Thursday September 26 2019, Weekly News Digest

LendingClub eligibility

News Comments Today’s main news: SoFi intros crypto trading. Investors locked out of LendingClub in 4 states. Funding Circle asks US regulators to folow UK’s model. Fundbox raises $176M. Klarna surpasses 12M transactions per year. Today’s main analysis: U.S. subprime auto loan ABS recession scenarios (A MUST-READ). Today’s thought-provoking articles: Recession talk cooling. Consumers with […]

The post Thursday September 26 2019, Weekly News Digest appeared first on Lending Times.

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United States

United Kingdom

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News Summary

United States

SoFi Introduces Crypto Trading With SoFi Invest (PR Newswire), Rated: AAA

SoFi announced today that it has added crypto trading to its fast-growing SoFi Invest platform, as a response to demand from its over 800,000 members. SoFi Invest is now the first platform to offer automated and active investing with stocks, ETFs, and crypto through a single app.

SoFi Adds Bitcoin, Litecoin, and Ethereum to Invest Platform (Cheddar), Rated: A

SoFi goes live with crypto trading service for its over 800K users (The Block), Rated: B

SoFi users can initially buy and sell three cryptocurrencies – bitcoin (BTC), ether (ETH) and litecoin (LTC). The Block first reported the story last week, saying that the firm is beta testing the service in partnership with Coinbase.

SoFi CEO on what’s next for the company (Yahoo! Finance), Rated: A

Sofi CEO Anthony Noto joins The First Trade to discuss what’s next for the company.

Watch the video here.

Charlie Lee {LTC} praises SoFi as crypto-investing with Litecoin kicks-off (Our Bitcoin News), Rated: A

Litecoin is ranked at #6 underneath Tether, as well as Bitcoin Cash, in the market. The price jumped up at a rate of 0.60% in the course of the past 24-hours. This led to LTC scaling all the way up to $57.03 where it presently rests. The trading volume recorded stands at roughly $2.957 billion, whereas the supply has 63,337,479 LTC coins included as part of circulation. The total market cap of Litecoin amounts to $3.612 billion which depicts a massive decline compared to the value attained a week back.

SoFi CEO: Start investing in your 20s (Yahoo! Finance), Rated: A

SoFi CEO Anthony Noto discusses how his company’s consumers can now buy and sell Bitcoin, Ethereum and Litecoin.

SoFi Refunds Investors Hit By Capital Gains from Proprietary ETFs (ETF Trends), Rated: A

Financial technology company SoFi is offering refunds to investors hit by capital gains taxes following the change of replacing Vanguard funds with their proprietary ETFs in certain portfolios managed by their robo-adviser.

Some Investors Locked Out of Investing in LendingClub Loans (Lend Academy), Rated: AAA

Over the last 24 hours we’ve received several messages from Lend Academy readers alerting us that they have received information that they are no longer able to invest in LendingClub notes. There is is also an active discussion on the Lend Academy forum.

LendingClub state eligibility as of 9/24/2019. Source: Lend Academy

Funding Circle urges US regulators to follow UK model (P2p Financ News), Rated: AAA

FUNDING Circle’s US division is urging the Securities and Exchange Commission (SEC) to amend its restrictions on peer-to-peer retail investment.

The US financial regulator limits annual investment to five per cent of an investor’s annual income if their yearly income or net worth is under $107,000 (£86,075), rising to 10 per cent if the investor earns more than that.

Two Franchise Trends Aspiring Franchisees Should Look Out For (Forbes), Rated: A

Over the past 14 years, I’ve coached more than 1,500 people who were searching for the best franchise for their situation. I recently read the 2019 Small Business Trends 

Fintech Fundbox raises $ 176M to lend to business using AI (Information Management), Rated: AAA

Fintech Fundbox Inc. has raised $176 million in a new funding round from investors including Allianz SE and General Catalyst. The company planned to announce the funding along with a new $150 million credit facility.

A Fundbox spokesman said the new round valued the company at between $500 million and $1 billion, but would not disclose the exact valuation.

U.S. Subprime Auto Loan ABS: Evaluating Recession Scenarios (DBRS), Rated: AAA

Summary Highlights

  • Under the hypothetical Recession Scenarios, DBRS found that credit enhancement (excluding excess spread) coverage of remaining expected losses, as determined by a multiple calculation, decreased at the inception of the hypothetical recession for all of the Sample Transactions. The senior debt tranches experienced a swift deleveraging whereas some of the subordinated debt tranches could be at risk for a potential downgrade during the hypothetical Recession Scenarios.
  • After the initial decline in the multiple calculations at inception of the hypothetical Recession Scenarios, the deleveraging nature of the sequential pay structures of the transactions resulted in the calculated multiples for the analyzed debt tranches to move into the multiple range corresponding to the original rating of the debt tranche over varying lengths of time. The multiples for some of the debt tranches originally rated BB were weaker and moved into the BB range at a slower pace. As a result, those tranches would be more likely to be considered for a potential downgrade as compared to the more senior debt tranches where the structures delevered more quickly and the multiples reached the range corresponding to the original rating over a generally shorter period.
  • Over the life of the Sample Transactions, the credit enhancement multiples for all of the debt tranches analyzed, some on a delayed basis, ultimately moved into the AAA rating multiple range.
  • In each of the Recession Scenarios, the structure of each of the transactions provided sufficient credit enhancement for timely payment of interest and ultimate payment of principal of all debt tranches.
Source: DBRS

Read the full report here.

A Cooling in Recession Talk, Heat Up in Housing (PeerIQ), Rated: AAA

Lower rates, improved credit scores, and tighter housing inventory are improving the outlook for housing. Housing market achieved an 18-month high in housing starts and a record high in FICO scores.

The Citigroup Economic Surprise Index – a measure of actuals vs economist’s expectations – has also registered readings above the neutral baseline suggesting slowdown fears may be exaggerated.

Source: PeerIQ, CitiGroup

Consumers with Significant Liquidity Needs Often Access Alternative and Traditional Credit Markets Concurrently (GlobeNewswire), Rated: AAA

Many lenders believe that consumers who turn to the alternative credit market for liquidity do so because they have no other options. However, a TransUnion study presented today at the Lend360 conference found that these borrowers are frequently applying for and receiving traditional credit at the same time. While traditional subprime installment lenders and alternative lenders are competing over the same consumers, the study finds that the liquidity need is often not fully met in either market.

Source: TransUnion

Risk Levels Higher for Traditional and Alternative Loan Borrowers

Controlling for risk score, 8.5% of the alternative credit-active consumers had a serious delinquency in the first 12 months, vs. just over 2% for the control group. Bankcard performance was also worse. While these borrowers exhibited a preference for unsecured personal loans under $1,500 within 12 months of the alternative credit origination, they also originated auto and bankcard credit during that time.

Read the full report here.

Lendio to Double Sales Force, Expand Loan Product Offerings (Benzinga), Rated: A

Lendio today announced plans to double the sales force at its Lehi, Utah, and Woodbury, New York, offices. The company has hired 80 employees in 2019, and intends to add another 40 sales representatives by the end of the year, with plans to bring on another 40 in the first quarter of 2020. In addition to the expanding workforce, Lendio plans to bolster its selection of loan products for small businesses, with a 10% increase in the number of product offerings in the coming year.

Fintech lenders taking more market share from banks, survey finds (American Banker), Rated: A

Fintechs are continuing to siphon away customers for unsecured personal loans from traditional lenders, according to a study released Wednesday by Experian.

The study found that digital lenders more than doubled their market share in the past four years, with consumers across the credit spectrum increasingly turning to fintechs like Lending Club and Social Finance.

Fintechs now provide 49.4% of unsecured personal loans as of March compared to 22.4% in 2015, according to Experian.

Fintech Lenders Could Hold the Keys to Recession Recovery (Salon), Rated: A

Born out of the last recession, young fintech lenders have not yet been tested by a significant economic storm, and many in the industry are wrapped up in a dialogue of speculation about the industry’s ability to ride out an impending recession. It’s time to turn the conversation instead to focus on how fintech lenders can position themselves to play a critical role in recovery from the next downturn, whenever it may happen.

WeWork should ask SoFi CEO for advice on how to save the company (Yahoo! Finance), Rated: A

The two new guys running the slowly sinking ship known as once hot tech startup WeWork should give SoFi CEO Anthony Noto a holla on his Apple iPhone. Trust me, Noto has some good, timely advice for Artie Minson and Sebastian Gunningham.

Because the former Goldman Sachs banker and Twitter chief financial officer, now SoFi chief clearly gets how to rebuild a promising tech startup after a high-profile challenge or two. And then possibly, take it down the path of a successful initial public offering.

Generation Z’ers want more financial education – and innovative tools to help them learn (PR Newswire), Rated: A

As high school students return to school, they may see the benefits of new state laws across the country that require curriculums to offer a class about personal finance. This is great news for young adults as 76% of recent high school graduates agree it should be required, according to a national survey by Experian.

Many Gen Z’ers surveyed say innovative tools are the way to go when it comes to learning about credit (45%) and almost half (48%) would prefer to use tech-driven tools versus textbooks to learn more.

Survey respondents also say they are currently learning about finances mostly through their friends (28%), YouTube (27%) and some form of social media (24%).

D.C. Court Dismisses Challenge to OCC’s Fintech Charter (Manatt), Rated: A

In the latest battle over the Office of the Comptroller of the Currency’s (OCC’s) plan to issue special purpose national bank (SPNB) charters, a D.C. federal judge has for a second time dismissed a lawsuit brought by the Conference of State Bank Supervisors (CSBS).

The decision creates the potential for circuit split, as a New York federal court reached the opposite conclusion in a nearly identical action filed by the state’s Department of Financial Services (DFS).

9 Ways To Build an Empire Without Lifting a Finger (Yahoo! Finance), Rated: A

Another way to build your real estate empire is through real estate crowdfunding. As with investing in a REIT, real estate crowdfunding allows you to pool your money with other investors to invest in real estate. This could include multifamily units, commercial properties and bundles of single-family homes.

According to U.S. News & World Report, the top real estate crowdfunding platforms are ArborCrowd, RealCrowd, Groundfloor, CrowdStreet, PeerStreet, Small Change and RealtyMogul.

If you can afford the minimum investment — which is usually $25,000 — you can make big returns. Groundfloor boasts 10% returns for individual investors and CrowdStreet’s is even higher with 25.5% total average annual returns across all fully realized deals.

RealCrowd offers a breakdown of average annual income on a $1 million investment based on the property type: $78,000 for a suburban office, $72,000 for a retail space, $59,000 for a downtown office and $58,000 for a multifamily unit.

The Best And Worst MA Towns For Young Families (Patch), Rated: A

The online mortgage broker Lending Tree has tried to take some of the guess work out of that decision by ranking every community in Massachusetts with 5,000 or more residents based on their appeal to families with school-age children.

Hingham, under Lending Tree’s methodology, received a score of 72.5. Last-place Webster’s score was 31.9. Other towns in the top 10 included Winchester, Needham, Milton, Longmeadow, Wellesley, Cochituate, Pinehurst, Lexington and Nantucket.

JPMorgan donates $ 25M to get fintech in hands of underbanked (American Banker), Rated: A

JPMorgan Chase announced Tuesday a $25 million commitment to the Financial Health Network’s Financial Solutions Lab, a program meant to focus on the creation of fintech tools to help consumers better manage their finances.

The Financial Health Network (formerly The Center for Financial Services Innovation) previously received a $30 million philanthropic donation from the bank that spanned the last five years.

Bitcoin and Ethereum dive deep, is Bakkt to blame? (Mashable), Rated: A

“The disappointing BAKKT opening signals to the crypto community that institutions are less ready to invest in BTC at scale than was supposed, which means the price was probably too high and due for a correction. What we’ve just seen is short sellers and momentum traders piling on to make things worse, and now here we are back at support,” Alex Mashinsky, CEO at crypto lending and depository company Celsius Network, told Mashable in an emailed statement.

STRATA Trust Company Reaches $ 2 Billion AUC Milestone (PR Newswire), Rated: A

STRATA Trust Company (“STRATA”), a custodian dedicated to the complexity of holding alternative investments in tax-advantaged, self-directed retirement accounts, announced today that the firm has surpassed $2 billion in assets under custody. STRATA offers access to a range of asset classes that include private equity, private debt, real estate, crowdfunding, structured settlements and more. Since 2008, STRATA has been committed to empowering investors and the investment community with wider diversification and alternative asset custody solutions in retirement portfolios by delivering industry-leading service, education and support.

Online Pawn Lending Goes Back Offline (Business Wire), Rated: A

Prominent online lender Borro Private Finance unexpectedly ceased its collateral-based lending program this summer after nearly ten years of business. The UK-US-based establishment specialized in online pawn loans against valuable assets, including fine art, jewelry, and watches. Borro’s discontinuation of its operations comes nearly two years after the company’s withdrawal from the bridge loan market in July 2017.

Eleventh Circuit Tosses Online Lender’s Forum Selection, Class Waiver Clauses (Lexology), Rated: A

Siding with six consumers who filed suit asserting violations of state usury laws against online lenders, the U.S. Court of Appeals for the Eleventh…

Marqeta Hires Vidya Peters As First Chief Marketing Officer, as Company Continues to Build Out Expansive Global Vision (Business Wire), Rated: B

Marqeta, the first global modern card issuing platform, today announced the addition of Chief Marketing Officer Vidya Peters to its executive team.

White Oak Commercial Finance Acquires Veritas Financial Partners’ Asset-Based Loan Portfolio (ABL Advisor), Rated: A

White Oak Commercial Finance (“White Oak”), an affiliate of White Oak Global Advisors, announced today it has purchased a portfolio of asset-based loans from Veritas Financial Partners, a Boca Raton, FL based specialty finance company.

Alchemy Technology And Equifax Partner To Drive FinTech Innovation (PR Newswire), Rated: B

Alchemy Technology Inc. and  Equifax Inc. (NYSE: EFX) today announced a new partnership to drive FinTech innovation. The relationship is designed to help banks, specialty financing firms and FinTech startups accelerate their time to market with easily deployable white labeled lending solutions. The two companies will make the “tech” in FinTech available to organizations of all sizes with a powerful combination of the Alchemy Lending Operating System and Equifax data analytics, credit, identity and income verification solutions.

Ex-Goldman Sachs Managing Director Joins Lendingblock as Strategic Advisor (Lendingblock), Rated: B

Lendingblock, the regulated, open exchange for institutional borrowing and lending of digital assets, today announces the appointment of John Macpherson as a strategic advisor.

CoreLogic Credco Integrates its Three-Bureau PreQual Solution with eLEND Solutions (CoreLogic), Rated: B

CoreLogic, a global provider of property information, insight, analytics and data-enabled solutions, today announced that CoreLogic Credco integrated its Three-Bureau PreQual credit report and score solution on eLEND Solutions, an automotive technology company specializing in online and in-store credit and finance solutions. The integration of the prequalification solution gives CoreLogic Credco customers who use eLEND instant, single-source access to a consumer’s credit report and FICO score from all three national credit bureaus – Experian, TransUnion or Equifax.

Tavant Named to 2019 IDC FinTech Rankings (Business Wire), Rated: B

Tavant, a Silicon Valley-based provider of AI-powered digital lending technologies, announced today it has been named to the 2019 IDC FinTech Rankings, the most comprehensive vendor ranking within the financial services industry.

United Kingdom

Klarna Surpasses 12M Transactions This Year (PYMNTS), Rated: AAA

FinTech payments disruptor Klarna has announced the start of its “No drama, just Klarna” retail campaign in partnership with 13 brands in the U.K., the company said in a press release on Wednesday (Sept. 25).

Klarna offers “pay later” payment options and attracts 50,000 new users each week. The startup said that in the past year, it has processed 12 million transactions. In August, more than 100,000 U.K. shoppers downloaded the Klarna app.

Klarna reports surge in payments, merchant growth during first half of 2019 (Mobile Payments Today), Rated: A

Klarna, a London based installment financing provider and challenger bank, said it surpassed 3 million active users in the U.K. and 170,000 retail merchants worldwide.

Brits hit financial maturity at 31 (P2P Finance News), Rated: A

THE age at which UK men and women finally feel secure in their finances is 31, according to Zopa.

The survey showed a clear split between age groups, with 21 to 25 year-olds believing 32 would be the age when they finally felt good about their finances, while those age 26 to 30 were less optimistic about the future, saying they would reach money maturity at 38.

OakNorth Bank completes £20m loan to specialist lending fund (London Loves Property), Rated: A

OakNorth Bank, the UK bank powered by OakNorth, has provided a £20m loan to the RAW Mortgage Fund, a specialist fund providing buy-to-let property loans against residential real estate in the UK.

Wonga borrowers have less than a week to submit payday loan reclaims (The Sun), Rated: A

Anyone who believes they have been mis-sold a Wonga loan is allowed to apply for compensation, but its administrators set a deadline of 11.59pm on September 30.

If you miss the deadline, you won’t be able to apply anymore and you won’t get any compensation for mis-selling.

Nexo Now Accepts Tokenized Gold for Instant Credit Lines and Will Offer Interest-Bearing Accounts on Gold (Covington Journal), Rated: A

Nexo is adding the NYDFS-regulated PAX Gold as a collateral option for its signature , bringing gold-backed lending to the blockchain.

With PAX Gold, now offers gold investors instant access to their gold wealth in over 45 fiat currencies via same/next day transfers and across 200+ jurisdictions.

European Union

Kreditech Eyes Expansion After Securing EUR 20 Million in Equity Financing (Yahoo! Finance), Rated: AAA

Kreditech is ready to scale globally in the near-prime customer segment – declares David Chan, Kreditech CEO. The Germany-based online direct lender and Point-of-Sale (POS) financing provider estimates its global target market at ca. EUR 300 bn in consumer credit issuance. It aims to reach EUR 1 bn in revenue by 2025, which will be driven by growth in existing markets where Kreditech is present, as well as expansion into new geographies. Kreditech currently operates in IndiaPolandRussia and Spain, and serves over one million customers. The company has raised EUR 20 million in its latest equity financing round.

You’ve heard of challenger banks, now meet the challenger lenders (sifted), Rated: AAA

For better or worse, it was Wonga that first put “challenger lenders” on the map. The UK payday lender’s meteoric rise saw it become a household name before its collapse last year after a string of irresponsible, inflated loans.

This month alone, large funding rounds were announced by Sweden’s Capcito and Lendify, as well as by UK’s Sonovate, an invoice lender for SMEs with over 750 active clients. Banks are also watching closely, with Goldman Sach’s equity arm being a notable funder in Lendable, recently ranked the UK’s sixth fastest-growing private tech company.

In the UK, the challenger-lender industry grew to £6.1 billion in 2017, according to a study by the Cambridge Centre for Alternative Finance (CCAF). The CCAF also estimated that 29% of all new loans issued to SMEs came from challenger lenders in 2017. PwC predicts that figure will rise to nearly 40% in the next decade.

Source: Financial Times
International

Marketplace Lenders Navigate The Choppy Waters Of Compliance (PYMNTS), Rated: AAA

Regulators the world over are beginning to take a closer look at the alternative and marketplace lending business model.

In June, the U.K.’s Financial Conduct Authority announced plans to impose stricter restrictions on marketplace and peer-to-peer (P2P) lenders beginning this December following the watchdog’s decision to place P2P lending platform Lendy into administration — a result, the FCA said, of the industry’s lenient requirements to disclose governance arrangements and controls.

Also, in China, analysts at Yingcan Group pointed to the government’s P2P and marketplace lending crackdown as being likely to shrink the industry by as much as 70 percent this year.

This Fintech Safari Could Be a Wild Ride (The Washington Post), Rated: AAA

From ATMs to credit cards and PayPal, the West’s dominance of innovation in consumer finance appears to have exhausted itself.

At the top of the emergent new order is the fintech duo from China — Alibaba Group Holding Ltd. and Tencent Holdings Ltd. Next in line are Alphabet Inc. and Walmart Inc., whose highly localized smartphone payment rivalry is playing out between Google Pay and PhonePe in India. In Southeast Asia, two homegrown ride-hailing giants are aspiring to dominate commerce.

The rise of African mobile money is associated with M-Pesa, Kenya’s digital-wallet revolution. Now traditional lenders like Standard Chartered Plc, with a presence on the continent going back more than a century, are discovering that online banking can help them mobilize low-cost current and savings accounts more profitably than acquiring customers via physical branches.

Australia/New Zealand

Harmoney says the P2P lender has been ‘slowly moving to lending our own money’ since 2015 (interest), Rated: AAA

The founder of Harmoney, New Zealand’s biggest licensed peer-to-peer (P2P) lender, says he can’t see a viable P2P lending model in New Zealand which is why Harmoney has started lending its own money.

Neil Roberts and David Stevens of Harmoney (Lend Academy), Rated: A

Harmoney, the first peer to peer lender to be licensed in New Zealand, has originated more than NZ$1 billion in loans since launching five years ago.


Read the PDF transcript here.

India

Kreditech targets India after EUR20m funding boost (Finextra), Rated: AAA

Kreditech, a German-based online lender and POS financing provider focused on “near prime” borrowers, is looking to the Indian market after raising EUR20 million in funding.

The round was co-led by Runa Capital and unnamed German private investors, with participation from existing shareholders HPE Growth and Amadeus Capital Partners.
Southeast Asia

Accumulated P2P lending exceeds W6tr (The Investor), Rated: AAA

Accumulated peer-to-peer loans in South Korea have surpassed 6 trillion won ($5 billion), data showed on Sept. 26.

Outstanding P2P loans extended by 220 companies stood at 6.2 trillion won in June, compared with 4.7 trillion won at the end of last year, according to the data compiled by the Financial Supervisory Service.

Indonesia’s Investree in talks to raise series C funding for regional expansion (Tech in Asia), Rated: A

Indonesia’s fintech peer-to-peer lending startup PT Investree Radhika Jaya is in talks with several investors to raise a series C funding as the firm looks to boost its expansion in Southeast Asia.

The Securities Commission Malaysia Approves EdgeProp as First Property Crowdfunding Platform in Malaysia (Crowdfund Insider), Rated: A

The Securities Commission Malaysia (SC) has registered EdgeProp Sdn Bhd as the first “Recognised Market Operator” to establish and operate a property crowdfunding platform in Malaysia. EdgeProp was granted an approval in principle in September 2019.

FINTECH COMPANIES FACE TALENT SHORTAGE (StaffingIndustry.com), Rated: A

The majority, or 94%, of fintech companies in Singapore, say the country requires fintech talent, according to survey data from Michael Page Singapore.

The number of Singapore consumers adopting fintech products and services has drastically risen in the last two years, tripling from 23% in 2017 to 67% in 2019, according to Michael Page.

Bitcoin Daily (PYMNTS), Rated: B

And Singapore-based exchange Bitrue has announced the launch of a low-interest crypto lending platform, which goes live on September 30.

MENA

Qatar Boosts FinTech Focus (PYMNTS), Rated: A

As reported by Crowdfund Insider, the Qatar Financial Centre (QFC) has expanded the number FinTech-related activities that will be awarded licenses. The additional support will come from the QFC platform.

The seven firms include DecisionLogic, which focuses on advanced bank verification that lets lenders qualify borrowers.

Africa

Proven ways you can make money in real estate (Daily Monitor), Rated: A

You can utilise a variety of methods that includes any of the following:
•Seller financing through lease options
•Trading fixed assets such as cars, jewellery and more
•Taking over someone else’s mortgage payments who might be in a distressed situation
•Bringing in an investment partner with cash
•Borrowing from a bank or getting a hard money loan
•Taking out a home equity line of credit
•Utilising a peer-to-peer lending network

Caribbean

Victoria Mutual acquires shares in Barbados-based FinTech Carilend (Jamaica Observer), Rated: AAA

Victoria Mutual Investment Limited (VMIL) has acquired a 30 per cent stake in Carilend, a Barbados-based financial technologies (FinTech) company, that is said to have revolutionised borrowing and lending in the Caribbean.

Authors:

George Popescu
Allen Taylor

The post Thursday September 26 2019, Weekly News Digest appeared first on Lending Times.

Friday June 30 2017, Daily News Digest

global developing markets sme credit demand

News Comments Today’s main news: Ron Suber steps down as Prosper president. Pave stops originations and considers strategic options. Square to start lending money. LendInvest cancels P2P authorization application. LendInvest receives highest rating from European agency. Reserve Bank of India finalizes P2P rules. Alipay to enter African market. Today’s main analysis: Alternative data transforming SME finance. Today’s thought-provoking articles: SoFi to offer […]

global developing markets sme credit demand

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United States

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News Summary

United States

Ron Suber, Prosper President and Industry Legend, Stepping Down (Lend Academy), Rated: AAA

After nearly 5 years, Ron has decided it is time to move on from Prosper. He’s been part of two turnaround stories at the company – one in 2013, and more recently as we’ve seen Prosper grow its business following the challenging environment in 2016. It is great to see them back on track, and Ron told me that he is leaving Prosper in the hands of a great CEO and management team.

When Ron recently shared his plans with me he made it clear that he will still be involved with Prosper as a company advisor and “President Emeritus” but he will not be involved in the day-to-day activities.

Over the last several years, Ron has made 21 investments in various fintech companies and he is an advisor to several of these companies.

Personal note from Ron Suber:

This isn’t just another, “I changed jobs” announcement, it’s a next phase of life with eyes wide open called “rewirement” not retirement.

Rewirement will include doing even more of the things I have enjoyed in the past – travel, teaching, learning, coaching/cultivating young entrepreneurs, being the investor/advisor that I enjoyed working with as an entrepreneur, exploring and spending time with you.

Jack Dorsey’s Square Inc. May Soon Loan You Money (WSJ), Rated: AAA

Square Inc., the technology company best known for processing payments for small merchants across the U.S., is now angling to lend to consumers, too.

The initiative, which follows the launch of a consumer-oriented Square prepaid debit card, is part of a broader push from the company to branch out beyond its original products—small, white credit-card readers that merchants plug into a mobile phone or tablet.

Offering consumers financing options for their purchases brings Square into competition with financial-technology companies such as PayPal Holdings Inc., Affirm Inc. and GreenSky LLC, as well as consumer lenders like Synchrony Financial that offer credit cards tied to specific retailers.

It also means Square will be on the hook for consumer defaults, which have recently ticked up at some online lenders and credit-card companies.

Square plans to hold the consumer loans on its balance sheet, but as volume grows it could look to sell loans to outside money managers, as it does with its small-business credits unit.

This Company Is Offering A Month’s Worth of Avocado Toast to Millennials Who Buy a House (Money), Rated: AAA

Inspired by the controversial comments made by an Australian millionaire last month, SoFi, an online personal finance company that targets millennial consumers, will give new home buyers a month’s supply of avocado toast if they purchase a home with SoFi mortgage in July.

For those who qualify, the avocado toast incentive program will be delivered in three shipments right to the recent homebuyers’s doorsteps. There is also an option between regular and gluten-free bread. (Of course, they will still have to toast the bread once it arrives.)

The marketing decision was ultimately in response to a now-viral interview in May that caused global uproar, in which Australian millionaire and property mogul Tim Gurner said millennials should refrain from buying the popular brunch dish if they didn’t want to quash their hopes of owning a home.

Can You Make Payments on Plane Tickets? (Forbes), Rated: AAA

Did you know there are a few ways to make payments on plane tickets if you can’t afford the full price today?

A new startup that offers payment plans for plane tickets is Airfordable.

Airfordable charges a one-time fee of 10%-20% of the ticket price and a down deposit is required. Your credit score isn’t checked, which is a definite plus for several reasons. After that, you make bi-weekly payments. Once the ticket is paid for, your e-ticket and itinerary are released.

CheapAir.com offers monthly payment plans for flights that cost more than $100 by partnering with Affirm. After selecting the flight you want to buy on CheapAir, you will be taken to Affirm’s website to complete the financing request.

Affirm will offer you a 3-month, 6-month, or 12-month payment plan for the plane ticket(s). Your interest rate will range from 10% to 30% depending on your creditworthiness.

Expedia has also teamed up with Affirm to offer payments on plane tickets.

Flightlayaway.com allows you to make payments on plane tickets and cruise tickets.

Flights can only be on layaway from two weeks to twenty weeks. At the end of 20 weeks, all financed flight expenses must be paid to receive your e-ticket and itinerary.

There is a one-time service fee of 15% on domestic flights and 18% on international flights when the flight is booked. And, there is an interest rate of 15% on all flights.

British Airways allows weekly payments on flight + hotel and flight + car packages only.

In America, it’s pretty common to take out a loan to buy a car, or a house, or college tuition. It’s less likely to take out a loan to buy gas for that car, paint for the house, or beer for the college tuition. But what about everything in between? What about $500 drones?

That’s where Affirm, a startup by one of the founders of PayPal, comes in. CEO Max Levchin thinks there’s a financial niche to fill for young people who want expensive things, but don’t have multiple Gs in the bank or on credit to drop on a luxury purchase. Affirm offers small, short-term loans that let customers spread out a big purchase, like a drone or $1,500 couch, over a short period of time. Affirm fronts customers the cash, then collects regular payments in more manageable chunks.

Right now, Affirm is slightly limited to an (albeit wide) selection of online retailers. The stuff you can buy is typical pricey-but-not-luxury products — Casper mattresses, Pottery Barn furniture, Newegg computer parts, clothes from online retailers, as well as drones, phones, and tech you would find in a Sharper Image catalog. In April, the company issued its one millionth loan, meaning that with at least a couple bucks in interest on even the smallest of loans, it’s probably bringing in quite a bit of cash.

Urban Housing Development eFunds (Fundrise), Rated: A

Now, you can invest directly into building new homesfor the next generation of American homeowners.

Funding Circle Strengthens U.S. Leadership Team with Head of Capital Markets & CCO Appointments (PR Newswire), Rated: A

Funding Circle, the world’s leading lending platform focused exclusively on small business, today announced two additions to its U.S. leadership team: Joanna Karger as U.S. Head of Capital Markets, and Richard Stephenson as U.S. Chief Compliance Officer.

Prior to Funding Circle, Stephenson served as chief compliance officer of Silicon Valley Bank. He has more than thirty years’ experience in various senior roles at U.S. financial institutions and law firms, serving as general counsel, chief compliance officer, chief risk officer, head of internal audit and interim chief executive officer at institutions such as Bank of America, Union Bank, Washington Mutual Bank and Mechanics Bank.

Online lender Pave closes to new customers, explores strategic options (American Banker), Rated: A

Pave, an online consumer lender based in New York, has stopped making new loans — a retrenchment that reflects challenges facing the broader sector, according to the company’s CEO.

CEO Oren Bass said in an interview Wednesday that Pave stopped making new loans about two weeks ago.

I’m sick of fintech taking credit union business (CUInsight), Rated: A

Credit unions have been playing a game of catch-up with banks for many years, and now the new kid on the block— Fintechs —are here to present even more of a headache. On December 31, 2016, Prosper Funding had approximately $22.3 million in unrestricted cash and cash equivalents and $32.8 million available for sale investments at fair value.  Their marketplace facilitated $2.2 billion in Borrower Loan originations during 2016, and as of December 31, 2016, $8.3 billion in Borrower Loan originations since it first launched in 2006.

Lending Club ended the year with a servicing portfolio of $11.1 billion, up 24 percent from the same period last year, and delivered $1.8 billion of principal and interest payments to investors throughout the 4th quarter of 2016 with cash, cash equivalents, and securities available for sale totaling $803 million, with no outstanding debt. What’s even more worrisome is that Lending Club’s venture into auto lending is still young and has a lot of potential if it gains serious traction.

Both companies sell consumer lending and deposit products to exactly the same prime-rated consumer credit segment that banks and credit unions do.

Credit unions need to up their game by:

  1. Allowing members to send money and receive money like popular online Venmo.
  2. Stay updated across all devices with real-time push-notifications and transactions.
  3. Credit unions will need to offer various software to their members to help them make better decisions and save massive amounts of time through analytics, accounting, budgeting, prediction, and decision- making software.

How Banks Can Attract More Millennials (ValueWalk), Rated: A

When trying to appeal to this younger generation, it is important to keep in mind that millennials have two main financial priorities; paying off their student loans, and saving for the future. On average, they spend 43 percent of their income to pay down their debts and put away 38 percent of their income as savings for the future. Three out of five millennials would like their bank to be a financial partner as opposed to just another business profiting off of their work. At the same time, only 32 percent of this generation feel their bank understands them. This is largely due to the fact that banks and other financial providers still offer solutions to meet the needs of baby boomers. This means tailoring products to meet millennial needs will create a more mutually beneficial relationship and help to attract younger customers.

New OCC Bulletin on Third-Party Oversight Highlights Fintech Relationships (Lexology), Rated: A

FAQ 7: Is a fintech company arrangement considered a critical activity?

In its response to FAQ 7, the OCC clarified that a relationship between a national bank and a fintech may or may not involve a critical activity, depending on the nature of the specific services the bank or the fintech has agreed to perform. In giving this response, the OCC recognized that third-party relationships are not automatically “high risk” merely because a fintech is involved.

FAQ 10: What should a bank consider when entering a marketplace lending arrangement with nonbank entities?

Although some may read the OCC’s response to FAQ 10 as an endorsement of “bank partnership model” lending relationships between national banks and marketplace lenders, the response includes no explicit mention of these relationships. The response references “marketplace lending or servicing arrangements,” and states that “banks should not originate or support marketplace lenders that have inadequate compliance management processes . . .,” but does not speak to the respective obligations of the parties to these arrangements. Thus, it is conceivable that the bulletin only addresses other types of relationships, such as warehouse lines of credit or loan servicing arrangements. At a minimum, however, the response confirms that national banks should not hesitate to enter into relationships with marketplace lenders as long as appropriate oversight mechanisms are in place.

FAQ 11: Does OCC Bulletin 2013-29 apply when a bank engages a third party to provide bank customers the ability to make mobile payments using their bank accounts, including debit and credit cards?

Until now, a national bank could have taken the position that a third party that merely enabled mobile card payments was not subject to OCC Bulletin 2013-29. To this end, the presence of a third party’s mobile payments application has no effect on the underlying card transaction, and the bank’s involvement is likely confined to deciding whether to promote the availability of the application to its customers. In its response to FAQ 11, however, the OCC clarified that these relationships need to be managed “in a manner consistent with OCC Bulletin 2013-29,” and directed banks to “work with mobile payment providers to establish processes for authenticating enrollment of customers’ account information.”

Pantera Capital to Raise $ 100 Million in Investment for ICO Hedge Fund (Coindesk), Rated: A

Announced today, investment firm Pantera Capital is launching a new hedge fund focused on investments solely in tokens that power public blockchain protocols.

Called Pantera ICO Fund LP, the fund intends to raise $100m, with $35m already raised in support from the firm’s existing investor base, undisclosed new investors, and according to the company, unnamed venture capital firms.

Kabbage headquarters building to get major renovation (Biz Journals), Rated: A

Crestlight paid $35.3 million, or about $167 a foot, according to Fulton County records. It announced the acquisition last week, but had not released the price. Lincoln Property Company Southeast won the leasing and management assignments.

Prologis, Inc. (NYSE: PLD) today announced a strategic partnership with Plug and Play, a global startup ecosystem and venture fund specializing in the development of early-to-growth stage technology startups in the Supply Chain and Logistics vertical.Prologis will provide mentorship and space in its logistics real estate properties to a select group of startups in the Plug and Play accelerator program to pilot new technologies. Prologis joins DHL, Maersk, Panasonic, Hitachi, Mann+Hummel, CMA CGA, Daimler, Deutsche Bahn, Swiss Post, BASF, Union Pacific Railroad and Ericsson as partners with Plug and Play.

Funding Circle’s U.S. head talks about growth and hiring secrets (Biz Journals), Rated: A

Sam Hodges, the U.S. managing director of Funding Circle, spoke to the Business Times about hiring techniques, missed opportunities, and what book had a profound influence on him, among other things.

RealtyShares Names Kristina Wallender SVP of Marketing (BusinessWire), Rated: B

RealtyShares, a leading online marketplace for real estate investing, today announced Kristina Wallender has joined the pioneering startup as senior vice president of marketing, focused on helping the company reach more investors and sponsors.

Wallender joins RealtyShares with marketplace and marketing leadership experience spanning large enterprise businesses like Amazon and early stage companies like Ticketfly, where she was the head of marketing for the past four years. Over her tenure, Ticketfly grew from a small startup to a leading live entertainment brand serving over 1,800 venues and promoters across North America. Wallender also played a key role in Pandora’s acquisition of Ticketfly in 2015, earning her a spot on Billboard’s 40 Under 40: Top Young Power Players in music. As part of the RealtyShares team, she will be responsible for growing both sides of the marketplace.

Google and SoFi Alum Named Okta Security Chief (Fortune), Rated: B

Okta, the Silicon Valley firm behind one of the year’s top tech IPOs, has named a new chief security officer.

The maker of identity management software has appointed Yassir Abousselham, a former executive at Google (GOOG, -2.53%) and chief information security officer at financial tech startup SoFi, as head of security. Abousselham began in the role on June 5th.

Vela Boosted Its Fintech Offerings With OptionsCity Acquisition (Benzinga), Rated: B

Vela Trading Technologies LLC, a fintech company specializing in market data technology, recently announced its acquisition of OptionsCity Software, which offers futures and options trading with analytics solutions.

The deal is expected to close at the end of the second quarter.

dv01 is hiring (DV01 email), Rated: B

We believe smart people can succeed at almost anything, so we encourage on-the-job learning (e.g. trying a new programming language) and real ownership over your work. Our fast paced environment necessitates a desire and willingness to grow both personally and professionally. We see value in effort and output, which is why we encourage all of our team members to take measured risks and never back away from a challenge.

United Kingdom

LendInvest cancels application for P2P authorisation (P2P Finance News), Rated: AAA

LENDINVEST has confirmed that it has cancelled its application with the Financial Conduct Authority (FCA) to operate a peer-to-peer lending platform.

The online mortgage lender revealed in its annual report, released this week, that it had shelved several applications with the City watchdog, for permission to operate a P2P platform and for credit broking and consumer credit licences.

Social P2P lender rolls out IFISA offering (AltFi), Rated: A

Flender, a Dublin-based, “friendly” peer-to-peer lending platform, is bringing its newly launched Innovative Finance ISA to the UK. The firm was fully authorised by the FCA in May.

RateSetter’s Paul Marston comments on Brexit (RateSetter email), Rated: A

Given the economic uncertainty created by Brexit, it is easy to understand why some small business owners have postponed important business decisions. However, SMEs have some important advantages which position them well to navigate through this period successfully. They can more easily adapt business models, diversify into new activities and implement new ideas.  It will be the business owners who are forward-thinking and act positively and decisively who are most likely to use uncertainty to their advantage.

For SME businesses that see opportunities to invest for future growth, the good news is that there are now real alternatives to the banks in terms of access to finance that can be provided in a simple and straightforward manner. We stand ready to help these businesses realise their plans.

The door is open for business leaders to redefine Brexit so that it is seen as an opportunity, rather than a threat.

China

China leads as fintech adoption doubles in two years, and here’s why (The Asset), Rated: AAA

Financial technology (fintech) adoption has doubled in the past two years, with China leading fintech adoption globally.

The average percentage of digitally active consumers using fintech services is around 33% across 20 key markets – this represents a doubling over the past two years when fintech penetration was recorded to be around 16%. The findings are noted in the EY Fintech Adoption Index, which surveyed 22,000 people online in 20 countries.

The report further shows that China leads the world with 69% of consumers using some form of fintech service, which is unsurprising given the ubiquitous adoption of payment platforms WeChat Pay and Alipay in China. Alipay and TenPay (WeChat Pay) together make up for 92% of the mobile payment market, and mobile payment transactions increased 381% in 2016 to 58.8 trillion yuan, according to iResearch.

An O2O Education System Provider Closed A Round of financing (Xing Ping She), Rated: A

Nobo Education announced they have closed a new round of financing $6.4M. This round was led by National SME Development Fund (THG Ventures), with participation from The Chinese Education Industrial Fund, which is jointly managed by DT Capital and ChineseAll. Previously, Nobo Education was known to have raised pre-A round of $1.79M in June 2016.

Founded in March 2013, Nobo Education is a Beijing-based international preschool education institution as well as new high-tech enterprise. Their core product—— Nobo Education System, an O2O system solution efficiently in kindergarten management, is the only system of education that has independent intellectual property right in China.

According to Nobo Education, among the total raised funds, ¥10M will continue to be used in pre-school education software R&D and service.

CreditEase Wealth Management Toumi RA Achieved Top Performance in First Year (Cision), Rated: A

Toumi RA, China‘s leading Robo-advisory platform built on 11-year expertise of CreditEase Wealth Management, has achieved outstanding performance since its launch on May 28, 2016, generating 2.55%-11.48% of cumulative return through May 31 2017, successfully bucking global capital market fluctuation, geopolitical risks and black swans.

In the past year, Toumi RA’s platinum/diamond members enjoyed an average cumulative return of nearly 7% for different portfolios, among which the risk-level-eight option produced the highest return of 11.48%. For gold members, Toumi RA boosted the level-eight portfolio’s cumulative return by 9.4% and the lowest-risk option by 4.23%.

An overwhelming majority of investors (99.6%) made profits during the first year, according to Toumi RA’s performance report, while only 0.4% of investors experienced lost either because of unfortunate investment timing during market highs or short-term investment during highly-volatile periods.

China’s nude loans fill female students’ pockets but suck them dry (ASEAN Today), Rated: B

In April this year, Xiong took her own life in a hotel far from her hometown in Xiamen. Incapable of repaying a debt of 570,000 yuan (US$82,722), Xiong’s circumstances worsened as online loan sharks threatened to make her nude photos public. She took her own life a few days after her mother received her nude photos.

“Nude loans” involves offering one’s nude photos to secure credit. Nude loans first gained nationwide attention in December 2016. The China Youth Daily discovered 167 women’s nude photos and obscene videos online. These women, many of them in their early 20s and receiving college education, handed over their nude photos and videos as collateral for loans from peer-to-peer (P2P) lending platforms.

Online lenders’ choice to use nude selfies to enforce repayment reflects the country’s paternal society. Nude selfies are risky enough to prevent female student clients from defaulting because Chinese women are still valued for their chastity.

European Union

LendInvest receives highest rating from European ratings agency (Mortgage Introducer), Rated: AAA

Specialist mortgage lender LendInvest has received the highest possible rating for the quality of its loan servicing from European ratings agency ARC Ratings.

For the third time in as many years the agency has awarded a SQ1 Servicer Quality Rating for LendInvest following a comprehensive annual review of the company, its performance, processes and infrastructure.

Swiss Fintech Loses Big Hitter (Finews), Rated: A

Swiss digital insurance broker Knip has agreed to merge with Komparu, a Dutch technology firm. Together they will operate as Digital Insurance Group (DIG), according to a joint statement.

The founder and CEO of Knip, Dennis Just(pictured below), won’t stay at the company.

Roeland Werring, co-founder of Komparu, will be the Group chief technical officer, while Ruben Troostwijkwill stay on as CEO of Komparu. Ingo Weberwas appointed as CEO of DIG.

Tikehau Capital buys Credit.fr (PE Hub), Rated: A

Tikehau Capital (Paris:TKO) today announced it has completed the acquisition of Credit.fr, the French specialist in crowdlending for small businesses financing, for an amount of €12 million. Incubated since March 2015 by Truffle Capital and under the leadership of Geoffroy Roux de Bézieux, its chairman since November 2015, Credit.fr has rapidly established itself as an essential player in the small and mid-sized companies (SMEs) alternative financing market.

This acquisition enables Tikehau Capital, a leading company active in the corporate lending and private debt market in France, to consolidate and expand its lending platform by bringing its corporate financing solutions to smaller businesses and SMEs. Through Credit.fr, Tikehau Capital will enable its wide network of investors and partners to broaden their investment policy, currently focused on medium-sized and larger companies, to include smaller businesses rigorously selected by Credit.fr teams.

International

Alternative Data Transforming SME Finance (SME Finance Forum), Rated: AAA

The report titled “Alternative Data Transforming SME Finance” looked at 800+ innovative digital SME lenders and digital commerce, payments and service providers in more than 60 countries. Here are some of the key findings:

  • Banks have valuable data, but are often not using it: Banks have a highly valuable repository of SME data, including SME owners’ customers’ daily transaction data that provides reliable real-time visibility into SME cash flows and credit capacity. However, most banks lack the ability to create innovative SME lending models from it.
  • Digital SME lenders are developing new relationships with SME customers and their data: In some cases, non-bank digital SME lenders insert themselves between banks and their SME customers, and forge fundamental changes in SME customer expectations.
  • New SME digital data streams are becoming more readily available and accessible: Digital SME lenders leverage vast and expanding stores of data, including from electronically verifiable, real-time sales, bank account money flows and balances, payments, social media, trading, logistics, business accounting, and credit reporting service providers, as well as a wide range of other private and public data sources used in the SME credit assessment process.
  • There are a wide range of digital SME originator lending business models: The new digital SME lending originator business models that take advantage of the expanding universe of SME digital data vary widely. This report highlights these business models, selected players, and the digital SME data they use. It includes marketplace lenders, tech, e-commerce, and payment giants which are extending SME lending into their non-banking digital ecosystems where they are already dominant. It also includes supply chain financing firms, mobile micro-lenders graduating to SME lending, and innovative banks.
  • Digital SME lending is becoming more of a global trend: 
  • Digital SME lender-bank collaboration is also a growing part of the future of SME finance: Banks may have been blind to digital SME lenders at first, and digital SME lenders may have said they would replace banks. However, both parties now have come to a simple conclusion: there are limits to what each player can do on their own and there is strength in collaborating.
  • Access to data is no longer the problem in SME lending: The digital economy has also given rise to an ever-evolving set of value-added cloud-based services to help SMEs with their finances, business planning, productivity, legal issues, data backup and security, file sharing, web conferencing, website builds, online marketing, business training, e-commerce, payments, loyalty programs, business intelligence, and more.
  • However, access to data for SME lending brings new challenges: With the abundance of alternative data, there are new issues of what to use, how to use it, and how to do this responsibly — while also respecting privacy and other important rights of SMEs.

Download the report here.

Singapore and Denmark Regulators Sign Fintech Cooperation agreement (Finance Magnates), Rated: A

Regulators in Singapore and Denmark are building bridges to assist Fintech companies expand abroad. The Singapore’s Monetary Authority of Singapore (MAS) and the Danish Financial Supervisory Authority (Danish FSA) yesterday have entered a cooperation agreement to promote innovation in financial services in their respective markets.

The agreement aims to help FinTech companies in both countries to expand into each other’s markets and also provides facilitated introductions when a fintech firm operating in one jurisdiction wants to better understand the rules in the other.

Advances in digital platforms (The Asset), Rated: A

Midway through the month, on June 14, Misys and D+H merged to form a new company called Finastra.

Shortly after the merger, several institutions announced they were working with the newly formed fintech giant. Rabobank selected Finastra to centralize their cross-border payments; SIA, a European provider of payment infrastructure and services, partnered with Finastra to provide real-time instant payments capabilities; and Mexico’s central bank, Banco de Mexico, also selected Finastra to transform its legacy risk management platform.

Investment Roundup: Visa Buys Stake in Klarna; Revolut, Tango Land Financing (PAYbefore), Rated: A

London-based travel card specialist Revolut is close to landing a £50 million (US$65 million) funding round that will value the company at £300 million (US$390 million), according to a report from Sky News. The round will be led by Index Ventures, which acquired an interest in Revolut last year, the report said. Silicon Valley investor Ribbit Capital is also said to be taking part in the round.

Finally, Seattle-based Tango Card, a provider of digital rewards and incentives to 2,000 corporate enterprise customers, has secured a $10 million investment facility from Silicon Valley’s Western Technology Investment.

Australia

Zagga pitches alternative asset class (Financial Standard), Rated: A

A new marketplace lender is hoping to turn traditional investing on its head with a pitch to wholesale and sophisticated investors.

Backed by an Australian Financial Services Licence and an Australian Credit Licence, Zagga hopes to differentiate itself from other marketplace lenders by providing a lending platform where all loans will be secured by a registered mortgage against real property.

To date, Zagga has helped facilitate a number of loans including a $7.15 million loan which was fully-funded within 17 days by 26 investors, and a $1.15 million loan to a husband and wife investor who wanted to top up their super fund before 30 June, funded in a few hours by six investors.

India

RBI finalises peer-to-peer lending norms (The Hindu), Rated: AAA

The Reserve Bank of India (RBI) has finalised norms for peer-to-peer (P2P) lending platforms and is expected to release final guidelines in 2-3 weeks, a top finance ministry official said.

According to the official, the P2P lending interface will come under the purview of RBI’s regulation by defining these platforms as NBFCs under the RBI Act by issuing a notification in consultation with the government.

Lendingkart to add marketplace, P2P loans and offer SaaS product: Harshvardhan Lunia (VC Circle), Rated: AAA

You had also mentioned about raising Rs 500 crore in debt.

Apart from the first Rs 500-crore debt fundraising exercise, we will also look to raise another Rs 500 crore in debt. We have initiated talks for this, but the process will take some time.

So, eventually will you be looking to raise more funds from banks and less from NBFCs?
Banks offer us lower-cost loans, but the process is more time consuming. They also operate within certain limitations. NBFCs are quicker with their disbursals.

Do you have plans to increase the ticket size of your loans, which is capped at Rs 10 lakh?
About 93% of our loans are less than Rs 10 lakh, and the Rs 50,000-10 lakh range remains our sweet spot. But, sometimes we do disburse loans of Rs15-20 lakh if there is a strong reference or recommendation. Our USP will be to remain a sub-Rs 10-lakh lender.

Tech is a major component of your business operations. How much of your budget allocation goes towards it?
Almost 25-30% of our budget goes towards technology. The tech team accounts for around 35% of our total manpower while two-thirds of our resources work on the lending business.

Most players tend to be asset-light. What was the business logic and strategy behind going asset-heavy?

That experience led to the decision of Lendingkart having an NBFC of its own, which would allow us to design our own products.

Will you continue to operate the same business model?
Two years down, we will diversify as a marketplace model, and may even get into the peer-to-peer lending space.

In fact, we will start a pilot with one or two players within the next six months. However, this year, the lending will predominantly be from our books. These plans will take a larger form in 2018-19 and 2019-20.

When will you start making profits?
The lending arm of our business will turn profitable by March 2018.

Which are your top performing markets?
Bengaluru, Mumbai, Hyderabad, Pune and Surat have been our top five performing markets.When will you start making profits?
The lending arm of our business will turn profitable by March 2018.

Asia

InVent takes stake in fintech Digio (Bangkok Post), Rated: A

InVent, a venture capital arm of SET-listed Intouch Holdings, has invested in a fintech startup, Digio, to boost the fast-growing e-payment market.

Digio is the first fintech company in InVent’s portfolio, which will strengthen Intouch’s offerings in the mobile payment business.

InVent has taken a 10% in stake in Digio but declined to say what it was worth.

Canada

A Canadian venture capital firm is funding entrepreneurs to relocate and become citizens (Business Insider), Rated: AAA

Sharma is the CEO and cofounder of Extreme Venture Partners, a Canadian VC firm that recently assembled a fundfor paying startup founders and their families to relocate to Toronto.

Upon arrival, they’ll receive seed funding, guidance on beginning their new Canadian life, and the opportunity to get on the fast-track for citizenship. Sharma says EVP is prepared to welcome 30 companies over the next three years.

Upon arrival, they’ll receive seed funding, guidance on beginning their new Canadian life, and the opportunity to get on the fast-track for citizenship. Sharma says EVP is prepared to welcome 30 companies over the next three years.

Issues in Bringing Canadian Fintech to the International Stage (CIGI Online), Rated: A

The aim of this policy brief is to provide a general description of the fintech industry in Canada, and to describe and draw attention to two complementary aspects of developing a fintech strategy for Canada: first, encouraging domestic fintech innovation — through open data and payment systems — and second, encouraging international expansion — through international agreements among regulators and comprehensive intellectual property strategies.

Get the report here.

FLEXITI FINANCIAL WINS BID TO OFFER POINT-OF-SALE FINANCING TO OVER 800 DEALERS ACROSS CANADA (Flexiti Financial), Rated: A

Flexiti Financial, a provider of point-of-sale (POS) financing and payment technology for retailers, today announced that it has won a competitive bid to be the preferred POS financing partner in Canada for the dealers of outdoor maintenance and equipment manufacturers including Husqvarna, Briggs & Stratton, Ariens, Big Dog Mowers, Hustler, ECHO Power Equipment and ECHO Bear Cat. Flexiti Financial now has access to over 800 dealers that sell lawn and garden tools and outdoor power equipment.

Dealers will now have access to Flexiti Financial’s award-winning POS financing platform, which will allow them to provide instant financing on any device, anywhere, and instant credit approval in three minutes.

Africa

Alipay for the first time to enter the African globalization version of the addition of a piece (01Caijing), Rated: AAA

June 26 evening, Alipay announced that it will launch Alipay in Africa to provide services to Chinese tourists. Since then, from the Alipay global strategy has taken a step further.

Authors:

George Popescu
Allen Taylor

Wednesday May 31st, Daily News Digest

Wednesday May 31st, Daily News Digest

News Comments Today’s main news: Behind the scenes as Orchard platform struggles, Earnest Prices $175 million Securitization, Peer-to-peer lender Wellesley & Co. pauses origination, RateSetter raises funds as it prepares to list, China Minsheng Investment leads $262m pre-IPO Today’s main analysis : LendingClub Files Presentation in Advance of Annual Shareholders Meeting, Parallels to the High Yield Bond Market, Today’s thought-provoking articles: Blackrock’s Consumer […]

Wednesday May 31st, Daily News Digest

News Comments

United States

United Kingdom

China

European Union

Korea

Australia

India

Singapore

News Summary

United States

Victory Park Capital sells Funding Circle US and Upstart loans, (Peer2Peer), Rated: AAA

The London-listed investment trust said that the loans sold represented 3.65 per cent and 1.48 per cent respectively of the company’s net asset value (NAV) as of 31 March. The firm said it will retain its non-performing Funding Circle US and Upstart loans, which represented 0.68 per cent and 0.21 per cent respectively of NAV as of 31 March 2017.

VPC announced in November 2016 that it was winding down its P2P lending portfolio, after losses triggered substantial writedowns.

Taking into account the loan sales, the company’s balance sheet investments accounted for 63 per cent of the NAV as of 31 March 2017, as compared to 17 per cent for the marketplace loans.

“The company expects to re-invest substantially all of the sale proceeds into balance sheet investments, as well as other strategic uses,” it said in a stock exchange announcement on Friday.

Fintech has peaked, claims Morgan Stanley report, (Alt Fi News), Rated:AAA

In a pessimistic new report, researchers from Morgan Stanley have concluded that while fintech companies style themselves as disruptors they will do more to strengthen than undermine incumbents in the long term.

“Only five disruptors have survived as standalone entities out of over 450 fintech firms launched during the dotcom era,” the report said.

Fintech has been most promising in areas lacking infrastructure and where established players have been weakest. This was particularly true of blockchain and robo-advice.

However, these trends are reversing as major financial institutions have started building their own robo-advisors and acquiring blockchain startups.

“Independent start-ups in the robo-advisor space will struggle to be profitable given the high cost of acquisition and intensifying competition.

“We think however that established financial advisors, banks, insurers, etc. will keep automating parts of their value chain…to improve the infrastructure for established incumbents.”

“Marketplace lenders are poised to grow at a… moderate pace leveraging traditional institutions as primary sources of capital; in essence serving as a more efficient customer acquisition and servicing channel for traditional lenders.

“We remain bullish on the potential for marketplace lenders to take share, as they benefit from regulatory arbitrage and changing consumer behavior.”

Behind the Scenes at Orchard Platform, a Struggle to Innovatete, (NY Times), Rated: AAA

“We’re launching a full marketplace from scratch,” Mr. Burton said a few months later, at Orchard’s Flatiron district office, and we “hope everyone shows up.” But they didn’t.

More than a year after Mr. Burton revealed his big plans, Orchard has completed just a scattering of transactions. Over that time, it burned through more than $5 million in legal fees and other expenses.

Next month, hoping to add momentum, Orchard plans to unveil a scaled-back version of the platform, eight months later than first planned.

But regardless of the company’s fate, its struggles thus far reveal just how hard it can be for a new entrant — even one with successful founders, a promising service and big-name investors — to break into a highly regulated industry.

Seeking financial expertise, Orchard recruited a few Wall Street veterans from Merrill Lynch and Bear Stearns. In late spring of last year, Mr. Burton had more than a dozen roadshow meetings with executives from the largest loan platforms, including Lending Club, Prosper Marketplace and Social Finance.

He hoped to charge them monthly fees of $2,500 to $5,000 to participate. Orchard also offered them the ability to be its “data partners,” so Orchard could standardize their data for trading purposes — which Mr. Burton called “the big heavy lift.”

Orchard also enlisted the help of Meredith Cross, a lawyer at WilmerHale and the former head of corporate finance at the Securities and Exchange Commission, as it met with Wall Street regulators.

But in July, S.E.C. officials told Orchard that they would consider loans being traded as securities, potentially imposing a tougher level of oversight. That made some lenders nervous about participating. Some lenders were also concerned about exposing investors they had cultivated to loans from competitors.

“We do not have a current need for a trading platform,” said Ryan Rosett, a chief executive of Credibly, which offers small-business loans. “Our capital markets team has the ability to sell our loans directly to a pool of institutional investors.”

Orchard was also fighting a separate headwind. The broader market for online loans was being buffeted by higher consumer loan defaults and investor fears. Some online lenders cut staff members, and others shut down as loan growth dried up.

As Orchard X struggled to get going, he said, legal documents for trades had “ballooned to 150 pages from a 20-page contract,” leaving him exasperated. “I’m a tech guy!” he said.

As it moves forward, Orchard has played down the regulatory issue, proceeding without an explicit formal S.E.C. ruling on whether the loans are securities. It is a potentially risky move, but one the company believes will work in part because it has dropped its goal of legal standardization, cutting the need for lending platforms to agree on regulation issues. The S.E.C. declined to comment.

In January, Orchard X arranged its first sale of about $30 million in loans from an ailing platform, a small-business lender called CAN Capital. The auction took a lengthy four weeks to complete. But Orchard X did receive a fee of 0.5 percent of the sale price.

Looking back, Mr. Burton said on April 4, Orchard should not have tried to persuade lenders to join the trading platform all at once. Having raised $30 million in 2015, Orchard plans to announce next month that it has raised an additional $20 million or more and to formally roll out its revised Orchard X transaction platform.

LendingClub Files Presentation in Advance of Annual Shareholders Meeting, (Crowdfund Insider), Rated: A

The file can be found here.

LendingClub (NYSE:LC) has filed a new form with the SEC (DEF 14A) in advance of the annual shareholders meeting which is scheduled to take place on June 6, 2017. The addition to the Annual Meeting Proxy Statement, a standard filing, includes a presentation on the company asking shareholders to support Director nominees, executive compensation and ratification of the auditor.

Perhaps the most interesting aspect of the filing is the synopsis of the events in 2016 that led to the departure of founding CEO Renaud Laplanche and the ensuing aftershocks that pummeled the online lender.

Law firm-issued collections letters continue to pose high risks, (Pepper Hamilton), Rated: AAA

The CFPB has pursued lawsuits, as well as formal enforcement actions, concerning misrepresentations of attorney involvement in debt collection-related communications.

On April 17, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit in Ohio district court against the Weltman, Weinburg & Reis law firm (WWR), alleging violations of the Fair Debt Collections Practices Act (FDCPA) stemming from the firm’s issuance of debt collection demand letters. The CFPB’s allegations against WWR closely resemble the FDCPA allegations that were considered by the D.C. Circuit Court of Appeals in Jones v. Dufek, 830 F.3d 523 (D.C. Cir. 2016). Dufek also concerned a debt collection letter that was sent by an attorney acting as a debt collector and not as legal counsel. On March 20, 2017, the U.S. Supreme Court denied the Dufek plaintiff’s petition for a writ of certiorari to review the Court of Appeals’ decision in favor of the defendant attorney/collector. Notwithstanding Dufek, however, debt collectors and first-party creditors are well-advised to be extremely diligent when using law firms as debt collectors.

In actuality, the CFPB’s complaint alleges that “no attorney had assessed any consumer-specific information . . . [a]nd no attorney had made any individual determination that the consumer owed the debt, that a specific letter should be sent to the consumer, that a consumer should receive a [collections] call, or that the account was a candidate for litigation.” Thus, according to the CFPB, the subject letters contained numerous misrepresentations that violated both the FDCPA and the prohibitions of the Consumer Financial Protection Act against unfair, deceptive or abusive acts or practices.

The specific deficiencies cited in the CFPB’s complaint against WWR include the fact that subject letters were printed on law firm letterhead, which prominently included the phrase “ATTORNEYS AT LAW” (in bold type and in all caps) and included the law firm’s name in the signature line.

In determining whether the Dufek letter violated the FDCPA as a false, deceptive or misleading representation, the Court of Appeals noted, as a threshold matter, that “if an attorney is acting only as a debt collector and has not formed a legal opinion about the case, he or she cannot send a letter [stating or implying] otherwise” without misleading the recipient/debtor..

Misrepresentations regarding attorney involvement in collections letters and other communications continue to be a “hot button” issue with the CFPB. The collections letters targeted in the CFPB’s lawsuit against WWR are distinguishable from the letter at issue in Dufek in that the Dufek letter included a disclaimer regarding the attorney’s review of the underlying account. Yet, the CFPB’s complaint against WWR can be read as implying that the use of attorney letterhead and the inclusion of the law firm’s name in the signature line were per se improper.

Earnest Prices $ 175 million Securitization of Refinanced Student Loans; Achieves AA (High) Rating by DBRS, (Market Wired), Rated: A

SAN FRANCISCO, CA–(Marketwired – May 24, 2017) – Earnest today announced the close of the $175 million Earnest 2017-A transaction backed by refinanced student loans. The offering received an AA (high) rating on the senior notes by DBRS which is now only one notch below the highest attainable rating of AAA. The transaction was three-times oversubscribed and traded at the tight end of market guidance.

Earnest has now completed five securitizations of refinanced student loans since February 2016 for a total value of over $877 million. In 15 months, the company has increased its rating on the senior notes from A to AA (high), a progression that often takes several years. This speaks to the quality of the underlying collateral and the advancement Earnest has made as a programmatic issuer in the capital markets.

“This marks another strong securitization for Earnest, providing us the opportunity to welcome new investors and continue building our capital markets program. We’re thrilled at the appetite and investor confidence in our offerings,” said Louis Beryl, CEO and co-founder of Earnest.

Elastic line of credit surpasses $ 200 million in outstanding loans, (Email), Rated: A

More than $680 million funded and 155,000 customers served since 2013 validates need for expanded access to credit in the U.S.

FORT WORTH, TX – May 31, 2017 – Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced the Elastic product has surpassed $200 million in total principal outstandings, with more than 120,000 open accounts.

Elastic, a bank-issued line of credit offered by Republic Bank & Trust Company (“Republic Bank”), has loaned over $680 million dollars to more than 155,000 customers, since its launch in 2013. The $200 million in total principal outstandings includes the 10% of outstandings Republic Bank retains. Elastic passed the $100 million in outstandings mark in May 2016.

About Elevate
Elevate (NYSE: ELVT) has originated $4 billion in non-prime credit to more than 1.6 million consumers to date. Its responsible, tech-enabled online credit solutions provide immediate relief to customers today and help them build a brighter financial future. The company is committed to rewarding borrowers’ good financial behavior with features like interest rates that can go down over time, free financial training and free credit monitoring. Elevate’s suite of groundbreaking credit products includes RISE, Elastic and Sunny. For more information, please visit .

Interest Rates on Connext™ Private Student Loans Decrease as Federal Student Loan Rates are Set to Rise, (Email), Rated: A

ReliaMax®, the complete private student lending solutions provider, today announced that the banks and alternative lenders participating in the Connext® Private Student Loan program will lower the interest rates on those loans. EffectiveJune 1, 2017, the lowest rates for variable- and fixed-interest rate Connext® loans for undergraduate and graduate programs will be reduced to 2.87 percent APR* and 5.40 percent APR*, respectively, and the borrower will not be charged an origination fee.

Federal student loan interest rates on new loans are scheduled to increase on July 1 for the 2017-2018 school year. These interest rates are adjusted each year based on the annual Treasury Department auction plus a set percentage amount added for each type of loan program. According to 

Blackrock’s Consumer ABS ETF and Parallels to the High Yield Bond Market, (PeerIQ Email), Rated: AAA

Shares of Lending Club and OnDeck surged last Monday 3.9% and 9.5% respectively, on reporting from the

MPOWER Financing Secures Add-on Investment from 1776 Ventures, (Email), Rated: A

MPOWER Financing (www.mpowerfinancing.com) announced today that 1776 Ventures (www.1776.vc) has doubled-down its investment in the company with an additional $500,000 investment ahead of MPOWER’s planned Series B for this summer. 1776 Ventures is an investment fund focused on seed-stage investments seeking to transform complex industries. In addition to being seed and Series A round investors, their partners have also served as a mentor and close advisor to MPOWER Financing.
MPOWER Financing is an innovative fintech company and provider of educational loans to high-promise international students who do not fit the traditional credit criteria of banks or lenders.

SoFi and JetBlue Help Customers Managing Student Loans Earn Reward Travel, (PR News Wire), Rated: B

Through the partnership, JetBlue’s TrueBlue members who refinance their student loans with SoFi will now earn 1 TrueBlue® point for every $2 they refinance through the lender, up to 50,000 points. With average monthly savings of $288*, refinancing student loans with SoFi frees up extra money that members can use to pursue travel plans, save and invest for the future, or buy a home.

 

United Kingdom

Peer-to-peer lender Wellesley & Co. publishes financial results and loan book, CFO resigns, ( Alt Fi), Rated: AAA

Wellesley & Co., the peer-to-peer lender best-known for investing alongside its investors, has announced wide-ranging changes to the business. In addition to publishing financial results for 2016, the firm has also made a first stab at publishing its loan book online.

Wellesley has now published its audited results for the year ended 31 December 2016. Its loan book grew 10 per cent during the period, to £163.6m, versus £148.7m lent in 2015. The firm made a loss for the year of £210,288, down from a loss of £2.2m in the previous year. But it made a pre-tax profit of £1.3m in the second half of the year.

Other notable points include having supported the development of 822 “mid-priced” homes in the UK. The firm also made a number of new hires in 2016, including Stephen Bell as chief risk officer in February, and Peter Scott as non-executive director in March. The firm claims to have delivered an average interest rate across all products of 4.49 per cent to investors.

Wellesley’s full accounts will be available via its website next week.

Chief financial officer Alasdair Lenman, who was appointed last summer, has resigned from the company. Lenman was hired to help the firm publish its late accounts up to December 2015 ahead of its abortive fundraise on equity crowdfunding platform Seedrs, which was pulled at the start of this year.

Further to these developments, Wellesley has temporarily paused its peer-to-peer lending operations, and is launching a new listed bond on the Irish Stock Exchange.

Turnbull said that Wellesley is pausing its P2P product in order to allow time for technical changes to be made. He said that these changes are designed to satisfy both investor demand and regulatory requirement.

Once re-launched, Wellesley & Co. will no longer deliver monthly interest payments to its investors. The monthly interest payment model was at odds with the style of development loans that the firm originates, which are repaid at maturity. Henceforth, the firm’s P2P product will offer a target rate of return, with interest repaid at maturity.

Wellesley has just launched its third bond, offering investors an annual interest rate of 4.75 per cent over 3 years, or 4 per cent over 2 years, paid monthly. The bond can be held within an ISA wrapper.

The first Wellesley bond was a mini-bond which raised a little shy of £50m. The second was listed on the Irish Stock Exchange, as is this third issue. The second bond was launched in response to ISA demand, and could be invested in via a stocks and shares ISA.

Wellesley is famed for skin-in-the-game approach to P2P, which in practical terms means that it takes a stake of every loan in a first loss position. It has previously been suggested that the proceeds of its bond listings – which in some cases may explicitly be used as working capital by the firm – have been used to fund this first-loss piece, as well as to top up its provision fund.

Peer-to-peer lender RateSetter raises £13m, Woodford and Artemis lead, (Alt Fi News), Rated: AAA

RateSetter, one of the UK’s “big three” peer-to-peer lenders, has scooped £13m in equity investment from existing backers. Investors in the round included well-known fund managers Woodford Investment Management and Artemis.

The two funds first backed RateSetter with a £20m investment in March 2015, in a round that valued the platform at £150m. This latest round takes the firm’s valuation to over £200m, with £50m in equity capital raised to date.

RateSetter has lent a cumulative total of £1.9bn since launching in 2010, according to AltFi Data, and is widely regarded as one of the UK’s “big three” P2P firms. But while the other two members in that trinity (Zopa and Funding Circle) have recently been fully authorised by the regulator, RateSetter continues to operate under interim permissions. FCA rules dictate that it will need to achieve full authorisation prior to launching its Innovative Finance ISA offering.

RateSetter raises funds as it prepares to list, ( Financial Times), Rated:AAA

The online lender has tapped existing investors for what is set to be its last round of private fundraising as the company prepares to list on the stock market to fuel its growth.
RateSetter, which has raised more than £50m of capital in total, will use the funding to launch its lending product in an Individual Savings Account, enabling investors to lend to borrowers online in a tax-free wrapper.
Funding Circle, which has in the past couple of weeks become the largest peer-to-peer site in the UK, also passed the FCA’s authorisation test last week, paving the way for its Innovative Finance ISA.

UK fintech shrugs off Brexit, trumps Germany, (Alt Fi News), Rated: A

Fintech firms  based in the UK have received more than double the overall capital invested into German fintechs  since the start of 2016. In fact, investments grew 81.7 per cent year on year from $284m in Q1 2016 to $516m in the opening quarter of this year, according to research by FinTech Global, a consultancy,

Investments, however, in both German and UK fintech companies have hit five-quarter high’s in Q1 2017 with $218m and $516m amount invested, respectively.

Both the UK and Germany raised nearly half of their total respective funding for 2016 in the opening quarter of the year. Therefore, fintech investment in both countries is on track to surpass the value invested last year.

UK fintech investments in Q1 was driven by the $101.8m round raised by Atom Bank while Germany’s largest deal went to deposit marketplace start-up Raisin which raised $32m Series C round.

India’s Wadhawan Group takes stake in Zopa, (P2P Finance News), Rated: A

ZOPA has raised £40m in a fresh equity fundraising round, led by Indian conglomerate Wadhawan Group.

Seedrs has joined Funding Circle and iwoca in partnering with Natwest, (Business Daily), Rated: B

Equity crowdfunding platform Seedrs has become the latest alternative finance provider to join a major Natwest programme that aims to open doors for UK SMEs to sources of finance.

“As the most active equity investor in UK private companies, Seedrs has already funded over 500 investment rounds for fast-growth SMEs, with more than £210 million invested into campaigns on our platform to date.

China

China Minsheng Investment leads $ 262m pre-IPO in P2P lending firm, (Deal Street Asia), Rated: A

China Minsheng Investment Group, one of the country’s largest private investment group, has led a RMB1.8 billion ($262 million) pre-IPO investment round in Chinese peer-to-peer lending company Tuandaiwang. Other investors in this round include Beijing Yisheng Innovation Technology and Beihai Hongtai Investment. This investment brings the company’s value up to RMB10 billion ($1.46 billion), said a report in China Money Network.

Tuandaiwang operates a P2P lending platform, which enables users to lend their saving at a higher investment return rate than traditional saving rates. It claims that individuals and companies have borrowed around RMB78 billion ($11.4 billion) since its launch in 2012 and lenders can make RMB2.3 billion ($335 million) in returns. The company said that it would spend this proceeds on the platform’s development and investment in other tech assets. The investors in its previous rounds with a combined funding of RMB675 million include JD Capital, Dongguan Securities and Giant Investment.

XIAOMI has started a bn Loan Refinancing, (Xing Ping She), Rated: A 

Chinese smart phone giant XIAOMI has started a three-year loan refinancing for a 2014 loan agreement, with the maximum amount is $1bn. The borrower is XIAOMI(Hong Kong), and the parent company XIAOMI acting as the guarantor. The deadline for underwriter is 23rd June, and the roadshow will be held on 1st June in Hong Kong. Deutsche Bank and Wing Lung Bank jointly served as book runners. The loan has been divided into two parts: Part A for regular loans ( $500 million) , and part B for revolving credit loan ($250 million).

It was revealed that XIAOMI’s $1 billion three-year loan in Oct 2014 was the company’s first show in the loan market. Deutsche Bank, J.P. Morgan Chase & Co. and Morgan Stanley was the initial leading and bookkeeping banks, and other 25 banks were involved in the loan.

P2P Company Tuandai Raised 0m in a new round of financing(Xing Ping She), Rated: A

Tuandai Group has closed a new round of financing of $270m. The financing was led by Minsheng Capital with $104 million.

Tuandai was set up in 2011, and transformed its core business to P2P Lending in October 2016, dividing its services into asset sector and the internet sector. In early time this month, Tuandai changed the name of their platform from “Tuandai Network” to “Tuandai Network丨 P2P Lending Investment”, and would be engaged in the intermediary business about network lending information.

European Union

Banco BNI Europa boosts European SMEs with €10M investment in Portuguese peer-to-peer platform RAIZE, ( Email), Rated: AAA

European Bank BNI Europa signs strategic partnership with Portugal’s largest peer-to-peer lender RAIZE

Portugal/Eurozone: Portugal’s economic recovery fuels interest in SME lending through peer-to-peer platforms

Agreement follows a £45M deal with the UK’s largest invoice peer-to-peer platform in May, 2017

RAIZE (www.raize.pt) is Portugal’s largest peer-to- peer lender focusing on SME lending. The online lender operates its own payments institution licensed and regulated by the Bank of Portugal and currently has more than 10,000 investors lending to SMEs. The platform expects to lend more than €15 million in 2017.

Korea

Local start-up Lendit raises 10 billion won, ( Korea JoongAng Daily), Rated: A

Lendit, a leading marketplace lending start-up, said Monday that it has raised 10 billion won ($8.9 million) from a group of investors including Altos Ventures, a Silicon Valley-based investment firm. Local venture capital fund YellowDog and Collaborative Fund, a New York-based firm, also contributed to the Series-B financing.

“We aim to cement Lendit’s position as the top lending startup in consumer financing by using the funds to boost R&D and foster professionals for tech and finance,” said Kim Sung-joon, CEO & founder of Lendit.

Founded in 2015, Lendit is the country’s top marketplace lender in the consumer lending segment with accumulated loans at 47.4 billion won as of May 29.

Australia

‘Green loan’ marketplace receives $ 20m, (Investor Daily), Rated: A

RateSetter’s new marketplace seeks to provide “more affordable finance options” for the purchase of energy efficient products by both businesses and individuals.

The marketplace has been given a ‘kickstart’ with a $20 million cornerstone investment from the government’s Clean Energy Finance Corporation (CEFC), RateSetter said in a statement.

It is anticipated that thousands of everyday Australian investors who want to earn attractive returns, while improving the country’s energy footprint, will participate in funding green loans via the marketplace.”

India

RBI guidelines on P2P lending platform likely by June-July, ( Live Mint), Rated: AAA

The Reserve Bank is expected to come out by June-July with guidelines to regulate the Indian peer-to-peer (P2P) lending market. The RBI had floated a consultation paper in April 2016 on the Indian P2P lending that has been taking roots in India.

At present, the status is that “it has gone from the RBI to the Ministry of Finance. The Ministry of Finance has put it out to the Ministry of Corporate Affairs and they have to come back (on the subject matter),” Mathews said. Faircent.com, which went live in 2014, has so far facilitated lending to the tune of Rs20 crore from its platform and set a much bigger target for the current fiscal. “So far, we have facilitated around Rs20 crore loans from Faircent platform.

This year we are scaling, we have to do some Rs50 crore of loans this fiscal,” he added. Next week, the company will also enter into loan against property (LAP) domain and match prospecting borrowers and lenders through Faircent.com, Mathews said.

“Constructive Synergy”: Indian P2P Lender Faircent Introduces New Student Loan, ( Crowdfund Insider), Rated: A

Indian online P2P lending platform Faircent.com announced a new semi-secure student loan product in collaboration with Bangalore-based micro-lending startups.

Under the partnership, college students may fund purchase of items such as laptops, books and smart mobile, by registering their loan requirements on the platform at a “reasonable rate” with a flexible loan period ranging between 6 and 36 months.

Singapore

Singapore’s biggest marketplace lender hits S$ 40 million originations, ( Alt Fi News), Rated: A

Singaporean marketplace lender Capital Match has hit S$40 million in loans funded and has started rolling out infrastructure to onboard European investors.

“The traditional SME lending sector in Singapore is highly inefficient and oligopolistic: at present the largest four banks account for 80 percent of SME Singaporean banking relationships,” Tobias Fischer, Director of Corporate Development, told AltFi.

“[But] banks have been more strict in their lending policies so there has been huge demand on the borrowing side.

“As a result [SME lending] is incredibly profitable, so there are great opportunities for investors to achieve excess returns.”

Authors:

George Popescu

Monday March 20 2017, Daily News Digest

lending club delinquency rates

News Comments Today’s main news: Experian, Finicity collaborate on MPL digitalization. RateSetter, Zopa among P2P lenders signed up on Bud. Lending Works launches 3-minute loan app. Creditas taps asset-backed market to fund auto loans. Today’s main analysis: PeerIQ performance monitor. OCC FinTech Charter: A new model for tech-enabled financial services? Today’s thought-provoking articles: Why CommonBond’s CEO says OCC charter […]

lending club delinquency rates

News Comments

United States

United Kingdom

Australia

China

India

South America

Asia

News Summary

United States

Experian and Finicity collaborate to digitize marketplace with less tedious experience for consumers and lenders (Yahoo! Finance), Rated: AAA

Experian®and Finicity have joined together to make it easier for consumers to apply for a loan, accelerating loan underwriting and broadening loan availability. The new technology also improves accuracy and reduces fraud risk for lenders. Experian’s new Digital Verification Solutions will deliver verification of assets and verification of income leveraging Finicity’s data aggregation and insight platform. Experian is the first credit bureau to implement this technology, which will give consumers the opportunity to secure mortgages as well as other types of loans with less paperwork and hassle by connecting with financial institutions digitally.

By digitizing the end-to-end mortgage process, loan approvals that take as long as 70 days, may be approved in as little as 10 days. With Experian’s industry-leading credit decisioning and Finicity’s account insights technology, consumers can rapidly complete the income and assets verification process through a simple digital experience.  Consumers will then permit delivery of appropriate account data, which is pushed to Experian’s Decisioning as a ServiceSM hosted platform. This will give lenders the ability to integrate consumers’ account data into their credit decisioning processes. As a result, lenders and other service providers will assess a consumer’s ability to pay and verify borrower income and assets in a manner compliant with the Fair Credit Reporting Act (FCRA).

Experian and Finicity’s partnership also will benefit the approximately 25 percent of the U.S. population with limited or no credit history, including millennials, who are the largest segment of the workforce and are increasingly applying for loans. While these consumers may have a limited credit history, most consumers have a checking and savings account, as well as other payment obligations such as rent, and utility and phone bills, which can demonstrate they are capable of repaying a loan.

PeerIQ Performance Monitor (PeerIQ), Rated: AAA

  • Lending Club targeted the most significant increases in borrowing rate to riskier borrowers in E, F, and G-grades. Prosper’s recent borrowing rate increases are mild comparing to Lending Club’s rate actions. We expect that the overall borrowing interest rates will continue to increase in response to hikes in Federal Funds rates
  • For Lending Club’s 36-mo and 60-mo products, delinquency rates continue to trend higher for 2016 vintage. We expect loans to approach peak delinquency after ~13 months of seasoning; for Prosper, we expect the 36-mo product to hit peak delinquency about 9 months of seasoning and 13 months for the 60-mo term product.
  • For both Lending Club and Prosper, charge-off rates continue to be elevated for loans in 2016 vintages. The spikes in charge off rates agree with delinquent loan pipelines as loans transition from delinquency to charge-off states. (We note that recent credit buy box tightening will not show up in the 2016 vintage).
  • We expect that originators continue to adjust pricing and credit modeling based on forward-looking credit market, Fed Funds rate expectations, the credit environment andthe competitive landscape in consumer unsecured lending.

See the full report here.

Why CommonBond’s CEO says fintech charter could be a game changer (American Banker), Rated: AAA

For the founder of an online lending startup, David Klein, CEO of CommonBond, talks like a sage.

The bearded entrepreneur notes approvingly that the conversations in his industry are becoming “more grounded and mature, rather than all about going to chase the shiny object,” and that company valuations are “catching up to reality.”

What’s new at CommonBond?

DAVID KLEIN: One of the things we are most excited about is what we call the 401(k) for student loans. This is SaaS-based technology that enables employers to contribute to their employees’ student loan repayment every month.

It is very early days, so only about 4% of companies have a student-loan-related benefit. That number is expected to be over 20% in two years.

Over 70% of millennials have student loan debt. Over 50% are thinking about student loans are thinking about them more than retirement and about 80% of them would choose a company to work for if they had this benefit.

In some of your talks over the last year or so, you’ve hypothesized that the number of marketplace lenders would soon shrink. Has it happened the way you thought it would? Have many hung on longer than you thought?

For online lending, 2016 was a year where the strong got stronger and the weak got weaker. There were a few shops that closed up and there were some players that became better known and entered 2017 stronger than ever. I think that continues in 2017 and 2018, regardless of geopolitical or macroeconomic picture, because if you study the emergence of industry, that’s what tends to happen.

What’s the key to that default rate? Are you chasing only the HENRYs?
We look at past credit and future prospects. We look at credit reports and FICO scores, but we look at cash flow, employment, industry of employment. We are looking at a host of factors.

What are your thoughts on the OCC’s proposed fintech charter?

The OCC charter would allow us to comply with regulation in one jurisdiction, instead of 51 jurisdictions including D.C. To the extent that we can save on costs, we could pass that along to customers.

It would affect capital costs. We might get access to low-cost deposits like banks do, we might get access to the Fed discount window to get close-to-free money and we might get access to better pricing in the capital markets by being a chartered institution. We’d be poised to significantly lower our cost of capital long term.

The OCC FinTech Charter: A New Model For Tech-Enabled Financial Services? (Payment Law Advisor), Rated: AAA

On February 21, DWT Payments team members Andy Lorentz and Tom Scanlon took part in a discussion organized by NYPAY that focused on the prospects of the OCC special purpose fintech charter.

View the presentation here.

The 5 Best ‘Alternative Investments’ to Consider (Newsmax), Rated: A

Private equityThese investments aren’t publicly traded or listed on the stock market. Private equity or venture capital firms invest in venture capital, start-ups, company growth, or restructuring of a company.

Real estate — Investing in property may include housing, apartment complexes, and commercial real estate. The Wall Street Journal explained that some self-directed individual retirement accounts allow people to diversify their investments into real estate, among other options, but there are many rules and risks. You also can invest in property indirectly through real estate investment trust (REIT) funds, which are available on public exchanges.

NEW REPORT: What’s The Ticket To Platform Payments Success? (PYMNTS.com), Rated: A

Radial, for example, an omnichannel technology and sales platform provider, recently debuted a new deferred payment option called Buy Now, Pay Later. The new payment feature, the result of a collaboration with European solution provider Klarna, allows customers to spread payments out over the course of six to 36 months. Similarly, fundraising platform Virgin Money Giving and payment processors Worldpay recently collaborated on a new payments system designed to handle the high number of donations that are made in the days and hours leading up to major events such as the London Marathon.

Meanwhile, PayPal looked to improve its platform with a new acquisition. The company announced plans to acquire multichannel bill payment processing and receivables company TIO Networks for a total of $233 million, according to reports.

Financial Poise™ Announces “EQUITY CROWDFUNDING,” a Four-Part Webinar Series, Available On-Demand Now through West LegalEdcenter (Benzinga), Rated: B

Financial Poise™ Webinars and West LegalEdcenter are pleased to announce the on-demand premiere of a new webinar series “EQUITY CROWDFUNDING 2017,” designed to introduce attorneys and business owners to the basics of investing in private companies through crowdfunding. Moderator Chris Cahill of Lowis & Gellen joins panelists from firms including Crowdcheck, CFX Markets, Crowdfunding Lawyers.net and Riggs Davie in Episode #1, Title III, Regulation A+, and State Crowdfunding Regimes.

Nasdaq Announces Development Role In Shaping Ad Contracts Blockchain (Yahoo! Sports), Rated: B

Securities exchange operator Nasdaq has announced it is helping to compile a blockchain for ad contracts, in partnership with the New York Interactive Advertising Exchange.

The blockchain is billed as being a transparent market mechanism for advertisers and publishers to set up ad contracts, creating a more fluid, price-driven environment for digital advertising.
It is hoped that the new system will provide a more efficient basis for the wider digital advertising industry, said to be worth in excess of $32 billion per year.
Nasdaq has already filed patents for its technology, in addition to launching its own private market Linq, powered by the same infrastructure, back in 2015.
United Kingdom

RateSetter and Zopa among P2P lenders signed up to money platform Bud (P2P Finance News), Rated: AAA

SIX PEER-TO-PEER lenders including RateSetter and Zopa have partnered with Bud, a new online platform and app that enables consumers to manage their finances on a single dashboard.

Zopa, Landbay and Assetz Capital have all got live pages on the platform, meaning that Bud’s customers will be able to manage their P2P loans alongside their bank accounts, pensions, mortgages and other investments.

LendingWell, Lending Works and RateSetter have also signed up to Bud, although their pages have not gone live yet.

Bud currently has 18 partners operational on the site, with another 20 signed up.

Walsh said that Bud is currently in talks with other P2P platforms.

It has been in its ‘beta’ testing phase since November and currently has around 4,000 customers signed up.

P2P lender launches three-minute loans through app (Bridging&Commercial), Rated: AAA

A fintech app has partnered with peer-to-peer (P2P) platform Lending Works to offer loans in just three minutes.

Revolut customers will now be able to apply for between £500-5,000 in credit in two minutes and receive funds on their contactless card almost instantly.

The London-based company also plans to enable a P2P lending marketplace among its own user base of 530,000 Europeans, ultimately allowing customers to lend and borrow money across borders.

RateSetter funds SME acquisition in the South East (P2P Finance News), Rated: AAA

RATESETTER has channelled £140,000 to fund a small- and medium-sized enterprise (SME) acquisition in the South East, as part of its focus on business lending in the region.

The peer-to-peer finance platform has arranged two loans to enable Thame-headquartered digital marketing agency Purple Frog acquire Oxfordshire neighbour OXLink, an IT specialist that will help it scale up its operations.

Zopa Celebrates Plus Products 1st Birthday (Crowdfund Insider), Rated: AAA

On Friday, peer-to-peer lender Zopa celebrated the one year birthday of its product, Zopa Plus, by taking a look back at its progress over the past twelve months.

While revealing how Zopa Plus has performed to date, the Zopa team explained that the product is performing in line with expectations. Although each individual investor has different Plus experiences, 73% of investors have notably invested for an average of at least six months, with no loan sales, have achieved actual returns of at least 6%.

Fintech Startup CurrencyCloud Raises m in Series D Funding Round (Finance Magnates), Rated: A

UK-based fintech company CurrencyCloud, a cross border payment-as-a-service provider, announced the raising of £20 million (US $25M) in Series D funding round. The company has raised from backers a total of £44 million ($61 million) in venture funding to date.

The firm has amassed an impressive roster of investors which this time included Alphabet’s venture arm GV, formerly Google Ventures, in addition to existing investors Notion Capital, Sapphire Ventures, Rakuten FinTech Fund, and Anthemis.

MarketInvoice names Zopa’s Giles Andrews as chairman (P2P Finance News), Rated: A

ZOPA co-founder Giles Andrews OBE has been appointed chairman of MarketInvoice, to help support the peer-to-peer invoice finance platform’s plans for growth this year.

Andrews will work directly with MarketInvoice’s co-founders Anil Stocker and Ilya Kondrashov to drive scale in the business, as well as chairing and managing the board of directors, the company said.

The high-profile appointment comes at a pivotal time for MarketInvoice, as it is looking to double its lending to £2bn this year.

 

Merseyside Pension Fund finances Canary Wharf development (IPE), Rated: A

The Merseyside Pension Fund has backed a £12m (€13.8m) loan secured against a development in Canary Wharf.

The £6.8bn public sector scheme has partnered with LendInvest on the deal.

The loan will help finance a planned development in London’s Docklands, which will include a 320-bedroom hotel and 199 residential units.

Digital Disruption Has Arrived In FinTech (Forbes), Rated: A

ClearBank, the first new clearing bank to be authorized in the UK in over 250 years launched on February 28th.

It is the only UK clearing bank that does not offer services direct to the consumer – a neutral and independent platform service that does not compete with its own customers.

There are big incentives for FinTechs and incumbents to use ClearBank. Put simply, they will be able to process payments and offer new competitive transactional banking services more cost effectively, efficiently and faster than has ever been possible.

I suspect ClearBank will be on the radar of everyone in the global FinTech ecosystem.

Blockchain, Distributed Ledger, Artificial Intelligence, and Identity technologies all promise to deliver technology enabled disruption, but appear to be slow out of the starting blocks with adoptable and scalable use cases. ed on February 28th.

Crowdfunding platform becomes Sharia-certified (Bridging&Commercial), Rated: A

Crowdfunding property investment platform Yielders has secured full Sharia certification from the UK Islamic Finance Council (UKIFC).

Launched in April 2016, Yielders specialises in pre-funded investment opportunities with pre-defined rental incomes, enabling investors the chance to start earning returns almost immediately.

How to find your way through the Isa maze (This is Money), Rated: B

Over the years, Individual Savings Accounts – Isas for short – have helped millions of people build long-term wealth they can access tax-free and at any time (unlike a pension).

But the Isa is about to get a major facelift which will make it a more exciting proposition than ever before.

From the beginning of the new tax year on April 6, a family of four – with two children under the age of 18 – will between them be able to squirrel away a maximum £48,256 in Isas over the course of 12 months.

Australia

AI automation FinTech startup Presagen secures competitive commercialization funding (Newsmaker), Rated: A

AI automation FinTech startup Presagen has secured its first round of funding as part of the South Australian Early Commercialization Fund  (SAECF), which is administered by TechInSA. SAECF is a new government grant funding scheme for companies with innovative technologies that have potential for global markets and large revenues. Presagen has been awarded the first of three possible phases of funding. Companies that are awarded all three phases can receive up to $500,000 in funding to support global commercialization initiatives. Presagen will use the funding to bolster its growing technical team.

Presagen uses a unique behavioral AI technique which emerged from the defense industry to automate complex human-centric tasks using software.

China

China, Blockchain & The Holy Grail of Marketplace Lending (CoinDesk), Rated: AAA

When one of the world’s largest corporations gets together with one of its largest peer-to-peer (P2P) lenders, you can almost hear the market sit up.

That’s what happened last week, when Chinese conglomerate Foxconn joined forces with P2P lender Dianrong to launch a blockchain platform for working capital. The benefits to supply chains are clear: smoother cash flows for suppliers will strengthen their liquidity, lower their costs and avoid delays in delivery due to lack of funding.

Should this change occur as projected, investment is likely to migrate to the stronger P2P lenders, shrinking the pool of potential borrowers.

The opportunity to lend to entities with a better-than-average risk profile at a reasonable return is the ‘holy grail’ of marketplace lending.

Peak Establishes New Fintech Subsidiary in China (Military-Technologies), Rated: B

Peak Positioning Technologies Inc. (CSE: PKK) (OTC PINK: PKKFF) („Peak” or the „Company”) today announced that the Company has established a new fintech subsidiary in Shanghai.

India

RBI likely to add tough riders to regulate P2P growth (India Times), Rated: AAA

The Reserve Bank of India (RBI) is expected to introduce strong riders to prevent the nimble peer-to-peer (P2P) lending industry from growing rapidly and suffering the same fate it did in many countries where P2P almost ended up looking like a ponzi scheme.

The RBI, which is expected to release the guidelines on the industry soon, believes that while the sector is yet to show much scale and traction, there should be a strict vigil on its functioning.

The regulator is worried about some cash-based unscrupulous lenders joining these platforms and lending at high interest rates, and would prefer institutional lenders to enter the space and perhaps reduce rates.

Credy looks to digitize personal lending in India  (TechCrunch), Rated: B

Lending platform Credy is looking to change the way people gain access to personal loans in India. The company, which is currently a part of Y Combinator’s Winter 2017 batch, is digitizing the process and improving access to capital for residents by opening up peer-to-peer loans to a wider group of borrowers and lenders.

With all that in mind, Credy has emerged to improve personal lending in a market that is worth $50 billion and is growing at a 30 percent rate.

South America

Brazil’s Creditas taps asset-backed debt market to fund auto loans (Reuters), Rated: AAA

Brazilian financial technology company Creditas Soluções Financeiras Ltda tapped the asset-backed debt market to raise 50 million reais (US$16 million) for auto loan refinancing, its chief executive said, an area shunned by traditional lenders after soaring delinquencies.

Sergio Furio said the transaction in February was the first in which Creditas fully decided collection and credit scoring procedures. Proceeds will go to refinance borrowers at a fraction of the cost of auto loans from banks.

Consumers in Latin America’s biggest country pay an average 190 percent a year for unsecured overdraft, credit card and consumer loans with banks.

Secured personal credit accounts for 1 percent of Brazil’s outstanding lending, a sign large banks have overlooked a segment that could thrive as benchmark domestic interest rates approach single-digits.

Asia

Our fintech future (Bangkok Post), Rated: A

In a digital world where the exchange of money is being revolutionised, banks are stepping up their collaboration with financial technology specialists to shape the future of financial institutions along with their security and data collecting systems.

While the internet has made banking much easier for consumers, it can also be a gold mine for hackers. In the old days they were simply called thieves, and they are breathing down the necks of banks, which are racing to find ways to make security cheaper and more effective. This is where fintech comes in.

In addition to working with fintech innovators on security systems and on ways to make customers’ banking experience better and faster. Mobile applications and various other electronic payment systems besides the ATM are the top examples that come to mind.

The Malaysia-based bank is broadening its fintech reach by joining with the likes of Samsung Pay and Go-Jek, a transport, logistics and payments startup in Indonesia, to provide more payment channels. It is also collaborating with the Thai mobile market leader Advanced Info Service for a mobile point of sale application, an e-wallet system for mobile money transfers, as well as Touch N’ Go, whose customers include Malaysian tollway operators, and the shopping portal Lazada for e-commerce payments.

US-based IDC provides market intelligence, advisory services and events for the information technology, telecommunications and consumer technology markets.

Artificial intelligence (AI) applications used to collect and analyse this personal information are getting smarter every day, opening more opportunities.

Mobile banking applications can be about providing services such as information about exchange rates or locations of businesses since it is not always about money transactions.

Authors:

George Popescu
Allen Taylor

Wednesday December 14 2016, Daily News Digest

Wednesday December 14 2016, Daily News Digest

News Comments Today’s main news: SoFi’s student loan refis serve as models for super prime jumbo mortgages. LendInvest launches first auction finance product. Today’s main analysis: If it walks like a bank and quacks like a bank, it’s a bank. Share buybacks continue at P2P Global Investments. Today’s thought-provoking articles: FCA bashes CFDs, yet invests in P2P. China’s […]

Wednesday December 14 2016, Daily News Digest

News Comments

United States

United Kingdom

  • LendInvest launches first auction finance product. GP:” LendInvest has been at the tip of the innovation, growth and online lending space. I am not surprised they continue innovating. Combined with their growth and their executive team recent hires, I would expect they are probably eyeing an IPO in the year or two.”  AT: “If this goes over big, I predict copycats.”
  • Share buybacks continue at P2P Global Investments trust. GP:” This is a valid strategy to help support the company , it’s NAV and take advantage of market innefficiencies.”
  • FCA bashes CFDs but invests in P2P – what gives? GP:” There is a huge different in CFDs (like FX spot) vs P2P. CFDs , nearly always, see investors losing money. P2P , nearly never sees investors losing money. How do I know this ? I run one of the main companies helping FX Spot and CFD brokers setup from tech, liquidity , legal and everything else. It was called Boston Technologies. ” AT: “I must admit, this does seem to be a double standard.”
  • Future outlook and predictions for UK P2P lending. GP:” All positive as you would expect.”
  • Expend to raise 750,000BP on Crowdcube. AT: “I find it ironic that FinTech companies are using crowdfunding sites to raise capital. Last week, it was Sharestates on SeedInvest. On the one hand, I understand that they are companies like any other and need operating capital. On the other hand, it could lead to a perception of robbing Peter to pay Paul, like a bank taking out a loan to pay off loans. Whether true or not, a perception could lead to detrimental effects in the market. I’m not sure this is a trend we want to see developing.”

Australia

China

India

News Summary

United States

SoFi’s Debut Prime Jumbo RMBS Is Big Play on Silicon Valley (National Mortgage News), Rated: AAA

SoFi Lending Corp.’s securitization of its student loan refis for high net worth individuals is now a model for its recent expansion into super prime jumbo mortgages.

SoFi has launched a $169.8 million bond issuance backed by 270 super-sized mortgages that SoFi has originated primarily to wealthy homeowners in California.

SoFi Mortgage Trust Series 2016-1 will issue four classes of super senior notes, and two tranches of supportive senior notes, secured by 15- and 30-year fixed rate home loans that the San Francisco-based lender began underwriting in late 2014.

The senior notes have preliminary AAA ratings from Fitch Ratings, DBRS and Kroll Bond Rating Agency.

The OCC’s Proposed Fintech Charter: If It Walks Like a Bank and Quacks Like a Bank, It’s a Bank (Paul Hastings), Rating: A

The OCC recognizes that the demographics of the financial marketplace also are changing with 85 million millennials becoming consumers of financial services—a demographic that has come of age using and relying on technology. As the Whitepaper notes, these market forces have resulted in technology-driven nonbank companies seeking new ways to deliver financial products and services. While frequently viewed as competition to traditional banks, given the challenges of bank regulation, technology companies frequently consider whether to become banks themselves. The Fintech Bank Charter may be a vehicle to do so. Whether the Fintech Bank Charter would carry with it all of the obligations of being a full-service bank, including the application for and receipt of FDIC insurance, and the significant regulation of bank holding companies under the Bank Holding Company Act (“BHCA”)[2]remains uncertain.[3] To be clear, and we think this thought has been lost by some commentators on the Whitepaper, this entity will be a bank and will be regulated as a bank with all of the requisite burdens and obligations of being a bank.

The Whitepaper is significant for its reaffirmation that the OCC has the authority to grant special purpose charters for national banks and federal savings associations under the National Bank Act and the Home Owners’ Loan Act (“HOLA”), respectively.[4] Existing OCC regulations define a “special purpose national bank” as a bank that conducts activities other than fiduciary activities that engages in at least one of the following three core banking functions: receiving deposits; paying checks; or lending money.[5]

While the OCC would be the primary prudential regulator and supervisor of a special purpose national bank, depending on the structure of the bank and the activities it conducts, other federal regulators may have oversight roles over its ownership structure and/or the operations of the bank.

The chartering process for a Fintech Bank would be the same as for a full-service national bank, applying supervisory standards involving safety and soundness, as well as requirements to provide fair access to financial services, treat customers fairly, and comply with all applicable laws and regulations. The OCC traditionally tailors these standards based on a bank’s size, complexity, and risk profile.

A special purpose national bank clearly will benefit:

  • Fintech companies seeking to operate under one national license rather than on a state-by-state regime (e.g., lenders, mortgage lenders, mortgage services, and money transmitters);
  • Nonbank lenders, mortgage originators, and servicers with less than $10 billion in assets, which can avoid CFPB supervision;
  • Payment processors or prepaid card program managers, which can control their own operations without being subjugated to a bank partner; and
  • Full service banks, which no longer will have to compete with nonbank Fintech companies, which they perceive are operating on an uneven playing field, as the laws and regulations applicable to all banks will apply to Fintech Banks.

Peer-to-Peer Lending Market: Small Business Units to Act as Building Blocks (OpenPR), Rate: A

TMR findings suggest that the opportunity in the global peer-to-peer market will be worth US$897.85 bn by 2024 from US$26.16 bn in 2015. The market is anticipated to rise at a whopping CAGR of 48.2% between 2016 and 2024. The biggest contributor to this growth will be small business end user segment that was likely to pace ahead at an impressive CAGR of 48.8% during the forecast period, very much retaining its leading stance.

The key trend likely to be adopted by leading players in the global peer-to-peer (P2P) lending market is to build strategic alliances to expand its small business loan divisions. For instance, Prosper Marketplace, Inc. joined hands with OnDeck and bought American Healthcare to improve its product portfolio. Similarly, LendingClub Corporation is also targeting startups by collaborating with trustworthy investors in the market.

Small Biz Loan Approval Rates at Banks & Institutional Lenders Reach New Heights (Crowdfund Insider), Rated: A

On Tuesday, Biz2Credit released its latest small business lending index, which reportedly revealed that loan approval rates at big banks and institutional lenders continued their recent surge and improved to new highs last month (November 2016).

According to the report, small business loan approval rates at big banks improved to 23.7%  during the month of November, which was up by two-tenths of a percent from October 2016. This marked the eighth time in the past nine months that lending approval rates increased at big banks. In addition to the increase, approval percentages at small banks improved 48.8%, up one-tenth of a percent from October.

Fintech Startup BlueVine Raises $ 49 Million in Series D Funding (Yahoo! Finance), Rated: A

BlueVine, a leading online provider of everyday financing to small businesses, announced today it has closed $49 million in funding. The Series D funding round was led by existing investors, including Lightspeed Venture Partners, Menlo Ventures, 83North, Citi Ventures, Rakuten FinTech Fund and Silicon Valley Bank.

Since launching in March 2014, BlueVine’s cloud-based financing solutions have helped thousands of small businesses obtain quick, easy access to the funds they need to purchase inventory, cover expenses and expand operations.

This financing will support BlueVine’s rapid growth as it expands its team and range of offerings. BlueVine has already funded more than $200 million in working capital for SMBs and is on track to fund more than $500 million in working capital during 2017.

BlueVine also announced it has once again increased its maximum credit lines based on client demand:

  • For invoice factoring the maximum credit limit has been increased from $250,000 to $2,000,000
  • For the business line of credit the maximum credit limit has been increased from $50,000 to $100,000

BlueVine offers credit lines starting at $5,000 for a business line of credit and $20,000 for invoice factoring.

Even Financial Milestone: Surpasses $ 1.5 Billion in Loan Requests & Increases Online Loan Originations by 205% (Crowdfund Insider), Rated: A

On Tuesday, fintech firm Even Financialannounced it increased loan originations by 205% quarter over quarter since the beginning of 2016. The company reported that, with more than $1.5 billion in loan requests, its platform has grown to serve over one million customers with its proprietary API and a broad network of consumer portal partners, backed by leading analytics and funnel optimization designed specifically for online finance.

2017 predictions from 4 top tech investors (Yahoo! Finance), Rated: B

More innovation in financial technology, though it could be the most regulation-prone sector

  • Many companies are working on elegant solutions to provide financing at point-of-sale that is either less expensive than today’s credit cards and/or available to consumers who may not qualify for credit cards. Loans will finally join the ranks of products and services available on demand.
  • Much of the fintech legislation to date has begun in the House or the Senate; the choices made at the bottom of the ballot are just as important as the one at the top, and investors and startups should remain hyper-aware of regulatory shifts.
  • Money center banks take the next step in 2017. We’ll see a handful of notable fintech acquisitions, but these companies will strive to continue to operate like startups, and will pay top dollar, in order to retain and attract top talent.
United Kingdom

LendInvest launches first auction finance product (Mortgage Introducer), Rated: AAA

The product, which is offered up to 75% loan-to-value, is designed for borrowers who need their deals to be fast-tracked by their lender to ensure certainty of funding within tight timeframes.

It features a 50% discount on valuation fees and no exit fees, terms from one to 12 months and loans from £75,000 to £7.5m.

Share buybacks continue at P2P Global Investments trust, nears 2 per cent of issuance (altfi), Rated: AAA

The largest closed-ended portfolio offering exposure to the P2P/marketplace lending space P2P Global Investments has entered into another round of share buy-backs in the past three weeks, according to regulatory filings.

In the past two months, the fund has engaged in share buybacks on 14 separate days, with tranches of buybacks ranging from 3,400 to 50,000 in a single day, the latter has occurred on four separate occasions.

British regulator bashes CFDs, yet allows £85 million of taxpayers money to fund potentially detrimental P2P lending sector (Finance Feeds), Rated: A

The Financial Conduct Authority (FCA) in Britain finds itself at a crossroads in terms of priorities once again today, as barely a week has passed since the national financial markets regulator released a set of proposed rulings which seek to limit the method by which contracts for difference (CFDs) are provided by large, publicly listed, well capitalized and very stable OTC electronic trading firms, yet allows other unregulated and potentially problematic businesses to flourish.

Today, just one week later, the FCA finds itself in a difficult position as the peer to peer lending industry – a particular sector which the FCA only recently deemed worthy of concerns around the growing complexity of the peer-to-peer market – has been the subject of an £85 million taxpayer funded round of investment.

Falling transparency and rising complexity among peer-to-peer lenders is a theme throughout the FCA’s 48-page report. The FCA writes at one point: “Firms’ desire to maintain confidence in platforms has occasionally led to firms acting in a nontransparent manner, masking true loan performance and exposing investors to risks.”

Future Outlook and Predictions for UK P2P Lending Market (TechBullion), Rated: A

Over the last few years, P2P lending has grown exponentially with cumulative lending reaching about £3.7 billion October last 2015in the UK.

Currently, the UK is the leading market in Europe, accounting for about 85 percent of the European market. In the next few years, P2P sector will grow fast, forcing some banks to change their ways.

According to Research and Markets, by 2018 P2P lending in the UK might be worth more than £5 billion.

In a new report, BI Intelligence predicts that UK P2P lending will grow at a 45 percent five-year compound annual growth rate, to reach $23 billion by 2020. The report also forecasts consumer, property, and business P2P lending volume in the UK, factors driving the growth, and how some unique features of the market are helping the country develop its P2P lending industry.

UK Fintech Startup Expend Looks to Raise £750,000 on Crowdcube (Crowdfund Insider), Rated: A

Expend, a UK-based fintech app startup, has launched a crowdfunding campaign on Crowdcube. The company is seeking £750,000 for growth and is offering 5.27% in equity. 

Australia

Turnbull says fintech is switched on (Investment Magazine), Rated: A

He acknowledged that financial services technology, or fintech, is ripe for investment in the industry by big companies, as well as by the private equity and venture capital industry. Peer-to-peer lending, crowdfunding, robo-advice and digital currencies were among the emerging fintech industries the PM name-checked in the speech.

Turnbull told the audience that working in the “fintech hub” of Sydney meant that they were in “one of the most exciting industries in the most exciting region” in the world.

China

China’s ‘Big Four’ banks still keeping a safe distance from burgeoning peer-to-peer lending sector (South China Morning Post), Rated: AAA

China’s major banks are seemingly taking a “wait-and-see” approach to being future custodians for the nation’s growing number of peer-to-peer (P2P) lending firms, whose reputation has been hit hard by a series of high-profile fraud cases.

By law, all P2P platforms now need to have the backing of a registered bank by August 2017, after being given effectively a 12-month grace period to meet the mandatory requirement.

So far, however, the country’s so-called “Big-Four” state-owned banks are yet to act as custodian to any P2P platforms, with only smaller lenders – mostly city commercial banks – dominating the segment.

India

RBI guidelines to act as a growth catalyst for P2P business (Your Story), Rated: AAA

For many individuals, P2P lending is an alternate source of securing finance. However, at present, it is  an unregulated sector. There are lines of reasoning in favour of as well as against regulating P2P lending. The jury is still out on whether and how the RBI should oversee this sector.

Those who don’t favour the RBI issuing guidelines often ask a question — why do we need a regulatory framework for P2P lending marketplaces? Arguably, the sector is in a nascent stage of development and poses no systemic risks. P2P lending is not perceived to have any significant impact on monetary policy transmission mechanism either. Further, it is often said that regulations may limit the progress of this innovative, efficient, and accessible avenue of alternate finance.

The RBI had released a consultation paper on P2P lending in April 2016 and had also welcomed feedback and suggestions.

The scope of regulations…

  • Permitted activity
  • Prudential regulations on capital
  • Governance
  • Business continuity plan (BCP) and customer interface
  • Regulatory reporting

Serious buyers always prefer to enter a sector that is regulated.

Strict regulations = greater accountability = higher transparency = big growth opportunities for serious players 

Authors:

George Popescu
Allen Taylor

The minutes of your (more dovish) RBI, charted

More dovish, we should add, for reasons already discussed — like the acceptance of a higher inflation threshold, the lowering of the real rate target, and the fact that the cut of 25bps in early October was on the back of a unanimous vote from the newly formed MPC under its new governor, Urjit Patel.

But more on that below the break.

First, that chart from Goldman based on the (now ex-Rajan) Reserve Bank of India’s recently released minutes:

Continue reading: The minutes of your (more dovish) RBI, charted

More dovish, we should add, for reasons already discussed — like the acceptance of a higher inflation threshold, the lowering of the real rate target, and the fact that the cut of 25bps in early October was on the back of a unanimous vote from the newly formed MPC under its new governor, Urjit Patel.

But more on that below the break.

First, that chart from Goldman based on the (now ex-Rajan) Reserve Bank of India’s recently released minutes:

Continue reading: The minutes of your (more dovish) RBI, charted

Your new RBI, not quite like the old RBI?

Raghuram Rajan is out. Pushed perhaps by some in the Indian political establishment who were unhappy with his outspoken views on matters non-monpol –“in the land of the blind, the one-eyed man is king” being a prime example — and by some who thought he wasn’t putting enough emphasis on growth when making his interest rate decisions.

Urjit Patel is in. He was supposed to signal policy continuity, more policy continuity and some more policy continuity. The kind of policy continuity only available if Rajan had *cough* just stayed on *cough* After all, Patel was a deputy governor at the RBI under Rajan and the architect of the RBI’s inflation targeting framework.

But is that prophesied continuity actually showing up?

Continue reading: Your new RBI, not quite like the old RBI?

Raghuram Rajan is out. Pushed perhaps by some in the Indian political establishment who were unhappy with his outspoken views on matters non-monpol --“in the land of the blind, the one-eyed man is king" being a prime example -- and by some who thought he wasn't putting enough emphasis on growth when making his interest rate decisions.

Urjit Patel is in. He was supposed to signal policy continuity, more policy continuity and some more policy continuity. The kind of policy continuity only available if Rajan had *cough* just stayed on *cough* After all, Patel was a deputy governor at the RBI under Rajan and the architect of the RBI’s inflation targeting framework.

But is that prophesied continuity actually showing up?

Continue reading: Your new RBI, not quite like the old RBI?

Wednesday September 14th 2016, Daily News Digest

Wednesday September 14th 2016, Daily News Digest

News Comments Today’s main news : Sharestates hits $1.3bil in funding capacity; MeasureOne raised $2.3 mil for student loan analytics ; Indian p2p market is growing at 30-35% per month, examples, and data; Fitch claims the Chinese structure finance market is heating up. Today’s main analysis : Moody’s SME securitization challenges ; US SME loans are […]

Wednesday September 14th 2016, Daily News Digest

News Comments

United States

Israel

China

India

 

United States

Moody’s: US small business marketplace lending securitizations encounter four key risks, (Moody’s ), Rated: AAA

The report can be found here.

In a new report, Moody’s Investors Service examines several credit risks in securitizations backed by loans to small businesses which are originated by US marketplace lenders (MPLs) that focus on lending to businesses with less than $10 million in revenues. These key risks have been recent topics of discussion and debate among sector participants. As small business MPLs originate more loans, they are likely to continue to turn to asset-backed securities (ABS) to fund their loans.

1. As a result of the short history of MPLs, the lenders often have not calibrated their proprietary credit models for a long enough period of credit history, such as a full credit cycle, to be considered dependable.

2. Lack of alignment of interest between the MPL and securitization investors could pose risks to the securitizations.

3. Moody’s says the regulatory environment with regards to small business marketplace lending is relatively new and susceptible to change.”If MPLs are negatively affected by regulatory scrutiny or changes, a weakening of their financial strength could damage their securitizations in a scenario in which that outcome leads to servicing disruptions or leaves MPLs unable to honor obligations to repurchase ineligible loans from the transactions under their representations and warranties, among other potential risks,”

4. The ability of small business MPLs to carry out servicing responsibilities through a credit downturn is a risk in small business marketplace lending transactions because MPLs have short operating histories and may be financially vulnerable in a credit downturn if loan origination volumes deteriorate significantly.

Comptroller Discusses Marketplace Lending, (OCC.gov), Rated: AAA

The speach can be found here.

I’ve been fortunate to oversee financial services, banks, and savings associations of all shapes and sizes for more than 30 years, at the federal and state levels.

Marketplace lending may use new technology or techniques, but it’s still about extending credit to borrowers—something that’s been done for more than 3,000 years. As entrepreneurs, you recognized an opportunity to deliver greater value by improving how credit is provided, making it faster, cheaper, and more convenient.

The rapid growth in marketplace lending over the past few years suggests that, as a group, you are on to something. The surging demand for this type of service has gotten investors’ attention. Whole loan sales to institutional investors have been increasing as a source of cost-effective funding, and asset-backed securities have provided an additional source of funding. In 2015, institutions originated about $6.6 billion in securities backed by marketplace loans—that’s three-fourths of the $8.2 billion in such securities originated to date.2 Maintaining strong, stable funding sources is critical to sustaining the sort of growth we’ve seen in marketplace lending.

However, the growth that we’ve witnessed has occurred under relatively positive conditions.

Long-term performance is just one thing to watch. The expansion of marketplace lending raises four other important policy and regulatory questions.

First, do new techniques, technologies, and products raise concerns about compliance with existing laws and regulations? Let’s take the example of the new algorithms for determining the creditworthiness of a consumer. While they have the potential to make credit available to more people who may not have otherwise qualified, do they raise issues of illegal bias? Does an underwriting model create a disparate impact on a particular protected class? New companies and companies deploying new technology should understand and ensure their products and services comply with existing laws, such as the Equal Credit Opportunity Act, that apply to all creditors—even those that are not banks. Lenders who operate without considering these questions may be accruing underappreciated financial risks and reputational liabilities.

Second, are existing laws and regulations adequate? I understand that earlier today, you heard from Congressman McHenry, who has been a real thought leader on these issues, about his views on the adequacy of the current statutory framework.

Third, do innovative activities, products, or services present a need for entirely new regulation or law to protect the public’s interest or prevent risk to the broader financial system?

The fourth type of policy question regarding innovation involves answering should innovation be regulated and, if so, “who” should be responsible for regulating an organization or activity. To some extent, the conversation about whether there should be a national substantive law or a federal license or charter for marketplace lenders and fintech firms is part of answering the question of “who” should regulate the activity.

We have heard voices on both sides of whether to grant federal banking charters to fintechs. Some have suggested that federal charters could ensure that fintechs engaging in banking activity receive rigorous, bank-like federal regulation and ongoing supervision. This may also provide a more level playing field for financial services offered on a national scale. Others have suggested that federal charters could help fintechs better navigate the existing regulatory landscape by consolidating oversight, reducing licensing burden, and applying a single uniform set of rules

On the other side, some have expressed concerns that, if granted a limited charter, companies might face lighter supervision or fewer consumer protections would apply. Others expressed concern that fintechs may seek federal charters to avoid consumer protections granted by state laws. The agency faced similar questions when it granted the first charter for Internet based banks in the late 1990s.

If we at the OCC do decide to grant limited-purpose charters in this area, the institutions who receive the charters will be held to the same strict standards of safety, soundness, and fairness that other federally chartered institutions must meet.

These four types of policy questions are among the many that our Innovation Framework Development Team is considering in their work to create a framework to enable the OCC to assess responsible innovation.

One. The framework will support responsible innovation.

Two. The framework will foster a culture within the OCC that is receptive.

U.S. bank overseer plans report on marketplace lending this fall, (Reuters), Rated: A

The U.S. Comptroller of the Currency said on Tuesday his agency plans to complete this autumn a framework to regulate marketplace lending, citing concerns that new financial-technology innovations may pose risks to consumers and the banking system.

Sharestates Hits the $ 1.3 Billion Mark in Funding Capacity, (PR Newswire), Rated: AAA

New York based Sharestates, one of the US online real estate crowdfunding platforms, announced today that it has surpassed $1 billion in committed capital for the purchase of loans.

Sharestates launched its full operation less than two years ago in February of 2015. Since then, the firm has originated over $150 million in loans across more than 210 projects, with an average loan size of approximately $728,000. To date, Sharestates has returned over $50 million to investors with an average return rate of 11.36% for 2016, with zero loss of principal. Sharestates’ current trajectory has it on a $25-$30 million month to month origination volume, leading it to break over $200 million in originations by years end.

This new round of financing comes a few months after Sharestates received $300 million in loan purchase commitments, driven by collaborations with Prime Meridian Capital Management and Colony American Finance.

To compete in the market, Sharestates leverages proprietary technology and a close partnership with The Atlantis Organization, which – founded by Radni Davoodi and Raymond Y. Davoodi in 2004  – has become one of the nation’s leading title agencies with over $4 billion in closed transactions.

Finding Cheap Loans Is Getting Harder For Small Businesses Around the World, (Bloomberg), Rated: AAA

Only 48 percent of small- and medium-sized businesses said they can get financing at rates below 8 percent, according to a new survey from C2FO, a financial technology startup that has created a marketplace where small- and medium-sized businesses can get paid early by the large companies they supply. The inaugural such survey, released last year, showed nearly 60 percent of respondents were able to secure funding at rates below 8 percent.

C2FO canvassed more than 1,800 small- and medium-sized businesses (SMEs) in the U.S., U.K., Germany, France, and Italy, with 80 percent of those firms having $2 million or less in gross annual revenue. It found borrowing was priciest in the U.K. and the U.S. with 42 percent and 47 percent of SMEs borrowing at a rate of below 8 percent, respectively. That compares with 52 of respondents in France, 51 percent in Germany, and 58 percent in Italy.

An apparent higher cost of capital has caused some of these firms to look at other sources, such as peer-to-peer, or marketplace, lending that involves directly matching would-be borrowers with lenders. On average, 18 percent of respondents in each country reported using peer-to-peer lending at some point.

More expensive credit in the U.S. stands somewhat at odds with the most recent survey from the National Federation for Independent Business (NFIB), which showed just 3 percent of small business owners reporting in July that their borrowing needs were not satisfied — 1 percentage point above the record low reached in September of last year. Still, the NFIB small business optimism survey has been sputtering with sentiment making little to no improvement over the last year, falling 0.2 point in August to a three-month low of 94.4.

“Uncertainty is high, expectations for better business conditions are low, and future business investments look weak,” NFIB Chief Economist Bill Dunkelberg said in a statement. “Our data indicates that there is little hope for a surge in the small business sector anytime soon.”

MeasureOne – Higher Education and Student Loan Analytics Firm – Provides Improved Insights into Student Loan Repayment and Risk, (PR Newswire), Rated: A

MeasureOne, a higher education data and analytics firm focused on the $1.4 trillion-dollar student loan market, today announced $2.3 million Seed financing led by Socratic Ventures along with Colchis Capital and University Ventures. The investment will allow MeasureOne to expand its rich data repository and analytics capabilities to help higher education institutions and lenders invest in talent, with better insights into student risk and potential.

MeasureOne specializes in data-driven insight for the higher education finance industry, and its most recent report on private student lending shows that families are effectively managing their private student loans.

MeasureOne, founded in San Francisco with offices in Dallas, TX and Ahmedabad, India. MeasureOne is applying data science and industry expertise in order to increase understanding of student loans and empower student loan lending, risk assessment, repayment, capital market investments and public policy development.

Wall Street’s Insatiable Lust: Data, Data, Data, (Wall Street Journal), Rated: AAA

A new species is prowling America’s most obscure industry conferences: the data hunter.

In one recent example, Mr. Haines discovered a mobile advertising company that also collected data on the type of device someone was using when displaying an ad to them. The data helped estimate iPhone sales ahead of Apple Inc.’s announcements in 2011 and 2012, and it was lucrative for Mr. Haines’s old company, Quanton Data.

Erik Haines, head of data and analytics at New York-based Guidepoint Global LLC, trawls the globe for meaningful data to sell to hedge-fund clients.

Hedge funds and other sophisticated investors are increasingly relying on intermediaries like Mr. Haines, 35 years old, as they seek insights into a company’s sales and health that aren’t readily available from conventional sources.

Gone are the days when a hedge fund would call up a random sampling of Aéropostale stores to ask managers about sales or simply visit big-box retailers to get a feel for the traffic.

The firm struck a deal with a large insurance company to find out every day what kinds of cars received insurance policies, a possible indicator of how sales are going for automobile manufacturers. Another deal is with a company that surveys construction permits across county municipal offices, which is a “proxy for construction activity,” he said.

There are also companies set up to create exhaust. In those cases, often a person’s data is the price of a free phone application or service. For example, app provider Slice Technologies Inc. lets users track the arrival of packages to their homes in its signature Slice app or block spam through another service it owns called Unroll.me without charge. But in exchange for those services, about four million users allow the company to read their emails.  Slice, in turn, also analyzes receipts and other data in a person’s email which it packages into anonymized data for advertisers and hedge funds. It might showAmazon.com Inc. selling more of a particularly profitable item or an increase in Netflixsubscriptions, which investors can use as a factor in their trades.

Steve Schwarzman, Blackstone CEO, interview analysis, (Termsheet, Email), Rated: AAA

Dan Primack in Termsheet reports:

“Blackstone boss Steve Schwarzman was interviewed at a CNBC conference yesterday by Becky Quick, and said four things of particular interest: (1) He believes much of the hedge fund industry will deviate from 2/20 due to performance troubles; (2) When asked what Blackstone’s stock price drop over the past year is a reflection of, he replied: “That’s a reflection that investors are wrong.” (3) The Fed will eventually raise rates (in part because the media is “daring” it to do so), but he believes the only real impact will be on financial markets, not on the real economy. (4) He declined to endorse either presidential candidate, and also seemed to accept the idea of changing the tax treatment of carried interest, as part of a more comprehensive tax reform package.”

Lending Club names former WaMu exec as its new finance chief, as bid to reassure investors continues. (San Francisco Business Times), Rated: A

Comment: We covered these news yesterday. More information today.

Thomas Casey will start his term at Lending Club Sept. 19. He was the finance head at WaMu prior to its sale to J.P. Morgan Chase & Co. in 2008 and was most recently finance chief for Acelity LP Inc.

In mid-July, Lending Club appointed BlackRock Inc. veteran Patrick Dunne as its new chief capital officer, as the company continues to struggle to restore investor confidence after forcing out its former CEO amid a lending scandal. Dunne is well known in Bay Area finance circles, having formerly headed BlackRock’s S.F. office.

P2P lenders not like having money with a bank, (Bendigo Advertisers), Rated: B

A new wave of online marketplaces is offering savers, investors and those running their own super funds much higher interest rates on their cash than they can get from banks.

All use “risk-based pricing”, where borrowers with the best credit scores pay lower rates of interest than those with poorer creditworthiness.

With a bank, everyone who wants a car loan who is considered a good risk pays the same interest rate.

With P2P lenders, the investors say how much money they want to invest, the term and the interest rate they want to receive. Then it is an auction process to match-up lenders with borrowers. [Comment: To my knowledge there are very few P2P lenders who still do reverse auction if any at all ].

While P2P lenders could be a good option as part of a well-diversified portfolio, they are not like having your money with a bank. [Comment: It is in the entire industry’s interest to make sure retail investors have a realistic expectation of risk vs reward of what they are getting into. Unhappy retail investors who have the impression that fraud was committed usually attracts draconian regulation. ]

Israel

A new fintech coworking space finds big bank partners, (Tradestreaming), Rated: AAA

For banks, just keeping up with customer expectations forces them to run at breakneck speed. To do this, some institutions run hackathons or add bean bags and an open space floor plan.

A new model developed by Israeli fintech hub, The Floor, solves this problem. Four of the world’s largest banks, HSBC, Santander, RBS and Intesa SanPaolo partnered with the the coworking space, looking for better dealflow. In addition, Accenture, KMPG and Intel are also cooperating with the new program.

The Chinese Pando Group, a $250 million venture firm, is an investor in The Floor and also provides a bridge to the East Asian market, traditionally ignored by Israeli companies.

Citi and Barclays also operate fintech accelerators in Israel, but those are focused on seed stage startups and operate as any other accelerator. The Floor targets companies in growth stage that have already raised at least $1.5 million in equity. “The goal is to get these startups integrated in banks,” explained Cohen.

The banks have a final say in approving companies into the coworking space. “We are a boutique coworking space,” said Moises Cohen, one of The Floor’s founders.

The Floor targets companies in growth stage that have already raised at least $1.5 million in equity. “The goal is to get these startups integrated in banks,” explained Cohen.

The Floor’s management team uses their industry connections to dramatically shorten the time it takes a participating fintech firm to get a pilot with a major bank. In at least one case, the team managed to get a startup integrated with a partner in under 2 months.

The model has attracted 10 companies since the hub was founded early this year. The Floor plans to expand that number to 25, or 5% of the fintech firms located in Israel. The new coworking space opened in August in the Tel Aviv Stock Exchange building. Before that, the companies worked in their own spaces. One company relocated from Russia to join The Floor.

China

Fitch: Chinese Structured Finance Market Continues to Expand, (Reuters), Rated: AAA

China’s structured finance market will continue expanding in both scope and scale, with increased asset-class diversification.

A total of CNY193.4bn (USD29.8bn) of Chinese structured finance transactions were issued in 2Q16, representing a 96% yoy increase. The increase was principally driven by 242% growth in the Asset-Backed Specific Plan scheme, which is regulated by the China Securities Regulatory Commission.

Issuance under the Credit Asset Securitization (CAS) scheme, which is regulated by the People’s Bank of China and China Banking Regulatory Commission and is the leading structured finance market by size, increased 43% yoy. The increase was predominately due to residential mortgage-backed securities (RMBS) and auto-loan asset-backed securities (ABS) issuances, although limited by a significant fall in collateralised loan obligation issuance. Fitch expects both RMBS and ABS asset-classes to maintain the growth momentum in 2H16.

Highlights for 2H16 include the issuance of three non-performing loan (NPL) ABS and two asset-backed note (ABN) securitisation transactions.

The three NPL ABS deals, originated by Bank of China Ltd. (A/Stable) and China Merchants Bank (BBB/Stable) were pilot transactions, as the regulators have restricted the market during the 2008 global financial crisis.

Fitch expects more NPL ABS to be launched in the near-term, as the government has granted quotas of CNY50bn to six commercial banks to help them deal with rising NPL ratios.

The two ABN securitisation transactions adopted a special purpose trust structure similar to CAS scheme, the first time this asset-class has used this structure since inception in 2012. This type of instrument allows non-financial corporates to issue asset backed notes in China’s interbank bond market.

The opening up of the interbank securitisation market to non-financial corporates leads Fitch to expect a continued flow of ABN issuance, as it provides a deeper investor-base than the stock-exchange bond market

A full copy of the report, China Structured Finance Quarterly – 2Q16, can be found here.

 

India

P2P lending on growth trajectory ahead of RBI guidelines, (Business Standard), Rated: A

While RBI prepares the blueprint to regulate the sector, for some of the pioneers in the field, business is growing at the rate of an average 30-35 per cent on a monthly basis.

Delhi-based Faircent, which started operations around 2014, saw almost more than ten times growth in loan transactions in the last one year, according to Rajat Gandhi, founder and CEO, Faircent. So far, the company has raised close to $3.5 million, with one of the investors being Mohandas Pai, former director at Infosys. On an average, there has been an almost 35-40 per cent growth in monthly business for the company, according to Gandhi. The number of loan requests in the platform too has doubled between April-September 2016, from about 14746 in April to about 29108 in the beginning of September.

Another P2P lending platform, Lendbox, which started operations about ten months back, has already facilitated loans of around Rs 9 crore in its platform. Loan disbursements through the platform has been growing at around 30-32 per cent on a monthly basis, according to Ekmeet Singh, CEO, Lendbox. Further, the company is looking to raise around $3 million from investors.

The industry is expecting RBI to create separate category of NBFCs (non-banking finance company) for P2P lending on the lines of NBFC MFIs (Microfinance Institutions), which in turn is expected to give a strong footing to P2P facilitators.

“Since P2P platforms do not undertake lending themselves, and are mere facilitators, capital requirement of Rs 2 crore, which is at a par with NBFCs, could be too high for most P2P platforms to meet. Hence, we suggested RBI to create a separate category of NBFCs,” according to the founder of a P2P company.

“After came out with draft regulations on P2P lending, there has been an increase in interest in the sector from institutional investors as well as borrowers and lenders. We are in advanced stages of discussions for raising around $3million to fund growth,” said Singh.

Micrograam, a rural-centric P2P firm is looking to raise around Rs 10 crore from investors, said Rangan Vardan, founder, Micrograam. At present, the capital base of the company is close to Rs 2.5 crore. The company has facilitated lending of about Rs 21 crore in the last five years. In 2014, the company had roped in V Balakrishnan, former Chief Financial Officer of Infosys, as its chairman.

Hyderabad-based i-Lend, which started operations around 2013, has been going slow in lending, but is expecting a surge in business and institutional lending after comes out with final guidelines on P2P lending. The company is looking to raise around $1.5-2 million from investors.

“At present, we are growing at a rate of around 15-20 per cent on a monthly basis. We are present in three cities–Hyderabad, Chennai and Chandigarh. We are planning to expand to Bangalore soon. The sector is waiting for guidelines. Once it comes out, institutional investments are likely to increase significantly,” said Shankar Vaddadi, Founder & Director, founder and director, i-lend.

With new RBI norms, P2P lending startups are hoping to attract VCs , (Economic Times), Rated: B

There are about 40 [P2P lending] entities in the country, according to Xeler8, which tracks startup activity in the country. Mohandas Pai, who has backed Faircent, said the Reserve Bank of India’s regulatory guidelines will bring clarity, which will attract more players and intensify competition.

On the other hand, regulation may also lead to many players shutting shop if they’re unable to meet requirements such as maintenance of Rs 2-crore capital and an interest rate cap, which were published in the RBI’s discussion paper in May.

“I know of at least five startups from this space that will have to shut down once the final guidelines are out,” said Sunil Kumar, founder, Bengaluru-based P2P startup Loan-Meet, which has been bootstrapped since it started operations last year.

Author:

George Popescu

Thursday September 1st 2016, Daily News Digest

Thursday September 1st 2016, Daily News Digest

News Comments Today’s interesting reads: Moody’s pointing out Prosper Marketplace successfully avoiding Madden vs Midland risk and new laws perhaps coming ; Amazon and Wells Fargo split up. In the UK : IFISA will open to bonds in Nov 2016. And more internationally: India will most likely get p2p regulation before Sunday; and interesting market overviews […]

Thursday September 1st 2016, Daily News Digest

News Comments

United States

United Kingdom

India

European Union

China

Indonesia

 

United States

Amazon and Wells Fargo part ways on private student loan deal, (Washington Post), Rated: AAA

(Amazon chief executive Jeffrey P. Bezos owns The Washington Post.)

Barely a month after teaming up, Wells Fargo has stopped offering Amazon.com customers discounted interest rates on private student loans.

Neither company would explain the abrupt end of the program, only confirming that it has been discontinued. The Wells Fargo Web page that once heralded the union now redirects to the bank’s run-down of its student loan products.

Until this week, Amazon Prime Student subscribers who applied for any of the bank’s education loans were eligible to have their interest rate lowered by half a percentage point. The deal was a bit unusual. Though it’s not uncommon for banks to partner with retailers to offer credit card customers discounts on shopping or travel, loans are another thing.

“We congratulate Amazon for deciding to stop promoting Wells Fargo’s costly private education loans,” said Pauline Abernathy, executive vice president of the Institute for College Access and Success (TICAS). “Private loans are one of the riskiest ways to pay for college, with none of the flexible repayment options and consumer protections that come with federal student loans. Students should consider other schools if a school requires them to take out a private loan.”

Moody’s: New efforts to bolster lender protections won’t eliminate legal risks for marketplace lenders, (Moody’s), Rated: AAA

Two recent developments in the marketplace lending space will be credit positive for some asset-backed securities (ABS) backed by marketplace loans, Moody’s Investors Service says in a new report. The moves, which reflect efforts to strengthen protections for holders of marketplace loans against legal actions by consumers, won’t eliminate this risk entirely, however.

“Some marketplace lenders have recently changed their origination model to address legal risks that could impair consumer loans whose interest rates exceed state usury limits,” says Moody’s analyst, Jody Shenn. “Meanwhile, newly proposed legislation, if passed, would create more explicit protections from state usury laws for bank-originated loans that are sold.”

Prosper Marketplace Inc. is the latest marketplace lender to adjust its origination model in the wake of the Madden v. Midland Funding LLC decision and other rulings, Shenn says. The changes strengthen loan holders’ ability to protect themselves against legal actions by consumers whose loans have high-interest rates but don’t completely remove this risk. Madden-like challenges, for example, could be heard by judges who are sympathetic to plaintiffs’ arguments.

Separately, US Representative Patrick McHenry has introduced a bill in Congress that would more explicitly protect bank-originated loans from state usury laws. If passed, the legislation would state that if a loan is valid when made due to the federal preemption of state usury laws, it would remain valid if it is then sold, assigned, or otherwise transferred.

“Such legislation would be credit positive for marketplace lending ABS because it directly addresses the Madden ruling and would prevent legal challenges based on the same theory,” Shenn says. “The bill is very narrow, however. It doesn’t resolve the issue of whether the bank or marketplace lender is the true lender of a loan, for example, which therefore is a separate legal risk for securitization transactions.”

Yirendai to defend against legal suits, (Shanghai Daily), Rated: A

Fifteen Chinese firms were sued in securities class action lawsuits in the US in 2015, taking up over 40 percent of all shareholder suits filed against US-listed foreign firms, research by Stanford Law School and Cornerstone Research showed.

On Tuesday, both New York and New Jersey-based law firm Bronstein, Gewirtz & Grossman filed a lawsuit accusing Yirendai of making “materially false misleading statements.”  On the same day Rigrodsky & Long PA filed a legal suit for the Central District of California against the P2P lender’s failure to disclose “rising fraud related to customer applications for its loan products,” and the negative impact that “the implementation of new anti-fraud regulations could have on Yirendai’s performance.”

Yirendai, the consumer finance arm of Chinese P2P lender CreditEase, yesterday rejected the complaints as “without merit” and the company intends to defend its interest.

Moody’s: Marketplace Lending is Good for Small Business Even as Pitfalls Remain, (Crowdfund Insider), Rated: A

Moody’s report in full can be found here.

Moody’s has published a report on the marketplace lending industry stating that platforms are “steadily expanding credit to small and medium-sized enterprises (SMEs) – but challenges remain. The authors are of the opinion that partnerships with traditional banks may ease the path forward for this segment of online lending.

Moody’s believes the new lending technology can help provide credit to SMEs while banks will benefit from access to the technology – including faster loan review – while expanding their relationships with customers.

The caveat to all of this is the looming risks of online lending and the list is challenging. Moody’s highlights model risk, regulatory risk, loan performance uncertainty and, yes, the risk from banks that are going it alone. With Goldman Sachs poised to enter the market in weeks, existing MPLs will have additional competition.

United Kingdom

Crowdfunded bonds: an income solution for ISA savers?, (City Wire), Rated: AAA

From November, the type of crowdfunded loans that will be authorized to sit within the new ISA will expand to include crowdfunded bonds. Unlike P2P lending, where investors’ money is spread among a large number of smaller loans typically made to small businesses and individuals, crowdfunded bonds see all of an investor’s money lent to larger, more established company.

The newest addition to the ISA stable, the ‘Innovative Finance ISA’, has been available since April. Currently, it allows peer-to-peer (P2P) lending investments to be held tax-free, such as loans made through lending platforms like Zopa, RateSetter and Funding Circle.

Julia Groves, head of crowdfunding at Downing and founder of the Crowdfunding Association, argued crowdfunded bonds were cutting out the fund manager middle-men and their high fees, meaning there were greater returns for investors.

Downing offered its first crowdfunded bond – investing in solar energy – at the beginning of the year at a fixed interest rate of 6.25%. It has launched eight bonds to date and is looking at launches next year that will enable investors to lend to care homes and nursery schools. Alongside solar investments, there is also a Pub Bond that offered 5.75% over 12 months plus a 20% discount card for investors in a chain of Home Counties pubs that is hoping to expand from its current four.

Downing is also seeing a boost from pension freedom, which has given over-55s the ability to be more flexible with their retirement savings.

Zopa doubles lending but reports £8.9m annual loss, (Financial Reporter), Rated: A

Peer-to-peer lending platform Zopa doubled lending to £532 million in 2015 but announced a 45% increase in annual losses from £6.1 million in 2014 to £8.9 million.

Zopa says the loss is due to “significant internal investments” throughout 2015. Headcount more than doubled, from 70 people in December 2014 to 157 in December 2015, and a focus on technology innovation combined with increased marketing activities stimulated the growth in disbursals and revenue.

India

RBI likely to agree on nodal agency, (Business Standard), Rated: A

The Reserve Bank of India (RBI) is expected to issue the final guidelines for peer to peer (P2P) lending in the next few days.

It is expected to concede to lending firms’ suggestion for a nodal agency.

Comment: I had to look up what a nodal agency means. Nodal means: at a place where lines, systems, or paths meet. I assume a nodal agency would mean an agency that reports to multiple government stakeholders. 

People familiar with the development say the final guidelines are expected to come out before he demits office on Sunday.

The entities also suggested they should be given access to credit bureau data, which could get approval. They say this will help improve the quality of borrowers.  Apart from structural guidelines, the rest would be more suggestive in nature. “This is because the sector is still evolving and they don’t want to clamp on it,” said one player.

Some had asked the minimum capital requirement of Rs 2 crore be relaxed.  While bigger entities wanted the amount to remain, smaller ones had reservations, saying they were not lending or accepting deposits, and it shouldn’t apply to them. Now the players are also expecting a clarification on this.

European Union

Marketplace Lending in Italy Still in Infancy but Long Term Potential is Promising, (Lend Academy), Rated: A

As of the latest available figures Italy accounts for a minuscule 0.27% share of the volumes originated by the industry since inception. True, the UK accounts for the lion’s share of the European pie at 84.80%, suggesting that marketplace lending in Europe is currently a tale of two markets: the UK, and “all the others”. But Italy’s share looks extremely low even in comparison with France’s 3.33% and Germany’s 5.55%. It is approximately one-third the size of Finland, a country whose population is over 10 times smaller than Italy’s.

Two new platforms have joined the segment of loans to individuals: Soisy and Younited Credit, the latter having clearly taken the lead in new monthly originations after only four months since launch thanks to the strong support of its French mother company (the former Pret d’Union).

Four more platforms have been established to provide financing for businesses. Two of these are already operating: Borsa del Credito (which focuses on medium-term (36 to 60 months) financing for micro-businesses and SMEs) and Work invoice, which as the name suggests is a marketplace for companies aiming at financing their business via the sale of some of their receivables.

Before the end of 2016, they will be joined by Instapartners, an initiative backed by an impressive team of former top consultants and well-known entrepreneurs and CashMe. Both newcomers will be focusing at least initially on offering short-term financing solutions to SMEs.

Data collected from sources such as Milan’s Polytechnic (publisher of an annual report on Crowdfunding which from this year also included “Crowdfunding Lending”) or our own site P2Plendingitalia.com (a specialist blog/site in Italian which collects monthly figures from all the platforms) are still very modest in absolute terms.

Italy is a market only marginally smaller than the UK, in terms of population (60 mn people vs the UK’s 65 mn) or measured by the size of its GDP. It is also home to over 6 mn businesses, of which 4 mil classified as “micro-businesses”. Finally, the pool of savings held by Italian households is huge. According to Bank of Italy’s data, total financial assets held by Italian households at the end of 2014 amounted to €3.9 tn (approximately $4.3 trillion) and total net wealth was estimated at €8.7 tn ($9.5 trillion USD).

China

Fosun chairman calls China’s P2P market a ‘scam’, (FT), Rated: A

China’s self-styled “Warren Buffett” and billionaire businessman Guo Guangchang on Wednesday called the country’s Rmb440bn ($65.9bn) peer-to-peer lending market “basically a scam”, becoming the latest high-profile executive to attack an industry that has been plagued by scandal.

The sector has been lauded for providing an alternative to low-interest deposits but has more recently gained a reputation for hosting some of the biggest scams involving retail investor cash in China’s recent financial history, incurring the wrath of some of the country’s top business people as well as the regulators.

Mr. Guo made the remarks at a press conference in Hong Kong following the release of the company’s interim results. Another Fosun executive emphasized that the company, known for using insurance premiums to make investments abroad, had never dabbled in the P2P business.

Earlier this month, the president of Ping An Insurance, China’s second-largest insurer, told the Financial Times that most P2P lenders were “fakes” and that the vast majority of China’s P2P lenders would not be able to continue their business in the future.

The president of Ant Financial Services, a subsidiary of Alibaba that houses the group’s payments and credit scoring platforms, has also tried to distance the company from China’s broader P2P lending market.

Mr. Guo has been no stranger to controversy himself. The Fosun chairman disappeared for several days in December, only to re-emerge claiming he had been assisting an investigation in China. The group subsequently walked away from a deal to buy an Israeli insurance company.

Indonesia

Indonesia’s Fintech investment to reach $ 8 b in two years: KADIN, (Deal Street Asia) ,Rated: A

The Indonesian Chambers of Commerce and Industry (KADIN) has said that the country’s fintech industry is expected to receive up to $8 billion (Rp 105 trillion) of investments by 2018.

“In 2008, fintech investment stood at roughly $ 900 million. It had increased to three billion in 2013, and is projected to reach $ 8 billion by 2018,” Roeslani said at the Indonesia Fintech Festival and Conference (IFFC).“

Southeast Asia’s largest market Indonesia has been witnessing an emergence of a number of fintech companies such as peer to peer lending company Modalku, mobile recharge platform Sepulsa, e-commerce financing company Kredivo, online micro-lending company UangTeman and many others.

Not long before that, Indonesian P2P marketplace Investree said it had secured a series A funding commitment from a local venture capital firm, Kejora. Details of the amount, however, were not disclosed.

Transactions through fintech in Indonesia are estimated to be Rp 40 trillion in the past two years, a rapid escalation alongside growth in internet usage in the country, with a third of its 250-million population going online. A fifth of that number, however, still have no bank accounts.

Around the globe, KADIN recorded that customers in the fintech sector in Africa have risen almost two times to 101.3 million users, from 57.8 million reported in 2012. North America has 90.7 million users, while Europe acquires 64 million. Latin America saw a growth of 162 per cent of users, while in the Middle East the number of users has increased more than 300 per cent. In the Asia-Pacific region, investment in fintech rose fivefold to $ 2.7 billion in the first three months of this year from the same period a year ago.

Karaniya Dharmasaputra, Secretary General of Indonesian Fintech Association said, boosting cooperation and increase connections among fintech companies in Indonesia are one of the strategic objectives of the association, as it can help improve public access to technology-oriented financial services.

Author:

George Popescu

The RBI wants to disintermediate you!

The Reserve Bank of India announced some fun stuff last night, which you can read about here and here.

The short story is that the central bank (with shiny new governor about to take control) seem to be trying to push large corporate borrowers away from banks — for lots of occasionally crony capitalist reasons — and towards a growing corporate bond market.

Continue reading: The RBI wants to disintermediate you!

The Reserve Bank of India announced some fun stuff last night, which you can read about here and here.

The short story is that the central bank (with shiny new governor about to take control) seem to be trying to push large corporate borrowers away from banks — for lots of occasionally crony capitalist reasons — and towards a growing corporate bond market.

Continue reading: The RBI wants to disintermediate you!