings are based on a weighted average of overall rating and the total volume of customer reviews for mortgage, personal, business and auto loans. Lenders were rated on offered rates, fees and closing costs, responsiveness, customer service and overall customer experience.

Mortgage Category

1)

Insight Loans

2)

J.G. Wentworth Home Lending, LLC

3)

CBC National Bank

4)

Arcadia Financial Group LLC

5)

Veterans United Home Loans

6)

First Midwest Bank

7)

AmeriSave Mortgage Corp

8)

Wyndham Capital Mortgage

9)

First Direct Lending, LLC

10)

HomePlus

Personal Loans Category

1)

First Midwest Bank

2)

Lending Club

3)

Avant

Business Loans Category

1)

Seek Capital

2)

RapidAdvance

3)

Currency Capital

Student Loans Category

1)

RefiJet

2)

up2drive – a division of BMW Bank of North America

3)

rateGenius

How Will a Real Estate Lending Slowdown Affect Marketplace Lenders? (National Real Estate Investor), Rated: A

According to new statistics from the Mortgage Bankers Association, real estate lending is slowing down. Lenders closed $491 billion in mortgage loans in 2016, down 3 percent from the previous year. The decline in the last quarter of 2016 was even more significant, falling 7 percent in comparison with the fourth quarter of 2015.

In commercial real estate, reports show that the decline is even sharper. According to Real Capital Analytics, U.S. commercial property purchases were down 10 percent in 2016 from the previous year, and the trend seems to be continuing into 2017. U.S. investors purchased $50.3 billion in commercial property in January and February of 2017, compared to $80.1 billion during the same timeframe in 2016.

With $300 billion in loans coming due in the next 18 months, it is unlikely that the slowdown is a sign that the industry is poised for a more significant decline.

Strong outlook for marketplace lending

While banks will likely continue to have a small pullback in commercial real estate lending, the outlook for marketplace lending is strong. In 2015, alternative lenders originated 68 percent more loans than the year prior, according to the Mortgage Bankers Association. With American Banker reporting a 700 percent growth in the marketplace lending industry in just four years, this growth is poised to continue.

While commercial real estate lending as a whole may have been down slightly in 2016, the outlook for marketplace and other non-bank lenders is strong for 2017.

A Simple Macroeconomic Case For Avoiding Lending Club (Seeking Alpha), Rated: A

We believe the most commonsense case for avoiding Lending Club (NYSE:LC) as an investment is pretty simple and doesn’t involve a deep dive into the numbers. We think the reasons for avoiding peer to peer lenders can be explained simply and are relatively easy to understand. Lending Club, along with other peer to peer lenders and smaller aggressive regional banks, will likely be a poor investments in coming quarters as a shorter-term debt cycle turns over and the lowest creditworthy types of loans begin to see a spike in delinquencies and faults.

While Lending Club loves to point out to its investors and those who participate in its online marketplace that a lot of its borrowers have great credit scores, the reality of the situation is that the lowest creditworthy people who are denied loans elsewhere will drift to platforms like Lending Club in order to secure a loan they otherwise would not be able to obtain. This is just simply a function of lending markets: the least creditworthy people will find the lowest spot on the totem pole to borrow money.

Enter Lending Club, a pool of investors chasing high yield and borrowers who were likely unable to obtain credit elsewhere. We think the obvious outcome for the broader economy will be significant and continued pressure on all peer to peer lenders, not just Lending Club, going forward over the next couple of years.

Small banks warm up to marketplace lending for SBA expansion (American Banker), Rated: A

Marketplace lenders are slowly gaining traction with community banks eager to do more Small Business Administration lending.

Five Star Bancorp in Rocklin, Calif., is the latest small institution to follow the trend, agreeing earlier this year to try out SmartBiz Loans.

Is PayPal Co-Founder Max Levchin Making The Next Credit Card Killer? (Forbes), Rated: A

Now, Max Levchin’s latest venture, the financial technology company Affirm, is seeking to bring more accountability and transparency to the banking industry through what he calls “fair and honest financing.”

According to CreditCards.com, the average amount of credit card debt is about $9,600. If you make the minimum monthly payment, you could pay more than $11,615 in additional interest during the life of the loan — which is more than you originally borrowed.

Affirm lets shoppers pay for purchases — such as a Casper mattress or Peloton bike — over time with simple-interest loans that are free of any penalty or late fees.

Last month, the San Francisco-based company completed its 1 millionth consumer installment loan.

Max Levchin: We started Affirm 5 years ago with the thesis that we could build smarter underwriting and anti-fraud technology to improve on the tired traditional systems, and therefore create financial products that are simple, transparent, fairly-priced and free of incentive misalignment that so often defines consumer banking.

Since 2014, our loan volume has grown 40+ times over, we’ve added 900 merchant partners including Expedia, Wayfair, Peloton, Casper and Eventbrite, issued more than 1 million loans, all while maintaining an industry-first Net Promoter Score (NPS) of over 70.

Max Levchin: Since 2001, the [CFPB] found that more than 29 million consumers had been harmed by illegal practices perpetrated by bad actors in the finance industry.

There are also several legal, yet equally harmful, practices being used by the industry today that are disproportionately affecting the most financially vulnerable populations.

I would also like to see the CFPB affirm a consumer’s right to access and permission their financial data. Doing so expands access to credit for the 58 million Americans considered credit invisible – those with no credit files or insufficient information in their files to generate a credit score.

Max Levchin: Over the next few years, we [plan] to offer many more services expected from a modern financial institution, while bringing transparency to the industry where too often the customer has to lose for the service provider to win.

A new era for big asset managers? Glass Steagall and fintech (The Financial Revolutionist Email), Rated: A

The current clamor for breaking up America’s big banks should serve to remind those institutions to carefully manage the newfound freedom they will enjoy if Dodd-Frank gets defanged. It should also spur them to continue to seek out new risk-detection and monitoring technologies to avoid the kinds of systematic problems that sparked neo Glass-Steagallism in the first place. Does voice trading have a future?

It’s easy to believe that with the growing role of IM/chat messages, computer on computer communications, sophisticated algos and machine learning, the telephone is destined for oblivion when it comes to trading. But in a new survey conducted by Greenwich Associates, “voice” was reaffirmed as an important element to building trust and detecting nuance between trading counterparties. That’s good news for start-ups like Apple should buy Canada or PayPal.

So instead of creating a money transfer service from scratch, Apple should consider scooping up Venmo and the rest of PayPal with it (and/or A two pizza, Agile future for banks.

ANZ, for example, is the latest bank to announce that it would shift to Agile teams of about ten as a way to

JPMorgan formally quits R3 (Finextra), Rated: A

JPMorgan Chase has formally exited blockchain consortium R3, following in the footsteps of fellow titans Goldman Sachs and Banco Santander who split last November.

The departure comes as R3 continues to pursue fundraising efforts, looking to raise to raise $150 million from its members and strategic investors in return for a 60% stake in the business – a downgrade from its original funding target of $200 million.

Ping-pong capitalism: RE tech firms look to China for cash (The Real Deal), Rated: A

Real estate tech startups like LendingHome, Fundrise, Cadre, RealtyShares and Roofstock also raised money from Chinese firms.

Between 2011 and 2015, annual Chinese investment in U.S. technology companies rose from $300 million to $9.9 billion, according to research firm CB Insights, before falling in 2016 amid a general slowdown in venture investment. The data doesn’t break down how much money went into real estate technology, but sources said it holds a special appeal to Chinese investors.

Hone is backing the real estate investment platforms Roofstock, RealtyShares and Clara Lending, the Airbnb competitor Overnight and the drone-based property inspection service BetterView, among others, making it one of the most active Chinese investors in the space. The social media company Renren invested in mortgage platform LendingHome and crowdfunding company Fundrise, among others. Alibaba founder Jack Ma is an investor in Cadre, the Jared Kushner-backed real estate investment startup.

The fintech revolution is nigh. Our next move is critical. (The Hill), Rated: A

The technology of the future that is thought capable of revolutionizing financial institutions and its regulators is already here. But with no national plan to harness it for economic betterment or regulatory transparency, it may well represent another missed opportunity to restructure the financial system.

One need only look to the evolution of the internet, with its revolutionary concepts of distributed communication that fundamentally changed how the world and its financial institutions communicate. A similar revolutionary technology, distributed ledger technology (DLT), is promising to fundamentally change how financial institutions store and report information, but only if it can become a common good like the internet.

With the CAT rollout and data collection not yet begun, a more robust and comprehensive DLT solution could be proposed, one which combines important CFTC products with those of the SEC in a shared data collection undertaking.

The U.S. needs a comprehensive fintech and regtech (regulatory technology) plan to efficiently deploy DLT.

With standardization, fintech and regtech innovation can enable virtual global views of financial data that is disbursed throughout local computer nodes (data collection points) across the globe. But this is only possible if these nodes conform to both common data standards and common networking protocols.

On Deck Capital subsidiary amended and restated its existing asset-backed revolving debt facility (Reuters), Rated: B

* On May 4, 2017 subsidiary amended and restated its existing asset-backed revolving debt facility – SEC filing

* Fourth A&R credit agreement provides for increase in lender’s revolving commitments from an aggregate amount of $75 million to $100 million

Shark Tank Star Kevin O’Leary Loves Fintech. (Crowdfund Insider), Rated: B

Shark Tank star Kevin O’Leary, also known as “Mr. Wonderful” to some, is a fan of Fintech. O’Leary is sharing the love by delivering the Keynote address at the upcoming Benzinga Fintech Awards scheduled to take place this coming Thursday in New York City (May 11, 2016).  O’Leary is said to be a regular suspect at the Benzinga offices too.

O’Leary will be presenting the keynote at the pinnacle of the award celebration.

Alongside O’Leary the following executives will be presenting or participating;

  • Kathleen Murphy, President, Personal Investing at Fidelity Investments
  • Tim Hockey, President and CEO of TD Ameritrade
  • Ron Suber, President of Prosper Marketplace
  • Matt Burton, CEO of Orchard
  • Adam Dell, founder and CEO of Clarity Money
  • Bill Emerson, Vice Chairman at Rock Holdings
United Kingdom

P2P platforms predicted to shift to hybrid models (P2P Finance News), Rated: AAA

UK PEER-TO-PEER lending platforms are poised to shift towards hybrid models to stay afloat, a financial services think tank claimed on Monday.

The P2P industry has re-shaped the country’s small corporate funding and investment market, putting pressure on traditional lenders to step up their game, said the Centre for the Study of Financial Innovation. But it is now facing a plateau that may require it to expand into direct lending and balance-sheet operations, as well as cutting interest rates, to become profitable.

He pointed out that SME lending growth has become relatively stagnant and that less than half of UK small businesses are aware of new online sources of finance. This casts a shadow over the volume growth that P2P lenders need to achieve to become a mass market.

And in response to the digital innovation brought about by P2P players, traditional banks have begun to change the way they address the SME market, upgrading their online services and shortening their decision-making timeframes.

Attracting borrowers and scaling up investment volumes is going to be one of the key challenges for platforms going forward, the report said, alongside proving the soundness of their underwriting during a credit downturn and investing in continued innovation in customer service.

Millennials spend over a third of take home pay on rent despite price growth beginning to slow (LendIt), Rated: AAA

Cash-strapped millennials renting in the UK are spending upwards of a third of their take home pay of £17,359 on rental payments, according to the latest Landbay Rental Index, powered by MIAC.

For tenants aged between 18-39 and living alone, 69% of a monthly post-tax income of £1,447 is spent on £1,012 of rent. In a shared house of two people, overall rent of £1,152 adds up to 39% of each tenant’s income, while those co-habiting in a three-bed property would each spend 30% of their monthly take home pay on a rent of £1,322.

Rents have continued to rise over the last five years, increasing by 9% across the UK since April 2012 and by 8% in London – with monthly payments remaining a huge burden on those struggling to save, despite the pace of rental growth beginning to slow since August 2015, from 2.66% to 0.82%. While rents have begun to fall in prime Central London, outer boroughs popular with millennials, such as Barking and Dagenham, Havering and Bexley have seen rents grow by 26%, 18.9% and 18.2%.

Current accounts: How fintech is revolutionising personal banking (Independent), Rated: A

The gig economy continues to grow, with about 5 million people in the UK working as independents. It makes sense that a bank account provider would want to cash in on that and that is why Coconut has sprung up – to provide tailored banking for freelance and self-employed workers.

Customers can manage and track their income and outgoings via an app, and it even gives reminders of tax deadlines and the end of the financial year.

Increasing numbers of customers are relying on their phones for their daily banking, with data from the British Banking Association revealing that customers used their phones to check their bank balances 895 million times in 2015 alone, a number that is no doubt rocketing upwards.

A number of fintech start-ups are trying to capitalise on this trend and Monzo is one.

The app gives customers a real-time insight into what they are spending and how they are spending it, helping to budget and stay in the black. Users can access their account via an app that gives data on their daily and monthly spending, as well as the overall health of their account.

The first bank to gain a licence while being centred entirely around an app, Atom is racing ahead in the fintech current account stakes. It offers some far-sighted technological developments, including the opportunity to do away with passwords and even debit cards, instead relying on voice and face recognition.

And DiPocket is a new financial app that isn’t a bank but offers customers mobile banking facilities via a prepaid Mastercard.

Funding Circle’s Desai: use P2P for monetary stimulus (P2P Finance News), Rated: A

UK POLICYMAKERS should start using peer-to-peer platforms to stimulate the economy, Funding Circle’s chief executive and co-founder Samir Desai said on Wednesday.

The head of the country’s third-largest business lender called on the government and the Bank of England to bypass the banking system and inject monetary stimulus via P2P platforms, capitalising on the direct access they provide to the real economy.

New direct Lending fund targeting 6.5% yield seeks fresh capital raise (AltFi), Rated: A

The Edinburgh-based RM Secured Direct Lending trust is seeking to raise fresh capital just five months after its launch as it nears full deployment of its capital.

Launched back in December 2016, the closed-ended fund targets the SME lending space investing in loans it originates of between £2-10m. It specialises in secured debt investments and the portfolio has had a good run since its initial public offering (IPO) with most of its capital invested or moving towards deployment.

Total Net Assets are today £48.9m. Nearly £40m has been invested in a total of 11 loans, with borrowers ranging from a healthcare group, a UK high street retailer and a large UK/European forecourt provider.

What role can robots really play in the financial advice market? (The Herald), Rated: A

So, when Royal Bank of Scotland announced in March that it would be rolling out robo-advice for mortgage applications by the end of the third quarter it was clear that that particular innovation is no longer quite so innovative.

Put simply, websites such as Nutmeg, which is by far the best-known name in the fledgling UK market, present would-be investors with a range of questions designed to ascertain their attitude to risk before directing them to a model portfolio that should suit their needs.

However, the issue, according to Stephen Martin, head of Brewin Dolphin’s Glasgow office, is that even where needs are uncomplicated, robo-advisers can only go so far because they will never be able to tease out information peculiar to individual situations.

Hollands agreed, noting that while robo-advisers are a positive addition because they are helping open the investment marketplace to a wider range of people, they cannot be seen as a like-for-like replacement for full financial advice.

While the robo-advice market in the UK remains small, covering in the region of £1.5-2 billion of assets, research from Deloitte suggests that with more and more people having to take responsibility for investing their own pensions the potential for growth is high.

The accountancy giant found that 43 per cent of 35 to 44 year olds with a pension would use robo-advice on where to invest it, with those with the smallest pension pots, who may not be able to afford traditional financial advice, most likely to go to a robo-adviser.

5 ways to finance your start-up business (Business Zone), Rated: B

Business grants: In an unsettled economy, start-ups are seen to be important as a way of encouraging economic growth- this is why so many banks and publicly funded organisations are happy to support your ambitions.

Short term loans: One way in which you can look to finance your business is through a quick loan from a reputable company. Quick loans can help to offer you the perfect cash injection necessary to get your business up and running with the ability for the debt to be paid back over a series of repayments. The key with funding your business through a short term loan is in finding a loan with a low interest rate.

Crowdfunding: Peer to peer lending and crowdfunding have become an increasingly popular way for entrepreneurs to start up their own businesses.

Friends and family: Something to always consider when looking towards funding your own business is to pitch for funding from your family members and friends.

Angel investors: Angel investors can be a great source of investment and can be found in most cities.

China

WeiyangX Fintech Review (Crowdfund Insider), Rated: AAA

WeChat Pay, one of the biggest mobile payment platforms in mainland China, has boosted its cross-border business by entering the U.S. market.

One in four of those aged between 18 and 27 use pay-by-credit services Ant Check Later, a personal loan and installment service under e-payment provider Ant Financial Services Group, as these freer spenders form the very core of the country’s burgeoning consumer-credit landscape.

People born in the 1990s constitute 47.3 percent of the platform’s registered users. Among them, nearly 40 percent prioritized the service as a payment option over its sister service Alipay, China’s largest mobile wallet by market share. This is 11.9 percentage points higher than those born before 1985.

Baidu Financial has announced to launch new consumer mortgage products with the aim of encroaching on consumer credit market.

On May 2, the National Committee of Experts on Internet Finance Security Technology, which was sponsored by the National Internet Emergency Center and the Internet Society of China, released a piece of evaluation criterion for P2P online lending platforms.

The rating standards mainly include five aspects: corporate strength, enterprise qualification, operation indices, cyber security and social reflection.

In another attempt to secure a firm grasp on China’s Fintech market, Chinese tech conglomerate LeEco has turned its next venture towards insurance and fund consignment. Since 2015, LeEco has got several financial licenses on various fields: micro credit, private placement, insurance and fund. Specially, LeEco is trying to build a fintech ecosystem, which covers micro finance, equity management, fund and insurance sales.

CreditEase CEO Ning Tang on China’s Marketplace Lending Industry, Robo-Advisors, Credit Scoring, & More (CB Insights), Rated: A

In recent weeks, Ant Financial‘s Yu’e Bao surpassed JPMorgan’s US government money market fund to became the largest in the world, China Rapid Finance became the second Chinese P2P lender to go public on a major US exchange, and Ant Financial upped its bid to acquire MoneyGram, the second largest global money transfer provider.

On the state of marketplace lending in China

Two fintech sectors — payments and marketplace lending — are more mature than others in China, as they have been around for over 10 years, have massive scale, and operate within robust regulatory frameworks and ecosystems.

We think that, over the next decade, sectors like crowdfunding, robo-advisors, insurance tech, blockchain and blockchain-driven applications will emerge. Some are behind marketplace lending by 3 years, some by 5 years, and some are behind by even 10 years, but I think all will go through a similar process in China.

It took 10 years for marketplace lending to grow from an idea to an industry in China. Recently, there has been tightening in the market, but I believe a tighter market will help the industry become more stable and healthy.

On credit scoring in China

Regulators have adopted a strong view that credit scoring is key for China to develop its credit bureau system. It will be a very strict process.

Currently, we use eCommerce data, telecommunications data, bank and credit card data, insurance data, and social security data. Big data is very helpful, but alternative data needs to cooperate with traditional finance and credit data to make the risk evaluation model really work.

I think China will develop a multi-layer system. The core will be the credit bureau — consisting of core credit data — and around it will be different applications for different industries utilizing some industry-specific data. Around that will be additional ancillary data services utilizing big data for anti-fraud, marketing, and so forth.

Still, the core layer will look quite similar to what the US credit system looks like.

On insurance tech in China

The biggest pain point for the insurance industry in China is that it’s never sold in the right way.

We don’t need more insurance products, we need more education and intelligent matching.

Where CreditEase is investing

Chinese investors are in the process of building globally diversified portfolios. From our point of view, we help clients who already have foreign currency outside of China to invest in the US and other parts of the world.

We are still quite interested in opportunities in lending. For example, we invested in (former Lending Club CEO) Renaud Laplanche’s new venture, Upgrade. I believe there are still a lot of opportunities left over from marketplace lending 1.0. We are similarly interested in crowdfunding, insurance tech, and — not only robo-advisors — but also B2B fintech models helping the wealth management and asset management industry.

P2P Industry News (Xing Ping She Email), Rated: A

Over 60% Chinese P2P Lenders achieved profit

According to the latest statistics from Online Lending House, 28 P2P Lending platforms disclosed their financial results, accounting for 1.3% of all the platforms. In 2016, 17 (61%) platforms have achieved profit, while 11 P2P Lenders had a loss.

The data shows that the most profitable platform is Yirendai, with $1.12 billion net profit. However, another US listed platform, China Rapid Finance, has lost $0.23 billion. Excluding lost platforms and those with incomplete data, the average net interest rate of 17 platforms are 25.92%, performing well in profitability.

 

Lenders Revenue

(Million RMB)

Net Profit

(Million RMB)

NetProfit Rate Founding Time Public Company shareholding ratio
Yirendai

3,238

1,116.4

34.48%

Jul. 2012 YRD

direct listing

WeiDai Network

1,776.3

325.50

18.32%

Jul. 2011 HAKIM UNIQUE

12.38%

Niwodai

666.9

64.88

9.73%

Jun. 2011 Jiayin Fin-tech

100%

PPmoney

327.74

43.09

13.15%

Dec. 2012

Wan Hui Technology

100%

AVATAR China

35.03

20.90

59.65%

May. 2015

Neo Telemedia Limited

70%

UF-Club

189.82

19.61

10.33%

Nov. 2013 Hemei Group

51%

Yinhu Network

50.91

2.41

4.72%

Jul. 2014

Panda Financial Holding Corp., Ltd.

100%

PP100

37.85

-12.12

Aug. 2015 Nuode Share

40%

Lcfarm

58.84

-45.10

Mar. 2015 NoPoison

33.64

China Rapid Finance

385.43

-230.25

May. 2015 XRF

direct listing

The huge market of Auto Finance may reach to 1.85 Trillion RMB in 2018 

After the Internet Finance mania in China, more attentions now are paid to bank depository of the auto loan market. In China, with the rapid development of economy, cars gradually become ordinary people’s necessary life consumption, especially in developed areas, and almost every family owning a car.

Meanwhile, the large holding numbers and high liquidity of cars make it one of the most promising vertical field in P2P industry. It was reported that the number of car users in China are rapidly increasing, which contributed to the rapid development of the auto loan market.

According to the latest data, the total volume of Internet auto finance in China is expected to reach at 1.85 trillion RMB, driving the penetration ratio of consumer finance to about 30%.

European Union

Temenos hires FinTech heavyhitter for Marketplace (IBS Intelligence), Rated: A

Temenos has announced Duena Blomstrom as Chief Growth Officer for Marketplace, its online store of 100+ FinTech solutions that have been certified and pre-integrated with the Temenos Suites.

Blomstrom is well known in the FinTech sector as an analyst, entrepreneur and Angel Investor, a mentor for Startupbootcamp and Techstars, and the inventor of the Emotional Banking, EX and Bank Branding concepts. For the past 18 years, she has operated on the strategy and consulting side, be it for sales or marketing.

But banks are not easily displaced. Peer-to-peer lending, for instance, has grown rapidly, but still amounted to just $19bn on America’s biggest platforms and £3.8bn in Britain last year, according to AltFi Data, an analytics company. And some marketplaces now involve banks. Lex Sokolin, director of fintech strategy at Autonomous, a research firm, argues that music—one of the first industries to be attacked by digital revolutionaries—was fairly easily disrupted. Retailing was a little harder, but customers got used to not handling books, cameras and clothes before buying. Finance and health care, he says, are much more difficult. People are rarely inspired by financial products, says Mr Sokolin, which makes it costly to build a brand. It is easier to team up with those who already have the customers.

In the West, regulation is opening up more of the field to fintechs, both large and small. A revised European Union directive on payment services, known as PSD2, allows third parties to offer more convenient ways of paying online or to consolidate information from different accounts (with the holder’s permission) so that people can keep track of their finances. America has no equivalent, but the Office of the Comptroller of the Currency, which oversees national banks, has proposed giving special licences to fintechs.

China’s digital behemoths worry less about such things. Companies like Ant Financial, the financial arm of Alibaba, an e-commerce giant, and JD.com, another online marketplace, have masses of data about those who buy and sell on their platforms. They know their spending habits and how much cash they can spare, so an easy next step is to offer them small loans. Big Chinese banks in any case neglect consumers and small businesses, so customers feel no loyalty towards incumbent lenders. Regulators have also been willing to let online companies shift into finance.

International

Q1 CYBERCRIME REPORT (ThreatMetrix), Rated: AAA

In the ever-evolving world of cybercrime, authentication continues to be a mainstay of global digital businesses; accurately recognizing trusted returning users and promoting a frictionless online environment builds a loyal customer base and reduces attrition.

However, cybercrime is becoming an increasingly global phenomenon, operating across borders in well organized criminal gangs, with knowledge sharing and centralized intelligence. Attacks continue to evolve quicker than the tools and techniques used to detect them.

Some key attack trends analyzed this quarter include:

  • The multifarious attack methods used in a 2017 cybercrime attack
  • The evolution of attacks from single to multi-vector approaches
  • Identity theft is a key issue for all industry sectors as they continue to see attacks involving stolen and synthetic credentials, harvested from omnipresent data breaches
  • The proliferation of RATs in the financial services sector
  • The sophistication of bot attacks
  • The only effective armor is to genuinely understand who your real customers are and how they transact, by collecting and processing all the information you know about them and using this to make informed risk decisions.
Source: ThreatMetrix

See the full report here.

Financial technology is proving less of a battleground than feared (The Economist), Rated: A

To be sure, a gang of newcomers have muscled their way into their domains. Peer-to-peer or marketplace lenders, such as Lending Club and SoFi in America, or Funding Circle and RateSetter in Britain, connect people and companies that want to borrow with those that have money to lend, promising both sides keener rates. Britain’s MarketInvoice allows small companies to borrow against receivables immediately, rather than turn to a bank or wait for bills to be paid. Digital banks such as N26 in Germany, Tinkoff Bank in Russia and an array of British hopefuls are challenging incumbents.

Islamic Fintech Alliance Publishes Fintech Industry Snapshop Report (Crowdfund Insider), Rated: A

The Islamic Fintech Alliance (IFT Alliance) has published its inaugural report on the emerging Fintech sector for the Muslim community.

Munshi is the founder and CEO of Ethis Ventures, a company that operates several platforms including crowdfunding. Mushis states that Muslims must unite to take advantage of this “unprecedented opportunity” to invigorate Islamic financial services with new forms of finance.

See the full report here.

Australia

Financial advisers should consider bitcoin as an asset class: Dunworth (Financial Standard), Rated: A

This week the cryptocurrency broke record-highs when it started trading above USD$1680 against the US dollar. As at May this year, the total market cap of the bitcoin market has more than doubled to US$23 billion since it hit the US$10 billion mark just three years ago.

“A lot of people say that bitcoin is very volatile. It is in the short term but if I were doing fund management for my client, I see it as a very good long term investment,” he said.

Cambridge University counts as many as 5.8 million unique users of the so-called crypto currency wallet, most of whom use bitcoin. More than 100,000 merchants and vendors now accept bitcoin as a form of payment albeit regulators warn that bitcoin users are not covered by refund rights.

Australia going cashless is great for fintech (AltFi), Rated: B

Australia is set to be an almost cashless society by 2020, promising benefits for fintech.

Since 2010, cash payments have declined a staggering 46 percent, and now make up less than 10 percent of all payments, according to new research by East & Partners Australia.

The hope for fintechs is that as payments go digital and the data supply increases, so too will demand for new technologies. It will also improve Australia’s attractiveness to foreign investors.

Writing in The Guardian, the economist Philip Soos denounced a cashless economy as empowering the security state and the banks.

India

Instamojo Wants To Help India’s Five Crore Small Businesses Transact Online (Bloomberg Quint), Rated: AAA

Digital modes of payment are becoming ubiquitous, riding on the government’s less-cash drive after demonetisation. Yet, Instamojo, a Bengaluru-based fintech company, feels not enough is being done for small businesses.

The company wants to help India’s micro, small, and medium enterprises receive payments online in a simple, hassle-free manner, said Sampad Swain, one of its founders and also the chief executive officer. The government last year projected that the number of such businesses has grown to over 5 crore.

The only two requirements for the company’s service to work is that both parties must have a mobile number and a bank account.

“If the mango seller wants to use our platform, he has to first do an e-KYC, which takes a few minutes,” said Swain. This can be done either through a mobile application that can be downloaded from the Play Store, or on Instamojo’s website.

The seller then generates a link by providing information on the ‘purpose’ of the transaction, and the amount that the buyer has to pay. In this case, the purpose would be a crate of alphonso mangoes, and the price would be Rs 1,700, Swain explained.

Once the link is generated, the seller can forward it to the buyer by any messaging mode, like WhatsApp, Facebook, email, or even an SMS. When the buyer clicks on the link, he or she is directed to Instamojo’s website, where a number of online payment options are available.

MENA

Middle East, North Africa (MENA) FinTech Update: Slow to Adopt or Miles Ahead? (EdgyLabs), Rated: AAA

Headquartered in Dubai, Wamda (which means “sparkle” in Arabic) is an organization that supports the entrepreneurial spirit and business initiatives in the MENA region. Along with PAYFORT, an online payment platform, Wamda Research Lab released a report that provides in-depth data about FinTech in MENA.

According to the ‘State of FinTech,’ over $100 million USD were invested in Fintech in the MENA region over the last decade, with $50 million expected for 2017 alone. In 2013, the number of Fintech startups was 46. Then, in 2015, that number increased to 105–with the United Arab Emirates leading the pack with 30 independent FinTech startups–and the overall MENA number is expected to reach 250 by 2020.

Authors:

George Popescu
Allen Taylor