Monday May 8 2017, Daily News Digest

Lending Club expenses revenues

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

Lending Club expenses revenues

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

MENA

News Summary

United States

Legislative Update 158 (Experian Email), Rated: AAA

Highlights this issue:

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

See the full report here.

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

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

Source: Lending Club & Seeking Alpha

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

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

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

Source: Lending Club

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

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

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

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

Source: Lending Club

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

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

Source: Lending Club

If we tally up our score card, we have:

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

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

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

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

Source: PeerIQ
Source: PeerIQ

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

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

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

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

Source: Lending Club

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

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

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

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

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

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

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

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

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

Mortgage Category

1)

Insight Loans

2)

J.G. Wentworth Home Lending, LLC

3)

CBC National Bank

4)

Arcadia Financial Group LLC

5)

Veterans United Home Loans

6)

First Midwest Bank

7)

AmeriSave Mortgage Corp

8)

Wyndham Capital Mortgage

9)

First Direct Lending, LLC

10)

HomePlus

Personal Loans Category

1)

First Midwest Bank

2)

Lending Club

3)

Avant

Business Loans Category

1)

Seek Capital

2)

RapidAdvance

3)

Currency Capital

Student Loans Category

1)

RefiJet

2)

up2drive – a division of BMW Bank of North America

3)

rateGenius

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

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

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

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

Strong outlook for marketplace lending

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

JPMorgan formally quits R3 (Finextra), Rated: A

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

China

WeiyangX Fintech Review (Crowdfund Insider), Rated: AAA

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

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

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

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

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

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

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

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

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

On the state of marketplace lending in China

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

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

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

On credit scoring in China

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

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

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

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

On insurance tech in China

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

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

Where CreditEase is investing

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

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

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

Over 60% Chinese P2P Lenders achieved profit

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

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

 

Lenders Revenue

(Million RMB)

Net Profit

(Million RMB)

NetProfit Rate Founding Time Public Company shareholding ratio
Yirendai

3,238

1,116.4

34.48%

Jul. 2012 YRD

direct listing

WeiDai Network

1,776.3

325.50

18.32%

Jul. 2011 HAKIM UNIQUE

12.38%

Niwodai

666.9

64.88

9.73%

Jun. 2011 Jiayin Fin-tech

100%

PPmoney

327.74

43.09

13.15%

Dec. 2012

Wan Hui Technology

100%

AVATAR China

35.03

20.90

59.65%

May. 2015

Neo Telemedia Limited

70%

UF-Club

189.82

19.61

10.33%

Nov. 2013 Hemei Group

51%

Yinhu Network

50.91

2.41

4.72%

Jul. 2014

Panda Financial Holding Corp., Ltd.

100%

PP100

37.85

-12.12

Aug. 2015 Nuode Share

40%

Lcfarm

58.84

-45.10

Mar. 2015 NoPoison

33.64

China Rapid Finance

385.43

-230.25

May. 2015 XRF

direct listing

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

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

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

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

European Union

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

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

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

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

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

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

International

Q1 CYBERCRIME REPORT (ThreatMetrix), Rated: AAA

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

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

Some key attack trends analyzed this quarter include:

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

See the full report here.

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

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

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

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

Munshi is the founder and CEO of Ethis Ventures, a company that operates several platforms including crowdfunding. Mushis states that Muslims must unite to take advantage of this “unprecedented opportunity” to invigorate Islamic financial services with new forms of finance.

See the full report here.

Australia

Financial advisers should consider bitcoin as an asset class: Dunworth (Financial Standard), Rated: A

This week the cryptocurrency broke record-highs when it started trading above USD$1680 against the US dollar. As at May this year, the total market cap of the bitcoin market has more than doubled to US$23 billion since it hit the US$10 billion mark just three years ago.

“A lot of people say that bitcoin is very volatile. It is in the short term but if I were doing fund management for my client, I see it as a very good long term investment,” he said.

Cambridge University counts as many as 5.8 million unique users of the so-called crypto currency wallet, most of whom use bitcoin. More than 100,000 merchants and vendors now accept bitcoin as a form of payment albeit regulators warn that bitcoin users are not covered by refund rights.

Australia going cashless is great for fintech (AltFi), Rated: B

Australia is set to be an almost cashless society by 2020, promising benefits for fintech.

Since 2010, cash payments have declined a staggering 46 percent, and now make up less than 10 percent of all payments, according to new research by East & Partners Australia.

The hope for fintechs is that as payments go digital and the data supply increases, so too will demand for new technologies. It will also improve Australia’s attractiveness to foreign investors.

Writing in The Guardian, the economist Philip Soos denounced a cashless economy as empowering the security state and the banks.

India

Instamojo Wants To Help India’s Five Crore Small Businesses Transact Online (Bloomberg Quint), Rated: AAA

Digital modes of payment are becoming ubiquitous, riding on the government’s less-cash drive after demonetisation. Yet, Instamojo, a Bengaluru-based fintech company, feels not enough is being done for small businesses.

The company wants to help India’s micro, small, and medium enterprises receive payments online in a simple, hassle-free manner, said Sampad Swain, one of its founders and also the chief executive officer. The government last year projected that the number of such businesses has grown to over 5 crore.

The only two requirements for the company’s service to work is that both parties must have a mobile number and a bank account.

“If the mango seller wants to use our platform, he has to first do an e-KYC, which takes a few minutes,” said Swain. This can be done either through a mobile application that can be downloaded from the Play Store, or on Instamojo’s website.

The seller then generates a link by providing information on the ‘purpose’ of the transaction, and the amount that the buyer has to pay. In this case, the purpose would be a crate of alphonso mangoes, and the price would be Rs 1,700, Swain explained.

Once the link is generated, the seller can forward it to the buyer by any messaging mode, like WhatsApp, Facebook, email, or even an SMS. When the buyer clicks on the link, he or she is directed to Instamojo’s website, where a number of online payment options are available.

MENA

Middle East, North Africa (MENA) FinTech Update: Slow to Adopt or Miles Ahead? (EdgyLabs), Rated: AAA

Headquartered in Dubai, Wamda (which means “sparkle” in Arabic) is an organization that supports the entrepreneurial spirit and business initiatives in the MENA region. Along with PAYFORT, an online payment platform, Wamda Research Lab released a report that provides in-depth data about FinTech in MENA.

According to the ‘State of FinTech,’ over $100 million USD were invested in Fintech in the MENA region over the last decade, with $50 million expected for 2017 alone. In 2013, the number of Fintech startups was 46. Then, in 2015, that number increased to 105–with the United Arab Emirates leading the pack with 30 independent FinTech startups–and the overall MENA number is expected to reach 250 by 2020.

Authors:

George Popescu
Allen Taylor

Thursday April 20 2017, Daily News Digest

real estate technology

News Comments Today’s main news: California SC finds arbitration agreement waiver unenforceable. BondMason first P2P provider to launch SIPP. China’s internet finance thrives as fraud fades. Marvelstone plans robo-advisor for family offices. Today’s main analysis: Real estate tech deals tick up. Today’s thought-provoking articles: 5 areas of fintech attracting investment. UK still fintech unicorn capital of Europe. Millennials favor search […]

real estate technology

News Comments

United States

United Kingdom

European Union

Australia

China

APAC

News Summary

United States

California Supreme Court Finds Arbitration Agreement Waiver of ‘Public Right’ Unenforceable (JD Supra), Rated: AAA

On April 6, the California Supreme Court issued a unanimous opinion in McGill v. Citibank, finding that a pre-dispute arbitration agreement was unenforceable to the extent it required the plaintiff to waive her right to seek public injunctive relief. According to the court, the right to pursue a public injunction constitutes an “unwaivable public right” under California law. Therefore, “a provision in any contract ― even a contract that has no arbitration provision ― that purports to waive, in all fora, the statutory right to seek public injunctive relief . . . is invalid and unenforceable under California law.”

The California court further explained that its partial unenforceability finding is consistent with the U.S. Supreme Court’s decision in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985). In that case, the Court stated that “[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitrable, rather than a judicial forum.”

The court also acknowledged, but found no reason to address, the plaintiff’s related claim based on what is known under California law as the “Broughton-Cruz” rule, asserting that a request for a public injunction cannot be decided in arbitration. Finally, the decision remanded the case to the California Court of Appeals to consider ― if either party should raise the issue ― the question of whether the rest of the arbitration agreement remains enforceable in light of language contained in the most recent version of the underlying account agreement stating that, “if any portion of the arbitration provision is deemed invalid or unenforceable, the entire arbitration provision shall not remain in force.”

Pepper Points

  • The decision of the California Supreme Court in McGill v. Citibank will likely be appealed.
  • In light of this decision, providers of consumer products and services should review their existing arbitration agreements to determine whether the consumer’s ability to pursue a public injunction or other “public rights” is completely foreclosed.
  • McGill v. Citibank also highlights the risks of including language in an arbitration agreement (or in any contract) stating that the agreement will be invalid if any portion of the agreement is deemed invalid or unenforceable. Given the impossibility of predicting how courts may interpret even well-settled questions of law, standard severability language is always preferable unless different language is specifically mandated.

Five areas of fintech that are attracting investment (Financial Times), Rated: AAA

At the same time, some of the steam has come out of the sector. Overall investment and merger and acquisition activity in fintech almost halved from a record high of $46.7bn in 2015 to only $24.7bn last year, according to KPMG.

Another negative factor was the governance scandal last year at Lending Club, the biggest online lender in the US, combined with disappointing performances by some of its rivals, which turned investors off peer-to-peer lending.

China

Total fintech investment in Asia inched up to a new record of $8.6bn last year, although the number of deals fell by more than 8 per cent. More than half the region’s total fintech investment came from one deal: Ant Financial’s $4.5bn funding round.

Artificial intelligence

The launch of voice-activated assistants such as Amazon Alexa and Google Voice has opened up possibilities for making online banking easier for customers. Banks such as Capital One have already latched on to this trend.

Cyber security

Cyber security shot to the top of the boardroom agenda for banks after one of the biggest bank robberies in history was carried out by cyber thieves on the Bangladesh central bank via the Swift payments system in February 2016. The crooks made off with $81m that was on deposit at the US Federal Reserve.

Blockchain

Most big financial groups remain convinced of the potential for blockchain to revolutionise parts of their industry and several central banks are examining the potential for using the technology to create digital currencies. Venture capital investment in blockchain companies rose by a fifth to $544m last year, according to KPMG.

Insurtech

The insurance industry has been slower than other areas of finance to wake up to the digital disruption at its door. But recently start-ups such as So-sure, Friendsurance, Lemonade, Guevara and Brolly have emerged with plans to transform the sector. Venture capital investment in insurance technology companies doubled last year to almost $1.2bn, according to KPMG.

Real Estate Tech Deals Tick Up, But Still Well Below Peak (CB Insights), Rated: AAA

2016 was a banner year for real estate tech with over $2.6B in funding to the category across 277 deals. At the current run rate, 2017 could very well reach another consecutive funding high, even as deals are on track to come in slightly below last year’s total.

So far this year, real estate tech companies have received $733M across 61 deals.  At the current run-rate investment activity is on track to reach $2.9B invested across 247 deals.

On a quarterly basis, deals have materially declined since Q3’16.

Funding, on the other hand, has increased in each of the last three quarters and Q1’17 received the second-largest quarterly funding total ever, behind Q2’16.

Why I Don’t Believe in the Hybrid Advice Model (Lend Academy), Rated: A

On paper, it looks pretty good: let the robot do the simpler stuff, like a modern-portfolio-theory allocation between a few ETFs, and have a human being intervene to provide more sophisticated and personalized advice.

In practice, I think it’s nonsense. If you believe the market is truly efficient, then there’s no point in using an advisor, robot or human. Just invest in a broad market ETF and be done with it (except for tax harvesting).

If you think the market is efficient-ish, then low cost optimization is the solution. Go robot. If you think you need an active manager, you should read the trove of statistical analysis that demonstrate you’re simply paying for someone’s yacht. Indexes beat stockpickers [92% of time]…

It does make sense for robo-advisors to move to the hybrid model, since it allows them to differentiate and de-commoditize their service, but for their clients, not so much.

Machine learning algorithms have become so good in the last 10 years, that any number-crunching and quantitative decisions a smart but junior employee can do, the machine will do better, faster, and cheaper.

Wealthfront Now Offers Securities-Based Lending (Financial Advisor IQ), Rated: A

As its first move into lending, robo-advice provider Wealthfront has revealed it will let clients borrow money against their investments, Reuters reports.

Along with robo rival Betterment, the robo-advisor has increased competition in the wealth management space against the likes of wirehouses Merrill Lynch and Morgan Stanley, brokerages like Charles Schwab and even fund houses with direct-to-consumer offerings like Vanguard.

Investors with at least $100,000 with Wealthfront can now borrow up to 30% of their balance for loans for anything except purchasing more investments on the firm’s platform, the company announced Wednesday.

Reuters reports loans will cost between 3.25% and 4.5%, and any money a client deposits into their account after taking out a loan will pay off the balance rather than investments.

Edward Jones partners with SixThirty to support financial technology startups (PR Newswire), Rated: A

Financial services firm Edward Jones today announced a multi-year partnership with SixThirty, a St. Louis-based venture fund that invests in financial technology (FinTech) startup companies. Backed by the St. Louis Regional Chamber, SixThirty was founded in 2013 and to date has funded more than 25 startups across the globe.

As part of the partnership with SixThirty, Frank LaQuinta, a general partner with Edward Jones, has joined the organization’s Investment Committee which evaluates the investment pipeline and selects FinTech startups that SixThirty invests in.

Pi Capital Advises Money360 on $ 250 million South Korean Financing Vehicle (Yahoo! Finance), Rated: A

Pi Capital International LLC (“Pi Capital”) is pleased to announce that it was the exclusive financial advisor and placement agent to Money360, Inc. for a structured debt facility of up to $250 million. The financing vehicle is designed to allow Money360 to employ funding as it provides commercial real estate loans to its U.S. client base. The fund provides Korean investors with a short-duration, high-yield fixed-income instrument.

“The fund raise by Pi Capital will allow us to substantially increase our assets under management,” said Evan Gentry, M360 Advisors’ CEO. “We believe this gives us a competitive advantage with an anticipated $250 million investment from one of South Korea’s most reputable financial institutions.”

ApplePie Capital Announces Appointment of Chief Development Officer and Franchise Finance Company Acquisition (Yahoo! Finance), Rated: A

ApplePie Capital, the first online lender solely dedicated to the franchise industry, today announced the appointment of franchise industry veteran Ronald Feldman as chief development officer, as well as the acquisition of Funding Solutions, LLC, a well-established national franchise lending consultancy that specializes in SBA, conventional and equipment finance loans. Feldman and Funding Solutions’ managing partner Randy Jones will join ApplePie’s leadership team.

These additions position ApplePie’s financial platform to exponentially expand upon its hallmarks of speed, flexibility and efficiency with new product options, an expanded network of lending sources and an extraordinary wealth of franchise finance expertise for its growing list of franchisor partners. Currently, ApplePie serves more than 40 franchisors including Orangetheory Fitness, Jimmy John’s, Jersey Mike’s and Marco’s Pizza.

Responsible for growing ApplePie’s brand portfolio and contributing to product strategy, Ronald Feldman comes to the company with more than 20 years of experience in franchise leadership and franchise financing.  He previously served as chief development officer at FranData, the industry leader in market research, and as a principal and co-founder of Franchise America Finance (FAF) and The Siegel Financial Group. Feldman was also an early franchisee of The Goddard School system. As an active advocate of the franchising business model, Feldman currently serves the International Franchise Association (IFA) as chair of the Supplier Forum Advisory Board and sits on both the Board of Directors and the Executive Committee of the association.  Feldman was awarded the Sid Feltenstein MVP Award for service to the IFA’s Political Action Committee (FRANPAC) in 2013.

Why More Millennials Would Rather Visit The Dentist Than Listen To Banks (Forbes), Rated: A

Unfortunately, some Millennial stereotypes are rooted in fact. A 2015 PWC survey showed that only 24% of us have basic financial knowledge, and even so, only 27% of us seek financial advice on saving and investing.

When it comes to jobs, we’re not the deadbeats that people assume. In fact, a 2015 Deloitte report found that 54% of Millennials had started or had planned to start their own businesses by year-end. Although we may work differently than generations past, many of us are passionate, entrepreneurial and looking to make a difference.

“Advisors need to understand how truly connected this new generation is to each other and to information.” When it comes to trusting a financial advisor, Kamine highlights this outsider oversight as a road block.

Millennials currently represent a meaningful fraction of U.S. wealth that will grow as baby boomers continue to pass down an astounding $30 trillion over the next 30 years. When this transfer of wealth happens, an estimated 66% of Millennials will fire their parents’ financial advisor, according to InvestmentNews Data.

This year, 86% of Millennials said they are interested in socially responsible investing, according to Morgan Stanley.

The Millennial Disruption Index reports 71% of us would rather go to the dentist than listen to what banks tell us. In our financial planning, we have shorter-term goals that we’re trying to align with the things we care about.

With an average age of 51, many advisors still build financial plans based on their view of a traditional life cycle with set ages for when we start a family, buy a house, climb the corporate ladder and retire. But their view is not our reality. Kamine adds, “Financial advice has been like a structured box without much creativity or understanding of the individual. Advisors need to become more dynamic because we’re revolting against structure. I’ve told my advisors I don’t envision buying a house for at least the next five years. And I’m definitely not focused on planning for retirement 40 to 50 years from now.”

Miami fintech company DadeSystems receives $ 2 million in funding (Miami Herald), Rated: A

DadeSystems, a Miami-based provider of account receivable automation solutions, raised $2 million in funding to accelerate its growth from Miami early-stage venture firm Ocean Azul Partners.

New GAO Study Examines Fintech Industry Regulation (Banking Journal), Rated: B

The report, the first in a series on regulation in the fintech industry, focuses specifically on marketplace lenders, mobile payments, digital wealth management platforms and distributed ledger (also known as blockchain) technology.

While the GAO did not issue any recommendations in the report, it noted that regulation of these four subsectors was varied depending on the types of products or services offered and the way in which they are delivered to consumers.

College Ave Student Loans Kicks off the Naked Financial Truth Digital Tour Featuring Financial Advice for Parents and Students (BusinessWire), Rated: B

College Ave Student Loans, the leading next-generation student loan fintech lender, has teamed up with America’s #1 College Life Expert Harlan Cohen to help families get comfortable with the uncomfortable when it comes to college and money. Hosted by Harlan Cohen, author of The Naked Roommate, the Naked Financial Truth Digital Tour will feature a series of free webinars and videos focused on financial advice, strategies and tips to help parents and students plan for post-secondary education.

The first webinar, “The 7 Biggest Financial Mistakes College Students Make (And How Parents Can Help)” will be held on Tuesday, April 25 at 7 p.m. ET. Registration for the webinar is free and available online at

Ben Franklin’s Fintech Accelerator is First of its Kind in the Region. These 8 Startups Made the Cut (Biz Journals), Rated: B

These eight companies — which are required to have a presence in the region to receive an investment — will begin the 12-week accelerator on April 24, meeting with mentors and advisors selected to help guide them toward growth and fundings. They run the gamut of the financial industry, from creating data visualizations of personal assets to a student loan repayment benefit program. Four focus on putting financial technology to use solving social issues.

  • Asset-Map (Philadelphia)
  • Bright Idea Energy (Philadelphia)
  • College Affordability (Wynnewood)
  • Factury (Silicon Valley and New York City)
  • FinPay (King of Prussia)
  • FixList (Philadelphia)
  • NeedsList (Philadelphia)
  • PeopleJoy (Philadelphia)

RayJay Adds Real-Time Client Updates to Planning Tools (Financial Advisor IQ), Rated: B

In the next several weeks Raymond James is setting its sights on rolling out a revamped suite of “longevity” planning tools. The updated software comes with the kinds of bells and whistles that advisors might expect from a nearly five-year-old package – a “new look and feel” as well as a “more conversational design,” as company execs put it.

Other notable enhancements, they say, include more flexibility for analyzing portfolio return patterns and capabilities allowing real-time updates as clients’ household budgets and retirement goals change over time.

TAMARACK IMPLEMENTS ITS SALESFORCE.COM LEASE/LOAN ORIGINATOR FOR CHANNEL PARTNERS CAPITAL (NEF Association), Rated: B

Tamarack, a leader in providing independent software solutions in the equipment finance and commercial lending industry, has added Channel Partners Capital as its newest client to utilize Tamarack’s Lease/Loan Origination Accelerator on Salesforce.

Channel Partners, a leading provider of small business working capital loans, will benefit from added flexibility, streamlined operations and enhanced audit controls, as a result of using Tamarack’s Lease/Loan Origination Accelerator on Salesforce.

Tamarack’s Lease/Loan Origination Accelerator on Salesforce is a scalable solution offering users the ability to automate work queues,increase throughput of loans without additional head count and customize notifications from lead generation through to funding.

United Kingdom

UK is capital of Europe for fintech unicorns (The Telegraph), Rated: AAA

The UK dominates the European financial technology industry, with figures showing it boasts more billion-dollar fintech companies than the rest of the continent put together.

Britain houses four fintech “unicorns” – companies valued at $1bn (£780m) or more – with a combined valuation of $18.5bn, according to a report by the technology investment bank GP Bullhound.

This compares to two in the rest of Europe, which are worth $4.6bn between them.

Globally, fintech investment grew slightly to $13.6bn, although there was a decrease in the number of investments from 942 to 840.

BondMason is first P2P provider to launch a SIPP product (AltFi), Rated: AAA

BondMason has become the first peer-to-peer service provider to launch a self-invested personal pension (SIPP) product. The service aims to offer investors a flexible and tax-efficient way to save for retirement.

The new retirement product, which selects loans across P2P lending platforms, will grant UK savers exposure to higher-return assets than traditional pension savings products. Starting from a minimum investment of £5,000.

Just Google it! Millennials favour search engines over financial advice (P2P Finance News), Rated: AAA

MILLENNIALS are favouring search engines over professional financial advice when it comes to managing their own money, research claims.

A poll of more than 2,000 adults by Zurich UK claims 15 per cent of millennials, referring to those aged 18-34, are turning to search engines such as Google instead of seeking professional financial advice, more than any other age group.

Only three per cent of 35-44 year olds and nine per cent of those aged 45-54 and over 55 respectively, opt for web-based information.

Asked why they eschew professional help, one in five millennials cited confidence in their ability to sort their own financial futures as a reason for not initially seeking professional help, while 37 per cent felt they do not earn enough to need to speak to a financial adviser, and almost a quarter said they were too young.

Loan searches on the internet ‘may affect credit rating’ (BBC), Rated: B

High Street bank TSB said some loan providers make a “hard mark” on credit files when someone asks for a loan price or quote.

TSB chief executive Paul Pester said: “We estimate that consumers are losing out by as much as £400m each year, which is going straight into the pockets of aggressive loans providers. It is time the industry comes clean on these costly underhand tactics.”

P2P lending is fast becoming the go-to option (Bridging and Commercial), Rated: B

P2P lending offers an innovative funding option for businesses – including developers – and is fast becoming the go-to option.

It’s essential that the development finance sector stays competitive and vibrant, and alternative lending allows that to happen. Far from just being a back-up for situations that the traditional lending sector can’t cater to, crowdfunding and P2P platforms can actually be a more efficient source of funding.

European Union

2018 is shaping up to be a regulatory nightmare for financial services (Information-age.com), Rated: AAA

Achieving compliance will not happen overnight. Indeed, MiFID II is widely considered to be one of the most sprawling pieces of financial legislation ever devised, and thus it presents numerous challenges. One of which being that recording calls will become mandatory for all areas of financial advice.

Then, if you add GDPR (the EU’s General Data Protection Regulation), coming into effect in May 2018, into the equation, 2018 is shaping up to be a regulatory nightmare for financial services firms. Under GDPR, we all have a‘ right to be forgotten’ or a right to erasure of all personal information held on us by a particular company. This places a duty on companies to be able to quickly access and delete the information they hold on specific individuals, on request.

However, comparing the responses of IT professionals and those responsible for managing Risk & Compliance within a business shows IT teams have a better overall understanding of the consequences of non-compliance. 62% of risk and compliance managers admitted to not knowing a company can be fined up to five million euros or 10 per cent of annual turnover, compared to only 42% of IT managers and decision makers.

Tinder for microloans: How to share lending risk with strangers (Russia Beyond the Headlines), Rated: A

A stranger’s photograph appears on your smartphone screen, and you decide whether to give him or her a loan or not. The money is not yours, but instead is provided by microfinance organizations. That’s the main difference from traditional American P2P (peer-to-peer) lending, and with Suretly you can earn or lose depending on whether the recipient of your largesse proves to be a reliable borrower or not.

Suretly is geared exclusively to short-term loans of up to one month; in other words, those with the highest interest.

The money itself is loaned by the microfinance organization that the borrower applies to, but only if they attract enough sureties to cover the whole amount, plus interest. Users share the risks, and depending on whether the individual returns the money or not, they can lose or earn from $1 to $10.

On the app, borrowers are divided into seven categories from A to G depending on their trustworthiness. The higher the risk that the loan won’t be repaid, the higher the price of its surety. The maximum commission is $1.5.

Australia

Goldfields Money makes Australian BaaS play with Singapore’s Instarem (Daily Fintech), Rated: AAA

Listed Australian deposit taking institution Goldfields Money (ASX:GMY) looks to be making good on its intention to become a leading player in the digital banking product distribution and BaaS market in Australia, announcing last week that it had signed an MoU with Singapore headquartered remittance fintech Instarem.

What is interesting about the MoU is the intent to move beyond remittance towards a broader banking play for cross-border SMEs and products orientated towards visa holders visiting or living in Australia.

The two companies should have a healthy market ready to capitalise on. According to the Australian Bureau of Statistics, over the last 10 years the proportion of the Australian population born in China alone has increased from 1.2% to 2.2%, coming in just behind New Zealanders and British immigrants. Those born in India currently make up 1.9% of the population, while citizens from the Philippines, Vietnam and Malaysia collectively add up to further 2.7%.

Migration isn’t going away. And the degree to which an individual’s assets are spread across countries is also on the increase thanks to globalization.

China

China’s Internet finance thrives as fraud fades (XinhuaNet), Rated: AAA

China has four large state-owned banks, and state-owned enterprises generally have easier access to financing. Many small companies are troubled by the financing bottleneck, creating pent-up demand.

Meanwhile, working-class families struggle to figure out where to invest their savings to seek higher returns, and many of them move money online. The country, home to the world’s biggest online population, also has a number of groups, such as college students, who are underserved by banks.

By March 2017, 3,607 Chinese P2P lending platforms had run into trouble or been forced to close, with only 2,281 platforms in normal operation.

On top of P2P lending, Internet finance also covers business such as third-party online payment, crowd funding, and other financial services.

Risk caused by the Internet finance industry has wide repercussions. Some P2P lending platforms resembled hybrid financial institutions providing clients with various financial services online, analysts said.

Businesses such as P2P lending, Internet-based insurance, third-party online payment, and online asset management were among key areas for strengthened supervision, industry observers said.

Internet finance last week appeared on the top banking regulator’s list of ten most important areas for enhanced risk control, with targeted measures to be taken to stem emergence of a financial crisis.

Wang said 2017 will be a watershed year for Chinese Internet finance as the rules are tightened, bringing the industry out of the wilderness.

Tishman Speyer, CreditEase team up to invest $ 1.4b in China (Deal Street Asia), Rated: A

New York-based developer Tishman Speyer is teaming up with China’s CreditEase Wealth Management to invest $1.4 billion in China and other countries within the next three years.

The strategic partnership is aimed to extend “global cooperation in resource sharing, fund investment, buyouts and business development,” the firms said in a joint statement.

APAC

Marvelstone Capital plans a robo advisor platform for family offices (AltFi), Rated: AAA

Singapore-based Marvelstone Capital plans a robo advisor platform for the under-served family office market in Asia.

The platform is being developed with Singaporean fintech startup Smartfolios, and will be launched in the third quarter of 2017. It will be available on desktop and mobile for Marvelstone Capital’s clients.

Marvelstone will target family offices based in Singapore, Malaysia, Indonesia, Myanmar, as well as India. The company points out that Malaysia is an important market and Cho added: “It is a huge market and the culture is quite unique as well, there’s a huge Shariah-compliant market, so it is definitely one of the most important markets for us.”

No Uber Moment for Fintech Just Yet (Broadridge), Rated: AAA