Wednesday March 21 2018, Daily News Digest

fintechs

News Comments Today’s main news: Mike Cagney’s Figure is out of stealth. CommonBond raises $50M. Airbnb features RealtyShares as multifamily financing solution. Monzo hits 500K current accounts. LexinFintech falls short on Q4 earnings. N26 raises $160M. Today’s main analysis: Mortgage Rate Competition Index widens. Today’s thought-provoking articles: The death of cash could be overstated. The most popular cities for millennial homebuyers. The […]

fintechs

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United Kingdom

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United States

Ex-SoFi CEO Mike Cagney’s new startup, Figure, is out of stealth (Fast Company), Rated: AAA

SoFi cofounder Mike Cagney, who resigned as CEO last year, has been quietly working on a new project involving home improvement financing and home equity lines of credit (HELOCs) for the last several months. Now, that project is out of stealth, with a live website: Figure.com.

According to Cagney’s LinkedIn profile, the startup plans to leverage blockchain-based technology and AI “to unlock new access points for consumer credit products that can transform the financial lives of our customers.”

The death of cash might be overstated (Business Insider), Rated: AAA

The decline of cash in the US might be exaggerated, according to Cardtronics and PYMNTS’ Global Cash Index (GCI).

Cash still sees healthy usage in the US: The share of cash in 2016 accounted for 12.6% of the country’s gross domestic product (GDP), and the study forecasts that it will account for 11.2% of the US GDP by 2021.

Here are three factors that might contribute to the endurance of cash in the US:

Source Business Insider

Cash persists for low-value transactions. Nearly two-thirds of US consumers said they prefer to rely on cash for purchases of $10 or less. That could be partly because it’s expensive for merchants to accept card payments, which leads to card transaction minimums that encourage cash usage for these purchases. This could help keep cash alive in consumers’ day-to-day lives.

Des Moines, Pittsburgh and Buffalo Among Most Popular Cities for Millennial Homebuyers (PR Newswire), Rated: AAA

LendingTree has released the findings of its study on the most popular cities for millennial homebuyers.

Young homebuyers are at the forefront of an increasing number of buyers returning to the housing market. The largest single-age population in the U.S. is 27-year-olds at almost 4.8 million, suggesting that millennials’ influence on the housing market has years to run before it peaks.

Millennial homebuyers make up one-third of mortgage requests. 32.5 percent of all mortgage requests through LendingTree between Feb. 1, 2017 and Feb. 1, 2018 came from consumers 35 years and younger. The average loan amount requested from this age group is $166,863.

Where millennials aren’t vying for homeownership. At the other end of the scale, Sarasota, Fla.Fort Myers Fla. and Honolulu had lowest shares of millennial buyers at 17.9 percent, 19.8 percent and 21.8 percent respectively.

Source: Lending Tree

CommonBond Secures $ 50M Series D Equity Round, Led by Fifth Third Bancorp (MarketWatch), Rated: AAA

CommonBond, a leading financial technology company that empowers students and graduates to pay for higher education, today announced a $50M Series D financing round.

Fifth Third Capital Holdings, LLC, a wholly-owned subsidiary of Fifth Third BancorpFITB, -0.69% led the round, with First Republic Bank FRC, -0.49% and Columbia Seligman Investments also participating, in addition to existing investors including Neuberger Berman, August Capital, and Nyca Partners. Individual investors in CommonBond include Vikram Pandit, former CEO of Citigroup, and Tom Glocer, former CEO of Thomson Reuters. This latest round brings CommonBond’s total funding raised to over $130M. CommonBond will use this new funding to accelerate its growth and invest further in technology.

Airbnb Features RealtyShares as First Multifamily Financing Solution (Business Wire), Rated: AAA

RealtyShares, a leading online marketplace for commercial real estate investing, today announced it is featured by Airbnb as a financing resource in its Multifamily Properties Toolkit, a website that gives owners, operators and developers of multifamily buildings resources to support long-term tenants who wish to share their space with travelers. RealtyShares provides experienced multifamily building owners and operators financing to buy, refinance, and renovate their buildings.

Landlords can now manage Airbnb activity in their buildings and share in the additional rental income with the Airbnb Friendly Buildings Program. As a result, multifamily property owners have become increasingly interested in helping their tenants improve and share their space on Airbnb.

OnDeck Appoints Kenneth Brause As New Chief Financial Officer (Crowfund Insider), Rated: A

Online lending platform for small businesses OnDeck (NYSE: ONDK) announced it has appointed Kenneth Brause as its new Chief Financial Officer, effective March 26th, as part of a mutually agreed upon transition process. The lender reported that current Chief Financial Officer, Howard Katzenberg. Katzenberg will serve as an advisor to OnDeck until April 13th, working closely with Brause to facilitate a smooth transition.

According to OnDeck, Brause brings more than 30 years of experience in the financial services industry to the lender’s team.

 

 

Average Cost of College Statistics for 2018 (Lend EDU), Rated: AAA

No matter whether you attend a public or private school, or whether you attend a 2-year or 4-year college, you can expect to pay more than those who attended before you.

By checking out the graph to the right (which does​ not account for inflation) you can see that in the past 20 years, tuition at all types of colleges has more than doubled, and in some cases has more than tripled.

Source: Lend EDU

Though the graph does not account for inflation, the rate of tuition increase has greatly outpaced the inflation rate – by at least 3 times for most school types.

The following is the average cost-of-attendance for the 2017-18 school year by school type including tuition & fees, room & board, books & supplies, transportation, and any other expenses.

  • Private 4-Year Not-for-Profit: $50,900   
  • Public 4-Year Out-of-State: $40,940  
  • Public 4-Year In-State: $25,290  
  • Public 2-Year In-District:​ $17,580   
  • Private For-Profit: $16,000 (tuition only)
Source: Lend EDU
Source: Lend EDU

 

Mortgage Rate Competition Index Widens (Lending Tree) Rated: AAA

  • Homebuyers could have seen median savings of $27,980 by comparison shopping for the best mortgage rates last week, up 4.5% from the prior week.
  • This week’s Mortgage Rate Competition Index was 0.60 for purchase mortgages, up 0.15 from a year ago, and up 0.02 from last week. The Index measures the median spread between the highest and lowest APR available on the LendingTree platform.

Purchase loans

  • Across all purchase loan applications on LendingTree for the week ending March 18, 2018, the index was 0.60, up 0.02 from the previous week.
  • How big of a deal is it to nab a mortgage rate that’s 0.60% lower than the competition? Over 30 years, that could translate to $27,980 in savings on a $300,000 loan
Source: Lending Tree

Mortgage fintech company completes capital raise (National Mortage News), Rated: B

Home Captain, a fintech company that looks to increase mortgage-lead conversion rates, completed a Series A financing round led by Spring Mountain Capital.

Spring Mountain joined Second Century Ventures, the strategic investment arm of the National Association of Realtors, as an institutional investor in Home Captain, which pairs prequalified homebuyers with real estate agents.

Ken Rees, CEO of Elevate, to Speak at LendIt Fintech Conference (Business Wire), Rated: A

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, announced today that their Chief Executive Officer, Ken Rees, will address the audience at LendIt Fintech 2018 along with CNBC’s Ari Levy.

Rees will be joined by Levy, senior technology reporter at CNBC, who will lead the discussion through a variety of themes, including:

  • How banks and fintech companies can partner to take advantage of the opportunity in non-prime lending
  • What it takes to build winning products for non-prime consumers
  • Predictions for the biggest areas of innovation in non-prime lending in 2018 and beyond

Covr Financial Technologies announces Michael Kalen as Chief Executive Officer (PR Newswire), Rated: B

Michael Kalen has joined Covr Financial Technologies, a digital, multi-carrier life insurance platform for financial institutions, as its chief executive officer, Covr Board Chairman Brian Finn announced.

U.S. Online Merchants Believe Instant Financing Will Drive Increased Sales (PNY), Rated: A

Online merchants in the U.S. are increasingly recognizing the importance of offering instant financing to shoppers, according to a new online e-commerce survey. Nearly two-thirds of retailers polled (64 percent) believe providing online financing options through their store is important to driving new and increased sales. Forty-six percent indicate it would decrease cart abandonment still one of the most critical challenges for online retailers today.

The survey was released here by Klarna, a leading global payments provider, at Shoptalk in Las Vegas.

Franklin Resources to Acquihire Random Forest Capital (Street Insider), Rated: B

Franklin Resources, Inc. (NYSE: BEN), which operates as Franklin Templeton Investments, today announced the acquisition of Random Forest Capital, LLC (“Random Forest”), an investment firm with expertise in data science and non-bank marketplace lending. Following the acquisition, the Random Forest team will join the Franklin Templeton Fixed Income Group investment team. Terms of the transaction were not disclosed.

New Florida law will loosen small-dollar lending rules (American Banker), Rated: B

Florida Gov. Rick Scott signed a bill Monday that will loosen the state’s rules for small-dollar consumer lending.

The law, which sailed through both houses of the Florida Legislature, authorizes 60- to 90-day loans of up to $1,000, while continuing to allow 30-day payday loans.

United Kingdom

Monzo Milestone: Challenger Bank Hits Half A Million Current Accounts (Crowdfund Insider), Rated: AAA

On Monday, UK-based challenger bank Monzo announced it has achieved half a million current accounts. The company launched its current accounts in October last year and since then, thousands of users have upgraded their accounts or signed up to start using Monzo’s banking products.

Monzo also reported that it will close the prepaid Beta on April 4th, so if users have not upgraded, their card will stop working and they won’t be able to use your Monzo app to make or receive payments.

Welendus goes live with interest-free loan offer (Peer2Peer Finance), Rated: A

PEER-TO-PEER payday lender Welendus has launched its first product, offering borrowers an interest-free loan if the debt is repaid in one day.

Individuals can borrow up to £500 using the new facility, which is aimed at those faced with unexpected or emergency bills, Welendus said. The borrower does not have to pay any interest if they pay the loan back within 24 hours.

There are no early repayment fees and borrowers can get a decision within five minutes.

Investors will receive returns ranging between five and 15 per cent to fund the loans.

Fintech referral platform bags series A fundraise (AltFiNews), Rated: A

Funding Xchange, one of a handful of platforms designated by HM Treasury to refer businesses declined credit by the banks to other sources of funding, has closed a £1.5m series A round.

The round was led by Calibrate Management Ltd and Kimera. The money will be used to continue the development of Funding Xchange’s automated decisioning technology, as well as for the incorporation of live transactional data sources.

Inflation finally falls but still beats savings returns (Peer2Peer Finance), Rated: A

INFLATION hit a seven-month low last month but there is little sign of respite for interest-starved savers as ISA season approaches, figures show.

Official for National Statistics (ONS) data shows consumer price inflation (CPI) grew by 2.7 per cent in February, finally falling from its five-year high of three per cent but still above the Bank of England’s two per cent target.

 

“But still, with inflation sitting at 2.7 per cent, savers’ cash is being eroded in real terms. In comparison to last year, savers would have found it difficult to get one per cent on an easy access ISA.”

Senior RBS fintech investment banker re-emerges at startup (Financial News), Rated: B

A former Royal Bank of Scotland investment banker, who led its coverage of fintech deals, has quit his private equity job after just five months to join a peer-to-peer lending startup staffed by former Goldman Sachs and HSBC analysts.

Rory McHugh, a former managing director at RBS, has joined Lendable, a UK-focused personal loans platform. Set up in 2014, the firm offers loans of up to £20,000 and raised £300m to lend to new customers in November.

Be a venture capitalist with an Innovative Finance Isa (The Times), Rated: A

Compared with cash Isas, Ifisas are as much a high-risk option as any loan that is not protected by the Financial Services Compensation Scheme (FSCS). This means that lenders cannot seek money from P2P borrowers that are unwilling or unable to pay money owed, whereas the scheme protects savings and investments offered by FSCS-authorised banks and other companies.

Source: The Times

There are more than 30 providers jostling for space and support from subscribers, with typical rates of return of between 3 and 7 per cent, as well as some offering up to 16 per cent. The interest rates on offer comfortably outstrip the 2 to 3 per cent attached to cash Isas. See our table, below, for a range of Ifisas presently available to new customers.

FCA calls for global effort to speed up fintech growth (NAI500), Rated: B

The Financial Conduct Authority has called for the creation of a global alliance of regulators that would encourage growth in fintech by allowing companies to test new products without going through a full approval process.

Speaking at the Innovate Finance Global Summit in London, Mr Woolard said expanding such a programme internationally would be “an immense undertaking”, but said “we’re up for the challenge”, having already seen “lots of interest” from other regulators.

China

Hot Chinese IPO LexinFintech Falls Short On Q4 Earnings, Revenue (Investors Business Daily), Rated: AAA

LexinFintech (LX) reported weaker-than-expected fourth-quarter earnings and revenue as the Chinese online lender issued its first quarterly report since its December IPO.

LexinFintech earned 4 cents per U.S. share diluted on revenue of $244.95 million. Analysts had expected EPS of 13 cents on revenue of $279.7 million, according to Yahoo Finance.

Shares tumbled 12.4% to close at 15.98 on the stock market today after rallying 5.3% on Monday to 18.25.

Loan originations rose 115% vs. a year, customer balances swelled 95% and registered users 99%. Acquisition costs per customer fell 22%.

Dow Jones Leads Morning Rally, But This FANG Stock Falls Further (Investors Business Daily), Rated: A

IPO Leader LexinFintech (LX) fell over 8% after the Chinese online lender reported weaker-than-expected Q4 earnings and sales results. The new issue has been volatile after a short-lived breakout above an 18.39 IPO-base entry on March 9. Just days later, the stock would trigger the 7%-8% sell signal before rebounding.

Golden Bull Limited Announces Pricing of Initial Public Offering (PR Newswire), Rated: A

Golden Bull Limited (“Golden Bull” or the “Company”) (NASDAQ: DNJR), an online finance marketplace that connects individual lenders with individual and small business borrowers, today announced the pricing of its initial public offering of 1,550,000 ordinary shares at a public offering price of $4.00 per share, for total gross proceeds of approximately $6.2 million before underwriting discounts and commissions and offering expenses. In addition, Golden Bull has granted the underwriters a 45-day option to purchase up to an additional 232,500 common shares at the public offering price, less underwriting discount and commissions.

 

European Union

The challenger bank N26 raises $ 160M ahead of U.S. launch (American Banker), Rated: AAA

The mobile-first bank N26 in Berlin has raised $160 million in preparation for its launch of a challenger bank in the United States.

All told, N26 has raised $215 million. Previous investors have included Peter Thiel’s Valar Ventures, Earlybird Venture Capital and Li Ka-Shing’s Horizons Ventures.

Part of the $160 million will be used on product development for the existing offering in Europe, according to U.S. CEO Nicolas Kopp. The rest — and he would not say how much this is — will be used for international expansion, most immediately into the U.K. and U.S. markets.

Swedish banks risk losing tens of billions of euros to fintech startups – here are the ones leading the charge (Business Insider), Rated: A

On Monday, the startup Enkla launched, causing a stir in the market. Their interest rate of 0,95 percent is well below the banks’ average interest rates and according to their CEO, Alexander Widegren, Enkla received about 2 billion euros (SEK 20 billion) in applications their first day, Di Digital reported.

Enklas goal is set to lend out 10 billion euros within 18 months.

The four largest Swedish banks, SEB, Nordea, Handelsbanken and Swedbank – which have a combined 75 percent share of the country’s mortgage market – all had a rough day on the stock market on Monday, which may have been caused in part by the emerging threat.

Australia

Australian SMEs favor alternate lending to fund business (Enterprise Innovation), Rated: AAA

Australian small and medium size enterprises (SMEs) are turning to non-banks to secure funding for their business. The latest issue of the Scottish Pacific SME Growth Index revealed that, between 2014 and 2018, the proportion of SMEs intending to use banks for funding has dropped from 38% to 24%. It also found that non-bank funding is now the first option for 22% of SMEs, up from 11% in 2014.

Moreover the report noted that 47.6% of SMEs, who have not used any non-banking lending options in the last 12 months, would be interested in using these options in the future.

There is an estimate 2.1 million SME businesses in Australia employing more than 7.3 million people or about 68% of Australia’s overall workforce.

Source: Enterprise Innovation

FinTechs To Surpass Banks As Aussie SMBs’ Top Finance Choice (PYMNTS), Rated: A

The “Scottish Pacific SME Growth Index,” released twice a year, found the portion of small businesses that said they would use banks for funding declined from 38 percent in 2014 to 24 percent in 2018.

Nearly half (47.6 percent) of SMBs that said they never used a non-bank to access financing said they would be interested in doing so in the future.

Asia

PT INVESTREE Radhika Jaya (Investree), a pioneer peer-to-peer lending (P2P) marketplace in Indonesia, is eyeing to close its Series B funding by the first half quarter of this year.

The company received an undisclosed amount of funding from Kejora Ventures in June 2016.

Investree has facilitated 600 billion rupiah (US$45 million) in loans to 330 SMEs, with 16,000 registered lenders, 5,000 active lenders between 21 to 40 years of age and has a return rate of 16.6% with no defaults.

In terms of business growth, Investree has seen 14% to 15% growth in revenue since 2016.

 

Latin America

Alipay breaks ground in Mexico (Finextra), Rated: AAA

Alipay, the world’s leading digital payments platform, operated by Ant Financial Services Group, today announced that it is further expanding its footprint in the Americas through a partnership with Openpay in Mexico.

Now, Alipay’s more than 600 million active users in China will be able to use Alipay to make purchases from Openpay’s affiliated businesses in Mexico. Alipay is China’s leading payment provider and the primary means of online and mobile payment for Chinese consumers.

Authors:

George Popescu
Allen Taylor

Friday September 1 2017, Daily News Digest

fintech adoption

News Comments Today’s main news: 2,000 IFISAs subscribed last year. Irish credit unions embrace Facebook Loans. Rubique launches new app features. Mexico has a new fintech law. Today’s main analysis: Mobile fintech vs . traditional banks: 15 things winners do well (a must-read). Today’s thought-provoking articles: The Personal Loan is Back. Is P2P lending headed for trouble? China’s $2T of shadow […]

fintech adoption

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Canada

Latin America

News Summary

United States

The personal loan is back (American Banker), Rated: AAA

The personal loan is hip again.

Well, let’s not get too carried away. Just 4.33% of millennials ages 21 to 34 took out unsecured personal loans in 2015, according to a recent analysis by TransUnion.

Peerform is Back With an Interesting New Investment Partner Random Forest Capital (Lend Academy), Rated: A

Late last year Strategic Financial Solutions (SFS) a leading debt settlement company, acquired Peerform and they have been building out new product offerings.

SFS looked at many marketplace lending platforms before deciding to acquire Peerform. They were impressed by their underwriting and regulatory sophistication, their strong brand presence online, their low customer acquisition costs and how they had been frugal with the capital they had raised.

Enter Random Forest Capital. They are a new investment management firm started last year with a focus on data science and machine learning. They love taking masses of unstructured data and not only making sense of this data but finding new predictive power in this data.

Peerform overhauled their APIs to be able to pull in thousands of data attributes and millions of data points for analysis.

The team at Random Forest was able to build proprietary credit models using this new data which they said was more data than is available from any other marketplace lending platform today. As Kevin pointed out, “the money will go where the data is”.

Random Forest also invests in other asset classes beyond consumer credit. They have positions in secured auto, fix and flip real estate and secured commercial debt – bringing their unique data science skills to each asset class.

Out of the shadows: How fintech is infiltrating the mortgage industry (Housingwire), Rated: A

A study released in the National Bureau of Economic Research maintains that nonbanks, such as Quicken and loanDepot, essentially tripled market share for mortgage lending between 2007 to 2015.

Meet Sophie — the AI assistant that wants to save you money (Business Insider), Rated: A

Called Douugh, the app is designed to be a financial control center. More intriguingly, it employs an intelligent virtual assistant named Sophie to help users fully understand and manage their finances.

Users start by plugging in all their bank account information into Sophie. Once she has access to those, she’s able to use them to map out users’ financial situations. From there, she can categorize users’ spending and see if they’re living beyond their means.

Taylor previously worked at SocietyOne, a marketplace lending platform he cofounded. While there, he realized how much of a problem financial literacy was in Australia and the US. That led him to launch Douugh last year.

Right now, Sophie is in training mode. Taylor said the company will remain in beta for the rest of the year and launch in February once Sophie has been trained on enough data. Eventually, Douugh plans to build out a full suite of financial products and make Sophie accessible via Alexa and Siri, he said.

In the future, Sophie could serve as a kind of personal banker for users, operating on autopilot and making transactions. For example, if Sophie sees that you’re about to be charged an overdraft fee for an account you’ve kept empty, Sophie could transfer a few dollars from another account to prevent it.

LendingTree Announces Starbutter AI as Winner of $ 25,000 Startup Innovation Spotlight (Business Insider), Rated: B

LendingTree®, the nation’s leading online loan marketplace, has announced Starbutter AI as the winner of its Startup Innovation Spotlight, a new initiative by LendingTree to showcase the top startup companies in financial technology (fintech) lead generation at LeadsCon.

Starbutter AI is a voice and chat app development company that creates AI-driven chatbots for financial products.

AI-based chat is disrupting lead generation in financial ecommerce, and 2017 has seen a massive shift in the digital landscape toward voice search. Voice search is now 25% of all mobile search and is projected to reach 50% in 3-4 years.

HIGH-FREQUENCY TRADING AND SPOOFING (All About Alpha), Rated: A

Six years ago Michael Coscia placed orders through the CME Group’s Globex platform via a trading algorithm that amounted to “spoofing.” He placed both large and small orders in the copper market, for example, with the large orders (cancelled within milliseconds) designed to create the illusion of market movement in order to create the reality of movements, whence the small order would reap its profits.

In November 2015 a jury convicted Coscia of commodities fraud and sentenced him to three years in prison.

Coscia argued on appeal that Congress’ language on spoofing is void for vagueness, that is, that it fails to provide traders with clear notice of what they are and aren’t allowed to do, and thus is inconsistent with due process of law.

The New York based law firm Cleary Gottlieb has made public a memorandum on the case.

London fintech opens first overseas office in Charlotte at WeWork (Biz Journals), Rated: B

PCI Pal, a London financial technology company focused on call-center compliance, is opening its first overseas office in Charlotte. The company has taken space at coworking giant WeWork’s new uptown location.

Barham says about 30% to 35% of the company’s clients have operations in the U.S., so the firm decided it was time to build out infrastructure here to support them.

BCU goes live on Microsoft Azure with the Temenos Lifecycle Management Suite (Temenos), Rated: B

Temenos (SIX: TEMN), the software specialist for banking and finance, today announces that Baxter Credit Union (BCU) has successfully implemented the Lifecycle Management Suite in Microsoft Azure. The implementation, which included the Collection, Service, and Loan Origination modules, incorporated an upgrade spanning four major releases, as well as the inaugural launch of the Lifecycle Management Suite in the Cloud.

United Kingdom

2,000 IFISAs subscribed last year as consumers eschew low-yielding cash ISAs (P2P Finance News), Rated: AAA

TWO THOUSAND Innovative Finance ISA (IFISA) accounts were subscribed in the last tax year, with retail investors collectively putting £17m in to the tax-free wrapper, official figures show.

ISA statistics released on Thursday by HMRC include IFISA data for the first time for the 2016-2017 tax year. The IFISA was first mooted by then-Chancellor George Osborne in July 2015, as a tax-free wrapper around alternative investments including P2P lending, and was officially launched in April 2016.

The average amount of money invested through an IFISA was £8,500 – slightly less than the average £8,623 put in to a stocks and shares ISA but almost double the £4,622 put in to a cash ISA.

Is peer-to-peer lending heading for trouble? (Which?), Rated: AAA

Two of the biggest peer-to-peer (P2P) lenders in the UK have been beset by problems over the past month, with RateSetter forced to make up a near £9m loan-deal gone sour and Zopa customers experiencing a severe cut in returns. So, is the market for peer-to-peer lending headed for trouble?

RateSetter lent a total of £36m to Vehicle Trading Group from 2014. This was wholesale lending, which meant that Vehicle Trading Group lent that money to other borrowers, including £12m to an advertising firm called Adpod (an unusual choice for a company that offers car loans).

Vehicle Trading Group went bust in May 2017. The Financial Conduct Authority (FCA) has warned P2P firms that lending to other lenders may be in breach of regulations.

RateSetter took over the struggling AdPod in the second half of 2016, but its customers didn’t find this out until shortly after Vehicle Trading Group went bust.

As well as winding down any new lending to wholesale lenders, RateSetter says it no longer issues business loans over £750,000.

Meanwhile Zopa, another well-known P2P website and one of the ‘big three’ players in the market along with Ratesetter and Funding Circle, has warned investors that they may see their returns cut for products with higher projected rates of interest due to a rise in consumer debts going bad.

Which? has been contacted by a member who complained to Zopa after putting £1,500 into Zopa’s higher-risk product, which typically projects returns of around 6% after bad debt. One year later, however, he had made only £42 – less than 3%.

Fintech could be risky if banks don’t cooperate, says the Bank for International Settlements (City A.M.), Rated: A

Banks will need to take measures over the coming years to mitigate the risks of financial technology (fintech), according to a new report from the Bank for International Settlements (BIS).

It noted that while research from McKinsey & Co in 2015 estimated that between 10 and 40 per cent of revenues and 20 and 60 per cent of retail banking profits could be put at risk by fintech over the next 10 years, other market observers saw the developments as more positive.

It also advised institutions to vet any outsourcers through a thorough due diligence process, saying that any risks and liabilities incurred during the operations would remain with the bank.

The new bank: Replacement of incumbents by challenger banks

However, new players could prove just too agile in their ability to push the boundaries of technology, the report warned. In this scenario, new banks or tech companies with a banking branch could steal market share.

The disintermediated bank: Banks have become irrelevant as customers interact directly with individual financial services providers, for instance by using distributed ledger technology

In this case, incumbent banks would no longer be a significant player because there would be no need for a trusted third party or for balance sheet intermediation. Customers could have a more direct say in choosing the services and the provider. This futuristic scenario can be seen in its nascent form in peer-to-peer lending platforms and cryptocurrencies.

China

China’s $ 2 Trillion of Shadow Lending Throws Focus on Rust Belt (Bloomberg), Rated: AAA

Regional banks in China’s rust-belt provinces are driving the rapid expansion of shadow banking in the country, fueling a web of informal lending that poses wider risks to the financial system, according to a study by UBS Group AG.

By analyzing 237 Chinese banks, many of them small and unlisted regional lenders, Bedford casts a new spotlight on underground financing and the risks it poses to the nation’s $35 trillion banking industry. Shadow loans grew almost 15 percent to 14.1 trillion yuan ($2.3 trillion) by December from a year earlier, equal to about 19 percent of economic output, he estimates.

Accounting for this financing, Chinese banks’ nonperforming loans could be three times higher than the official published level, he said.

Asset Quality

Bank of Tangshan is an unlisted lender in the struggling northeast city of the same name, which produces more steel than any other city around the world. The firm’s shadow loans grew 86 percent last year to a size equal to 308 percent of its formal book, the highest of any bank in China, according to Bedford’s report.

Still, the bank reported a bad-loan ratio of just 0.05 percent last year, the lowest of any bank in UBS’ analysis, exemplifying the “distortion” shadow loan books create in assessing asset quality, Bedford said. Bank of Tangshan representatives didn’t respond to an email seeking comment.

Shadow loans can be used to circumvent regulations capping loans to a single borrower at 10 percent of a bank’s assets, or 15 percent in the case of a group company and its subsidiaries, according to Bedford. For example, he said that Baoshang Bank, an Inner Mongolia lender, has extended shadow loans equivalent to 126 percent of its net assets to one borrower.

Car Finance Penetration Rate in China Expect to Double in Five Years (Xing Ping She), Rated: A

According to a public report, from 2005 to 2015, the ratio of purchasing cars by loan in China has grown rapidly from less than 10% to 25% ~ 30%. During the past ten years, auto finance in China has been developing so fast. And from 2016 to 2017, during the short two years, the car finance penetration Rate continue to rise. Now the rate has reached to 35%~40%, among which the luxury car financial penetration rate is even higher. Furthermore, it is expected to double in five years.

On the prevention of various types of ICO to absorb investment-related risks in the name of the tips (National Internet Finance Association), Rated: B

To protect the legitimate rights and interests of the public, the relevant risk issues are as follows:

First, some institutions at home and abroad use all kinds of misleading propaganda means to ICO in the name of engaged in financing activities, the relevant financial activities without any permission, which is suspected of fraud, illegal securities, illegal fund-raising and other acts. The majority of investors should remain sober, vigilant, beware of being deceived. Once found to have involved in illegal acts, should immediately submit to the public security organs.

Second, due to ICO project assets are not clear, lack of investor appropriateness, a serious shortage of information disclosure, investment activities are facing greater risk. Investors should be calm judgments, be careful to take their own investment risk.

Third, China Internet Finance Association member units should take the initiative to strengthen self-discipline, to resist illegal financial behavior.

European Union

Credit Unions embrace FinTech as loans flood in through Facebook (Independent.ie), Rated: AAA

Credit Unions around Ireland have entered the FinTech arena, with some credit unions reporting a 10-fold interaction with younger adult members since they began rolling out digital loan service initiatives earlier this year.

Since its launch, the “Facebook Loan” initiative has already been a huge success for several credit unions throughout the country – now accounting for up to 15pc to 20pc in loan enquiries per month for some credit unions.

Following an initial successful pilot project, this has now become an established channel for credit unions, with close to half of consumers using the facility to take out a loan never having borrowed from a credit union before.

New European fintech hubs are on the horizon (Business Insider), Rated: A

Sweden‘s deal share of the European fintech investment market is growing for the third consecutive year. Its share expanded 2% between 2015 and 2016 to reach 8%, and currently stands at 12%, meaning it’s already ahead of last year’s figure. The country’s share of deals is also increasing ever-more quickly, from 2% over 2015-2016 to 4% between 2016 and 2017 year-to-date (YTD).

France is also seeing its deal share increase for the third year in a row, and like Sweden, its 2017 YTD share (11%) has already overtaken its 2016 figure (10%). However, its deal share growth has slowed down slightly, from 4% during 2015-2016 to 1% between 2016 and 2017 YTD.

International

Mobile Fintech vs Traditional Banking products: 15 awesome things winners do well (Robosoft Technologies), Rated: AAA

As of 2017, banking executives are completely missing the mark at correctly understanding the rise in popularity for fintech products. It all comes down to the user experience. Banks are misinterpreting and miscalculating the role user experience plays in the overall satisfaction customers have with a banking product.

Fintech vs Traditional banks – attitudes and missed expectations

In 2016, Capgemini Consulting in collaboration with EFMA conducted a global study to gauge customers’ attitudes towards financial service companies – banks and fintech companies alike. As part of the study, the researchers asked customers to rate the most important reasons why they are using financial products coming from fintech companies. In parallel – they asked banking executives to do the same.

The results show a complete disconnect between what consumers want and appreciate about fintech and what banks think consumers appreciate about fintech products.

But what they completely missed is that 80% of consumers rank faster service and good experience as a primary reason why they’re using fintech products (the two being completely correlated). In contrast, only 40% of banking executives believe good service/ experience is critical to fintech’s rise in popularity.

Source: Invoiceinterchange.com

Banking executives do not understand what consumers want.

Consider the following stats to understand the result of banking executives missing the mark on user experience from the Millennial Disruption Index Report:

  • 71% of consumers would rather go to the dentist than listen to what banks are saying
  • 1 in 3 consumers are open to switching banks in the next 90 days if a better product is made available to them
  • All 4 of the leading banks in the US are among the ten least loved brands by Millennials
  • 33% of Millennials believe that in the next five years they won’t need to do business with a bank at all
  • Nearly 50% of Millennials believe that innovation in the banking industry will come from outside the banking industry
  • 73% of Millennials would be more excited about a financial service product coming from Google, Amazon, Apple, Paypal or Square than from their own national bank.

1. Integrated products & services (Mint and YES Bank)

It gets tiring to jump from one product to another at every given moment to get a good feeling of your overall financial life.

That is why Mint.com has managed to grow from nothing to 20 million active users in only 11 years. What Mint.com does is to order and organize your entire financial life in a seamless way to give to a bird’s-eye view of your financial life.

YES bank’s mobile solution, YES Mobile 2.0 is developed keeping in mind today’s customer’s mobile lifestyle. The app offers consumers with a seamless omnichannel experience across platforms – smartphones, tablets and smartwatches. Further, the mobile app also has some innovative features to enable easy transactions on the app. Some of these are:

  • One-touch bill payment.
  • Speech to text capabilities to enable hands-free complaints/queries registration
  • On-the-go bill payments from Wearables including Apple and Android smart watches.
  • Easy transfer of money to phone book contacts, Facebook friends and Twitter followers etc.

2. Personalized recommendations (Credit Karma)

Credit Karma is a simple credit history monitoring tool with an added benefit. Whereas they can use the service for free, they will receive personalized recommendations based on their credit reports, credit card usage and other factors. What is very interesting – and smart – for Credit Karma is that while offering these suggestions they also inform their users of their odds of acquiring a new line of credit – credit card, loans, mortgages and more. And most importantly, the user experience is clean, easy to follow and to act on it.

4. Access credit card balance without logging in (Citibank)

Remember how users ranked “speed of service” as the second most important criteria on why they love fintech products? Citibank actually leads the wave of banking institutions that allow their customers to do just that. Instead of logging in to see the most frequently sought for account information, their mobile app allows users to get a glimpse of their account simply by firing the app.

7. Seamless digital payment option (Apple Pay)

It is literally impossible for banks to create something simpler than this. For readers who are not iOS users, Apple Pay works by double tapping the home button. It then pulls up the Wallet application allowing users to pay at different retailers with the default card on file.

9. Text message notifications (Digit)

Digit is a fintech savings platform which analyzes a person’s checking account balance and spending habits and subtracts a small amount from the account every 2-3 days which is deposited in a savings account.

14. Password entering and password retrieval (Acorns)

First and foremost, Acorns has adopted the widely accepted retail practice of allowing users to unmask their password. This is an acceptable practice which reduces user authentication errors. By simply adding a “show” button, Acorns makes the login experience just a little easier.

In addition, the password reset flow is as simple as they come.

Fintech: beware the fake news (Banking Technology), Rated: AAA

A few years back, the general consensus was that banking as we knew it was over.

Fast forward two years and opinion has arguably swung too far in the other direction. The consensus now is that fintech firms tried to disrupt banks but couldn’t.

If we were to apply Gartner Hype Cycle terminology to fintech in general, we would argue that fintech went from the peak of inflated expectations to the trough of disillusionment in the last two years. If you look at the investment figures, however, the picture is not so clear. While there has been a correction in VC funding, Q2 2017 was the largest quarter of investment yet. Maybe Q2 was a blip, maybe we are heading out of the trough of disillusionment to the slope of enlightenment – or maybe investors are more sanguine about the prospects for fintech, seeing through the hype cycle.

The truth is that fintech is neither going to kill all banks nor is it a fad.

But the pessimism has become exaggerated for four main reasons:

1. Some extremely successful and highly disruptive fintech companies have been born, such as Ant Financial and PayPal (which, if a bank, would be one the ten largest in the US);

2. Adoption rates for fintech products are growing and are already material in many countries around the world (see chart below), meaning that fintech firms are successfully changing customers’ banking habits, which should help lower the cost of acquiring customers in future (a key hurdle for many fintechs);

3. Fintech companies are evolving, pushing further in middle and back office functions, extending the range of services they offer and generally becoming asset heavier and more vertically integrated, putting them in a position to compete more effectively; and,

4. Because the indirect impact of fintech has been massive.

Source: Banking Technology

UAE Remittance Giant Taps Ripple Blockchain for Instant International Payments (CryptCoinsNews), Rated: A

A report by regional publication Arabian Business has revealed that UAE Exchange, one of the region’s earliest remittance operators with some 800 offices across 31 countries, is looking to partner San Francisco-based FinTech firm Ripple to facilitate instant international money transfers.

The remittance operator sees blockchain technology as the solution toward faster and efficient money transfers at significantly lower costs for customers. Ripple uses its bank-friendly public blockchain, the Ripple Consensus Ledger, to link its international partners and facilitate real-time money transfers globally.

FinTech, The Financial Crisis And The Smartphone (Forbes), Rated: A

It is ten years since the Financial Crisis and I am often asked if FinTech was born out of the crisis.

In June 2007 two Bear Sterns hedge funds hit problems, by August BNP Paribas shut down access to hedge funds with sub-prime mortgage exposures, and in September Northern Rock, a UK savings and mortgage bank had a run on it, the first bank to suffer this consequence in 150 years in the UK.

It would be another full year before the collapse of Lehman Brothers in September 2008 and the global financial system melted down.

Chris Skinner, the global FinTech pundit, heralds the beginning of FinTech with the launch of Zopa, a UK peer to peer lender started in 2005. It was the first time he had heard the word FinTech.

US market place lenders Prosper, launched in 2005, and Lending Club, launched in 2006, were out of the gates before any evident signs of the impending crisis.

It appears FinTech was not born out of the Financial Crisis.

India

Rubique Launches New Features On Its App (DQ India), Rated: AAA

The interactive app will now focus on complete digitization of the loan and credit card application process. The most significant new feature of the app is ‘Digital Profiling’ and once the profile is created, all the bank policies and algorithms are run against the user’s profile for tailor-made offers.

The key features of an app:

  1. Digital profiling: created based on the back-end by collecting data through SMS scrapping, network type, device characteristics and certain key data points
  2. Pre-qualified offers: The data engine keeps evaluating the offers available on the platform versus customer profile available & proactively keep notifying users on the eligible offers
  3. Document Upload & instant approval: Aiming towards 100% digitization and create a paperless experience for the user, the app allows user to upload the supporting documents required & Rubique’s unique integration feature which is one of its kind in the entire industry, let user get in principal approval online for his/her requirement making it entie digital
  4. Status tracking: Due to direct integration with financial instituions’ system, user can check the application status in real time
  5. Wish List: The app also allows user can also maintain its wish list related to his/her futue loan & credit card requirement
Asia

Blockchain solution aims to stop trade invoice fraud (GT Review), Rated: A

Trade finance is rife with cases of document duplication and the industry is currently exploring ways in which blockchain can be used to prevent these cases of fraud. Earlier this year, warehousing company Access World experienced a number of cases of warehouse receipt duplication, while the costs of the Qingdao fraud, which also involved multiple warehouse receipts, are still being counted.

Invoice Check from Trade Finance Market (TFM), a Singapore-based fintech company, is one of the early products to launch with this aim in mind. It has been developed over the past year on the Ethereum platform and uses smart contracts.

Canada

Bianca Lopes of Bioconnect Presents Building the Human into FinTech (StartUp Toronto), Rated: A

Latin America

New fintech law: what you need to know (International Law Office), Rated: AAA

On March 23 2017 the draft Financial Technology Law was published. The law will regulate:

  • the organisation, operation, function and authorisation of companies that offer alternative means of access to finance and investment (so-called ‘financial technology (fintech) institutions’ (FTIs));
  • the issuance and management of electronic payment funds; and
  • the exchange of virtual assets or cryptocurrencies.

The Ministry of Finance and Public Credit Comments (SHCP) has sought comments on the draft law from the Mexican banking and financial industries.

Under the law, the main authorities in the fintech field are:

  • the SHCP;
  • the National Banking and Securities Commission (CNBV); and
  • the Bank of Mexico (known as Banxico).

Pursuant to the initiative, the following institutions that undertake financing, investment, savings, payments or transfer activities through interfaces, the Internet or any other means of electronic or digital communications will be considered FTIs:

  • electronic payment institutions – these offer issuance, management, accountability and transfer of electronic payments services. Electronic payment funds include:
    • the amounts or units of an asset that can be assigned a monetary value and are recorded in an electronic transaction accounting ledger; and
    • the amounts accepted by a third party as receipt of an amount of money or respective virtual assets;
  • virtual asset management institutions – these contact third parties through digital means in order to buy, sell or dispose of their own or a third party’s virtual assets and receive virtual assets to make transfers or payments to a person, including another virtual asset management institution. Virtual assets are digital units that have similar uses to the Mexican peso, as determined by Banxico in accordance with certain criteria; and
  • crowdfunding institutions – these serve as mediators to investment seekers and potential investors through digital platforms, such as websites or mobile applications, so that prospective investors can fund applicants through such digital platforms.

Authors:

George Popescu
Allen Taylor

Wedneday March 29 2017, Daily News Digest

ron suber fraud

News Comments Today’s main news: How to build a $100 billion company. Square launches in UK. Century-old Thai bank plans digital revamp. ClaimVantage raises funds to expand into Asia. Today’s main analysis: Tech will lead to new sub-prime crunch. Today’s thought-provoking articles: An unofficial chat with Ron Suber. How technology is changing online credit checks. Legal considerations of running a […]

ron suber fraud

News Comments

United States

United Kingdom

China

Asia

MENA

Africa

News Summary

United States

Tech will lead to new sub-prime crunch (TechCrunch), Rated: AAA

The tables below demonstrate cumulative changes in interest rates for Lending Club and Prosper. Although the rate for high-grade loans for Lending Club has slightly increased over time, while dropping a little for Prosper, the tendency for both companies is similar: They are widening the gap between low and high-grade borrowers.

Since 2013, the top 40 percent of earners have accounted for 84 percent of all new income and 34 percent of new debt, which led to a material reduction in aggregate leverage relative to income and provided for consistent growth of retail sales, as this cohort represents 65 percent of total consumption. According to the article, the recession will be a result of a material reduction in consumption from these top earners, who have historically followed the deterioration of lower and middle-income households.

With the penetration of technology, more and more labor-intensive work is shifted to computers or machines. People employed in manual labor, who mostly get an hourly wage, are in less demand on the market, which leads to the number of such jobs decreasing. Most jobs that were previously done manually are being substituted by machines, which, accordingly, increases competition among workers of respective industries.

The statement is easily supported by the last data available: A new study by Forrester forecasts that cognitive technologies such as robots, artificial intelligence, machine learning and automation will replace 7 percent of U.S. jobs by 2025 (with 16 percent of jobs replaced and the equivalent of 9 percent jobs created).

By the end of 2016 there were more than 4.1 million people who drove for a living, with more than 3.5 million doing it full time. The automatization of driving will lead to all of them being forced to change their jobs, and obviously turning to software and tech industries is not an easily affordable option for these people.

Employment in the tech industry is, on the other hand, quickly growing. According to the results of a Cyberstates 2016 report prepared by nonprofit IT trade association CompTIA, employment in tech hit its highest growth rate in more than a decade in 2015, reaching 6.7 million people for companies with formal payroll in place in the U.S., up about 200,000 from the year prior.

Summarizing the above, we can expect that for workers employed in labor-intensive industries, the wages are not going to rise as a result of increased competitiveness for jobs in these sectors. Stagnating wages will lead to credit of such workers suffering (which is, in fact, already happening), as their anticipated increase in income is not realized even when the economy is doing well in general.

How To Build a 0 Billion Company (Newco Shift), Rated: AAA

Mike Cagney, the CEO of financial services startup SoFi, does not lack for confidence. But then again, confidence is what you need to raise billions of dollars and take on some of the largest and most powerful companies in the world — global financial giants like Chase, Citi, and Bank of America. To get there, Cagney’s got a pretty clever playbook: He’s partnering with those same banks, who buy the loans he originates and profit from SoFi’s unique skill at acquiring new customers.

An Unofficial Chat with Ron Suber, the Tom Brokaw of Fintech (finTEK News), Rated: AAA

If you circulate within fintech, pretty much anywhere on the planet, there is a high likelihood you’ve heard of Ron Suber.  And in case you haven’t, he’s the president of Prosper Funding, the marketplace lending platform that has now funded over $8B in loans, and recently closed a deal with a group of institutional investors to purchase up to $5 billion worth of loans over the next 24 months.

I asked him how he deals with all the travel, plus the highs ($5B deal-yeah!) and lows (Lending Club-OMG!) of the job, and he jokingly responded “Funny – (with) a unique combination of Yin Yoga and Johnny Walker Black”.  He also said he does “intention setting” before he gets out of bed every day, which he has found incredibly helpful.

The full deck for the Lendit 2017 presentation can be downloaded at this link: LendIt.FINAL

The last deck he shared with us from the AltFi Australasia Summit in Sydney.  The event was attended primarily by Australians and New Zealanders, with some Asians in attendance as well and also had a slightly different angle.

The speech compared online lending to online trading, showed a 5 point overview of the industry since inception, and included a picture showing traditional banks already involved in marketplace lending.

How to Start a Real Estate Crowdfunding Platform (Crowdfund Insider), Rated: A

Tech development is not cheap. Those hoping to raise angel or VC capital for a real estate crowdfunding platform have, in my humble opinion, missed the boat by a couple of years.

That said, if venture funding isn’t available, it doesn’t make sense to spend a lot of money on technology. Many of the RECF platforms out there today would like to command a tech multiple, but in reality, function more so as technology-enabled brokering or origination shops. For the vast majority of RECF platforms, their value is is not in their technology, but their ability to fund or originate deals.

  • Will this be a personal platform for your own deals, or will the platform raise funds for deals from other parties? If the latter, you may be brokering or dealing, and may need to obtain a license.
  • Will you be selling equity or debt securities? What type of debt will you be selling? What will it be secured by, if anything? What type of equity will you be selling?
  • What type of real estate will you be raising funds for? Will the properties be residential properties? Commercial? Rehab? New development? Is there a geographic scope involved? You should have a specific business plan in mind.

It’s great that RECF platforms are hot right now, but remember – you’re still selling a security, and securities laws really aren’t the type of laws one should take lightly.

RealtyShares Raises Its Largest Joint Venture Capital Investment to Date for Avesta Biscayne Apartment Complex in Miami (Yahoo! Finance), Rated: A

RealtyShares, a leading online marketplace for real estate investing, today announced that its network of accredited investors has raised $3.5 million in equity capital for the $67.3 million acquisition and renovation of Avesta Biscayne in North Miami, Florida. This is the largest equity investment that RealtyShares has raised to date through its real estate investing marketplace.

Avesta Biscayne is a 402-unit apartment community near the Biscayne Bay shoreline, consisting of six mid-rise buildings and amenities including a clubhouse, two pools and a tennis court. The deal is sponsored by Avesta Communities, a vertically integrated multi-family owner-operator specializing in apartments serving the middle-income renter. Previously, Avesta raised $2.25 million through RealtyShares to recapitalize and renovate Avesta Bridgewater, a 344-unit apartment complex in Orlando, Fla.

Shadow banking is getting bigger, not better (Standard.net), Rated: A

In the U.S. mortgage market as a whole, shadow banks held a 38 percent share in 2015, compared with 14 percent in 2007.

In other markets, financial organizations that are not subject to bank regulation have flourished, too. According to the Financial Stability Board, the august body that makes recommendations to the global financial system from Basel, Switzerland, “other financial intermediaries” — the category that includes non-bank lenders but not insurance companies and pension funds — increased their assets to $80 trillion, or 23 percent of total financial assets, in 2014. Their average growth reached 5.6 percent in 2011 through 2014, while the global banking system’s assets stopped growing during that time.

The reason shadow banks have largely escaped public scorn, regulatory scrutiny and high capital requirements is that they often came in the guise of high-tech disruptors. Quicken Loans Inc., the third biggest mortgage lender in the U.S. in 2015, does business online and on the phone, and that somehow makes it less interesting to regulators than a bank that does the same through an old-style branch network. Lending Club and other “peer-to-peer” lending firms quickly became conduits for large investors, not “peers,” yet they avoided regulation as though they were innovative tech platforms.

By 2015, 85 percent of the mortgages they originated was sold to government-sponsored enterprises such as Fannie Mac, Ginnie Mae, Freddie Mac and Farmer Mac. They benefit from implicit and explicit government guarantees originally supplied to banks — without shouldering the same regulatory burden or facing the same stigma. In other words, they profit from regulatory arbitrage.

Kroll Bond Rating Agency Releases U.S. Consumer Loan ABS Rating Methodology (Business Wire), Rated: A

This report describes KBRA’s rating methodology for U.S. consumer loan asset-backed securities (“Consumer Loan ABS”). This includes transactions secured by collateral originated by traditional consumer loan companies, as well as, through online consumer loan marketplace lending platforms (“MPL Platform”).

Wells Fargo’s Robo is Pricier Than Competitors (Financial Advisor IQ), Rated: A

Wells Fargo is betting that having access to a live financial advisor will convince clients to put up higher minimums and pay more for its robo-advice platform than for its competitors’ platforms, the Wall Street Journal writes.

The company’s Intuitive Investor automated advice service requires a $10,000 minimum investment and costs 0.5% of assets annually, according to the paper.

By contrast, Merrill Lynch’s Edge Guide Investing platform and Schwab Intelligent Portfolios only require a $5,000 minimum, while Wealthfront requires $500 and Betterment has no minimums, the paper writes. All of these platforms charge fees ranging from 0.25% to 0.45% of assets, except Wealthfront, which only starts charging 0.25% on accounts with more than $10,000, according to the Journal. Vanguard Personal Advisor Services, meanwhile, comes with a hefty $50,000 minimum but charges only 0.3%, the paper writes.

What’s more, Wells Fargo and other full brokerages aren’t necessarily competing with pure robo-advice pioneers such as Betterment and Wealthfront, William Trout, a senior analyst at research firm Celent, tells the Journal. Rather, they’re aiming to tap into their existing client base, he says. Wells Fargo is targeting its retail bank clients who currently don’t receive any form of advice, Lai tells the paper.

Jed Morey And The Art Of The Publishing Pivot (Innovate LI), Rated: A

So the New York Financial Press, launched in April 2016 by Syosset-based Morey Publishing as an “alternative financial news journal” that would dive deeper than earnings statements and trading indexes (not to be confused with the Wall Street-based media company founded in 2005 by Pierre Alexandre) – is now feeding Mayava Capital Inc., a Syosset startup created to facilitate small-business lending.

The other five sites – each focused on lending in a particular vertical market, such as healthcare or transportation or IT – were created by Morey et al specifically to usher visitors directly into Mayava Capital’s arms.

FUTURE DIGITAL FINANCE AND PERFORMANCE HORIZON RELEASE NEW INDUSTRY BENCHMARKING REPORT (Future Digital Finance Email), Rated: A

Today, Future Digital Finance and Performance Horizon released their findings from their new report titled “Benchmarking Performance Marketing Adoption within Financial Services Strategies”. As the consumer revolution in retail banking continues, the whole financial services vertical has seen dramatic shifts towards electronic interactions across their consumer and business-to-business operations. This new study takes a look at the wider variety of marketing channels firms have begun to leverage, especially ones with clear measurement methodologies that contribute towards revenues.

Key statistics from the survey include:
– Performance marketing, including affiliate marketing, primarily drives customer retention for 21% of financial services companies.
– Almost a third of companies spend at least 20% of their overall media budget on performance-oriented programs, while 21% of companies spend at least 40% of their overall media budget on performance oriented programs.
– Finance companies are looking to grow performance-based marketing programs as 77% of companies prefer to pay new partners based on performance.
– 93% of companies expect mobile website sales will increase, and 92% expect mobile app sales will increase in 2017.
– 86% of companies agree that data and insights from their existing partner marketing programs enable them to make better business decisions.

Mortgage Automation Pioneer cloudvirga Raises $ 15 Million in Series B Funding (PR Newswire), Rated: A

cloudvirga℠, developer of the automated, cloud-based intelligent Mortgage Platform® (iMP), announced today it has raised $15 million in a series B funding round led by Incenter, a Blackstone Group portfolio company. The new funding will support cloudvirga as it scales its technology and expands its product offerings.

Cloudvirga’s flagship mortgage point-of-sale (POS) system, the iMP empowers consumers to take the helm of a completely re-engineered mortgage workflow that automates the entire initial disclosures process and delivers unmatched transaction speed and efficiency to both borrowers and lenders. Central to cloudvirga’s success is its ability to maintain strict regulatory compliance, reduce time to close and save lenders money by moving many traditional back-office tasks to the front of the loan process.

Why squeeze fintech into a bank regulatory box? (American Banker), Rated: A

Within the constraints of its jurisdiction and mission, the OCC is clearly trying to do its part to address the regulatory issues raised by financial service providers in the technology sector. The agency is not simply pursuing a “bank-lite” charter.

The regulation of financial services in the U.S. is highly fragmented, and fintech is challenging every aspect of that structure. Federal and state agencies can stake claim over the regulation of fintech, yet both are ultimately limited by narrow lanes and tightly defined jurisdictional boxes prescribed to them by their respective charters. As a result, even the most well-intentioned efforts are only able to address the trees, but not the forest.

The goal of its proposal is to encourage the entry of fintech firms into federally regulated financial services. But if the actual pool of applicants ends up being extremely small, that’s going to be a real problem.

Random Forest Capital Raises $ 1.75 Million for Strategic Talent Acquisition (Random Forest Email), Rated: B

Random Forest Capital () completed its seed round in January 2017 with $1.75 million led by a very impressive group of angel investors. The money will be used to build out its full stack software and machine learning algorithms and acquire strategic talent for helping institutional investors find the right opportunities in consumer, residential, and commercial credit.

“There are 400+ platforms that originate many types of secured & unsecured debt,” said Kevin Farrelly, chief operating officer, general partner, and co-founder of Random Forest Capital. “We can analyze a massive amount of data from those platforms in seconds whereas a human analyst will take days to weeks.”

Random Forest Capital uses machine learning algorithms and third-party systems with APIs to source investment opportunities from eight platforms (and growing). Their custom algorithms then price the risk and can execute in microseconds.

“Loan originators make money originating loans – so it’s in their best interest to bucket all the loans together. Our goal is to preserve investor capital. These competing interests create a fundamental divide where alpha in marketplace lending is easily found,” said Austin Trombley, chief technology officer and co-founder of Random Forest Capital.

Random Forest Capital recently added two new members to its expert leadership team. Julie Choi, Ph.D. has been named the chief risk officer.  Carl Siemon, Ph.D. has been named the principle data scientist for Random Forest Capital. Siemon is a Physics Ph.D. graduate from UT Austin where he was supported by the prestigious National Defense Science and Engineering Fellowship.

MoneyLion Wins Gold at PYMNTS Innovation Project Awards for Best Credit Innovation (MoneyLion Email), Rated: B

MoneyLion, the mobile personal finance platform that puts consumers in control of their financial lives with AI-driven tools and smarter credit products, has won the gold medal for Best Credit Innovation at the PYMNTS 2017 Innovation Project Awards. The award coincides with a major growth milestone for MoneyLion, which now has over a million users.

Real estate crowdfunding platforms raising American real estate prices (STL Real Estate), Rated: B

But, with the rise of third-party crowdfunding platforms, most notably of Chinese origin, middle class people can get in on a piece of the real estate pie – no matter where they live.

Today, Brooklyn is where it’s at, with the price of Brooklyn town homes and apartments growing 16 percent between 2015 and 2016, while Manhattan properties decreased by 1 percent.

United Kingdom

JACK DORSEY LAUNCHES MOBILE PAYMENTS COMPANY SQUARE IN THE UK (Irish Tech News), Rated: AAA

Mobile payments company Square launched for UK based businesses today. This launch is the fifth market for Square since launching in the US in 2010 and since expanding to Canada, Japan and Australia.

Square Point of Sale has actually been available in the UK, among other markets around the world, for a few years already, however the full features of the product that’s available in Square’s four main markets were not available.

LendInvest Property Development Academy Expands Course Offerings (Crowdfund Insider), Rated: A

LendInvest, a leading UK online property finance lender, is launching the LendInvest Property Development Academy in four more key cities around the country following overwhelming demand for its London & Southeast courses.

In addition to three more courses for London & Southeast candidates this year, the Academy has expanded to:

  • Northern England: Manchester, 25 – 26 May
  • Scotland: Edinburgh, 22 – 23 June
  • Midlands: Birmingham, 7 – 8 September
  • Southwest England: Bristol, 9 – 10 November

All courses are carefully tailored to resonate with common issues facing developers in their respective regions. All modules are taught by industry specialists from the local area who will drawn on locally relevant case studies and anecdotal evidence.

Lendy Integrates Saving Stream Platform to Continue Growth (Crowdfund Insider), Rated: A

Lendy, announced on Tuesday it is integrating its popular investor-facing platform, Saving Stream, under its Lendy brand as part of the platform’s continued growth. According to the company, it is merging Saving Stream, with its borrower-facing brand, Lendy Finance, in order to simplify its branding and to make accessing its loan-based crowdfunding platform easier and more accessible to clients.

Lendy revealed that the total amount loaned to property developers and investors through its peer-to-peer platform has now topped £285 million and its 15,000 registered users have received £20 million of interest from the loans they have written. The company also stated its user base has more than doubled from 5,600 at the start of 2016, with the platform’s popularity among lenders being driven by:

  • The security provided by property-backed loans
  • The additional security provided by Loan To Value (LTV) ratios on all Lendy loans being capped strictly at 70%
  • Returns of up to 12% on loans written through the Lendy service.
China

How technology is changing online credit checks (SCMP), Rated: AAA

It generally takes nothing more than a simple click on the ‘yes’ button to authorise an online peer-to-peer (P2P) lender to go through an applicant’s credit history before approving a loan.

But the assessment may in fact go far beyond the borrower’s imagination.

With vast amounts of data at their disposal, the powerful analytical programs behind the screen are often capable of picking up diverse fragments of an applicant’s life story and piecing together a complete picture. And it all happens in a matter of minutes.

Cloud Atlas, a risk management system developed by Finup, is one such example. After obtaining consumers’ consent to access their mobile contacts book and apps as well as information provided by third-party data agencies, the system is able to carry out a thorough analysis to figure out whether the applicant is eligible for loans on the particular P2P platform.

The pass rate of applicants for loans under the Cloud Atlas system is well below 10 per cent, as the three-year-old company uses strict criteria.

High employee turnover sign of transformation in P2P lending industry (Global Times), Rated: A

With the rollout of new regulations in February, there has been a wave of resignations in China’s peer-to-peer (P2P) lending industry, as employees worry about the prospects of the business.

“I resigned in February,” said a woman surnamed Liu, a former employee at one of China’s leading P2P platforms, which she refused to be named.

Liu started her career in Internet finance in October 2016. Half a year later, she worries about the industry’s prospects.

Recently, P2P industry employee turnover has shot up, with some workers joining larger P2P companies and some moving to other industries.

The number of Chinese P2P lending platforms fell from 3,516 in November 2015 to 2,393 in February 2017, according to data from the Shanghai-based P2P lending platform wdzj.com.

Just a few big Chinese P2P lenders seen surviving in sector tarnished by scandal (SCMP), Rated: A

The seemingly relentless proliferation of China’s peer-to-peer (P2P) lending platforms has finally been contained by stringent measures introduced by the government in a bid to tackle a fraud epidemic that tarnished the industry’s reputation.

The sector, which ballooned to host thousands of firms of varying sizes and specialities, will eventually become limited to just a handful of mega participants, according to Zhang Shishi, a co-founder of the Chinese P2P platform Renrendai.

However, the heated competition that emerged as a wave of profit-hungry new players crowded in, all hunting aggressively for investors and money in the markets, led to a rise in illegal activity. Countless cases of P2P lenders promising high returns from non-existent projects and then running off with the proceeds made the headlines.

Asia

Century-Old Bank Plans Digital Revamp to Fight Fintech Risk (Bloomberg), Rated: AAA

Siam Commercial Bank Pcl, Thailand’s oldest homegrown lender, plans to reinvent its mobile digital payment platform as a lifestyle app to help fend off competition from upstart financial technology providers.

The lender is working with companies including Accenture Plc, Microsoft Corp. and International Business Machines Corp. on the project, Chief Executive Officer Arthid Nanthawithaya said in an interview. The long-term goal is an app that allows customers to search and pay for entertainment options such as restaurants and cinemas, going beyond just day-to-day banking, he said.

Siam Commercial Bank’s shares gained 0.6 percent at 10:46 a.m. in Bangkok on Wednesday. The stock has climbed about 4 percent in the past three years, less than the 8 percent advance in the Stock Exchange of Thailand’s Banking Index.

‘Why would we ignore a billion people?’: An Irish fintech firm has raised €2m to expand into Asia (Fora), Rated: AAA

IRISH-BASED FINTECH COMPANY ClaimVantage has secured €2 million in funding to bankroll its move into Asia.

The international firm, which has been headquartered in Dublin since it was founded in 2006, develops and provides cloud-based claim management software for some of the top insurance firms in the US and Canada.

Singapore Inks FinTech Cooperation Pact with France (Cryptocoins News), Rated: A

The Monetary Authority of Singapore (MAS), Singapore’s central bank and financial authority has signed FinTech cooperation agreements with a pair of French regulators to boost FinTech ties between the two countries.

The cooperation agreement sees Singapore’s central bank partner the Autorité de Contrôle Prudentiel et de Résolution (ACPR), the authority monitoring banks & insurance companies in France and the Autorité des Marchés Financiers (AMF), France’s stock market regulator.

Under the agreement, the three authorities will adhere to a framework that fosters the sharing of information relating to FinTech trends and services. Joint innovation projects and regulatory hurdles will also be discussed between the two countries.

MENA

MENA Fintech Startup NOW Money Wants To Help Everyone Get Access To Banking (Entrepreneur), Rated: AAA

According to the World Bank’s Migration and Remittances Factbook 2016 report, migrants are sending earnings worth more than US$441 billion to families in developing countries, contributing to the 10% of GDP of some 25 developing countries. With KSA, UAE and Kuwait among the top ten high-income countries categorized as main sources of remittances in 2014, six GCC countries accounted for $98 billion in outward remittance flows in 2014. As the region’s expat population transfer money to respective home countries, there’s a prevalent reality that there is a struggle (especially among blue-collar workers) to access bank accounts- and this is what fintech startup NOW Money is trying to solve.

With a tagline of “empowering the unbanked,” founders Katharine Budd and Ian Dillon launched NOW Money to provide expat workers who don’t have access to banking and remittance services with direct access to a current account, debit card and remittance from their proprietary app and service center.

Compared to outbound remittances sent as cash (which is often hard to follow), the startup tracks “payments from salary, to remittance, to collection by overseas. This is an important step change in the progress the UAE is making towards combatting money laundering and criminal funding.” With respect to security and privacy, facial recognition tech is used to enable users to log in to the NOW Money app- a photo cannot be used to fake an entry, since movement is accounted for by this feature: the user has to blink to log in. It also records the way you hold your phone and type, so suspicious behavior will cause an alert notification. Although pin codes and passwords are still present as per the current compliance laws requirement, the team believes such a system is still susceptible to hackers, and thus Budd asserts the advantage of biometrics.

Alternative Financing in Africa, Middle East (Microcapital), Rate: A

The authors estimate that approximately USD 475 million was made available in Africa and the Middle East via alternative financing methods between 2013 and 2015, with Israel accounting for USD 125 million of this total. The authors conclude that alternative finance as a whole grew more slowly in Africa and the Middle East than in other parts of the world as the development of the market was in its early stages.

Kabbage: working capital for small businesses unable to obtain credit from traditional sources (MENAFN), Rated: A

As a large percentage of small businesses, online retail sales as a percentage of total retail sales have doubled in the past five years. Ecommerce sales overall in 2006 were just over 107 billion, representing 2.7 percent of total retail sales . There are over 100 million Ebay users in the US today, with an estimated 200 million new listings in 2Q, 2008 alone. There are an estimated 5 million power sellers transacting over 48 billion on Ebay and more than 8 million high-volume sellers representing over 70 billion across all marketplaces.

Rob Frohwein founded Kabbage to get small businesses capital quickly, an area in which banks have long struggled.

Kathryn Petralia has 12 years of experience in the consumer credit and payments space.

Amy Zimmerman has spent 15 years building tech companies by identifying and cultivating talent. Her focus at Kabbage is to foster the company’s inventive culture.

Africa

The legal considerations of running a FinTech startup in Nigeria (Techpoint), Rated: AAA

However the alternative method is for a startup to operate on its own steam by meeting the requirements to obtain the requisite licences although this method requires significant capital outlay. As such, FinTech startups that are seeking to exploit the significant market opportunities in Nigeria are bound to run into several regulatory compliance obligations.

The payment and processing segment of the FinTech sector for example — which has shown the most growth and success thus far — is primarily governed by the same general framework as are traditional financial institutions providing offline financial services (e.g. money/payment transfers, clearing, switching, settlement etc), in addition to regulations related specifically to that sub-sector.

Thus, the legal and regulatory framework that is generally applicable to financial institutions — such as the Central Bank of Nigeria (CBN) Act, 2007, the Banking and Other Financial Institutions Act (BOFIA) and all subsidiary instruments stemming from same — are all relevant to any non-bank led startups providing digital equivalents of offline financial services. This framework brings with it mandatory obligations such as KYC and AML requirements that must be strictly adhered to.

Commercial lending activities are regulated in Nigeria and as such require licensing by either the CBN (for banks and other financial institutions) or the Ministry of Home Affairs of the various states (non-financial institution lenders).

As it stands, insurance penetration in Nigeria is only at 0.6% and the growth of the middle class, alongside increased economic activity, indicates a very bright future for this sector.

The Nigerian Insurance Act provides the overarching framework for operators of all types of insurance business in the country and the National Insurance Commission (NAICOM) is the industry regulator. Under the act, one must be duly registered with NAICOM before engaging in the business of insurance.

Authors:

George Popescu
Allen Taylor