Thursday July 25 2019, Weekly News Digest

marketplace lending

News Comments Today’s main news: Equifax to pay up to $700M in data breach settlement. MoneyLion raises $160M. Monzo, Starling win top rankings among banking apps. Harmoney makes maiden profit. Today’s main analysis: Peter Renton’s quarterly MPL results – Q1 2019 (A MUST-READ). Today’s thought-provoking articles: Metro areas with the biggest jump in private million-dollar […]

The post Thursday July 25 2019, Weekly News Digest appeared first on Lending Times.

marketplace lending

News Comments

United States

United Kingdom

Internationnal

European Union

Other

News Summary

United States

Equifax will pay up to $ 700 million to settle data breach lawsuits (CBS News), Rated: AAA

Equifax will pay up to $700 million to settle with the Federal Trade Commission and others over the massive 2017 data breach that exposed the private data of nearly 150 million people. Consumers are eligible to claim as much as $20,000 in cash payments, the FTC said.

The proposed settlement with the Consumer Financial Protection Bureau, if approved by the federal district court Northern District of Georgia, will provide up to $425 million in monetary relief to consumers, a $100 million civil money penalty, and other relief.

MoneyLion Announces $ 160M in Funding  (Finanzen), Rated: AAA

MoneyLion today announced $160 million in funding — $60 million in previously unannounced financing and a $100 million Series C funding round.

The round was co-led by Edison Partners and Greenspring Associates and included strategic investment from Capital One, a diversified bank that offers a broad array of financial products and services to over 45 million consumers. The round also included investment from MetaBank and FinTech Collective. Upon completion of the Series C round, the company will have raised over $200 million in equity financing.

OnDeck Taps Bank Veteran to Lead ODX Sales and Strategy (OnDeck), Rated: A

OnDeck today announced the appointment of Lonnie Hayes as the Head of Sales and Strategy for ODX, a wholly owned subsidiary of OnDeck that assists banks with streamlining and digitizing small business credit origination.

My Quarterly Marketplace Lending Results – Q1 2019 (Lend Academy), Rated: AAA

My overall returns for the twelve months ending March 31, 2019 was 6.09%. This is up from 5.35% that I reported in Q4 and 4.77% in Q3. My original six LendingClub and Prosper accounts had another full percentage point jump. Last quarter I reported the returns on those six accounts had jumped from 3.19% in Q3 to 4.16% in Q4. We see this quarter they are at 5.18%. This is quite a remarkable turnaround and while I still think 5% is not a high enough return for unsecured consumer lending, it is certainly moving in the right direction.

Source: Lend Academy

Metros With the Biggest Jump in Private Million-Dollar Businesses (LendingTree), Rated: AAA

  • Austin, Texas topped the list with a 15.1% increase in privately held companies surpassing $1 million in revenue between 2014 and 2016. The number of Austin firms in that category rose by 1,857.
  • Jacksonville, Fla. and Riverside, Calif. came in a nose behind, with an increase just under 15%. The number of firms rose by 963 and 2,359, respectively.
  • Buffalo, N.Y. was the only metro on our list to lose businesses with seven figure revenues: The city in upstate New York was down by four such firms, a reduction of 0.1%.
  • Baltimore and Oklahoma City made the smallest gains, at just over 1%, or 187 and 117 businesses, respectively.
  • Los Angeles had the largest number of firms to pass the million-dollar mark – 6,664 – followed closely by New York at 6,568. Those large numbers represent increases of almost 8% and 5.2%, respectively, leaving them in the 16th and 29th spots on the list.

Lendio Marries SMB Loan Management With Accounting (PYMNTS), Rated: A

Small business loan marketplace Lendio has announced the acquisition of bookkeeping software provider Billy.

press release Tuesday (July 23) said Lendio is rebranding Billy to Sunrise, a small business bookkeeping solution that integrates accounting, cash flow management, loan management and credit data into a single solution.

How AI can advance the cause of fair lending (American Banker), Rated: A

The rightful prohibition of ZIP codes in underwriting is one example of how financial regulators ensure fairness by protecting against discriminatory lending. But the increasing reliance on artificial intelligence and machine learning, or “automated insights” as I prefer to call it, has made testing a wide variety of inputs for specific outcomes a sophisticated, scientific process carried out by companies. Lawmakers should consider these varied new data options when they evaluate machine learning during a hearing later this week.

Aura Closes $ 28.7 Million Expansion Loan from Angel Island Capital (Business Wire), Rated: A

Aura, a mission-driven financial technology company that offers affordable loans to hard-working families, today announced it has closed $28.7 million in residual debt financing from Angel Island Capital (“AIC”) to help the company grow and keep pace with the demand for its loans.

Drip Capital raises $ 25 mn from Accel, Sequoia (IBS Intelligence), Rated:
A

Drip Capital, a technology-enabled cross border trade financier, has raised $25 million in Series B funding from investors led by Accel Partners. Existing investors Sequoia Capital, Wing VC and Y Combinator also participated in the round.

More options to save on student loans at Credible (Credible), Rated: A

With Ascent and MEFA on board, Credible’s student loan marketplace now provides access to eight lenders, including traditional banks, online lenders, and state student loan authorities.

This is how fintech solutions are speeding up mortgage closing times (Housingwire), Rated: A

Financial technology is transforming the mortgage industry by making the origination process more convenient and secure for borrowers.

In 2018, BOK began leveraging Roostify’s digital platform to provide its customers a secure way to upload, send and receive loan documents remotely.

Financial services newcomer Cross River blurs line between fintech, banking (ROI), Rated: A

Few would expect it was a good idea to start a bank right as the recession raged a decade ago.

Fewer still would say any bankers eager to do that, as Cross River Bank did, would go on to become one of the state’s most impressive growth stories.

Fitch Ratings: Questions Increase Around Fringe Players in U.S. ABS (ABL Advisor), Rated: A

While U.S. core ABS performance remains strong due largely to low unemployment, many investors are zeroing in their questions on some of the sector’s non-core assets, according to Fitch Ratings in its 2019 Virtual Investor Video Series for structured finance.

Should fintechs be regulated like banks? (BAI.org), Rated: A

According to the U.S. Treasury report, more than 3,330 new technology-based financial services industry were founded from 2010 to the third quarter of 2017, creating industry investment worth more than $22 billion: a thirteen-fold increase since 2010. Lending by these firms now makes up more than 36 percent of all U.S. personal loans, up from less than 1 percent in 2010.

Examples of Financial Services Business Ideas (Entrepreneur), Rated: A

If you’re financially savvy, you can start your own peer-to-peer lending business. This is when you give small amounts of money to a business or private person, while collecting interest on the returns. Before you start lending out money, here is a successful business you can learn some strategies from:

Business Name: RainFin

Website: 

Established date: 2012

About the business:

RainFin offers an online marketplace that enables borrowers to access affordable debt capital and investors to access new asset classes. RainFin is a registered credit provider and aims to remove traditional costs and barriers for borrowers and investors through innovative technology, designed to create a transparent and fair marketplace.

NASAA Warning on Initial Loan Procurements: “Crowdfunding Meets Blockchain” (Crowdfund Insider), Rated: A

NASAA describes initial loan procurements as a crowdfunding method that allows borrowers and creditors to enter into loan agreements through legally binding smart contracts stored on the blockchain.

To quote NASAA:

“Companies using blockchain technology need to raise capital just like any other company. One way these companies accomplish that is through initial coin offerings (ICOs), which require the new company to create tokens that can be sold to investors and used for the development of new projects. An alternative fundraising method is catching the interest of investors. Initial loan procurements allow companies to raise capital without the added burden of creating tokens.”

Examples of Online Business Ideas (Entrepreneur), Rated: A

Online real estate investing platforms now exist, and they enable anyone to invest a percentage into a property instead of the whole amount. If you have the right skills, you can start your own online business.

Before you launch your business, learn a few strategies from this example of an online business:

Business Name: Real Estate Crowdfunding

Website: 

About the business:

Real Estate Crowdfunding offers its clients lower fees, the option to invest in a development nearby and transparency, which enables their customers to find out more about projects before investing.

Mynd Property Management Acquires HomeUnion, a Real Estate Investing Portal (Yahoo! Finance), Rated: B

Mynd Property Management, a modern property management company powered by on-the-ground experts and technology, has acquired HomeUnion, a company that enables investing in small residential properties in 20 U.S. markets. The acquisition comes on the heels of Mynd’s recent merger with RentVest, which doubled Mynd’s property management footprint to more than 8,000 small residential rental units in a total of 16 markets.

Pennsylvania Attorney General Josh Shapiro announced a settlement with Think Finance, a payday lender that has targeted nearly 80,000 Pennsylvanians.
United Kingdom

Monzo and Starling took first and second place in a ranking of banking apps (Business Insider), Rated: AAA

UK-based Monzo has taken the top spot in a ranking of bank apps by MoneySavingExpert.com, beating out both peers and incumbents, The Irish News reports. Seventy-eight percent of the consumers surveyed said the neobank’s app had plenty of features and strong usability.

Competing neobank Starling picked up second place, with 70% of consumers approving of its app’s features and usability. The rest of the top five was rounded out by Barclays (57%), Lloyds Bank (49%), and NatWest (47%).

Source: Business Insider

Lord Myners heaps further pressure on FCA over Lendy failings (P2P Finance News), Rated: A

FORMER City minister Lord Myners is keeping the pressure on the Financial Conduct Authority over its decision to authorise now-collapsed peer-to-peer lending platform Lendy.

A series of written parliamentary questions show Lord Myners is seeking answers on whether better regulation is needed and the creditor status of Lendy investors.

Lessons from Lendy (Brismo), Rated: A

– History of troubled lender shows the importance of independent verification of credit performance
– This is not a function the regulator can reasonably be expected to undertake
– Marketplace lending will fail to access deep pools of funding until these lessons are learned

Innovate Finance expands national network with three regions added (ComputerWeekly), Rated: A

Last week Innovate Finance announced the addition of Fintech Northern Ireland, Fintech Wales and Fintech West to the national network.

Growth Street pledges £75m overdraft funding for East Anglia (P2P Finance News), Rated: A

GROWTH Street has pledged to commit £75m of overdraft-style financing to small- and medium-sized enterprises (SMEs) in East Anglia.

The peer-to-peer business lender, which provides a revolving credit facility for borrowers, said it is already 10 per cent towards its target having lent £7.5m in the region.

Is Short-Term Financing Right For Your Business? (Nav), Rated: A

If you need a short-term capital boost, there are a number of options available to you. Here are a few short-term financing examples that you may want to consider.

Superdry collaborating with Klarna (Fibre2Fashion), Rated: B

British contemporary fashion brand Superdry and leading payments provider Klarna have entered into a collaboration, enabled by Adyen. Superdry customers can now use the Pay later or Pay in 3 in the UK, and later this month will be able to Pay in 4 in the US. This will make everything from jackets to jeans more accessible to Superdry customers globally.

OakNorth completes £11.4m loan to Ocea for major new residential development in Redhill, Surrey (Fintech Finance), Rated: B

LendInvest boosts business development team with new hires (P2P Finance News), Rated: B

Nigel Robbins has joined LendInvest from specialist mortgage lender Magellan to source deals across the South West of England.

European Union

In-house marketing at Klarna: Interview with Elin Svahn (BannerFlow), Rated: AAA

In-house marketing is transforming the industry. It is a movement rising in popularity year on year, with over 91% of European decision-makers moving operations in-house.

How do you structure your in-house marketing at Klarna?

When I started, Klarna was in the process of a complete restructuring of their in-house operations. The brand was divided into many separate domains, with different teams having different priorities, and ‘issues’ to solve.

Today, we have four marketing domains: Branding, Merchant Aquisition and Growth, Communications and PR, Consumer Growth and Loyalty. Within each of these domains, we have different competencies. So for example, within the Branding domain, we have a mix of marketers, designers, and copywriters.

AdviceRobo has launched an open banking capability for lenders (Business Insider), Rated: A

AdviceRobo focuses on offering credit risk management solutions, and its latest API product enables lenders to categorize transactional data and predict defaults to make sound credit decisions.

The Netherlands-based fintech’s new API, dubbed CatRobo, is powered by PSD2 — a regulation that came into effect in January 2018 forcing banks to open up their data to third-parties.

Here’s what it means: The API will help lenders make better use of their data, better compete with alt lenders, and lend out more cash to underserved consumers.

Source: Business Insider
International

Justin Sun denied reports that he had postponed a charity lunch with the investing guru after attracting regulatory scrutiny. In China, where executives sometimes vanish, such reports are not unusual.

Embedded finance, or why fintech mega VC rounds have become so common (TechCrunch), Rated: A

This morning, it was personalized banking app MoneyLion,  which raised $100 million at a near unicorn valuation. Last week, it was N26, which raised another $170 million on top of its $300 million round earlier this yearBrex raised another $100 million last month on top of its $125 million Series C from late last year. Meanwhile, companies like payments platform Stripesavings and investment platform Raisintraveler lender Uplift, mortgage backers Blend and Better, and savings depositor Acorns have also raised massive new rounds this year.

Cryptocurrency loan site YouHodler exposed unencrypted user credit cards and transactions (TechCrunch), Rated: A

A cryptocurrency loan startup exposed reams of customer credit cards and user transactions for almost a month — because it forgot to protect the server with a password.

Security researchers Noam Rotem and Ran Locar found the database belonging to YouHodler, a lending platform designed for cryptocurrency, which claims to have processed $10 million in loans to more than 3,500 customers.

The database contained 86 million lines of daily updating records of the lending platform, containing streams of logs and computer commands based on users’ interactions on the front-end website. That also included sensitive information such as every time a transaction or a loan went through.

Source: TechCrunch

Crypto Lending Market ‘Continues to Experience Sustained Growth’ (CryptoGlobe), Rated: A

In the Q2 2019 edition of its quarterly ‘Digital Asset Lending Snapshot’ report, Genesis Capital made several interesting observations:

  • At the end of Q2 2019, the total value of “active loans outstanding” was $452 million versus $181 million in Q1 2019, i.e. a quarter-over-quarter (QoQ) increase of 149%.
  • Originations went up 48% QoQ, which means that Genesis Capital has just experienced its fifth straight quarter of “strong growth.”
  • Genesis Capital has originated over $2.3 billion in “loans and borrows” since the business was launched in March 2018.
Source: CryptoGlobe

What Is DeFi? (Bitcoin Market Journal), Rated: A

DeFi platforms leverage smart contract technology to provide decentralized financial solutions, such as digital currency-based peer-to-peer lending, dollar-pegged stablecoins, or investable tokenized asset baskets. The existing DeFi market is still at an early stage so we can expect more decentralized financial services that operate on a permissionless, transparent, and efficient manner on the blockchain to materialize soon.

Decentralised Finance in a centralised world (Business Times), Rated: A

THE growth of global financial markets has created enormous wealth, especially benefitting a few players who are closely connected to the world’s main financial centres.

The centralised nature of the industry has enabled these powerful intermediaries to position themselves in the middle of the system and thus extract rents from other participants.

This oligopolistic structure has stifled competition and decreased efficiency, while increasing the cost of financial services.

Time for a rethink? (Securities Lending Times), Rated: A

David Lewis of FIS discusses the dip in the securities finance industry’s global revenues and explains the factors changing the dynamics of the industry

Finacity Facilitates the Addition of UK Entities to USD $ 115 Million Receivables Securitization (Virtual Strategy Magazine), Rated: A

Finacity Corporation (“Finacity”), a member of the Greensill family of companies, and DZ Bank AG Deutsche Zentral-Genossenschaftsbank (“DZ Bank”) announces the addition of Volt Information Sciences, Inc. (“Volt”) United Kingdom subsidiaries as sellers of receivables to Volt’s existing trade receivables securitization. The 2-year facility supported by Volt’s US and UK receivables allows for up to USD $115 million in funding with a $35 million sublimit for letters of credit.

Australia

Harmoney makes maiden profit (MSN), Rated: AAA

The company, which is partly owned by Heartland Bank (17 percent share) and Trade Me (15 percent), made a net profit of $7.2 million in the year ended in March, compared with a loss of $1.8m the year earlier.

Its revenue was up 25 percent to $32.9m, with net interest income of $728,000 – nearly 10 times more than the year before.

Why bank hybrids are far too expensive (Cuffelinks), Rated: AAA

Yield chasing has spilled into nearly every asset class, with Australian listed bank hybrids no exception. The current average margin of bank bills at +2.40% is close to the lowest level for at least seven years.

Source: Cuffelinks

Alternatives to bank hybrids

2. Marketplace lending

Institutional and retail investors can both access marketplace lending (also known as peer-to-peer lending) via a growing number of online platforms. There’s a mixture of residential and commercial property secured loans available, as well as unsecured business and personal loans. For more conservative investors, loans backed by residential property with an LVR of 60% or less typically yield 5-7%. Commercial property loans, business loans and personal loans usually come with higher yields. Investors in riskier loans should be expecting to lose a portion of their total return when some of the borrowers default and should set their return expectations accordingly.

India

India’s FinTech Cube Wealth expands asset management biz in UK, Hong Kong (IBS Intelligence), Rated: AAA

Cube Wealth, an Indian FinTech start-up for financial planning and wealth management, is entering the global markets in this quarter (July-September) of 2019. The plan is to set up a tech-enabled asset management company in the UK, Hong Kong and Switzerland to start with so that customers in those markets can get an access to some leading fund managers in the emerging markets, including India.

Southeast Asia

Hedge Funds Help Fuel Southeast Asia Consumer Lending Boom (Bloomberg), Rated: AAA

A small but rising number of hedge funds are being established to help finance the boom in online and peer-to-peer lending across Southeast Asia.

Pilgrim Asia Consumer Finance Fund, founded by Brian Yonghui Tan and Paul Sheng, aims to raise up to $20 million in its first year and generate a return for investors of around 8% per annum. It will charge a 2% management fee.

OJK Condemns Fintech Lender over Indecent Post of Debtor (Tempo), Rated: A

The Financial Services Authority (OJK) condemns fintech lender Incash for posting a photo of one of its debtors online, with captions saying she was willing to have sex for money so she could pay her debts to the online lender.

Authors:

George Popescu
Allen Taylor

The post Thursday July 25 2019, Weekly News Digest appeared first on Lending Times.

Friday May 25 2018, Daily News Digest

The likelihood that business would choose fintech over banks

News Comments Today’s main news: Prosper qualifies borrowers up to $40K. GreenSky completes largest fintech IPO of the year. RateSetter hits $2.5B in lending. Lebashe increases RainFin stakes to 75%. Today’s main analysis: Peter Renton’s quarterly MPL results. Today’s thought-provoking articles: Alternative loan customers may perform well on traditional credit products. Banks, credit unions, and alternative lenders. How Ashton Kutcher […]

The likelihood that business would choose fintech over banks

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

Prosper Introduces Loans Up To $ 40,000 For Borrowers (Prosper Blog) Rated: AAA

Today we’re pleased to announce that Prosper now offers qualified borrowers access to loans up to $40,000.

GreenSky Completes Largest Fintech IPO of the Year (Lend Academy) Rated: AAA

There is a lot that sets GreenSky apart from many of the fintech companies that exist today. The biggest differentiator is that the company is profitable and runs a high margin business. In fact, the company has been profitable for the last five years. They reported $139 million in net income on revenues of $326 million last year. They also have a highly differentiated, boots on the ground model to originating loans, empowering contractors to offer financing to homeowners at the point of sale. They also partner with other types of merchants to offer financing. GreenSky only holds a small portion of loans on their own balance sheet with most loans being funded through around 15 bank partners.

Segment of Population Using Alternative Loans May Perform Well on Traditional Credit Products (Globe Newswire) Rated: AAA

Two-thirds of consumers active in the alternative loan market fall in the subprime risk category, the riskiest of all credit tiers. Yet, a new TransUnion (NYSE:TRUstudy found that many of these consumers perform well when opening traditional credit products such as credit cards, auto and personal loans.

TransUnion studied over five million consumers who originated a traditional credit product between Q2 2015 and Q1 2016 and measured their performance 12 months after originating the loan. Of the over five million consumers, approximately 450,000 (or 8%) were present in TransUnion’s alternative lending database. TransUnion then compared the performance of the alternative loan population to those consumers who were not seeking or did not possess an alternative loan product.

The study corroborated that many alternative loan borrowers do present greater risks on traditional loans. However, there is a material subset of this population that would present reasonable risks on an auto loan or credit card, among other traditional products.

For instance, in the near prime risk tier (consumers with a VantageScore 3.0 credit score of 601-660):

  • Approximately 14% of those borrowers who possessed only one short-term loan went 90 or more days past due on a traditional account 12 months later.
  • The delinquency level declined to less than 12% when a consumer possessed two alternative loans.
  • The delinquency figure dropped even further to around 9% when a consumer had eight or more alternative loans over the course of seven years.

Near Prime Consumers with Strong Alternative Loan Payment History Perform Better on Traditional Loans

Number of
Satisfactory
Alternative
Loan
Accounts
0 1 2 3-4 5-6 7-8 9-10 11+
Ever 90+
Days Past
Due in 12
Months on
Traditional
Loans
18 % 11 % 11 % 11 % 10 % 9 % 8 % 8 %

Comparing Origination Activity of Alternative Loan Borrowers to the Rest of the Population

Approximately 26% of alternative loan borrowers who originated a traditional loan product in the study opened an auto loan and 50% took out either a personal loan or auto loan. This latter statistic compares favorably to the 37% origination rate for the rest of the population in the study.

From a supply perspective, traditional finance companies are providing by far the most loans to alternative lending consumers, with a market share of 59%. However, credit unions (9%) and FinTechs (3%) supply about 12% of such loans to this credit population.

Five Banks and Credit Unions Rocking The Small Business Market (The Financial Brand) Rated: AAA

FIS found that more than one-quarter (27%) of small businesses in the U.S. are using alternative lenders like these. Among Millennial business owners, that percentage is double (48%). And yet only 7% say they are using these platforms for lower interest rates; in most cases, banks and credit unions offer better rates. FIS also found that small businesses have been turning to non-bank financial apps to make B2B payments.

In research conducted by ath Power Consulting, two-thirds of small business owners said they would consider switching to a competing banking provider if it offered products and services to help them better manage and grow their business, and over half (54%) would consider switching to a non-bank alternative for the same reasons.

Source: The Financial Times

Digital Federal Credit Union and offers a service to small businesses to raise capital and give its members an opportunity to invest in community business. The credit union has partnered with GrowthFountain, a funding portal of crowdfunding solutions. Tennessee Valley Federal Credit Union has also done the same thing.

San Francisco startup Seed is a free mobile-only banking service for small businesses, who can get a checking account and a debit card through Seed’s partnership with The Bancorp and have access to bill payment, mobile check deposit and ACH and wire transfers. Seed is sort of like Mint and QuickBooks except that Seed directly partners with a FDIC-insured bank (like how Simple started out). There’s not a physical checkbook in sight.

My Quarterly Marketplace Lending Results – Q1 2018 (Lend Academy) Rated: AAA

My preliminary return of 4.70% is close to where it was last quarter but still down. I don’t expect my final Lend Academy P2P Fund return to increase this number so I am still stuck in the downward trend of returns.

My six original accounts at Lending Club and Prosper have all been open for at least six years so they are very mature accounts that have experienced several turns of capital as I have kept reinvesting over the years. The returns for the past year are still bad at 2.34% as I continue to pay for poor underwriting performance in 2015 and 2016 at both companies. When you see today that you can get 3% on a 10-year Treasury Note a sub 3% return is just not acceptable for an unsecured consumer loan.

Source: Lend Academy

SoFi finds new downtown San Francisco office a talent magnet as it expands services (San Francisco Business Times) Rated: A

San Francisco-based SoFi said a downtown San Francisco office it picked up this year through an acquisition is paying an unexpected dividend: greater interest from engineers that the fintech wants to hire.

SoFi has 44 engineers at the company’s downtown San Francisco office at 222 Sutter St, consisting of almost 15,000 square feet on one floor. Another 40 or so employees float between SoFi’s downtown office and Presidio headquarters.

How [and why] I invest in startups (TechCrunch) Rated: AAA

A lot of venture funds try to optimize for returns. They run complex ratio economic models to determine what their diluted value will be at the end of the life cycle of the optimal and non-optimal case of every given company.

What I look for in founders

I don’t have a magic formula, but there are four important factors that must all check out for me to invest in a founder.

  1. Domain Expertise
  2. Grit
  3. Purpose
  4. Charisma

Amazon’s Finance Ambitions Are Drawing Attention From the Fed (Bloomberg) Rated: A

Fed Vice Chairman Randal Quarles, the U.S.’s most influential banking watchdog, is monitoring the potential for disruption to the industry and has expressed concern about how tech companies could provide financial services outside of regulators’ oversight, according to people who’ve spoken with him privately. Quarles hasn’t yet made any moves to intervene and the Fed’s influence would be limited.
Should the Fed get involved in the debate, it could be welcome news for traditional banks, who view Amazon and other technology companies as potential threats that enjoy fewer regulatory constraints. The companies are increasingly encroaching on lenders’ business, as evidenced by Amazon’s recent interest in offering a product akin to checking accounts.

Autotrader and Kelley Blue Book Team with LendingTree to Empower Shoppers with Auto Lending Options (PR Newswire) Rated: A

Securing vehicle financing in advance can save car buyers both time and money on their car-shopping journey. With this in mind, Autotrader and Kelley Blue Book, both Cox Automotive companies, have teamed with LendingTree. LendingTree’s auto finance marketplace provides each site’s visitors simple and easy online financing that can be used for new and used cars and trucks, anywhere in the United States.

Plenty of payday loan customers have good credit: TransUnion (American Banker) Rated: A

When Liz Pagel and Matt Komos began analyzing a slew of alternative credit data gathered by FactorTrust, an alternative credit bureau TransUnion acquired last year, they sought to understand the behavior of consumers who use payday loans, pawnshop loans, auto title loans, rent-to-own arrangements and “buy here, pay here” credit.

But 12% turned out to be prime and super prime. Only 3% were unscored.

The researchers then looked at what other credit these short-term borrowers have and found 75% have traditional credit, too.

Developers could make bank from Dodd-Frank rollback (The Real Deal) Rated: B

New legislation passed by the House of Representatives would relax restrictions on thousands of smaller lenders, potentially opening up the spigot for developers seeking commercial loans. The bill, which is awaiting President Trump’s signature, would remove provisions of the 2010 Dodd-Frank Act that many community and regional banks had deemed too costly and unfairly burdensome.

14 Chicago tech companies made Inc.’s 2018 Best Workplaces list (Built In Chicago) Rated: B

OppLoans is an online lender that uses a data-driven credit-scoring algorithm to provide loans to consumers who can’t access credit from traditional institutions. OppLoans is one of the fastest-growing tech companies in Chicago and has been named to the Inc. 500 two years in a row.

 

 

Fundbox Named “Best Overall Business Lending Company” In 2018 FinTech Breakthrough Annual Awards Program (PR Newswire) Rated: B

 Today Fundbox,  a leader in credit and payments for small businesses serving other businesses (SMB2B), announced that it has been selected as winner of the “Best Overall Business Lending Company” award by FinTech Breakthrough, an independent organization that recognizes the top companies, technologies and products in the global FinTech market today.

“We are delighted to recognize Fundbox for one of our program’s marquee awards, the Best Overall Business Lending Company award, an uber-competitive award category for our program with many compelling companies nominated,” said James Johnson, Managing Director, FinTech Breakthrough. “Fundbox stood out from the competition with its artificial intelligence-based underwriting platform. By fully automating the underwriting process with a data-driven risk model, Fundbox promises to underwrite faster, more cost-effectively and with greater accuracy than many other lenders – opening up lending possibilities for more customers. Congratulations to the entire Fundbox team for their industry recognition with our 2018 FinTech Breakthrough Award distinction.”

United Kingdom

RateSetter hits £2.5bn of lending (Peer2Peer Finance) Rated: AAA

The peer-to-peer lender, which launched in 2010, said 65,000 people have RateSetter investment accounts, financing more than 460,000 borrowers.

Investors have lent more than £1.55bn to individuals and almost £950m to businesses and have earned an average annual return of 4.4 per cent.

ArchOver launches Innovative Finance ISA to UK investors (Global Banking & Finance) Rated: A

ArchOver, the peer-to-peer (P2P) business lending platform, is helping British investors make the most of their annual tax-free allowance with the launch of its Innovative Finance ISA (IFISA). ArchOver’s IFISA service offers investors premium credit control and security, proven by ArchOver’s no-loss rate. It allows investors to invest directly in successful businesses, earning tax-free interest of up to 10% p.a. – far more than the average return on a cash ISA.

OakNorth: Brexit creates opportunity to reform banking regulation (AltFi News) Rated: A

OakNorth has called on the Treasury to use Brexit as an opportunity for regulatory reform in banking.

Responding to the Treasury Select Committee’s inquiry on SME finance, the bank said that there should be more proportionality between challenger banks and incumbents.

Mayo-based Doherty Menswear successfully raises €45,000 in peer-to-peer loans (Mayo Advertiser) Rated: B

To date, €1,012,000 has been raised through Linked Finance’s online lending platform (www.linkedfinance.com ) to facilitate business growth in Mayo, for 29 businesses.

Two more hires for ThinCats amid company growth (Peer2Peer Finance) Rated: B

PEER-TO-PEER lending platform ThinCats has appointed two new sales and marketing executives, as its hiring spree continues.

The alternative finance specialist has named Tony Smedley (pictured) as head of sales operations, and Richard Wilson as head of marketing, as part of a new push to “ramp up the provision of vital funding for small- and medium-sized enterprises (SMEs).”

China

China Rapid Finance Announces Preliminary First Quarter 2018 Results (PR Newswire) Rated: AAA

China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE:XRF), operator of one of China’s largest consumer lending marketplaces, today disclosed preliminary financial results for the first quarter of 2018.

The Company expects to report a net loss in the range of $25 to $30 million, the majority of which consists of approximately $16 million of one-time expenses: 1) non-recurring expenses associated with preparing for registration; 2) write-offs related to receivables and amortizations; 3) non-cash accounting charges related to adoption of the new GAAP standard for revenue recognition (ASC 606); and 4) one-time costs associated with a pilot funding program that was discontinued due to regulatory changes.

Yirendai Reports First Quarter 2018 Financial Results (PR Newswire) Rated: AAA

In the first quarter of 2018, Yirendai facilitated RMB11,956.7 million (US$1,906.2 million) of loans to 174,128 qualified individual borrowers through its online marketplace, representing a year-over-year growth of 65%; 23.1% of loan volume were generated by repeat borrowers who have successfully borrowed on Yirendai’s platform before; 72.5% of the borrowers were acquired from online channels;  100% of the loan volume originated from online channels was facilitated through mobile.

In the first quarter of 2018, Yirendai facilitated 214,231 investors with total investment amount of RMB11,427.6 million(US$1,821.8 million), 100% of which was facilitated through its online platform and 95% of which was facilitated through its mobile application.

In the first quarter of 2018, total net revenue was RMB1,592.7 million (US$253.9 million), an increase of 56% from prior year; net income was RMB278.9 million (US$44.5 million), a decrease of 21% from prior year and adjusted net income in the first quarter of 2018 was RMB668.5 million (US$106.6 million), an increase of 91% from prior year.

The fuse that could light China’s debt bomb (Financial Review) Rated: A

A financial planning manager in a major Shanghai bank branch points to a flickering computer screen displaying a list of wealth management products for customers wanting a higher yield to normal deposits.

For a deposit of 100,000 yuan ($20,600), he recommends a “low risk” product with an interest rate of 4.25 per cent over one year. Alternatively, the customer can opt for a riskier 4.75 per cent yield but there is no guarantee they will get any of their money bank. The customer is advised to act fast as yields are falling rapidly following closer government scrutiny of China’s savings products since March.

European Union

New Robo.cash P2P Lending & Millennials Research & 4M€ Milestone (Crowdfund Insider) Rated: AAA

Robo.cash’s research shows that Millennials are steadily taking over the leading position from the older generation of investors. Six months ago, the average age of investors of the platform was 38 years, and the age groups were distributed as follows: Silent generation (73-90) — 0.8%; Baby boomers (54-72) — 9.5%; Generation X (38-53) — 38.6%; Millennials (22-37) — 50.3% and Generation Z (18-21) — 0.8%. Today, the typical investor has grown younger to 37 years old due to the increased share of Millennials — 53.9% and Generation Z — 1.8%.

Source: Crowdfund Insider

Dublin-founded Future Finance agrees £100m debt facility (Irish Times) Rated: A

Future Finance, a Dublin-founded student loan specialist that recently secured €40 million in funding, has signed a £100 million (€114 million) debt facility.

The deal with alternative asset management firm, Waterfall Asset Management, which includes an option to participate in a further £150 million (€171 million) extension, will enable the company to grow its student lending business further.

International

What the Blockchain Means for the Future of Small Business Funding (Business.com) Rated: AAA

Business financing has always been a thorny issue for many small and medium-sized businesses (SMBs), and is often cited as one of the reasons behind the morbid failure rates for new businesses. One report found that about 29 percent of failed businesses identified the lack of working capital as a major reason for failure, second only to the lack of market demand for their products or services.

Here are a few specific ways the blockchain can be used to bolster funding for SMBs.

1. P2P lending

The blossoming crypto market is also helping fan the flames of disruption for P2P business lending. Earlier this month, Ripple, the company behind the third-largest cryptocurrency, XRP, announced plans to push the use of XRP into other industry segments outside of P2P payments and banking, including the P2P lending industry.

2. Using blockchain and big data to improve existing systems

Wish Finance, a blockchain-based lending platform for SMBs, is using the blockchain to help improve traditional risk scoring systems while providing a simple platform for repayments.

3. ICOs and SMB funding

But as investors become wiser and as trust becomes a permanent feature of the blockchain, there’s a growing opportunity for SMBs with solid business models to cash in.

Africa

Budding SA bank buys peer-to-peer lending firm RainFin (Business Tech) Rated: AAA

Johannesburg-based Lebashe will boost its holdings in RainFin by 24% to 75% for an undisclosed sum, the company said in an emailed statement on Thursday. RainFin, the largest peer-to-peer lender in South Africa, bought back the 49% held by Barclays’s South African unit, with Lebashe acquiring its 51% stake in February last year.

Asia

Singapore’s GIC emerges as most active Asian PE investor in Q1 (Deal Street Asia) Rated: AAA

Singapore’s sovereign wealth fund GIC completed at least 11 private equity deals in the first quarter of this year, making the $344-billion fund the most active Asian PE investor during the period.

GIC joined other investors in sealing two of the biggest investments of the quarter, according to a PitchBook report. It participated in the $5.5-billion buyout of Denmark’s Nets A/S by partnering with private equity firm Hellman & Friedman, and in the $2.5-billion investment in FirstEnergy in January.

Canada

IOU Financial Inc. Releases Financial Results for the Three-Month Period Ended March 31, 2018 (Benzinga) Rated: AAA

IOU FINANCIAL INC. (“IOU” or “the Company”) (TSXV:IOU), a leading online lender to small businesses (IOUFinancial.com), announced today its results for the three-month period ended March 31, 2018.

  • Net earnings on an IFRS basis and adjusted net earnings amounted to $0.8 million in Q1 2018, the second consecutive quarter with positive earnings for the Company.
  • Loan originations increased 11.2% to $24.5 million compared to the same period in 2017.
  • Provision for loan losses decreased 50.6% to $0.9 million in Q1 2018 driven by measures taken to reduce defaults.
  • Opex decreased 23.1% to $1.9 million for the first quarter of 2018

Authors:

George Popescu
Allen Taylor

Thursday April 5 2018, Daily News Digest

Thursday April 5 2018, Daily News Digest

News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2018-2. dv01’s Q1 securitization volume hits $2.58B. Revolut releases open API. RainFin acquires stake in 4AX. Today’s main analysis: International P2P lending volumes for March 2018. Today’s thought-provoking articles: Trends on millennials and money. A tale of two fintech sectors. Amazon could become the third largest […]

Thursday April 5 2018, Daily News Digest

News Comments

United States

United Kingdom

European Union

International

India

Africa

News Summary

United States

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2018-2 (Business Wire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2018-2 (“SCLP 2018-2”). This is a $544.6 million consumer loan ABS transaction.

This transaction represents SoFi Lending Corp.’s (“SoFi” or the “Company”) 14th rated securitization collateralized by a portfolio of unsecured consumer loans. SoFi currently originates personal loans through its state licenses or complies with certain requirements where a state lending license is not required.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2018-2

Class Preliminary Rating Initial Class Principal
A-1 AA (sf) $277,700,000
A-2 AA (sf) $127,900,000
B A (sf) $75,000,000
C BBB (sf) $64,000,000

DV01’S Q1 SECURITIZATION VOLUME TOPS $ 2.58B, ENCOMPASSING NINE DEALS FROM SIX ORIGINATORS (DV01), Rated: AAA

dv01 closed out Q1 with nine new securitizations, totaling $2.58 billion in total issuance. This represents a 141% increase from last year’s Q1 volume, which totaled $1.07 billion.

Deals were originated by six different lenders, including Prosper, Upgrade, LendingClub, CommmonBond, SoFi, and Marlette. Three of the deals (UPT I 2018-1, UPT I 2018-2, and CLUBC 2018-2) were trust certificates. dv01 was loan data agent on eight of the nine deals; loan level data and reporting tools for all the deals are accessible through dv01’s Securitizations portal.

Millennials and Money: 30+ Trends Financial Marketers Need to Know (The Financial Brand), Rated: AAA

Here are over 30 facts, statistics and insights about Millennials banks and credit unions need to know to serve this essential market segment more effectively.

  •  Millennials want to learn how to feel financially empowered. Nearly three quarters say they feel confident in their ability to make financial decisions, but they still want to learn more. 92% believe that being educated on personal finances is important. (Source: CSpace)
  • Millennials are so serious about their financial health that more than a third (34%) have a written financial plan, much higher than the 21% of Gen X and 18% of Baby Boomers who have done the same. However, 78% rarely or never make spreadsheets for their finances, and 35% say they’d rather vomit than make a spreadsheet to help them manage their finances. (Sources: Schwab, Varo Money)
  • Maybe Millennials don’t need help from real human beings. With 85% saying artificial intelligence could help them better manage their finances, banks and credit unions should use digital tools and AI to deliver the financial insights they crave. Nearly half of Millennials say they want their bank to be able to anticipate their financial needs and offer them timely advice (Sources: Varo Money, Segmint).
  • Millennials’ top savings priorities are emergency funds (64%), retirement (49%), and buying a house (33%). Nearly half already have $15,000 or more in savings, and 16% have a whopping $100,000 or more in savings. (Source: Bank of America)
  • When it comes to saving, Millennials still have significant headwinds: three in four college graduates today will have a heavy student debt load. (Source: ABA)
  • The average graduate from the university class of 2016 has $37,172 in student loan debt, up 6% from the prior year. (Source: Student Loan Hero)
  • Student loan debt is such a burden that 70% of Millennials say that financial circumstances were a key consideration in deciding whether or not to go to college. (Source: Harvard)

Publicly Listed Fintech Companies – a Tale of Two Sectors (Lend Academy), Rated: AAA

(KFTX) is a good place to start.

Since inception in June 2016, the index has returned 46%, outperforming the broad market S&P 500 by a whopping 24%, and even the tech-heavy NASDAQ by a meaningful 9%.

Source: Lend Academy

Amazon could become the third-biggest US bank if it wants to: Bain study (CNBC), Rated: AAA

Amazon could rival the nation’s big banks in as few as five years, capitalizing off its digital prowess and massive consumer base, according to a Bain & Company report.

Pushing customers toward a co-branded banking account also allows Amazon to cut down on transaction costs, Bain said.

Amazon could – according to Bain calculations – avoid more than $250,000,000 in credit card interchange fees every year if finds a bank willing to partner on checking accounts.

Source: Bain & Company

Why Amazon won’t enter the advice market (Investment News), Rated: A

Despite what many see as the inevitability of tech giants entering the financial advice business, the economics of doing so — as well as the intensely regulated nature of the business — make their entry unlikely, according to a new report from Cerulli.

The Boston-based research firm says that “companies like Facebook, Amazon, Apple, Netflix and Google (FAANGs) have the tools and data to excel, but face significant obstacles that will likely preclude their entry,”

One major obstacle, Cerulli says, is the relatively small size of the market. The firm estimates that the “digital advice opportunity segment” represents only about 12% of investors, or a segment “that would be difficult to scale to be of strategic interest to the world’s largest technology providers.”

The Credit Junction Secures $ 150 Million Credit Facility from MidCap Financial (Business Wire), Rated: A

The Credit Junction, the first data-driven, asset-based lender for small and mid-sized businesses, has secured a $150 million credit facility from MidCap Financial, a leading capital provider to the middle market specialty finance industry. The facility strengthens and expands The Credit Junction’s ability to deliver comprehensive capital solutions to businesses across the United States.

The Credit Junction combines traditional credit metrics with data intelligence and partners with business owners to deliver asset-based financing alternatives unique to the needs of each borrower. Since its launch in May 2015, The Credit Junction has helped businesses across the country achieve their growth objectives while supporting job creation and development in the communities they serve.

Real Estate Investment Platform, Sharestates, Changes the Game with User Experience (UX) (PR Newswire), Rated: A

Sharestates, an online real estate investment platform, announced today the launch of new online user portals that fully optimize the real estate investment process from beginning to end, providing investors with the first ever UX solutions in the real estate investment industry.

Sharestates’ unique solution was designed by the company’s development team alongside CEO and Co-Founder Allen Shayanfekr with UX and functionality in mind – now offering investors a streamlined “one stop shop” in real estate financing.

Banking Disruptors: Peer-to-Peer Lending and Payments (The Motley Fool), Rated: A

Peer-to-peer lending platforms such as Prosper and LendingClub (NYSE:LC) have changed the way people can borrow money, and apps such as Venmo and Zelle have made it easier and cheaper to send money.

In this segment from Industry Focus: Financials, analyst Michael Douglass and Motley Fool contributor Matt Frankel talk about the ways that technology is disrupting big banks, and what this trend could mean to the banking industry.

How Affirm Personal Loans Can Help You Finance Smaller Purchases (Student Loan Hero), Rated: A

The average student loan payment is $351. Between such a high monthly payment and rent, finding the money to furnish your home or buy a new computer can seem daunting.

If approved, you can now shop. When you’re ready to make a purchase, you can enter the total from your online shopping cart on Affirm’s site. You then choose an amount between $50 and $10,000. You’ll be provided virtual card information to complete the purchase. With some partner retailers, you might select Affirm at checkout instead.

LendingTree Launches Credit Analyzer, a Free Credit and Debt Analysis Tool (Lending Tree), Rated: A

LendingTree, the nation’s leading online loan marketplace, today announced the launch of its Credit Analyzer, a free credit and debt analyzer tool, which was created to help consumers avoid common credit mistakes, improve debt management skills and find the right financial products for their needs.

Credit Analyzer is a free tool that provides a deeper, instant analysis of consumers’ credit and debt situations and offers personalized recommendations based on individuals’ financial goals. The user experience is designed to make it easier for consumers to understand the most important factors that impact credit scores.

 

What will the financial services industry look like in five years? (Lend Academy), Rated: A

This article briefly touches on many of the themes being explored at our LendIt Fintech USA 2018 conference, which is now just days away:

Audits Will Go the Way of the Dodo Bird

The protocol of trust is here to stay, and it’s going to disrupt everything.

While the blockchain has not rendered audits unnecessary yet, I believe we’ll see it happen within the next five years.

Smart Contracts Are In, Long, Paper-Intensive Financial Processes Are Out

As I write this, Lending Robot is raising a private round of growth capital. The closing process, called “papering” for very obvious reasons, is just as onerous and Microsoft Word-oriented as I remember it back in the early 2000s when I was a young VC.

Fintech is Everywhere

Fintechs are enhancing the customer experience along four axes: choice, price, convenience, and predictability. They are meeting the needs of educated, aware, demanding consumers and they are attacking traditional financial institutions at every angle.

 

Five Things Fintech Startups Must Do In 2018 To Get Noticed, Adopted And Funded (Forbes), Rated: A

Here are five things the winners nailed that newcomers must do to compete:

  1. Build a seamless digital customer experience (CX) customized to each set of eyeballs, across platforms — plus, make financial services ubiquitous, instead of an unfortunate necessity.
  2. Streamline their lead generation and nurturing through automation, machine learning and AI, plus intelligent CRM throughout the customer journey. This powers faster, more accurate processes like loan origination, mortgage underwriting and credit application decisions, among others.
  3. Instead of being scared of increased regulation, embrace it as a driver of innovation.
  4. Upend an established Wall Street business model both by undercutting fees and over-delivering on performance.
  5. Find novel, values-driven ways to increase millennial participation in financial services.

Financing Small Businesses- 6 Tips For Finding An Online Loan (Bizztor), Rated: A

Online business loans are a popular option for financing small businesses. Over the years more small business owners have been turning to online lenders as banks have cut down on loans to smaller businesses.

With the assistance of technology and algorithm, online lenders are able to assess conventional credit standards like cash flow and personal credit score.

DriveWealth Raises $ 21M in Series B Funding (Finsmes), Rated: A

DriveWealth Holdings, Inc., a Chatam, N.J.-based fintech company, closed a $21m Series B funding.

The round was led by Raptor Group Holdings, SBI Holdings, Inc, and Point72 Ventures, LLC, as weel as existing investors Route 66 Ventures.

The company intends to use the funds to develop its technologies and scale its business.

Mosaic Readies New Solar Loan Deal (Global Capital), Rated: A

The San Diego-based company filed documents with the Securities and Exchange Commission on Monday for Mosaic Solar Loans 2018-1. The ABS-15G forms name Deutsche Bank and BNP Paribas as banks on the deal.

The transaction, Mosaic Solar Loans 2017-2, was priced at 185bp over interpolated swaps for the senior class, yielding 3.854%. Energy related ABS such as solar and Property Assessed Clean Energy (Pace) deals were heavily subscribed throughout last year, with strong issuance of residential Pace bonds and the first ever issuance of commercial Pace ABS from Greenworks Lending.

Laurel Road And Darien Rowayton Bank Officially Rebrand Under Integrated Laurel Road Name (PR Newswire), Rated: B

Laurel Road, an online lender and FDIC-insured bank, officially announced today that Darien Rowayton Bank and its national online lending division will rebrand under the integrated national Laurel Road brand. The new, unified Laurel Road brand represents a deep understanding of its customer base, best-in-class technology and industry-leading compliance and risk management.

Bankrupt Payday Lender Can’t Move Pa. AG’s Suit To Texas (Law 360), Rated: B

Think Finance LLC, a financial technology firm that critics say uses Native American tribes to skirt payday lending laws, failed to convince a Pennsylvania federal judge on Tuesday to move an action brought by the state’s attorney general to Texas, where it has filed for bankruptcy.

The company has been hit with lawsuits over its alleged role in several “rent-a-tribe” schemes, where a high-interest lender affiliates itself with a Native American tribe to shield itself from legal challenges.

Sarasota-Manatee ranks last for millennials buying homes (Sarasota Herald-Tribune), Rated: B

Millennials rank as the key target in the economic development world setting sights on future prosperity. A new study casts a pall over efforts to build the Sarasota and Manatee population of this prized demographic. Out of the largest 100 U.S. metropolitan statistical areas in the country, Sarasota-Manatee ranked dead last among cities favored by millennial homebuyers.

The study, conducted by LendingTree, focused on the percentages of all loan requests to the online loan marketplace that came from millennials. That figure for Sarasota fell far from top-ranked Des Moines, Iowa — 17.9 percent versus 42.4 percent. Fort Myers ranked just above Sarasota, with 19.8 percent.

The Online Lending Policy Institute (OLPI) Appoints Deputy Director (Lendit), Rated: B

Robert J. (Bob) Mullenbach, CRCM, Managing Director – Compliance Division Deputy at ProBank Austin – has been appointed as the Online Lending Policy Institute’s (OLPI) new Deputy Director. Mr. Mullenbach brings 25 years of regulatory compliance experience in billion-dollar financial institutions, regional and community banks, fintech’s, and leading consulting firms. In his current position, Bob audits clients on the myriad of regulatory requirements associated with consumer/commercial lending, bank secrecy act/anti-money laundering, privacy, and non-deposit investment products.

Microloans offer needy a better alternative (The Columbus Dispatch), Rated: B

Central Ohio chapters of the St. Vincent dePaul Society, an international charity run by Roman Catholic volunteers, give needy folks a better option through the society’s microloan program. Information is available through the organization’s website at svdpcolumbus.org.

Anyone of any faith who needs up to $500 for car repairs, school, home repairs or medical bills, can apply for a quick loan with a low interest rate and 12 to 15 months to pay it off.

Contrast that with the typical payday-loan operation, which loans a couple-hundred dollars and demands payment in two weeks. Many borrowers who are strapped enough to go to such a lender in the first place can’t pay it back that quickly. This leads to loans on top of loans, with tacked-on fees that can lead to an effective interest rate of nearly 600 percent.

SunTrust teams with fintech to offer loans for HVAC upgrades (American Banker), Rated: B

SunTrust Banks in Atlanta is teaming up with another fintech upstart to expand its reach in consumer lending.

The $202 billion-asset company said Wednesday that it has struck a partnership with the online lender Microf to offer point-of-sale loans to homeowners looking to replace aging residential heating, ventilation and air conditioning systems.

SunTrust will hold the loans on its books and a pay a fee to Microf for the referrals. Microf, based in Albany, Ga., offers the loans through its nationwide network of HVAC contractors.

United Kingdom

Revolut unleashes open API to all customers (Fintech Futures), Rated: AAA

APIs and open banking are hotter than a freshly tarmacked road in summer, and Revolut joins the mad-for-it crowd.

On its blog, the bank, which was launched in mid-2015 and offers a money transfer app, says account owners can generate sandbox and production keys, and set whitelisted IPs as an “extra layer of security”.

Away from these API days, the firm adds that over the last few months it’s been making updates to its business accounts.

New fintech fund could boost P2P sector (Peer2Peer Finance), Rated: A

At a time when investment trusts such as Victory Park Capital Specialty Lending have signalled a shift away from P2P opportunities, Augmentum Fintech’s investment adviser has hinted that P2P lenders could be included in the portfolio.

Augmentum Fintech was launched by Augmentum Capital, a venture capital (VC) firm backed by Lord Rothschild’s RIT Capital Partners, last month. The VC firm already had a 7.4 per cent holding in P2P giant Zopa worth £18.5m that has been transferred into the investment company portfolio and its founder Tim Levene, who is acting as investment adviser to Augmentum Fintech, said that the firm is well geared to the P2P sector.

FCA reveals it intervened in Collateral administration to protect investors (Peer2Peer Finance News) Rated: A

THE FINANCIAL Conduct Authority (FCA) has revealed that it intervened in the administration of Collateral because the peer-to-peer lender failed to seek its approval when it appointed an insolvency practitioner.

Wigan-based Refresh Recovery was selected by Collateral when the company shut down in February but it was revealed on Tuesday that the City watchdog was looking to appoint a different administrator.

“The Collateral companies were required to obtain the approval of the FCA when appointing an administrator,” the FCA said in a statement on Wednesday.

ISA countdown: The latest IFISAs on the market (Peer2Peer Finance News), Rated: A

March saw the introduction of tax wrappers from peer-to-peer property platforms The House Crowd and Safe as Houses, while EasyMoney, part of Sir Stelios Haji-Ioannou’s easy family of brands, launched its second IFISA offering.

Safe as Houses

The Safe As Houses ISA, which invests in loans made to Safe as Houses Group to develop, regenerate and sell on distressed properties, offers investors a return of six per cent.

The IFISA has a five-year term and requires a minimum investment of £5,000.

The House Crowd

The House Crowd’s IFISA invests in secured P2P loans and property development investments and offers a target return of seven per cent.

The House Crowd requires a minimum investment of £1,000, and new investments can be added to the IFISA in £1,000 increments, up to a maximum of £20,000 across an investor’s entire ISA portfolio.

Investors will get a fixed return paid in twice a year in October and April.

EasyMoney

The latest IFISA to hit the market before the deadline came from EasyMoney, offering target returns of 7.28 per cent. This eclipses the 4.03 per cent returns offered by its first product that launched in February.

The P2P lending platform said its new ‘balanced’ IFISA allows individuals to invest in a broader range of property-backed loans, limited to 75 per cent loan-to-value (LTV).

MINOR INVESTOR: An Innovative Finance Isa with a 7% rate is a tempting idea but tread carefully in the investing Wild West (This is Money), Rated: A

Only the peer to peer lending element can be included in an innovative Isa, not the equity version where investors take a stake in a company.

Obviously, innovative Isas don’t qualify for the savings element of the Financial Services Compensation Scheme that protects up to £85,000 per licensed bank.

Crucially, however, neither do they get the FSCS investing element that covers up to £50,000 in case your investing platform goes bust and hasn’t done what it is meant to with your money.

European Union

Robo advisors and the Data Revolution (GDPR) (AltFiNews), Rated: AAA

With just a month to go until the General Data Protection Regulation (GDPR) is implemented throughout Europe in May. We look at how the new regulatory regime will affect the nascent Digital Advice industry. Some of the upcoming regulatory changes issued from the EU and its commissioners should be positive for fintech asset managers.

With a clear focus on transparency, robo-advisors should look forward to the new era of information portability and openness.

The digital advice sector has from inception attempted to gain a competitive edge with clear transparent product engineering and pricing, but it won’t all be plain sailing and there may be headwinds ahead.

BANCO BNI EUROPA grows significantly in 2017 and attracts equity investor (Fintech Finance), Rated: A

2017 was once again characterized by the significant growth of Banco BNI Europa’s activity, increasing 41% in assets (from € 362M in 2016 to € 509M in 2017), 16% in customer deposits (from € 262M in 2016 to € 305M in 2017) and 379% in banking income (€ 2,8M in 2016 to € 13,2M in 2017). 

Net income reached € 2.3M, increasing regulatory capital to € 23.3M and the solvency ratio comfortably above the statutory limit at 13%.

International

International P2P Lending Volumes March 2018 (P2P Banking), Rated: AAA

Milestones achieved this month (overall volume since launch):

  • Landbay reached 100M GBP
  • Estateguru reached 50M EUR
  • Linked Finance reached 50M EUR
Source P2P Banking

Banking at a Tipping Point as Fintech Drives Change (Cash Lady News), Rated: AAA

According to Citigroup consumer banking currently generates around $870bn in revenues across Europe and North America, with digital innovators accounting for just 5% of that total. But if the report’s predictions are correct, by 2023, disruption by fintech companies will account for 17% of a total earnings pot of $1.200bn

Follow the Money

CitiGroup cites figures showing that global investment has risen from around $0.5bn in 2019 to just under $20bn today. And most of that investment – Citigroup puts it at 70% is focused on the key areas of personal and SME banking.

Read the full report here.

ROSCAcoin: A Self-Regulating, Autonomous and Decentralized Financial Platform for the Unbanked (BTC Manager), Rated: A

ROSCAcoin is a new decentralised autonomous and self-regulating platform built on the Ethereum blockchain. The project aims to develop an innovative financial infrastructure that allows creating solutions for people with little or no access to financial services. ROSCAcoin is set upon an ancient model of borrowing very popular in third world countries.

ROSCA, or Rotating and Saving Credit Association, is defined by a method of borrowing where a group of individuals agree to cooperate for saving and borrowing purposes within a pre-established period; is also a form of peer-to-peer banking and peer-to-peer lending. ROSCAcoin strives to introduce this method using the blockchain technology.

The platform is powered by its own currency RCA, which will be the engine of the whole ecosystem. By using smart contracts, ROSCAcoin is trying to build the ultimate financial solution for the unbanked.

“Stars are Aligned” for an Higher US Dollar Against the Swiss Franc (PoundSterling Live), Rated: B

The Dollar has risen 4.4% versus the Swiss Franc since mid-February and could be about to accelarate the move suggest analysts; this despite the sizeable global stock market sell-off which would normally be expected to support the safe-haven Franc.

Safe-haven currencies usually strengthen in times of fear, such as the present, however this does not appear to be the case with USD/CHF which has risen due to the USD outperforming CHF – not the other way round.

White Oak Signs Agreement to Acquire LDF Group (Globe Newswire), Rated: B

White Oak Global Advisors, LLC on behalf of its institutional clients (collectively “White Oak” or the “Company”), announced today that White Oak has agreed to expand its asset-based lending platform to serve clients in the U.K. and Europe through the acquisition of LDF Group (“LDF”), a U.K.-based finance company providing asset finance, business loans, commercial mortgages and education leases to small and middle-market companies.  Established in 1986, LDF is an industry leader and one of the largest independent finance providers for small businesses in the U.K.

India

Faircent brings Shalabh Gupta on-board as national sales head – lending (The Siasat Daily), Rated: A

Leading Peer-to-peer (P2P) lending company Faircent on Thursday announced that the company has hired Shalabh Gupta as national sales head – lending.

As an industry veteran with over 17 years of extensive sales experience with brands like the Times Group, Reliance Capital, HDFC Bank, and ITC Limited, Shalabh will play a crucial role in furthering the company’s impressive growth plans and vision as a part of its leadership team.

Aadhaar-Based EKYC Limitations Cause Trouble For Fintech Startups (Ink 42), Rated: AAA

Since the Supreme Court extended the deadline for linking of Aadhaar to host of services, the fintech segment has been riddled with burdens of limited Aadhaar-based eKYC. The companies have been unable to access Aadhaar database for verification of their customers.

Impact Of Aadhaar KYC On Fintech Startups

According to reports, fintech startups across the insurance, lending and broking sectors are being denied access to authentication agencies for eKYC to verify customer antecedents on the Aadhaar database amidst rising concern over data privacy.

UIDAI revokes e-KYC services for some e-wallets, online lenders (The Times Of India), Rated: A

In a move that seems to have left fintech players scrambling, the Unique Identification Authority of India (UIDAI) revoked on Tuesday their access to a dozen agencies that provide e-KYC verification and authentication services. Some of these agencies – KUAs (e-KYC user agencies) and AUAs (authorised user agencies) – will no longer be able to provide e-KYC verification to onboard new customers or authenticate financial transactions affecting e-wallets, online lenders, NFBCs and smaller fintech players.

Africa

RainFin acquires stake in 4AX (Business Tech), Rated: AAA

Fintech company RainFin has announced the conclusion of a transaction with 4 Africa Exchange Proprietary Limited (4AX), which will see the company sell to 4AX its corporate debt marketplace, in exchange for a strategic shareholding in 4AX.

RainFin’s credit marketplace technology has been utilised by companies to raise debt funding from both tradition and non-traditional sources since its formation in 2002.

Accra, Ghana to Host 2018 Startupbootcamp Africa (Tech in Africa), Rated: B

Accra, Ghana’s capital city will host the forthcoming Startupbootcamp (SBC) Africa Accelerator program. The SBC sponsors include the Old Mutual, BNP Paribas, RCS, PwC, and Nedbank. During the event, startups present to the panelists for about two hours.

Authors:

George Popescu
Allen Taylor

An Overview of African Alternative Lending

African alternative finance

The majority of the African population is underserved and unserved when it comes to banking services. Therefore, a new crop of fintech startups are thriving in Africa by developing innovative products to accommodate the needs of the community. Accenture estimates that over one-third of mainstream financial services revenue is at risk due to disruption in […]

African alternative finance

The majority of the African population is underserved and unserved when it comes to banking services. Therefore, a new crop of fintech startups are thriving in Africa by developing innovative products to accommodate the needs of the community.

Accenture estimates that over one-third of mainstream financial services revenue is at risk due to disruption in the industry from fintech.

Africa: The Land of Opportunity

According to Disrupt Africa’s Finnovating for Africa Report, there has been a boom in fintech startups since 2015. About 301 startups were tracked, and the majority of them were set up in the last two years. They’ve collectively raised around $93 million since 2015.

The reason for this exuberance is smartphone adoption. South Africa and Kenya are the fastest growing smartphone markets in the world. As per 2015 research statistics, 88% of Africans didn’t have a bank account, but they did have smartphones. In 2015, 183 million people in Africa had a mobile wallet. That was 3 times the number of digital wallet users in the U.S. and expanding at 3 times the annual growth rate. If this trajectory continues, every African will have a mobile wallet by 2020. Numbers here clearly suggest that fintech startups have a huge opportunity staring at them.

Potential for Home Grown Peer-to-Peer Platforms

As per the Africa and Middle East Alternative Finance Benchmarking Report, Kenya and South Africa are leading the P2P business lending market in Africa. But a noteworthy point here is that 90% of online alternative lending originated from platforms headquartered outside of Africa.

Source: d/p2p-lending-potential-africa/

The third largest alt-lending model in Africa was P2P business lending, which experienced astronomical growth from a modest $2 million in 2014 to $14 million in 2015. In 2015, Kenya and South Africa were the market leaders, garnering $16.7 million and $15 million, respectively.

“(Source) The East Africa region has the largest market share of the African alternative finance market. In 2015, East Africa accounted for 41% of total African market share, while West Africa accounted for 24% and Southern Africa accounted for 19%.”

Source: d/p2p-lending-potential-africa/

Since the market is still in a nascent stage, there has been no regulatory policy for the alternative finance industry. But positive efforts have been made in recent times to develop a regulatory ecosystem that will help in developing this budding industry in the region.

The Alternative Lending Leaders in Africa

Leading alternative lenders in Africa include:

  • Aella Credit – Started in 2015 by Akin (Akinola) J, Aella Credit’s headquarters is in Mountain View, California. The firm provides instant credit solutions that eliminates the hassle of standard loan applications and enables employees to borrow at competitive and fair rates through their employers.  Company offices are located in the United States and Nigeria. They raised a paltry $150,000 as seed capital but have gone on to raise an additional $1 million. Aella Credit disbursed over $1 million in loans with a 0% default rate to about 1,100 borrowers in the course of its soft launch.
  • Branch – Branch was launched in 2015 by Daniel Jung, Matt Flannery, and Random Bares. They raised over $11 million in various funding rounds. Branch eliminates the challenges of getting a loan by using the data on borrowers’ phones to create a credit score. It encrypts the data, thus ensuring complete privacy. Branch is a for-profit socially-conscious company based in San Francisco and Nairobi.
Source: Branch
  • KiaKia – Founded in 2016 by Chiemeziem Anyadike, Olajide Abiola, and Olajide Abiola, KiaKia is headquartered in Abuja, Federal Capital Territory, Nigeria. Utilizing machine learning, big-data, predictive analytics, digital forensics, and social collateral as part of its proprietary algorithm for credit scoring and risk assessment, the company provides real-time access to consumer and SME capital to underbanked Africans. Loans offer interest as low as ₦10K – ₦200K at 0.80%, durations ranging from 7-30 days, and no collateral. It has managed to raise $50,000 in funding.
  • Microcred Group – Microcred was created in 2005 by Arnaud Ventura with the support of Positive Planet and a number of institutional investors. Its headquarters are in Paris, Ile-de-France, France. A leading digital finance player for financial inclusion in Africa & China, Microcred offers financial services to emerging client segments, particularly the unbanked with a focus on micro & SMEs. The company operates in Madagascar, Senegal, Nigeria, Ivory Coast, Mali, Zimbabwe, Burkina Faso, Tunisia, and China. The group has raised over € 99 million in various rounds of funding.
  • Musoni – Founded in 2009, Musoni is headquartered in Amsterdam. Musoni BV is a social enterprise that establishes best-practice microfinance institutions and uses technology to lower costs, reduce risk, and improve efficiency. In 2009, Musoni set up the first cashless Microfinance Institution (MFI) in the world using mobile payments for all transactions. Since then, Musoni Kenya has disbursed close to 50,000 loans to micro entrepreneurs with a total value of $12 million. In 2011, Musoni won the award for ‘most innovative use of technology’ at the Global Microfinance Achievement Awards in Geneva.
  • RainFin – RainFin was launched in 2012 by Hannes Van Der Merwe and Sean Emery. Headquartered in Somerset West, South Africa, RainFin was South Africa’s first lending marketplace. It pioneered a viable alternative for quality borrowers looking for access to finance and lenders looking for returns that are higher than fixed deposits or the stock market. It offers loans ranging from 6-24 months and at an APR starting from 10.25%.
  • FarmDrive – Founded in 2014 by Peris Nyaboe and Rita Kimani, FarmDrive is headquartered in Nairobi, Kenya. This firm is a social enterprise that connects unbanked and underserved smallholder farmers to credit, while helping financial institutions to cost effectively increase their agricultural loan portfolios.

Apart from the above-mentioned lenders, there are a few more who are trying to make their mark in the African market, such Merchant Capital, Lydia.co, and many more.

Conclusion

Africa is not a homogeneous market. It is imperative for alternative lending startups to understand the different cultural nuances so they can develop products that have utility. As the region continues its socioeconomic upliftment, more people will need access to financial services. This makes Africa an exciting market for alternative lending in years to come.

Author:

Written by Heena Dhir.

Wednesday June 21 2017, Daily News Digest

Mountain View

News Comments Today’s main news: DBRS takes rating actions on SoFi consumer loans. Relendex secondary trading platform tops 1M GBP. Xeenho closes new round of financing. Today’s main analysis: The current state of MPL in Japan. Today’s thought-provoking articles: Vanguard takes robo-advice to $65B. Female entrepreneurs more cagey about post-Brexit. 5 ways financial apps are changing banking. United States […]

Mountain View

News Comments

United States

United Kingdom

China

European Union

Australia/New Zealand

Asia

Africa

News Summary

United States

DBRS Takes Rating Actions on SoFi Consumer Loan Programs (DBRS), Rated: AAA

DBRS, Inc. (DBRS) has today reviewed seven ratings from four SoFi Consumer Loan Program U.S. structured finance asset-backed securities transactions. Of the seven outstanding publicly rated classes reviewed, six were confirmed and one was upgraded. For the ratings that were confirmed, performance trends are such that credit enhancement levels are sufficient to cover DBRS’s expected losses at their current respective rating levels. For the rating that was upgraded, performance trends are such that credit enhancement levels are sufficient to cover DBRS’s expected losses at their new rating level.

RATINGS

Issuer Debt Rated Rating Action Rating Trend Notes Published Issued
SoFi Consumer Loan Program 2016-1 LLC Class A Notes Upgraded AA (sf) Jun 20, 2017 US
SoFi Consumer Loan Program 2016-2 LLC Class A Notes Confirmed A (sf) Jun 20, 2017 US
SoFi Consumer Loan Program 2016-3 LLC Class A Notes Confirmed A (sf) Jun 20, 2017 US
SoFi Consumer Loan Program 2016-5 LLC Class A Notes Confirmed A (sf) Jun 20, 2017 US
SoFi Consumer Loan Program 2016-2 LLC Class B Notes Confirmed BBB (sf) Jun 20, 2017 US
SoFi Consumer Loan Program 2016-3 LLC Class B Notes Confirmed BBB (sf) Jun 20, 2017 US
SoFi Consumer Loan Program 2016-5 LLC Class B Notes Confirmed BBB (sf) Jun 20, 2017 US

Vanguard rides robo-advice wave to $ 65B in assets (InvestmentNews), Rated: AAA

While much of the financial services industry has been fretting for the past few years over how to compete in the age of digital-advice platforms, The Vanguard Group Inc. appears to have cracked the code in a steady climb to more than $65 billion under management on its two-year-old robo.

Vanguard’s Personal Advisor Services, which is four times the size of the next-largest robo-platform, is a hybrid that incorporates human advisers and is starting to look like the blueprint for the way to leverage digital advice.

CleanCapital Closes Investment Round Led by FinTech Leaders and Pioneers (CleanCapital Email), Rated: A

CleanCapital, an online marketplace for clean energy investing, announced today the closing of the first round in Series A funding, as part of an ongoing capital raise. The new capital will allow CleanCapital to implement their technology roadmap and continue scaling operations, growing its team, and expanding opportunities for clean energy investing. CleanCapital’s proprietary platform has benefits that are two-fold, by creating opportunity for investment and increasing ease for project owners to exit their current portfolios. By reducing barriers both for the flow of capital and access to investments, CleanCapital is accelerating clean energy deployment.

To date, the team has financed over $40M of solar projects and more than 20 MW in operating solar assets. They have also received funding from industry leader John Hancock Life Insurance to finance numerous assets. CleanCapital has created a unique algorithm to efficiently scrub and value projects so that only the best investment opportunities are included in investment portfolios.

Investors include FinTech leaders and pioneers such as Ron Suber, President of Prosper Marketplace, Jon Barlow, Founder of Eaglewood Capital Management, and Bradley Pattelli, Former Chief Investment Officer of LendingClub. In addition, the company was recently selected to be featured on leading startup fundraising platform SeedInvest which historically has accepted just 1% of startups applicants.

Transparency A Growing Concern for Alternative Investing (Plan Sponsor), Rated: A

The study shows transparency continues to lead all investment considerations and has significantly grown in importance following the financial crisis of 2008.

“Degree of transparency” was cited as very important by 63% for alternative and 62% for traditional investments. It was also cited as the most important post-investment consideration by 21% for traditional assets and 17% for alternatives, compared to 9% and 3%, respectively in pre-crisis.

Tech Gap Widens Between Haves, Have-Nots (Financial Advisor IQ), Rated: A

The gap between independent RIAs who are keeping up with evolving technologies and those who aren’t is widening. And that’s stunting growth for advisors who aren’t acting proactively to keep on top of a rapidly evolving marketplace.

At least that’s what Fidelity finds in a new study published Tuesday looking at industry trends in high-tech adoption. As part of its research into firms using the latest electronic tools – including everything from interactive website software to advanced CRM programs and integrated back-office systems – the custodian has developed a list of tech-savvy “eAdvisors.”

Fintech Brings Residential Real Estate To The Web (NASDAQ), Rated: A

However, there are a number of limitations that come with completing the mortgage application process entirely online. You likely won’t be able to complete the process online if you’re applying for a jumbo mortgage (for which the limit is $417,000 in most of the United States); if you’re self-employed with various sources of income; if you or a tax advisor manually prepared your taxes; or if you don’t have online accounts with all of your financial institutions.

Still, the option to purchase real estate quickly and easily online is very attractive for foreign buyers, investors, and modern, web-savvy homebuyers. Although completely online real estate transactions only represent a small fraction of the more than $2 trillion in annual real estate transactions worldwide today, the demand is growing, and it seems likely that a substantial percentage of homes will be purchased completely online within just a few years.

Selling a home online offers a number of notable advantages. Perhaps most importantly, you avoid using a real estate agent so you don’t have to pay the usual 3% to 6% commission.

The key disadvantage of a fully online transaction, of course, is the possibility of making some kind of mistake during the process that could cost you a chunk of money, or even the chance to purchase your dream home.

Suretly Brings Crowdvouching to the Lending Market, Announces ICO (Inside Bitcoins), Rated: A

New York-based financing startup Suretly has announced that its crowdfunding campaign is set for July 2017 launch. Suretly offers a safe new way to obtain a personal loan, through its unique ‘Crowdvouching’ platform.

Unlike traditional P2P lending platforms which require investors to co-sign for a percentage of the loan, Suretly’s crowdvouching system requires a much larger number of backers to secure the loan and in doing so, substantially reducing the individual risk of all parties. Suretly is currently focused on short-term loans, and the platform has already been called the “Tinder for Microloans.”

The company’s ICO will give all investors an opportunity to purchase the platform’s SUR tokens and contribute towards the growth of the crowdvouching project.

GDS Link Joins Marketplace Lending Association (PRWeb), Rated: B

GDS Link, a global provider of risk management solutions and consulting for multiple verticals within the financial services industry including marketplace lending, retail finance, alternative financial services, credit card, auto, and business leasing, today announced that it has joined the Marketplace Lending Association (MLA) as an associate member.

Lending Club’s Dolan Joins Metromile in California as Chief Financial Officer (Insurance Journal), Rated: B

San Francisco, Calif.-based Metromile has named Carrie Dolan chief financial officer.

Dolan most recently served as CFO of Lending Club, an online credit marketplace connecting borrowers and investors. Prior to Lending Club, Dolan was with Charles Schwab & Co, where she was senior vice president and treasurer and CFO of Schwab Bank. Early in her career, Dolan held various financial positions at Chevron.

Eight Fledgling Fintech Providers Win Capital with CFSI Awards (Paybefore.com), Rated: B

Eight fledgling fintech companies have won $250,000 each from the Center for Financial Services Innovation.

  • Blueprint Income, which offers a pension anchored on “a simple, pre-determined income stream backed by insurance companies.”
  • Dave, whose product “alerts consumers ahead of an upcoming overdraft and can instantly advance up to $75 at 0 percent interest to prevent overdraft fees.”
  • EverSafe, which monitors bank and investment accounts, credit cards and credit reports, and then alerts older consumers and their relatives to irregular activity.
  • Grove, which offers personalized financial advice and comprehensive financial plans that are “within reach for everyone.”
  • Nova, a firm that “has built the world’s first cross-border credit reporting agency by building data partnerships across the globe,” a product that can help immigrants gain credit.
  • Point, described as “an alternative to traditional home equity loans and home equity lines of credit.” The company buys into a fraction of a consumer’s property, paying today for a share of the home’s future appreciation.
  • Token Transit, a mobile app that “enables low-income riders to have convenient access to the transit passes they need. Riders are able to pay using a credit, debit or a prepaid debit card.”
  • Tomorrow, which provides “long-term financial security to busy millennials and working families.”
United Kingdom

Relendex’s Secondary Trading Platform Tops £1 Million (Crowdfund Insider), Rated: AAA

Relendex, a secured peer to peer lending platform, has announced that its secondary market trading has surpassed the £1 million mark.

Relendex says this indicates that lenders have embraced the secondary platform. On the Relendex Resale Marketplace investors are able to buy and sell Loan Parts at par with no fees charged.

Female entrepreneurs more cagey about post-Brexit prospects (P2P Finance News), Rated: AAA

A poll by the peer-to-peer lender shows that less than half as many female business owners are confident about the success of their businesses post-Brexit, compared to their male counterparts.

The research, conducted by RateSetter Business Finance, has revealed that only 10 per cent of women business leaders believe that leaving the EU will be positive for their business.

This contrasts with 21 per cent of male business owners who have an optimistic outlook about their ventures after Brexit.

Additionally, 32.7 per cent of female business owners want to find a lender that understands their business and business model, compared with just 19 per cent of men.

TrueLayer raises $ 3M Series A to provide fintech companies with easy access to bank APIs (TechCrunch), Rated: A

TrueLayer, a London startup that’s built a developer platform to make it easy for fintech companies to access bank APIs — and ride the PSD2 gravy train — has raised $3 million in Series A funding. The round was led by Anthemis Group, with participation from existing investor Connect Ventures, and will be used by TrueLayer to expand its team and increase coverage of supported banks before opening up beyond beta testers later this year.

Launched in private beta in February, the TrueLayer developer platform currently supports things like account verification, KYC processes, and accessing transactional data for account aggregation, credit scoring, and risk assessment. It is available in the U.K. and Simoneschi says TrueLayer will expand to other EU countries later in 2018.

Soldo, a London fintech startup that offers a multi-user spending account, raises M led by Accel (TechCrunch), Rated: A

Soldo, the London-based fintech startup that offers a multi-user spending account, first launched for consumers and since tailored to businesses too, has raised $11 million in Series A funding. Venture Capital firm Accel led the round, with participation from Connect Ventures, InReach Ventures, U-Start and R204 Partners.

Creathor Venture and private investors invest CHF 2.5 million in PropTech company Allthings (IT Business Net), Rated: A

Creathor Venture, a pan-European venture capital firm, together with a circle of experienced private investors from the real estate industry invest CHF 2.5 million in German-Swiss property tech company Allthings Technologies AG. Allthings connects tenants, owners, property managers and developers of living and commercial property through a modular communication and service platform.

Zorin hires ex-Funding Circle underwriter (Bridging & Commercial), Rated: B

Colin Chung (pictured above) has been recruited as an associate director in the credit risk team, while Katy Katani (pictured below) has joined as head of business development.

Colin was previously at Funding Circle, where he was a senior property underwriter, and has over 10 years of experience in real estate finance.

China

Xeenho Closed a New Round of Financing for its Business Transformation (Xing Ping She Email), Rated: AAA

On Jun 20th, Xeenho announced to have finished their third round of financing. This round of financing was led by Hongshang Capital, with Jade Value and Hunan Culture & Art Industry Group participated. The financing amount was again reached to tens of millions of yuan. All the funds have been in place, and they are in the process of handling business changes.

Started as one of the first P2P loan funds in China, Xeenho has an accumulated volume of nearly 3 billion RMB to date. The excellent risk control and the big data application in fintech constitute the core value of Xeenho. Based on its self-developed IFRM risk control and big data system, Xeenho keeps the record of Zero Bad Debt, which makes the company developed as a guidance for due diligence, P2P rating, research report, P2P asset portfolio allocation for clients and investors.

In 2016, Xeenho launched a new Robo-Adivisor product – Xeenho Zhi Tou, attracting capital for different P2P platforms, and Xeenho provides guarantee in this process. In the late of the same year, Xeenho set up self-media platform – Xing Ping She, aiming at building an industrial ecosphere and providing services which is specially designed for specific fintech companies.

This A round of financing would be a fresh start to Xeenho. Dr. Yang Li, the co-founder and CEO of Xeenho said, “After A round of funding, we will continue to focus on business in big data mining, equity investment and information consultation, and explore to develop new business at the same time. We hope to realize the development of collectivization in the next three years, so as to build a complete system of financial ecology and become one of the leading fintech companies.”

European Union

Bank to the future: five ways financial apps are changing banking (Banking Technology), Rated: AAA

  1. Banks will face stiff competition from new wave of fintech start-ups – In the UK it is firms like Bean, Ernst, Moneybox, Pariti and Plum, to name just a handful, and this picture is repeated across Europe.
  2. New open data initiatives will mean unparalleled access to consumer data – In the UK, PSD2 is being delivered by the Open Banking project. Alongside this the Treasury is running the Pensions Dashboard project, which will liberate customer data on long-term retirement savings in the same way.
  3. New services will revolutionise who people trust for financial advice
  4. Personal finance dashboards (PFDs) will open the way for long-term savings as well as short-term financial management – Pensions dashboards already exist in many other European states including Denmark, the Netherlands and Sweden.
  5. The workplace will be key to the new market – In practice, the workplace is likely to be a highly successful channel for such services complementing employers’ pensions and employee benefits delivery. In the UK, auto-enrolment means nearly all employees will soon be members of a workplace pension scheme.
Australia/New Zealand

Robots closer to getting go-ahead to give financial advice to humans (Stuff), Rated: AAA

Getting personalised financial advice from a “robot” may be a step closer to becoming reality.

The Financial Markets Authority has asked for feedback on whether it should use its powers to allow personalised financial advice generated by a computer programme or algorithm.

Under current law, personalised advice, which takes into account an individual client’s financial situation and goals, can only be delivered by a human being.

Asia

The Current State of Marketplace Lending in Japan (Lend Academy), Rated: AAA

Marketplace lending growth in Japan has been slow compared to the U.S., Europe and China but that has started to change in the past three years. The market has been almost doubling each year and we expect this trend to continue through 2017. Investment volume was $140 million in 2014, $310 million in 2015 and $530 million in 2016. We estimate it to reach $1 billion this year.

Marketplace lending, also commonly referred as “social lending” in Japan, started as p2p lending around 2008 but struggled due to high default rates, which sometimes reached 30%. Since Japanese lending law prohibits interest rates above 15% in most cases, a 30% default rate was not sustainable for those businesses.

The industry average APR increased to 8.4% from 5.7% in two years, mainly due to newer entrants that were charging higher APRs. Default rates in the past three years have been close to zero due to platforms being more selective on who they lend money to.

Based on our research, average spread (i.e. margin) for crowdfunding platforms in Japan is 4%-5% annually. Typically crowdfunding platforms are lending at 13% and funding at 8%. Based on this margin, a crowdfunding platform needs to service portfolio of between $50 – $100 million to be break-even. Only a few crowdfunding platforms have reached this scale, however given the current market growth, many players will achieve this volume after 1-3 years of being in business.

Africa

Consumer lending has dropped to ‘almost zero’ under new regulations – Rainfin CEO (Ventureburn), Rated: AAA

Consumer lending on marketplace lending platform RainFin has ground to a halt since the new National Credit Regulations threshold came into effect on 11 November, the company’s chief executive Sean Emery said yesterday.

Under the new threshold, lenders who lend even one cent to consumers have be registered with the National Credit Regulator to do so.

Authors:

George Popescu
Allen Taylor

Friday February 17 2017, Daily News Digest

P2P Global Investments

News Comments Today’s main news: OnDeck Capital struggles. SoFi in talks with Silver Lake for $500M funding. UK FinTech funding bounces back Today’s main analysis: FinTech deal sizes are shrinking. The alternative income source top managers are buying. Today’s thought-provoking articles: Starling CEO says EU law is good for UK FinTech. United States OnDeck Capital struggling. GP:” […]

P2P Global Investments

News Comments

United States

United Kingdom

European Union

Asia

Africa

News Summary

United States

OnDeck Capital shares plunge on downbeat outlook (Reuters), Rated: AAA

OnDeck Capital Inc (ONDK.N) shares fell as much as 24 percent on Thursday after the online lender posted its fifth straight quarterly loss and set aside more money for future losses after determining its calculations were askew.

Like its digital lending peers, OnDeck has been struggling with investor’ concerns over the quality of its underwriting and ability to maintain a rapid pace of growth.

As a result, OnDeck’s provision for loan losses more than doubled during the fourth quarter, to $55.7 million.

Amid all the changes, OnDeck’s originations of $2.4 billion in 2016 were up 26 percent from the prior year, less than half the pace of growth it posted in 2015.

The company is taking several steps to slash costs by $20 million a year, including cutting 11 percent of its staff and reducing marketing and technology expenses, Breslow said.

SoFi Is in Talks for $ 500 Million Funding Led by Silver Lake (Bloomberg), Rated: AAA

Social Finance Inc. is close to raising about $500 million in a funding round expected to be led by private equity firm Silver Lake Partners to bolster the expansion of its online-lending businesses and personal financial services, according to people familiar with the matter.

The fundraising round values SoFi at $4.3 billion, higher than its previous valuation of $3.2 billion, one of the people said. The deal isn’t finalized and could still fall through, the people said.

Why Online Lenders Keep Disappointing (The Wall Street Journal), Rated: A

Online lenders LendingClub and On Deck Capital took some nasty tumbles in 2016. Now, just as it began to look like they had regained their footing, they are getting tripped up again.

LendingClub shares fell 4.7% on Wednesday after the company gave disappointing guidance for 2017. Then, on Thursday morning, On Deck shares tanked by around 15% on a fourth-quarter net loss that was much bigger than expected. LendingClub’s stock fell again by around 6%.

The company’s fourth-quarter results show progress on all these fronts, but also the costs. Banks, which had shied away from buying the company’s loans after last year’s revelations, have largely returned, funding 31% of loan originations in the fourth quarter, up from 13% the previous quarter.

But LendingClub still disappointed investors by forecasting a bigger-than-expected net loss in 2017. Higher expenses are one reason, with stock-based compensation rising by 35% last year to $69.2 million. This likely has to do with the need to retain and attract talent in the wake of last year’s turmoil, says KBW analyst Jefferson Harralson. The company’s loan originations also have been basically flat for three quarters in a row, making it harder to grow revenue enough to overcome the higher expenses.

ArborCrowd Announces $ 22.4 Million Commercial Real Estate Deal (Crowdfund Insider), Rated: A

ArborCrowd announced on Thursday the launch of its latest real estate investment opportunity that is open to accredited investors. According to the portal, the “Southern States Multifamily Portfolio” features three multifamily properties in both Alabama and Mississippi.

Since its debut, ArborCrowd has provided the public with exclusive multifamily investment properties in New York City.

According to ArborCrowd, the $24.4 million Southern States Multifamily Portfolio was acquired in November 2016 by Varden Capital Properties, LLC as a value-add repositioning. ArborCrowd investors have the opportunity to own a piece of a $2 million equity stake in the Portfolio with a targeted 17 percent to 20 percent Internal Rate of Return (IRR) and a targeted investment hold period of two to three years.

Fintech deal sizes are shrinking (Business Insider), Rated: A

Global VC-backed fintech funding reached $12.7 billion in 2016, down 13% year-over-year (YoY) from $14.6 billion in 2015. However, deal numbers held firm at 836, down just 1% YoY from 848 in 2015. That suggests the decline in funding was the result of smaller deal sizes, and that’s backed up by a couple of other key pieces of data.

  • Fewer mega-rounds. There were 38 mega-rounds ($50 million+) in 2016, down from 63 in 2015.
  • Two deals in China accounted for $2.2 billion. Lending platform LU.com raised $1.2 billion, while JD Finance, a subsidiary of e-commerce giant JD.com, raised $1.0 billion.

OCC fintech charter: Something Ds and Rs can both love (American Banker), Rated: A

As the Office of the Comptroller of the Currency moves forward to grant national bank charters to fintech companies, unity of purpose could be achieved by stepping back to consider the broad policy goals that Democrats and Republicans typically seek in regulating and supervising financial services markets and businesses.

Both Democrats and Republicans want to address the financial needs of smaller Main Street businesses. Both parties understand that small and midsize businesses are the ones creating the jobs of the future. Both Republicans and Democrats prefer simplicity over complexity.

Concern for abuse of this charter by unscrupulous actors is legitimate and is best addressed by continuing to allow state regulators and attorneys general to enforce civil and criminal laws against fraud and unfair and deceptive practices, while consolidating supervision in a single strong agency at the federal level.

A charter is a perfect example of retaining significant state authority made possible by clear and simple federal rules. This federal-state partnership will produce strong governance and controls on a national scale through the supervisory process. It is the only way to achieve uniform requirements across all 50 states. Maintaining a costly, complex and time-consuming state licensing process while at the same time requiring companies to satisfy federal mandates will kill off a job-creating pro-consumer innovation.

US regulatory environment threatens the rise of fintech (TechCrunch), Rated: A

Fintech companies earned approximately ₤6.6 ($8.15) billion in revenue globally in 2015, according to a report commissioned by the Treasury of the U.K. government. Recent data on the sector from KPMG shows that while North America has fallen behind Asia in terms of regional investments in fintech, companies in North America still received $900 million of $2.4 billion, or more than 37.5 percent of funds, in the third quarter of 2016. KPMG notes that both the number of deals and total amount invested in American fintech companies has dropped significantly, while Asia continues to see growth in fintech investments.

The U.S. is producing many fintech startups attractive to investors — just not as attractive as the less numerous Asian startups. The third quarter of 2016 was the second of the year in which Asian fintech companies attracted more venture capital funding than North America, and pending fourth quarter results, total investment for the year by venture capital in Asian fintech outstrips that in North American fintech $4.7 billion to $4.5 billion. America remains a fintech leader, but its position is being challenged.

Not just the Treasury report, but investors themselves, as well as founders, have identified regulation as a main concern, and European regulators have responded by overhauling EU laws related to payment services to benefit fintech startups. In Asia, numerous countries have already adjusted regulations to promote fintech growth, including the largest consumer markets, China and India.

The problem with fintech regulation in the U.S. is not just what those regulations are, but persistent confusion about what those regulations are, and deep uncertainty about how they are evolving.

Marketplace Lending, The Crowdfunding Alternative? (GlobeSt.com), Rated: A

We sat down with Gary Bechtel, president of Money360, to talk about the growth in the market and the acceptance of marketplace lending platforms.

GlobeSt.com: What are the benefits of marketplace lending?

Bechtel: Speed, flexibility and creativity are huge competitive advantages, especially in the bridge lending arena, where the ability to react and close loans quickly is key. The ability to operate under reasonable regulatory oversight, and without the multiple layers of approvals and regulation that govern more traditional lenders, helps us speed up the process dramatically.

GlobeSt.com: What opportunities has this created for Money 360?  

Bechtel: We are seeing more and more transactions that otherwise would have gone to traditional lending sources because of our ability to react quickly and be more creative with deal structures. We have grown to accommodate larger transactions, filling a void left by banks, credit unions, life companies and CMBS lenders. We see this opportunity as an ongoing trend and are building our business accordingly.

The Whaley Report: Peer-to-peer pressure (Market Intelligence Center), Rated: A

I read an article last week, “How Investors Can Earn 7% Returns in a 2.5% World” and  I’m convinced it’s the beginning of the end for some unsuspecting investors.

The author, Stephen McBride, discusses the benefits of peer to peer lending as an asset class for investors who want to enhance the yield on their portfolios in light of the current low yield environment.

P2P lending may not wipe out wealth like a good old fashioned financial crisis but there are certainly less risky situations. Bungee jumping in Mexico or “investing” your paycheck in lottery scratchers comes to mind.

Size Matters

First, the average loan amount on various P2P platforms, like Lending Club, is $25. Let’s be conservative and say that you have decided to “invest” $20K of your hard-earned shekels in P2P lending to enhance your investment yield. Your $20K would be lent out to approximately 800 people, to fund everything from movie screenplays to food trucks specializing in cuisine from New Caledonia.

Fees

Just like any other investment opportunity, you pay to play. Lending club charges 1% on all monthly payments that you receive from your peers to whom you’ve lent money. They also take a healthy amount of fees for any collections process they go through for delinquent payments. On that basis alone, if your return starts out at 7%, like this article suggests, you are already down to a 6% net return before you ever transfer the money to your bank account.

Loan Shark Says What?

This is going to shock you but not all 800 of your peers are going to repay you the $25 you lent them to start their new Cat Tattoo Parlor. Based on data from Lending Club, the default risk of your peer group is not to be trifled with.

Similar to corporate bond ratings, people seeking to borrow money through a P2P platform are rated from “A” to “G.” An “A” rating is lower risk and a “G” is the guy who has 10 credit cards maxed out, no income but somehow manages to buy lottery scratchers every week.

No rational person is carving out a percentage of their portfolio for peer to peer lending. The risk-adjusted reward of this type of investing just doesn’t warrant it.

5 Common Misconceptions About Alternative Lending (Business2Community), Rated: B

Today, businesses have learned that alternative lending, which includes commercial business loans, factoring, peer-to-peer lending and crowdfunding, can solve many problems quickly and efficiently without a lot of the delay and paperwork associated with bank loans.

Only bank-rejects apply to alternative lenders:

While it’s true that many businesses find it easier to qualify for a loan from an alternative source than from a bank, many owners prefer dealing with alternative lenders, as they tend to be more flexible, less judgmental and faster to respond. Many alternative lenders do not require collateral, can process an application in a few hours, and fund a loan within a day or two.

You have to be desperate to seek an alternative loan:

Alternative lenders assess the risk of each loan and assign an interest rate that makes sense. Any good alternative lender wants to see its borrowers succeed, not fail, and will usually work with business owners to come up with solutions with the right fit.

You can hurt your credit score by borrowing from an alternative lender:

If you pay back your loan responsibly, your business’ credit score should increase.

You need high margins to make alternative loans work:

IOU Financial has only four funding requirements, and none have anything to do with margins. We require that you own and operate your own business, have been in business for at least a year, make 10 or more deposits per month and have average daily balance of $3,000 per month.

Alternative lending is unregulated:

The business model and cost structure of alternative lenders are much different from those of banks. Nonetheless, alternative lenders must adhere to federal and state lending regulations that require truthfulness and disclosure. There is also the whole area of contract law that governs alternative loans.

SoFi hires Condé Nast’s Danika Owsley for consumer comms (PR Week), Rated: B

Financial technology company SoFi has hired media specialist Danika Owsley as its first director of consumer comms.

Owsley will report to SoFi’s comms leader, VP of communications and policy Jim Prosser, when she starts in the role on February 28.

The San Francisco-based company hired Owsley to work in New York, home to most media outlets that are relevant to SoFi’s operations. SoFi bills itself as a “modern finance company” and many of its services are focused on millennials.

United Kingdom

P2P Lender Folk2Folk Joins Peer to Peer Finance Association (Crowdfund Insider), Rated: AAA

Peer to peer lender Folk2Folk has joined the UK Peer to Peer Finance Association (P2PFA).  The P2PFA is acknowledged as a stamp of quality operations as members are held to a high standard and required to follow certain transparency guidelines.

Founded in 2011 as a self-regulatory entity for the sector, the largest UK peer to peer lending platforms are members of the P2PFA and represent more than 75% of the UK P2P lending market. P2PFA members operate a diverse range of business models within this segment of finance and collectively lent almost £3 billion during 2016.

The alternative income source the top managers are buying (Trustnet), Rated: AAA

Industry powerhouses Invesco, Woodford, M&G, Aviva and AXA are among those turning to peer-to-peer lending for alternative streams of income, according to industry experts.

Indeed, over the past 18 months, UK gilts have performed particularly strongly, returning 8.59 per cent – though this has fallen back from highs in August 2016 where the index was up 17.23 per cent.

In fact, if not for a strong run for UK equities at the start of the year, gilts would still be outperforming the FTSE 100, which has returned 14.51 per cent over the period.

The industry brings a stable pool of capital to an industry that craves that stability of capital as knowing that the lender is there enables a much more attractive and reliable borrowing rhetoric, he adds.

His company runs the £682m P2P Global Investments PLC trust, which buys higher-quality loans (grade A, B and C) from the platform providers from across the market cap spectrum, though it currently focuses on the developed markets only.

Since its launch in 2014, the fund has grown its dividend in each year and currently pays out 5.48 per cent.

Over its lifetime, had an investors paid in £10,000 on the day of its launch, the trust would have paid £1,158, according to FE Analytics.

However, Sachin Patel, chief capital officer at peer-to-peer platform provider Funding Circle says delinquency rates are currently at historic lows.

While the sector will likely be hit by a financial crisis – such as the one seen in 2008 – as borrowers will be more likely to default, he says they are not seeing any signs of stress among their borrowers.

Indeed, with delinquency rates so low, the platform released the SME Income fund at the end of 2015 with the aim of giving investors a passive option to the asset class.

UK FinTech Funding Bounces Back in Q4 2016 (Cryptocoins News), Rated: A

U.K. FinTech startups raised $173 million across 16 deals in Q4 2016, an increase of $95 million from Q3, according to a report from CB Insights.

Despite an increase in U.K. financial technology investment during Q4 2016, across the whole year the amount raised only amounted to $494 million compared to $962 million in 2015. During Q4 2015, U.K. FinTech funding reached $275 million.

CB Insights found that in 2016, European venture capital funding reached $1.2 billion across 179 deals, down from $1.6 billion during 2015.

Uber launching financial advice sessions and appeals panel for UK workers (Belfast Telegraph), Rated: A

Uber is offering English courses, financial advice and introducing an appeals panel for its UK workers after facing criticism over lack of support and rights for its drivers.

It is now launching earnings advice sessions on how to best take advantage of the app, flexible pay options that allow drivers to cash out their fares before the end of the week and discounted online investment advice for products like ISAs and pensions.

European Union

The CEO of startup bank Starling says EU law is ‘important and good’ for UK fintech (Business Insider), Rated: A

The founder and CEO of digital-only, startup bank Starling says EU law has been good for fostering Britain’s flourishing fintech — financial technology — sector and says she fears Brexit may set it back.

However, Boden is worried that Brexit will cause the UK to miss out on laws such as the Payment Service Directive Two (PSD2), which forces banks to open up their data to new entrants. This will allow third parties to help people manage their accounts and loosen banks’ stranglehold of customer relationships. PSD2 comes into force in 2018.

Boden, a former executive of Allied Irish Bank, told the FT it is “disappointing” that Starling will be unable to launch across Europe using passporting rules. Theresa May has made clear that her government plans to sacrifice EU passporting rules, which let financial firms sell services across the EU from London, in order to regain control over immigration.

Starling has yet to launch but has gained its banking licence.

REAL ESTATE LESS THAN 10.000 EUROS, IT IS POSSIBLE! (The Quebec Telegram), Rated: A

Note: it is possible to lodge the shares in a PEA, to erase taxation. “However, we advise against investing below 5,000 euros, because the tax savings will be absorbed by bank charges , ” says Cyril Benchimol, CEO of Immovesting.

Asia

Experian Partners With Lenddo to use its Solution in Financial Inclusion efforts (Benzinga), Rated: AAA

Experian, the leader in global information services, will partner with Lenddo, a leader in non-traditional data solutions, as part of Experian’s Consumer Financial Inclusion Indexing platform in Indonesia and Vietnam.Using Experian’s global expertise and knowledge, the introduction of Lenddo’s technology into Experian’s platform will provide financial firms with more information to offer appropriate financial services. Consumers who are unbanked or underserved by major financial institutions will gain access to a gamut of financial services including remittances, savings, credit and wealth management services.

Southeast Asia is poised to remain one of the fastest groups of economies in the world, with an unbanked population of about 438 million people. With the wealth of alternative data and innovative technology available, financial access for the unbanked has seen a rapid rise and many opportunities created to serve this new and underserved market.

Africa

Investment group buys into SA peer-to-peer lending firm RainFin (BusinessTech), Rated: AAA

RainFin and the LeBashe Investment Group have concluded a transaction for the latter to acquire a 30% stake in RainFin, for an undisclosed amount.

Barclays Africa (Absa) originally acquired a 49% stake in the peer-to-peer lending firm in 2014, however, in late 2016, the company’s founders and directors said that they would buy that stake back.

Authors:

George Popescu
Allen Taylor

Friday February 17 2017, Daily News Digest

P2P Global Investments

News Comments Today’s main news: OnDeck Capital struggles. SoFi in talks with Silver Lake for $500M funding. UK FinTech funding bounces back Today’s main analysis: FinTech deal sizes are shrinking. The alternative income source top managers are buying. Today’s thought-provoking articles: Starling CEO says EU law is good for UK FinTech. United States OnDeck Capital struggling. GP:” […]

P2P Global Investments

News Comments

United States

United Kingdom

European Union

Asia

Africa

News Summary

United States

OnDeck Capital shares plunge on downbeat outlook (Reuters), Rated: AAA

OnDeck Capital Inc (ONDK.N) shares fell as much as 24 percent on Thursday after the online lender posted its fifth straight quarterly loss and set aside more money for future losses after determining its calculations were askew.

Like its digital lending peers, OnDeck has been struggling with investor’ concerns over the quality of its underwriting and ability to maintain a rapid pace of growth.

As a result, OnDeck’s provision for loan losses more than doubled during the fourth quarter, to $55.7 million.

Amid all the changes, OnDeck’s originations of $2.4 billion in 2016 were up 26 percent from the prior year, less than half the pace of growth it posted in 2015.

The company is taking several steps to slash costs by $20 million a year, including cutting 11 percent of its staff and reducing marketing and technology expenses, Breslow said.

SoFi Is in Talks for $ 500 Million Funding Led by Silver Lake (Bloomberg), Rated: AAA

Social Finance Inc. is close to raising about $500 million in a funding round expected to be led by private equity firm Silver Lake Partners to bolster the expansion of its online-lending businesses and personal financial services, according to people familiar with the matter.

The fundraising round values SoFi at $4.3 billion, higher than its previous valuation of $3.2 billion, one of the people said. The deal isn’t finalized and could still fall through, the people said.

Why Online Lenders Keep Disappointing (The Wall Street Journal), Rated: A

Online lenders LendingClub and On Deck Capital took some nasty tumbles in 2016. Now, just as it began to look like they had regained their footing, they are getting tripped up again.

LendingClub shares fell 4.7% on Wednesday after the company gave disappointing guidance for 2017. Then, on Thursday morning, On Deck shares tanked by around 15% on a fourth-quarter net loss that was much bigger than expected. LendingClub’s stock fell again by around 6%.

The company’s fourth-quarter results show progress on all these fronts, but also the costs. Banks, which had shied away from buying the company’s loans after last year’s revelations, have largely returned, funding 31% of loan originations in the fourth quarter, up from 13% the previous quarter.

But LendingClub still disappointed investors by forecasting a bigger-than-expected net loss in 2017. Higher expenses are one reason, with stock-based compensation rising by 35% last year to $69.2 million. This likely has to do with the need to retain and attract talent in the wake of last year’s turmoil, says KBW analyst Jefferson Harralson. The company’s loan originations also have been basically flat for three quarters in a row, making it harder to grow revenue enough to overcome the higher expenses.

ArborCrowd Announces $ 22.4 Million Commercial Real Estate Deal (Crowdfund Insider), Rated: A

ArborCrowd announced on Thursday the launch of its latest real estate investment opportunity that is open to accredited investors. According to the portal, the “Southern States Multifamily Portfolio” features three multifamily properties in both Alabama and Mississippi.

Since its debut, ArborCrowd has provided the public with exclusive multifamily investment properties in New York City.

According to ArborCrowd, the $24.4 million Southern States Multifamily Portfolio was acquired in November 2016 by Varden Capital Properties, LLC as a value-add repositioning. ArborCrowd investors have the opportunity to own a piece of a $2 million equity stake in the Portfolio with a targeted 17 percent to 20 percent Internal Rate of Return (IRR) and a targeted investment hold period of two to three years.

Fintech deal sizes are shrinking (Business Insider), Rated: A

Global VC-backed fintech funding reached $12.7 billion in 2016, down 13% year-over-year (YoY) from $14.6 billion in 2015. However, deal numbers held firm at 836, down just 1% YoY from 848 in 2015. That suggests the decline in funding was the result of smaller deal sizes, and that’s backed up by a couple of other key pieces of data.

  • Fewer mega-rounds. There were 38 mega-rounds ($50 million+) in 2016, down from 63 in 2015.
  • Two deals in China accounted for $2.2 billion. Lending platform LU.com raised $1.2 billion, while JD Finance, a subsidiary of e-commerce giant JD.com, raised $1.0 billion.

OCC fintech charter: Something Ds and Rs can both love (American Banker), Rated: A

As the Office of the Comptroller of the Currency moves forward to grant national bank charters to fintech companies, unity of purpose could be achieved by stepping back to consider the broad policy goals that Democrats and Republicans typically seek in regulating and supervising financial services markets and businesses.

Both Democrats and Republicans want to address the financial needs of smaller Main Street businesses. Both parties understand that small and midsize businesses are the ones creating the jobs of the future. Both Republicans and Democrats prefer simplicity over complexity.

Concern for abuse of this charter by unscrupulous actors is legitimate and is best addressed by continuing to allow state regulators and attorneys general to enforce civil and criminal laws against fraud and unfair and deceptive practices, while consolidating supervision in a single strong agency at the federal level.

A charter is a perfect example of retaining significant state authority made possible by clear and simple federal rules. This federal-state partnership will produce strong governance and controls on a national scale through the supervisory process. It is the only way to achieve uniform requirements across all 50 states. Maintaining a costly, complex and time-consuming state licensing process while at the same time requiring companies to satisfy federal mandates will kill off a job-creating pro-consumer innovation.

US regulatory environment threatens the rise of fintech (TechCrunch), Rated: A

Fintech companies earned approximately ₤6.6 ($8.15) billion in revenue globally in 2015, according to a report commissioned by the Treasury of the U.K. government. Recent data on the sector from KPMG shows that while North America has fallen behind Asia in terms of regional investments in fintech, companies in North America still received $900 million of $2.4 billion, or more than 37.5 percent of funds, in the third quarter of 2016. KPMG notes that both the number of deals and total amount invested in American fintech companies has dropped significantly, while Asia continues to see growth in fintech investments.

The U.S. is producing many fintech startups attractive to investors — just not as attractive as the less numerous Asian startups. The third quarter of 2016 was the second of the year in which Asian fintech companies attracted more venture capital funding than North America, and pending fourth quarter results, total investment for the year by venture capital in Asian fintech outstrips that in North American fintech $4.7 billion to $4.5 billion. America remains a fintech leader, but its position is being challenged.

Not just the Treasury report, but investors themselves, as well as founders, have identified regulation as a main concern, and European regulators have responded by overhauling EU laws related to payment services to benefit fintech startups. In Asia, numerous countries have already adjusted regulations to promote fintech growth, including the largest consumer markets, China and India.

The problem with fintech regulation in the U.S. is not just what those regulations are, but persistent confusion about what those regulations are, and deep uncertainty about how they are evolving.

Marketplace Lending, The Crowdfunding Alternative? (GlobeSt.com), Rated: A

We sat down with Gary Bechtel, president of Money360, to talk about the growth in the market and the acceptance of marketplace lending platforms.

GlobeSt.com: What are the benefits of marketplace lending?

Bechtel: Speed, flexibility and creativity are huge competitive advantages, especially in the bridge lending arena, where the ability to react and close loans quickly is key. The ability to operate under reasonable regulatory oversight, and without the multiple layers of approvals and regulation that govern more traditional lenders, helps us speed up the process dramatically.

GlobeSt.com: What opportunities has this created for Money 360?  

Bechtel: We are seeing more and more transactions that otherwise would have gone to traditional lending sources because of our ability to react quickly and be more creative with deal structures. We have grown to accommodate larger transactions, filling a void left by banks, credit unions, life companies and CMBS lenders. We see this opportunity as an ongoing trend and are building our business accordingly.

The Whaley Report: Peer-to-peer pressure (Market Intelligence Center), Rated: A

I read an article last week, “How Investors Can Earn 7% Returns in a 2.5% World” and  I’m convinced it’s the beginning of the end for some unsuspecting investors.

The author, Stephen McBride, discusses the benefits of peer to peer lending as an asset class for investors who want to enhance the yield on their portfolios in light of the current low yield environment.

P2P lending may not wipe out wealth like a good old fashioned financial crisis but there are certainly less risky situations. Bungee jumping in Mexico or “investing” your paycheck in lottery scratchers comes to mind.

Size Matters

First, the average loan amount on various P2P platforms, like Lending Club, is $25. Let’s be conservative and say that you have decided to “invest” $20K of your hard-earned shekels in P2P lending to enhance your investment yield. Your $20K would be lent out to approximately 800 people, to fund everything from movie screenplays to food trucks specializing in cuisine from New Caledonia.

Fees

Just like any other investment opportunity, you pay to play. Lending club charges 1% on all monthly payments that you receive from your peers to whom you’ve lent money. They also take a healthy amount of fees for any collections process they go through for delinquent payments. On that basis alone, if your return starts out at 7%, like this article suggests, you are already down to a 6% net return before you ever transfer the money to your bank account.

Loan Shark Says What?

This is going to shock you but not all 800 of your peers are going to repay you the $25 you lent them to start their new Cat Tattoo Parlor. Based on data from Lending Club, the default risk of your peer group is not to be trifled with.

Similar to corporate bond ratings, people seeking to borrow money through a P2P platform are rated from “A” to “G.” An “A” rating is lower risk and a “G” is the guy who has 10 credit cards maxed out, no income but somehow manages to buy lottery scratchers every week.

No rational person is carving out a percentage of their portfolio for peer to peer lending. The risk-adjusted reward of this type of investing just doesn’t warrant it.

5 Common Misconceptions About Alternative Lending (Business2Community), Rated: B

Today, businesses have learned that alternative lending, which includes commercial business loans, factoring, peer-to-peer lending and crowdfunding, can solve many problems quickly and efficiently without a lot of the delay and paperwork associated with bank loans.

Only bank-rejects apply to alternative lenders:

While it’s true that many businesses find it easier to qualify for a loan from an alternative source than from a bank, many owners prefer dealing with alternative lenders, as they tend to be more flexible, less judgmental and faster to respond. Many alternative lenders do not require collateral, can process an application in a few hours, and fund a loan within a day or two.

You have to be desperate to seek an alternative loan:

Alternative lenders assess the risk of each loan and assign an interest rate that makes sense. Any good alternative lender wants to see its borrowers succeed, not fail, and will usually work with business owners to come up with solutions with the right fit.

You can hurt your credit score by borrowing from an alternative lender:

If you pay back your loan responsibly, your business’ credit score should increase.

You need high margins to make alternative loans work:

IOU Financial has only four funding requirements, and none have anything to do with margins. We require that you own and operate your own business, have been in business for at least a year, make 10 or more deposits per month and have average daily balance of $3,000 per month.

Alternative lending is unregulated:

The business model and cost structure of alternative lenders are much different from those of banks. Nonetheless, alternative lenders must adhere to federal and state lending regulations that require truthfulness and disclosure. There is also the whole area of contract law that governs alternative loans.

SoFi hires Condé Nast’s Danika Owsley for consumer comms (PR Week), Rated: B

Financial technology company SoFi has hired media specialist Danika Owsley as its first director of consumer comms.

Owsley will report to SoFi’s comms leader, VP of communications and policy Jim Prosser, when she starts in the role on February 28.

The San Francisco-based company hired Owsley to work in New York, home to most media outlets that are relevant to SoFi’s operations. SoFi bills itself as a “modern finance company” and many of its services are focused on millennials.

United Kingdom

P2P Lender Folk2Folk Joins Peer to Peer Finance Association (Crowdfund Insider), Rated: AAA

Peer to peer lender Folk2Folk has joined the UK Peer to Peer Finance Association (P2PFA).  The P2PFA is acknowledged as a stamp of quality operations as members are held to a high standard and required to follow certain transparency guidelines.

Founded in 2011 as a self-regulatory entity for the sector, the largest UK peer to peer lending platforms are members of the P2PFA and represent more than 75% of the UK P2P lending market. P2PFA members operate a diverse range of business models within this segment of finance and collectively lent almost £3 billion during 2016.

The alternative income source the top managers are buying (Trustnet), Rated: AAA

Industry powerhouses Invesco, Woodford, M&G, Aviva and AXA are among those turning to peer-to-peer lending for alternative streams of income, according to industry experts.

Indeed, over the past 18 months, UK gilts have performed particularly strongly, returning 8.59 per cent – though this has fallen back from highs in August 2016 where the index was up 17.23 per cent.

In fact, if not for a strong run for UK equities at the start of the year, gilts would still be outperforming the FTSE 100, which has returned 14.51 per cent over the period.

The industry brings a stable pool of capital to an industry that craves that stability of capital as knowing that the lender is there enables a much more attractive and reliable borrowing rhetoric, he adds.

His company runs the £682m P2P Global Investments PLC trust, which buys higher-quality loans (grade A, B and C) from the platform providers from across the market cap spectrum, though it currently focuses on the developed markets only.

Since its launch in 2014, the fund has grown its dividend in each year and currently pays out 5.48 per cent.

Over its lifetime, had an investors paid in £10,000 on the day of its launch, the trust would have paid £1,158, according to FE Analytics.

However, Sachin Patel, chief capital officer at peer-to-peer platform provider Funding Circle says delinquency rates are currently at historic lows.

While the sector will likely be hit by a financial crisis – such as the one seen in 2008 – as borrowers will be more likely to default, he says they are not seeing any signs of stress among their borrowers.

Indeed, with delinquency rates so low, the platform released the SME Income fund at the end of 2015 with the aim of giving investors a passive option to the asset class.

UK FinTech Funding Bounces Back in Q4 2016 (Cryptocoins News), Rated: A

U.K. FinTech startups raised $173 million across 16 deals in Q4 2016, an increase of $95 million from Q3, according to a report from CB Insights.

Despite an increase in U.K. financial technology investment during Q4 2016, across the whole year the amount raised only amounted to $494 million compared to $962 million in 2015. During Q4 2015, U.K. FinTech funding reached $275 million.

CB Insights found that in 2016, European venture capital funding reached $1.2 billion across 179 deals, down from $1.6 billion during 2015.

Uber launching financial advice sessions and appeals panel for UK workers (Belfast Telegraph), Rated: A

Uber is offering English courses, financial advice and introducing an appeals panel for its UK workers after facing criticism over lack of support and rights for its drivers.

It is now launching earnings advice sessions on how to best take advantage of the app, flexible pay options that allow drivers to cash out their fares before the end of the week and discounted online investment advice for products like ISAs and pensions.

European Union

The CEO of startup bank Starling says EU law is ‘important and good’ for UK fintech (Business Insider), Rated: A

The founder and CEO of digital-only, startup bank Starling says EU law has been good for fostering Britain’s flourishing fintech — financial technology — sector and says she fears Brexit may set it back.

However, Boden is worried that Brexit will cause the UK to miss out on laws such as the Payment Service Directive Two (PSD2), which forces banks to open up their data to new entrants. This will allow third parties to help people manage their accounts and loosen banks’ stranglehold of customer relationships. PSD2 comes into force in 2018.

Boden, a former executive of Allied Irish Bank, told the FT it is “disappointing” that Starling will be unable to launch across Europe using passporting rules. Theresa May has made clear that her government plans to sacrifice EU passporting rules, which let financial firms sell services across the EU from London, in order to regain control over immigration.

Starling has yet to launch but has gained its banking licence.

REAL ESTATE LESS THAN 10.000 EUROS, IT IS POSSIBLE! (The Quebec Telegram), Rated: A

Note: it is possible to lodge the shares in a PEA, to erase taxation. “However, we advise against investing below 5,000 euros, because the tax savings will be absorbed by bank charges , ” says Cyril Benchimol, CEO of Immovesting.

Asia

Experian Partners With Lenddo to use its Solution in Financial Inclusion efforts (Benzinga), Rated: AAA

Experian, the leader in global information services, will partner with Lenddo, a leader in non-traditional data solutions, as part of Experian’s Consumer Financial Inclusion Indexing platform in Indonesia and Vietnam.Using Experian’s global expertise and knowledge, the introduction of Lenddo’s technology into Experian’s platform will provide financial firms with more information to offer appropriate financial services. Consumers who are unbanked or underserved by major financial institutions will gain access to a gamut of financial services including remittances, savings, credit and wealth management services.

Southeast Asia is poised to remain one of the fastest groups of economies in the world, with an unbanked population of about 438 million people. With the wealth of alternative data and innovative technology available, financial access for the unbanked has seen a rapid rise and many opportunities created to serve this new and underserved market.

Africa

Investment group buys into SA peer-to-peer lending firm RainFin (BusinessTech), Rated: AAA

RainFin and the LeBashe Investment Group have concluded a transaction for the latter to acquire a 30% stake in RainFin, for an undisclosed amount.

Barclays Africa (Absa) originally acquired a 49% stake in the peer-to-peer lending firm in 2014, however, in late 2016, the company’s founders and directors said that they would buy that stake back.

Authors:

George Popescu
Allen Taylor

Monday December 5, 2016, Daily News Digest

zopa

News Comments Today’s main news: OCC plans special charter for FinTechs. Today’s main analysis: Zopa cuts savers off. PeerIQ’s analysis of the OCC charter. Today’s thought-provoking articles: P2P lenders blur into mainstream banks. International P2P lending volumes. Harmoney fined for misleading consumers. United States OCC’s special-purpose FinTech charter. AT: “Lend360 offers a breakdown of the OCC charter with awesome […]

zopa

News Comments

United States

  • OCC’s special-purpose FinTech charter. AT: “Lend360 offers a breakdown of the OCC charter with awesome analysis. This information is straight from the OCC’s white paper on the topic. This charter is making a lot of industry insiders very happy.”
  • PeerIQ Weekly update focused on the OCC charter (and LC’s latest securitization review). AT: “Get a bird’s eye view of the baseline standards from the OCC white paper in PeerIQ’s nifty chart. Plus, a terrific analysis of LendingClub’s near-prime securitizations for the year.”
  • OCC white paper on national bank charter for FinTech companies. “Get it straight from the horse’s mouth. This white paper explains why FinTech regulation is necessary and why the OCC is the proper authority for that regulation.”
  • OCC charter unlikely to kill bank partnerships. GP: ” It’s unclear how onerous the application process and the ongoing regulatory framework will be. Once we see a few companies going through the process we will know if working with a bank, which has its own costs, is worth it or not. ” AT: “I agree. I think we’ll see many more partnerships in 2017.”
  • RealtyMogul lowers minimum investment for REIT. GP: ” RealtyMogul went the whole p2p way. I applaud. I think they will see a tremendous amount of free PR and marketing with this. Way to go ! ” AT: “Last week, LendInvest reduced the minimum size of its loans. This could be the beginning of a new wave of competition among crowdfunding, crowdlending, and crowd investing platforms where the players chase new business by offering better incentives and lower standards for approval. In the case of marketplace lenders, that could be a negative as we are already seeing a wave of defaults, which could increase if I’m right. Or, maybe this competition will stay between investment platforms.”
  • Sharestates lists on SeedInvest.
  • Baby Boomers benefit from rising interest rates, including P2P lending.

United Kingdom

European Union

Australia

China

Africa

News Summary

United States

OCC Announces Special-Purpose FinTech Charter (Lend360 Email), Rated: AAA

This morning (Dec. 2), the OCC announced that it is going ahead with its plan to issue special-purpose charters to Fintech companies, published a Whitepaper on the topic, and requested comment on the granting of special-purpose national bank charters to Fintech companies. Comments are due by January 15, 2017.

The OCC plans to grant charters for special-purpose national banks. Companies

  • would be required to conduct at least one of the following three core banking functions – receiving deposits, paychecks, or lending money;
  • would be subject to the corporate organization and structure provisions of the National Bank Act;
  • may only engage in activities that are permissible for national banks;
  • would be subject to the receivership provisions in the National Bank Act (in September 2016, in anticipation of today’s announcement
  • would be required to be a member of the Federal Reserve System; and
  • would be subject to the same laws, rules, examination and reporting requirements as national banks, including legal lending limits and limits on real estate holdings.

To the extent that an applicant for a special-purpose charter proposes to accept deposits other than trust funds, it would be required to apply to, and receive approval from, the FDIC for deposit insurance. As an insured depository institution, the special-purpose national Bank would be subject to the Community Reinvestment Act. In addition, the Dodd Frank Act includes specific provisions exempting from CFPB enforcement and supervisory jurisdiction insured depository institutions with less than $10 billion in assets. (Said another way, a non-depository special-purpose national bank would be fully subject to CFPB supervision and enforcement, based on its business activities.)

The OCC would expect any applicant for a special-purpose national charter to fulfill all of the requirements of a full-service national bank, including:

  • a detailed business plan covering a minimum of three years, and clearly articulating why the applicant is seeking a national bank charter;
  • a strong governance structure and risk management system to identify, monitor, manage, and control risk;
  • minimum and ongoing capital levels commensurate with the risk and complexity of the proposed activities of the applicant, including a proposed minimum level of capital that the applicant would meet or exceed at all times;
  • adequate liquidity to readily and efficiently meet expected and unexpected cash flows and collateral needs at a reasonable cost;
  • alternative business and recovery strategies that address various best-case and worst-case scenarios;
  • a culture of compliance that includes a top-down, enterprise-wide commitment to understanding in adhering to applicable laws and rules; and
  • a demonstrated commitment to financial inclusion “that supports fair access to financial services and fair treatment of customers,” including a business plan that demonstrates how the proposed bank plans to respond to the needs of the community.

PeerIQ Weekly Update: December 4, 2016 (PeerIQ Email), Rated: AAA

(See article above on OCC special charter please 1st).

PeerIQ summarizes below the baseline supervisory standards from the OCC’s “Exploring Special Purpose National Bank Charters for FinTech Companies”:

This week marks the first rated securitization of LendingClub near-prime unsecured consumer loans. The transaction is notable in that it is the first rated deal consisting of Madden & Midland loans (~10% of loans from NY, CT, and VT) – a positive sign for market acceptance. The enforceability of these loans will be subject to subsequent court decisions in the second court regarding exportation of usury limits.

We have seen three LendingClub Near-Prime securitizations this year; they are LCIT 2016-1, LCIT 2016-2, and MHMT 2016-LC1.

LCIT 2016-NP2 was priced at 3.0% yield and 6.0% yield for A and B tranches, respectively. The pricing for LCIT 2016-NP2 A was 120 basis points tighter than MHMT 2016-LC1 A with the same credit support, yet, longer WAL; it is also 75 basis points tighter than LCIT 2016-NP1 A. Given the collateral pool of the LCIT deals are similar and tranches have the identical credit enhancement, the expected loss of each tranche should also be comparable. Exhibit 3 displays the pricing of A and B tranches against tranche weighted-average life. The arrows point to LCIT 2016-NP2 deal pricing. As the weighted-average life of the bonds increase, the credit risk premium increases, as indicated by the dotted trend line. The tighter pricing of LCIT 2016-NP2 cannot be explained by tranche average-life.

Could the improved credit market condition explain the favorable pricing in LCIT 2016-NP2? SoFi recently priced SCLP 2016-3 A tranche at 200 basis points over benchmark rates on October 6th; and the SCLP 2016-2 A tranche was priced around 215 basis points over benchmark rates on July 26th, only 15 basis points wider. The dramatic improvement in LCIT 2016-NP2 pricing cannot be rationalized by the marginal spread tightening in the credit market since end of July to December.

Due to the tightening pricing of A and B tranches, LCIT 2016-NP2 excess spread is 22.15%, a 55 basis points improvement than that of LCIT 2016-NP1, and about 270 basis points better than that of MHMT 2016-LC1 (Exhibit 3). The LCIT 2016-NP2 residual holders sit in first-loss position with economics that tie directly to uncertain prepay and default expectations. They benefit from significantly higher yield in return for bearing this risk.

The emergence of rated securities from LCIT shelf supports our belief that the rating agencies are more comfortable in rating this nascent industry with more historical performance data and issuers are more inclined to get their deals rated to expand their investor base.

Exploring Special Purpose National Bank Charters for Fintech Companies (OCC), Rated: AAA

When President Abraham Lincoln signed the law creating the national banking system and the Office of the Comptroller of the Currency (OCC), the very notion of establishing a national bank charter was itself innovative. Our country’s leaders provided the Comptroller with the authority to grant a national charter because they recognized the public value of a robust, unified, and nationwide system of banks.

The national banking system became a source of strength for the nation and our economy. National banks and, later, federal savings associations became anchors of their communities and the predominant providers of financial services for consumers and businesses. The system flourished because it enabled and encouraged national banks and federal savings associations to adapt to the changing needs of their customers and the market.

More than 150 years later, we have a diversified and evolving financial services industry. New technology makes financial products and services more accessible, easier to use, and much more tailored to individual consumer needs. At the same time, consumer preferences and demands are evolving, driven by important demographic changes: for example, the entry of 85 million millennials into the financial marketplace in the United States. Responding to those market forces are thousands of technology-driven nonbank companies offering a new approach to products and services. Five years ago these services either were available only from traditional banks or not available at all. Initially, many of these nonbank providers of financial services viewed themselves as competitors of banks. Now, some financial technology—or fintech— companies are considering whether to become banks.

OCC’s fintech charter unlikely to kill bank partnerships (SNL), Rated: A

The OCC on Dec. 2 released its long-awaited framework for a limited charter available to financial technology companies, but some consultants expect many fintech companies to continue relying on bank partnerships.

So far, the nascent fintech industry has largely relied on bank partnerships to issue loans. If a corporation wants to lend in a state, it needs to be licensed in that state and abide by usury limits that cap maximum interest rates on certain loans. For lenders looking to tap the national market, those requirements are burdensome, requiring a licensed loan officer in each of the 50 states. Instead, fintech lenders have partnered with banks to issue the loan, relying on the bank’s preemption from such state laws pursuant to the National Bank Act. For example, WebBankissues loans for LendingClub Corp. Banks like Cross River Bank and Celtic Bank also focus on this type of business, although the business model has become increasingly uncertain due to various court rulings.

The OCC’s Dec. 2 framework could negate the need for those partnerships. Fintech companies can now apply for a national charter that grants those preemption benefits without a bank partnership. But it remains an open question whether they will ditch banks in favor of the charters, especially considering OCC Comptroller Thomas Curry’s insistence that fintech companies will be subject to the same scrutiny the regulator applies to banks.

RealtyMogul.com MogulREIT Lowers Minimum Investment to 00 (Crowdfund Insider), Rated: A

RealtyMogul.com has lowered the minimum necessary to invest in their first REIT or MogulREIT I to $1,000. Previously, the minimum investment was $2,500. RealtyMogul.com CEO Jilliene Helman said their goal was to give more investors the opportunity to invest in unique real estate investments on their platform.

Last month, MogulREIT I declared its first dividend that is on track for an 8% annualized return.

Invest in Sharestates (SeedInvest), Rated: A

Sharestates is accepting investments for an Offering under Regulation D.

Because Sharestates is offering its securities under Regulation D, select materials are publicly viewable. However, investors must sign up or log in to SeedInvest and confirm status as an Accredited Investor prior to making an investment and accessing the complete profile and offering materials.

Once a loan application is filled out by the potential borrower, the first steps of underwriting begin. A quick review discovers whether the loan is a quick one based on some key details including credit score, bankruptcy history, sponsor’s track record, etc. If the initial details fall into our acceptable requirements, the full underwriting process begins: Credit Report, Partial Track Record Report, Title Search, etc. If the loan passes that level of underwriting, then the loan is approved to be funded.

Sharestates funds deals in two different ways. One way is by funding whole loans with its institutional capital partners (hedge funds, private equity funds, etc.). The second way is by funding a loan with both institutional capital and Sharestates’ balance sheet capital. Once the loan is funded and the borrower receives the capital, Sharestates then sells its position online to their registered individual accredited investors. This allows for two key user benefits: 1) The borrower receives their funding quickly, and does not have to wait for Sharestates to raise capital, and 2) Individual accredited investors start earning interest immediately (after funds arrive in Sharestates’ account).

4 Ways For Baby Boomers To Benefit From Rising Interest Rates (Forbes), Rated: B

Make sure you have the appropriate exposure to fixed income. Platforms likeBetterment do this automatically based on your age and risk appetite. Atarget date fund also does this automatically, but watch out for high fees with some of the funds.

Be a lender. Peer-to-peer lending companies source and screen applications for credit and then offer you the ability to invest in a diversified portfolio of those loans.

Get your latest retirement income number. The simplest tool I’ve seen is Blackrock’s CoRI index retirement income planner.

In general, rising rates are a good thing for retirees. But there are a number of reasons to proceed with caution.

United Kingdom

We can’t accept any more of your money, Zopa tells savers (Telegraph), Rated: AAA

Britain’s biggest peer-to-peer lender is to limit the amount that savers can invest via the platform because of a shortage of creditworthy borrowers.

In an email to customers yesterday, it said: “We always aim to lend your money out in a reasonable time. However, with current volumes of new money transfers combined with demands for loans seasonally declining in December, we don’t expect this to be achievable this month.

Peer-to-peer lenders are blurring into mainstream banks (Financial Times), Rated: A

The idea of so-called “peer-to-peer” lending was to bypass the mainstream, not become part of it. There was a strong emphasis on community, with loan investors posting personal messages to borrowers.

Last month, perhaps the most significant bridge yet was crossed when the pioneer of P2P lending, the UK platform Zopa, announced that it would establish its own bank. True, the change doesn’t mean the lender is abandoning its roots entirely. About 70 per cent of its business comes from consumers lending directly, and it will continue to connect them to borrowers. But the move is — over time — likely to transform Zopa’s business as it allows the platform to get round the biggest barrier to success in the marketplace model: its critical dependence on new transactions for the income platforms earn.

As should be clear from the marketplace name, online lenders such as Zopa don’t own the loans they originate. Most operate as platforms for investors, which means that new business flow is essential for generating revenue.

That wouldn’t matter so much if the marketplace movement’s goals were modest. Retail lenders tend to be sticky and might live with fluctuations in activity. But the sector has been backed by impatient venture capital investors, drawn in by the possibility of rapid expansion followed by a suitably lucrative exit. And their vision depends on platforms seizing a big share of total lending pretty fast.

What has become clear is that there are simply not enough consumer lenders to deliver the objective. Just to reach the $26bn the sector lent last year in the UK and the US, platforms have already leaned heavily on institutional money. And that has turned them into something more like old-fashioned finance companies — increasingly dependent on market access for funding.

Climbing off the wheel is sensible. Ownership of the loans they originate through a bank structure allows platforms to build up the income they need. Growth may be slower, but their innovative technology and low cost should help platforms carve out a defensible position. Meanwhile profits should be bigger, helping venture capital owners to find an exit — albeit at less elevated multiples.

Too Much Investor Demand Curtails Retail Access to P2P Loans (Crowdfund Insider), Rated: A

The FT is reporting that Zopa has put a halt to retail investors lending money on their peer to peer lending platform. Allegedly, yield hungry investors are “flooding” the market hunting for better returns in this historically low interest rate environment.

While the FT called it “the latest sign of trouble” for P2P lending, but that is really hard to discern. Zopa apparently did say that it was a case of investor demand outstripping supply but did not indicate that demand for credit was waning beyond historical norms.

One way of interpreting this phenomena is that there is a growing awareness of the superior risk adjusted returns being made available by Zopa – and frankly many other peer to peer lending platforms in the UK.

P2P Lending Platform Flender Nears £500,000 Funding Target on Seedrs (Crowdfund Insider), Rated: A

Just a couple weeks after launchings its Seedrs campaign, peer-to-peer finance platform Flender has secured more than £380,000 out of its £500,000 funding target. 

Funds from the equity crowdfunding campaign will be used for the following:

  • Key hires, including a direct sales team and in-house software developers.
  • Marketing, including online targeting and above-the-line advertising.
  • Product development, specifically native iOS and Android versions plus roadmap features for all channels.

THINCATS BOSS URGES FIRMS TO GRASP ‘OPPORTUNITY FROM UNCERTAINTY’ (Insider Media), Rated: A

The founder of Leicestershire-based peer-to-peer lending platform ThinCats has told Insider that the uncertainty sparked by the outcome of June’s EU referendum could provide opportunities for budding entrepreneurs.

Kevin Caley established ThinCats with Peter Brown and Paul Meier in 2011, partly in response to the financial crash of 2008.

Caley also revealed that ThinCats has overhauled its loan grading system to identify different levels of security and ability to repay.

Peer-to-peer lending and robo-advice can be great solutions for traders, but your research should always be thorough (Finance Magnates), Rated: A

Brexit, interest rate cuts and global economic turbulence have left a volatile and low-yield environment. Some glimmers of hope shine however, in the form of peer-to-peer lending (P2P) and robo-advice.

Peer-to-peer lending has an established investor-base. Namely, retail investors. The average deposit across a platform is around the £5,000 mark, however, with minimum investments of £10 in several cases, you could be lending capital and earning rates in the region 5% p.a plus in no time.

With a peer-to-peer investment you can expect returns significantly higher than those on offer from a high-street bank. With a record-low base saving rate of 0.25%, it is little wonder people are searching for an alternative. And with interest rates ranging 3-19% p.a, P2P lending could be that alternative.

The major P2P lending platforms, such as Zopa, RateSetter and Funding Circle (£1 billion+ lent by each), tend to return 3-7% p.a, depending on the platform and product.

Peer-to-peer lending platforms Zopa and RateSetter spread your capital between dozens of borrowers, in some cases up to 100.

One of the big perks in the industry that grabbed major headlines was the launch of the Innovative Finance ISA in April 2016. The government has put its cards on the table, giving peer-to-peer lending the stamp of approval.

European Union

International P2P Lending Volumes November 2016 (P2P Banking), Rated: AAA

The total volume for the reported marketplaces adds up to 438 million Euro.

All eyes on consolidation, funding diversification at MPL confab (GlobalCapital), Rated: A

Industry players speaking with GlobalCapital on the sidelines of the event noted the absence of several unsecured consumer lending players at this year’s conference – namely CircleBack Lending and Peerform – pointing to a wave of consolidation as the online lending market matures.

Australia

Harmoney fined 2k for misleading consumers (NZ Herald), Rated: AAA

Peer-to-peer lender Harmoney has been fined $292,5000 for misleading consumers into thinking they had been pre-approved for a personal loan.

The Commerce Commission filed six charges against Harmoney under the Fair Trading Act relating to 27 versions of a pre-approval letter.

The letter was sent to over half a million Kiwis between October 2014 and April 2015 inviting people to visit the Harmoney website to find out how much money they had been approved to borrow.

But in reality they still had to go through an approval process.

Media mogul-backed bank challenger close to breaking even (The Age), Rated: A

SocietyOne, a peer-to-peer lender that is partly owned by Rupert Murdoch, Kerry Stokes and James Packer’s companies, expects to start making profits within the next 12 to 18 months.

After a year of rapid loan growth, chief executive Jason Yetton said the lender now faced the prospect of breaking even, though this would depend on how much it invested.

While SocietyOne is currently loss-making, its progress is a sign of peer-to-peer lending gradually becoming more established in Australia, as it is in the US and Britain.

Personalised Investment Portfolios: The Customer Takes Centre Stage (The Market Mogul), Rated: A

From insurance to wealth management, from peer-to-peer lending to payments, Fintech startups are transforming the financial system. They attracted $5.2bn in the first quarter of 2016 alone. Customers have many reasons to flock towards Fintech offers: low-cost, user-friendly interface, accessibility, transparency and exciting customer journeys.

The ‘Fintech’ revolution (Sky News), Rated: B

Peer-to-peer lending now offers to perform the same functions using the internet to match savers and investors directly, bypassing the banks.

Banks will need to figure out how to respond.

One option we are starting to see is banks providing funding to the peer-to-peer lenders, so they just operate on one side of the market – that of accumulating funds for investment.

 

China

Five on Trial for Gold Smuggling, Chinese P2P Lending Ponzi Scheme (Crowdfund Insider), Rated: A

In a follow-up to the Ezubao (Ezubo) shutdown, five people affiliated with the Chinese P2P lending platform that is accused of a Ponzi scheme are on trial for gold smuggling.  This is the first court case that is a part of a scandal that robbed investors of between 50-58 billion yuan (approximately $7.6-8.4 billion) and shook the Chinese crowdfunding world earlier this year.

According to a Chinese news outlet, the five Ezubao affiliates smuggled over a thousand gold bars (worth approximately $4.8 million) out of China’s Yunnan province and illegally crossed over Myanmar’s border multiple times last year.

As a result of the fraudulent P2P lending platform fallout, 900,000 investors across China lost their savings; authorities froze more than 10 billion yuan in funds and seized about 300 million yuan worth of cash and assets; and 26 people — including Ding and President of Yucheng Zhang Min — face charges of fraud and illegal fundraising.

Africa

SA crowd-funding site launches R100 million loan facility for corporates (BusinessTech), Rated: AAA

Peer-to-peer lending firm RainFin has launched a R100 million business-to-retail product directed at corporates and established businesses to participate in the crowd-funding space.

Barclays Africa (Absa) originally acquired a 49% stake in RainFin in 2014, however, last month, the company’s founders and directors said that they would buy that stake back.

Prior to this launch, RainFin said that the credit marketplace has been primarily used by small businesses seeking small (less the R750,000) loans for working capital.

Authors:

George Popescu
Allen Taylor