Monday November 6 2017, Daily News Digest

SoFi CLP 2017-6 structure

News Comments Today’s main news: Lending Club considering bid for bank charter. N26 to launch in the UK. TransferWise hooks $280M investment for APAC expansion. Zopa vows rate hike won’t impact loan performance. Hexindai debuts on NASDAQ with 60% increase. Westpac profits AU$7.99B. Kaodim raises $7M. Today’s main analysis: SoFi’s latest consumer lending deal. Today’s thought-provoking articles: How payment tech is […]

SoFi CLP 2017-6 structure

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

News Summary

United States

Lending Club eyes charter as landscape evolves (Global Capital), Rated: AAA

Lending Club is exploring the idea of operating as a bank or obtaining a fintech bank charter in order to keep pace with a changing lending and regulatory landscape, an executive from the marketplace lender said on Thursday.

Speaking at the Digital Lending + Investing conference in New York, Valerie Kay, Lending Club’s head of institutional investor group, said that the platform is considering both pathways as the business grows.

How payment technology is being disrupted (The Next Web), Rated: AAA

One of the earliest changes involving the payment industry is how banks and customers behavior is shifting with one another. Quite simply, people have different expectations with how money should move, as well as how quickly. This is a cross-generational phenomenon and something that banks are trying to keep up with.

According to Bank Innovation, approximately 70 percent of millennials now do their banking online.

According to Business Insider, peer-to-peer payments alone are on pace to be worth $86 billion by 2018. And with the popularity of apps like VenmoPayPal, and even Square Cashcontinuously on the rise, this trend doesn’t show signs of slowing down anytime soon.

CurrencyPay, an online payment system that not only finances major equipment for businesses, but extends online payment methods from credit and debit cards to include ACH or wire, all the while reducing fees across the board.

SoFi’s Latest Consumer Lending Deal (PeerIQ), Rated: AAA

On Thursday, President Trump announced his nomination of Jerome Powell to succeed Fed Chairwoman Janet Yellen as the next chairman of the central bank.

Also on Thursday, President Trump rolled out his new tax plan which reduces the number of tax brackets from seven to four and cuts the corporate tax rate to 20% from 35%. Relevant to marketplace lenders, the tax plan reduces the mortgage interest deduction cap by half.

SoFi’s Latest Consumer Lending Deal

SCLP 2017-6 is the largest deal on SoFi’s shelf, and the first since SCLP 2017-5, which priced concurrently with Mike Cagney’s resignation. As we discussed in our previous blog post, SCLP 2017-5 priced slightly wider on the news (10 to 15 bps). SoFi’s latest consumer lending deal, SCLP 2017-6, is the first deal from SoFi with borrowers living in FEMA declared disaster areas, comprising approximately 12% of the deal.

Source: PeerIQ, Company Filings, Kroll Bond Rating Agency, S&P

SCLP 2017-6 Structure
Although it may seem that SoFi is structuring deals more aggressively, the A and B classes have higher initial CE when compared to SCLP 2017-5 by 2.38% and 0.76% respectively.

Source: PeerIQ, Company Filings, Kroll Bond Rating Agency, S&P

Square’s Jack Dorsey: We’re moving as fast as we can with bank application (Fast Company), Rated: A

“I think the [regulatory] environment really changes depending on who you’re talking about,” says Dorsey, who traveled to New York this week for the unveiling of Square Register, a new hardware device. “There’s a lot of appreciation for the fact that we’ve spent eight years serving an underserved customer, an underbanked customer, both on the seller and the individual side.” Before Square unveiled its signature card reader, he adds, micro-merchants “couldn’t participate in the economy in the way that the economy was moving.”

Investors see “perfect storm” in marketplace loan ABS (Global Capital), Rated: A

An investor roundtable at the Digital Lending + Investing conference in New York on Thursday highlighted developments in the securitization of marketplace loans over the last 12-18 months. The transition to a hybrid funding model for lenders, in addition to the emergence of more sophisticated deal structures, have …

MoneyLion takes on America’s savings crisis with the launch of MoneyLion Plus (BusinessWire), Rated: A

Despite solid economic and wage growth in the U.S. since the 2008 crisis, a host of studies point to critically low rates of savings and widening income inequality among American consumers. In the face of this savings crisis, mobile consumer finance platform, A monthly subscription gives MoneyLion Plus members access to the following benefits:

  • Guided savings: MoneyLion Plus makes it easy and convenient to save $50 or more per month. MoneyLion’s technology analyzes each member’s cash flows to determine when to set aside and save money from their checking account. Via the MoneyLion mobile app, members are provided with personalized daily budgeting tips to help them optimize their spending and increase their savings even further.
  • Fully-managed investment account: The funds saved are automatically invested into a fully-managed investment account featuring a diversified portfolio of ETFs built to suit the financial needs and life stage of each member, all without any additional trading or management fees. These portfolios are based on simple investment strategies that will help members grow their wealth.
  • Low-cost access to credit: Unexpected expenses can reset savings back to square one, preventing longer-term growth of wealth. Access to personal loans with APRs of 5.99% or less, regardless of credit score, offers MoneyLion Plus members an affordable means to manage their cash flow needs and avoid costly overdraft or late payment fees. 
  • Cashback bonus: MoneyLion Plus offers its members additional rewards, including an instant $1 cashback bonus deposited into a member’s investment account each day they log into the MoneyLion app. Members also earn rewards based on their investment account balance.
  • MoneyLion mobile app: Members can access all of their benefits on-the-go via MoneyLion’s mobile app, including viewing their savings progress, getting personalized tips and offers for saving more, and accessing their loan funds in just a few taps.

Credit Karma Launches Online Vehicle Center (Finovate), Rated: A

Consumer credit monitoring and financial health startup Credit Karma has launched a new offering today that changes those routines. The company’s new automotive information center is a one-stop shop for helping consumers to manage and organize their vehicle-related finances and information. Included among the capabilities are an overview of the user’s DMV profile, with vehicle and drivers license information, vehicle value estimations, and manufacturer recall notices.

The two most notable capabilities are the auto insurance score and comparison tool and the vehicle refinancing decision tool.

Fintech Lenders Are Holding Larger Portion of the Personal Loan Market (Lend EDU), Rated: A

During the Digital Lending + Investment Conference in New York, the consumer credit reporting agency Transunion released the results of a study called ”Fact versus Fiction: FinTech Lenders.” In a nutshell, the study concluded that fintech lenders were not riskier than other lenders, and they are starting to represent a more significant part of the loan industry in the USA.

By the end of the year, the fintech lenders comprised 30 percent of outstanding personal loan balances which is up from four percent in 2012. Up through June in 2017, fintechs represented 32% of the personal loan market.

In the second quarter of 2016, 14.8 million people had a personal loan; after one year, that number increased to 16.1 million. Additionally, the total outstanding personal loan volume more than doubled from $45 billion in Q2 2012 to $106 billion by Q2 2017.

Wells Fargo Launches New Banking App “Greenhouse” (Crowdfund Insider), Rated: A

Banking giant Wells Fargo announced on Thursday the launch of its new banking app, Greenhouse. The company described the app as a new mobile banking experience that provides tools to help consumers manage their money and know where they stand financially. 

According to Wells Fargo, consumers using the Greenhouse app will be able to have money management with two accounts that work together, immediate access to their Greenhouse account, and the ability to send and receive payments.

Marketplace Lending News Roundup – November 4 (Lend Academy), Rated: A

Redpoint Capital Group Sells Stake to Dundon Capital Partners (BusinessWire), Rated: A

Redpoint Capital Group, LLC (“Redpoint Capital”), a leading alternative credit manager, announced today that it has agreed to sell a stake in its affiliated General Partner and Management Company to an affiliate of Dundon Capital Partners, LLC (“DCP”). DCP is led by Thomas (“Tom”) Dundon, one of the founders and former CEO and Chairman of Santander Consumer USA (“SCUSA”), a leading publicly-traded non-captive finance company.

As part of the transaction, both Tom Dundon and DCP Partner, John Zutter, will sit on Redpoint Capital’s Board of Directors along with Redpoint Capital Managing Partners Alex Dunev and Andy Thomas.

Digital Lending Innovation Starts with the Simple Things, Bank of America Says (Bank Innovation), Rated: A

Financial services should focus on “making the easy stuff really easy,” Schleck said yesterday during a panel discussion at the American Banker Digital Lending and Investing conference in New York.

Schleck was the sole representative from a traditional bank during the discussion, with fellow panelists hailing from alternative fintech companies and lenders  – Lending Club, Funding Circle, and Varo Money.

The key to BofA’s innovation in this space was a cross between data (also highlighted by others on the panel) and simplicity, Schleck said, pointing to the bank’s success with mobile direct deposit as an example.

Citizens Digitizes SMB Lending Process With Fundation (PYMNTS), Rated: A

Citizens Bank is enhancing its small and medium-sized business (SMB) lending offering by digitizing the loan application process, according to a press release published by the financial institution (FI) on Thursday (Nov. 2).

The bank is launching a new platform, built in collaboration with alternative online lender Fundation, allowing SMB customers of the bank to apply for a loan or line of credit and receive an approval online.

BlackRock pivots to US west coast as part of tech push (Financial Times), Rated: A

BlackRock is pivoting its business to the US west coast, moving Mark McCombe, head of Americas, to San Francisco as part of a broader plan by the world’s top asset manager to step up its focus on technology and innovation.

More than 40 per cent of BlackRock’s $5.9tn in client assets are managed from San Francisco, which accounts for a third of group revenue.

New Online Portal Offers Loans Up to $ 500,000 to African American Entrepreneurs in Chicago (Black Enterprise), Rated: A

The national advocacy group Small Business Majority, national online lender Fundera, and micro-lender Accion have developed SimpleGrowth, a new online lending marketplace. Calling SimpleGrowth a first-of-its-kind local lending portal, officials say the platform will allow African American entrepreneurs in Chicago to connect with area lenders via a website.

Individuals can seek loans ranging from $500 to $500,000 at various rates, depending on the business owner’s readiness and other factors.

There are 230,000 small businesses in Chicago, but an unusually high percentage of those businesses are owned by African Americans. Cook County, Illinois—which includes Chicago—has the most African American-owned small businesses of any county in the country at 110,000, the U.S. Census Bureau’s 2012 analysis of small businesses reports.

The financing will come from Chicago lenders including Accion, Local Initiatives Support Corporation Small Business and the Women’s Business Development Center, all Community Development Financial Institutions that support small business entrepreneurship. Businesses can apply for the loans for free.

LoanDepot Starts JV (Orange County Business Journal), Rated: B

LoanDepot LLC, the nation’s second largest non-bank consumer lender, announced a joint venture with OfferPad, a real estate investment company, to speed up the process of mortgage approval.

The joint venture will be a stand-alone mortgage broker with LoanDepot acting as the wholesale lender, Calle said. It is expected to launch in the first quarter and will be based in Phoenix.

Online Lender Better Mortgage Names Jeff Corbett New Director of Business Development (Crowdfund Insider), Rated: B

Better Mortgage, a digital mortgage company working to improve access to home financing through transparency, honest guidance, and zero loan officer commissions, announced on Friday it has appointed Jeff Corbett as its Director of Business Development and adding him to its growing Strategic Partnership team.

Silicon Valley Start-ups Join the Line-up for Blockchain Expo North America (Coinspeaker), Rated: B

Amongst those speaking is Karma – a cross-border peer-to-peer lending platform, working to eliminate inefficiencies in the P2P lending industry. Karma will be taking to the stage in the ICOs, Tokens and Cryptofinance conference track on November 29, to introduce their service to delegates ahead of their closed ICO sale later this month.

Goji Appoints Peter Breitstone As New CEO (Crowdfund Insider), Rated: B

Specialist provider of P2P and marketplace lending products and services, Goji, announced on Friday it has appointed Peter Breitstone as its new CEO. According to the company, Breitstone has over 20 years of senior executive leadership experience at several global insurance companies, including Insureon, Zurich, and Aon. Breitstone also built and ran Environmental Partners, an insurance brokerage specializing in Environmental Risk and Insurance Management, which he sold to Aon.

Weekly WealthTech Report: The First CEFEX-Certified Robo (Wealth Management), Rated: B

PlanCorp is putting its experience and research into a new hybrid robo advisor called BrightPlan, which it says is the first of its kind to be certified by the Centre for Fiduciary Excellence for providing prudent fiduciary practices to clients. The online service offers goals-based financial planning without requiring users to invest.

Clients can choose either a digital-only service, or tap into Plancorp’s team of wealth managers.

United Kingdom

European Fintech N26 to Launch in the UK in Early 2018 (Crowdfund Insider), Rated: AAA

N26, a digital-only challenger bank based in Germany, announced on Friday it is launching its services in the UK in early 2018. This news comes after the fintech startup announced plans to launch in the U.S. next year. UK customers may now get early access by signing up directly on the company’s UK homepage.

TransferWise announces $ 280m investment round as company looks towards APAC expansion (AltFi), Rated: AAA

The international money transfer service raised $280m in a Series E round as it plans for global expansion and challenge to banking disruptors.

The round was led by asset management firm Old Mutual Global Investors (OMGI), investing funds managed by its small and mid-cap UK equities desk, and Silicon Valley venture capital firm IVP.

Zopa says rate hike will not impact loan performance (P2P Finance News), Rated: AAA

ZOPA has reassured investors that the Bank of England’s interest rate hike will not impact the performance of the peer-to-peer platform’s loans.

On Thursday, the central bank raised the base rate from 0.25 per cent to 0.5 per cent – the first increase in a decade.

LendInvest to enter BTL market after securing new funding line (Bridging&Commercial), Rated: A

LendInvest has agreed a long-term financing facility with Citi which will help the lender enter the UK’s £40bn buy-to-let market.

LendInvest now manages over £500m of lending capital on behalf of its institutional investors.

UK interest rates rise for first time in 10 years (Growth Business), Rated: A

For the first time in more than ten years, the Bank of England has raised interest rates. The official bank rate has been lifted from 0.25 per cent to 0.5 per cent, the first increase since July 2007.

The hike has divided opinion and it is yet to be seen how severely the impact will hit the UK. Mr Carney expects banks to pass on the rate rise to savers, but said many mortgages, loans and credit cards would not see an immediate impact.

With an alternative outlook, Giles Cross, CMO at FOLK2FOLK, says, “For years low interest rates have been bad news for consumers wanting a positive return on their money in real terms. So today’s announcement may come as a small relief to many people who are looking for an increase. Whilst the reality is that consumers may not see the outcome passed on from their financial services provider or bank for a long time.

British fintech lender Cashplus seeks licence (Times of Malta), Rated: A

Cashplus said yesterday it will soon apply for a UK banking licence as part of the British fintech firm’s plan to step up its challenge to traditional banks.

The move will allow Cashplus to convert the £200 million of customers’ funds it holds into bank deposits, its chief executive Richard Wagner told Reuters.

Volkswagen explores obtaining UK banking licence (Financial Times), Rated: A

Volkswagen is preparing to apply for a UK banking licence so it can carry on providing finance to motorists after Britain leaves the EU.

Lendy considers offering auto-invest products (P2P Finance News), Rated: A

LENDY is seeking views from investors on the introduction of an auto-invest product.

The peer-to-peer property lender has issued a survey to its customers to find out their views on a product that would self-select loans for lenders.

Simon Champ of P2PGI and Pollen Street Capital (Lend Academy), Rated: A

In this podcast you will learn:

  • How Simon first became interested in the online lending space.
  • Simon’s original goal when he started P2PGI.
  • What it was like trying to raise the initial capital for the fund in 2014.
  • How many platforms they launched with initially.
  • The scope of the fund: both lending verticals and geographies.
  • How Brexit and the currency challenges of the British Pound has impacted the fund.
  • How the fund has evolved from P2P to a broader direct lending focus.
  • The main challenge of pure peer to peer lending platforms.
  • How they are using leverage today at P2PGI.
  • The P2PGI approach to due diligence and how they decide to make an investment in a new platform.
  • The historical returns of the fund and Simon’s views of the challenges here.
  • His view on the poor performance at US consumer platforms in 2015 and 2016.
  • Why P2PGI left Marshall Wace and merged with Pollen Street Capital.
  • Simon’s view on the evolution of the lending space and where it is going.

CoInvestor Provides First Digital Access For Advisers Into LendInvest’s Real Estate Opportunity Fund (MondoVisione), Rated: A

CoInvestor, the alternative assets platform, has been chosen by LendInvest Capital as a preferred method for UK advisers to invest in its Luxembourg-domiciled Real Estate Opportunity Fund.

Interview with Stuart Law, CEO and co-founder of Assetz Capital (P2P-Banking), Rated: A

Assetz Capital is now the UK’s second-largest peer-to-peer business and property lender and also the second largest in Europe.

What are the three main advantages for investors?

Firstly, we only lend to businesses who we assess as credit worthy businesses with tangible assets.

Secondly, we cater for all types of investors.

Thirdly, we are also the only major UK P2P platform to still offer a manual investment option.

What are the three main advantages for borrowers?

Rather than being just a website with automated credit assessments, Assetz Capital is run by finance, banking, credit and lending professionals with huge industry experience, alongside our large UK-wide network of employed Regional Relationship Directors who visit potential borrowers and help structure the loans.

We’re also a lean business, and as such we have lower overheads than traditional lending institutions.  Coupled with the fact that we only lend to credit worthy businesses holding tangible assets, this means our cost of borrowing for businesses is kept low.

Assetz Capital has succeeded in growing loan originations sharply in the past 12 months. How did you achieve that and were intermediaries like brokers a major factor?

To date, more than 350 successfully funded projects have come through brokers, and we predict that this will grow to approaching 1,000 by the end of the 2018 year.

Singaporean sovereign wealth fund piles into OakNorth fundraise (AltFi), Rated: A

Challenger bank OakNorth entered into the UK’s stable of unicorns in October when it raised £154m.

The £154m round valued OakNorth at £934m (approximately $1.3bn). The money came from three investors, The Clermont Group, Toscafund and Coltrane, which collectively took a 16 per cent stake in the company. Today, the trio has been joined by a fourth investor: GIC, Singapore’s sovereign wealth fund.

Anyone for a Crowd VCT? (AltFi), Rated: A

Currently the excellent Wise Alpha is plastered all over the Waterloo and City line. And in recent months Crowdcube has also been blasting out adverts at the Waterloo train station. Not to be outdone, Seedrs is making a regular appearance on the London tube as are a whole number of digital banking apps. Even Abundance in recent years has been making an appearance on billboards at railway stations as far away as Winchester. Now we’re seeing Funding Circle blasting out its message nationwide as part of its multi-million-pound advertising campaign.

This is all very welcome, but I think it poses some broader questions about what the alternative finance space needs to make itself seem more mainstream. I see no reason why a big player such as Funding Circle shouldn’t use big national brand advertising, but I doubt its overall effectiveness.  My sense is that much smaller, baby steps are needed to mainstream the sector and originate new customers – and, crucially, build brand acceptance amongst investors.

Three alternative reasons to consider peer-to-peer investing (Your Money), Rated: B

However, any investment where capital is at risk – such as alternative lending – is not covered by the Financial Services Compensation Scheme (FSCS) and should not be considered as a substitute for cash deposits. So, why should investors look at the burgeoning alternative lending sector? There are three possible reasons:

  • Diversification
  • Funding your income needs
  • Managing pension allowances – Alternative lending certainly offers attractive returns relative to other investment options, as well as against cash at the bank. ThinCats has achieved average returns for investors of 7%-8.5%(as at 11 Oct).

Hello Soda Raises £5.5M in Funding (FINSMES), Rated: B

Hello Soda, a Manchester, UK-based international big data and text analytics company, raised £5.5m in equity and debt funding.

China

Chinese peer-to-peer lender Hexindai shrugs off tighter scrutiny concerns, rising more than 60pc on Nasdaq debut (SCMP), Rated: AAA

Shares in Hexindai, China’s fifth biggest P2P lender, surged more than 60 per cent on its Nasdaq debut on Friday, shrugging off looming concerns of possible tighter scrutiny on P2P lending platforms by Chinese authorities.

Shares in the company traded up 65 per cent to US16.50, just 20 minutes into the listing under the symbol HX, from its offering price of US$10 per American depositary share. The company aims to raise up to US$88 million through the flotation.

China’s unicorns face questions over fundraising (Financial Times), Rated: AAA

Jianpu Technology, the Chinese financial comparison site poised to list later this year, has been stripped of its status as a “unicorn” worth $1bn after regulatory filings revealed it had inflated the funds raised from investors.

Peer-to-peer lender Ppdai’s fundraisings detailed in its filing also fall short of earlier disclosures, according to calculations by Crunchbase, which collates its data from a variety of mostly publicly available channels, including US Securities and Exchange Commission documents.

Qudian’s initial public offering prospectus put its bad-loan ratio at 0.5 per cent — an unusually low but not impossible figure, especially if was selling off bad debt to third parties, which is a common practice among online lenders.

Source: Financial Times

Qudian’s prospectus did not advertise a clear pre-IPO fundraising figure. However, Crunchbase says the company raised about $873m from a number of investors before it went public.

Source: Financial Times

Chinese auto-trading IPO may prove to be a lemon (NASDAQ), Rated: A

Yixin could raise more than $800 million in a Hong Kong float. The Chinese firm wants to be to cars what Ctrip has become for mainland travellers: a one-stop online shop. It is well-positioned for China’s car boom and changing attitudes towards borrowing, but a punchy valuation means it could struggle after listing.

China’s car market is booming. And Yixin smartly targets people born from the 1980s onwards. They are more open to borrowing than their thrifty parents, and many don’t have credit scores, making it tricky for them to borrow from banks instead.

Yixin Group, an online auto-trading and financing company backed by Chinese internet giant Tencent, is planning to raise up to $867 million through an initial public offering in Hong Kong, Thomson Reuters publication IFR reported on Nov. 2.

IDG Capital, CreditEase help retail investors tap new economy (China Daily), Rated: B

Leading venture capital firm IDG Capital and Credit Wealth Management, an independent wealth management arm of CreditEase Group, has formed a comprehensive strategic partnership at the latter’s 2017 private equity investment forum held in Beijing on Friday.

The system enables analysis of 20,000 institutions via 60 dimensions such as styles of their management teams, when they exit from companies they have invested in and who buy into these companies.

European Union

Early Facebook Backer Tied to Russia Bank, Kushner Platform (Bloomberg), Rated: A

A prominent Silicon Valley investor who was an early backer of Facebook Inc.partnered in two investments with the Russian state-controlled bank VTB Bank PJSC before it was sanctioned, his spokesman confirmed Friday.

Yuri Milner, the Russian-born founder of DST Global, also invested $850,000 of his personal money last year in Cadre, a real-estate investing platform co-founded and partially owned by the family of Jared Kushner, President Donald Trump’s son-in-law and senior adviser. Milner’s spokesman said that VTB played no part in his Cadre investment, which was done solely on the business merits of Cadre.

You too can become an investor in exciting new Irish innovation (Independent), Rated: A

Backing young companies sounds expensive and risky but it doesn’t have to be either. Today with no more than €50 you can start lending to fledgling Irish businesses through a peer-to-peer platform like Linked Finance. The same €50 could back numerous new ideas on a crowdfunding platform like Fund It.

Today there are 17,000 people lending a total of over €35m through Linked Finance alone but there’s €99bn more sitting in Irish deposit accounts, according to the Central Bank’s July 2017 figures.

International

An Acceleration in Fintech Capital Raising (Lend Academy), Rated: AAA

The recent CB Insights Fintech Trends Briefing points to the rise in fintech financings as Q3’17 saw 278 deals to VC-backed fintech companies, the largest quarter since Q1’12. While total capital invested is down 25 percent from Q2’17 to $4bn the pace of the deals show investors appetite for fintech companies is still very strong.

Facial recognition startup Megvii Face++ raised $460mn in their most recent investment round led by China State-Owned Venture Capital Fund and the China-Russia Investment Fund.

German based online lender Spotcap raised $26mn in equity and debt funding.

Credit Sesame, a San Francisco and Mountain View, Calif. – based personalized credit service and financial wellness company, raised over $42mn in funding.

FS Card Inc., a Washington, DC-based financial services company focused on underserved consumers, raised a $150mn credit facility.

Finova Financial, provider of fair and affordable digital alternatives for Americans underserved by the traditional banking system, secured $102.5mn in equity and credit facility funding.

LendingHome, a San Francisco, CA-based real estate marketplace lender, raised $457mn in capital, which includes both permanent equity and the launch of LendingHome Opportunity Fund II.

BlueVine, a Redwood City, CA-based provider of working capital financing to small and medium-sized businesses, secured up to $130mn in debt capital financing.

OakNorth, a London, UK bank that provides debt finance to fast-growth businesses and established property developers, received a $202mn investment.

SalaryFinance, a London U.K.-based innovative financial wellbeing employee benefits company, completed a $52mn funding round.

How banks can use ETHLend to reduce interest rates globally (TechBullion), Rated: A

P2P platforms are great for smaller loans (i.e. paying off credit cards or repairing a damaged car), but they might not be as affordable and available for larger purchases (i.e. a home purchase or a new car). Especially in developing markets, such larger finance goals might be out of reach due to the lack of credit scoring systems or access to capital in the first place.

Now, how could ETHLend be used to fulfill this market? Let us imagine that a bank or an institutional financer is looking to finance asset backed loans. They have a minimum loan amount of $100,000, and because of this they will be unable to accept loan terms for smaller loans. These banks and institutional financiers would be able to go onto the ETHLend platform, and offer their liquidity to another investor (wholesale borrower) who has large amounts of digital tokens (cryptocurrency) to pledge as collateral.

The investor (wholesale borrower) can then take that $100,000 they got from the bank and turn around and offer loans on a smaller scale to people on the platform or in their local markets, whom do not need to pledge collaterals.

Lendoit – The Decentralized Marketplace Lending Platform Where Everyone Benefits (Chipin), Rated: A

Current P2P platforms are not really P2P because they need to have intermediaries like issuing banks or trust accounts for the system to work. This is a problem as intermediaries usually lack transparency and are also restricted geographically.

For instance, the annual interest of a loan in Brazil may be more than 50% while it is only 1% in Japan.

Source: Chipin

Lendoit is a decentralized peer-to-peer lending marketplace platform that connects borrowers and lenders globally in a fast, easy, and extremely secure manner by using the blockchain and smart contracts.

With the blockchain, Lendoit is able to automate all of the processes required in P2P money lending without sacrificing anything. Instead, everything will be much cheaper and more efficient which is exactly the solution to problems of cross-border loans.

Smart Loan Contracts contain the borrower’s details including his or her score as well as containing the conditions of loans and their respective tenders.

The Smart Reputation Contract works similarly to credit score; in Lendoit, they act as the global score of an Ethereum address and can be utilized for other purposes other than credit transactions.

The Smart Conversion Contract is responsible for converting currencies into the LOAN token when it comes to making transactions on the platform.

Lendoit Global Payments will launch a token for sale for the aptly named LOAN token.

  • Token name: LOAN
  • Token base: Ethereum (ERC-20 compliant)
  • Token supply: TBA
  • Token sale duration: December 13th, 2017

P2P Lending Offers Participants More Efficiency and Convenience in the Financial Services Sector (NewsBTC), Rated: B

The global lending marketplace market is projected to reach $290bn. by 2020, with an expected compound annual growth rate of 51% from 2014-2020.

Colombia Fintech Startups Alegra and Bankity to Compete for Funding at Finnosummit in Miami Next Week (Finance Colombia), Rated: A

Later this month in Miami, a group of 10 Latin American fintech startups will gather in Miami to compete. Two companies, Alegra and Bankity, are from Colombia and will be vying against peers from Mexico, Brazil, Argentina, and Chile for the $50,000 USD prize.

The competition is part of Visa’s Everywhere Initiative and will be taking place within Finnovista’s larger Finnosummit on November 9 in Florida’s largest city.

Bankity offers the first intelligent banking card in Latin America.

Alegra, founded by Santiago Villegas and Jorge Soto, is also great because it aims to help small business owners with tedious tasks like invoicing and reporting with its cloud-based accounting software.

Blockchain is bringing the sharing economy to everyone (VentureBeat), Rated: A

The sharing economy relies on a distributed workforce, shareable assets, and peer-to-peer transactions and contracts. Companies in these emerging marketplaces handle payments through smart contracts and blockchain technology. This greatly lowers costs, improves trust and transparency with the community, and simplifies transactions at a global scale by making them near-instantaneous, even when distributing payments to thousands of digital wallets at once.

One of the biggest markets for data is social media and online retail. DataWallet, based in San Francisco, helps users download their digital identity and upload it to a blockchain-powered data exchange where companies can purchase it, with payments made to users through the blockchain.

Ride-sharing company LaZooz, based in Tel Aviv, is building a decentralized, Uber-like app that uses blockchain to pay drivers and other community participants. WeTrust, in Fremont, CA, is doing something similar in the peer-to-peer lending space, charging only a max fee of .3 percent instead of 1 percent, like LendingClub.

Australia

Westpac posts AU$ 7.99b yearly profit, sends digital Customer Service Hub live (ZDNet), Rated: AAA

Westpac has processed its first live home loans through its new technology platform, the Customer Service Hub, with the bank saying the initiative aimed at speeding up and simplifying the home loan process as its largest transformation program to date.

For the 2017 financial year, the bank reported AU$7.99 billion in after-tax profit, on revenue of AU$21.8 billion, an increase of 4 percent year-on-year.

As of September 30, 2017, Westpac boasted 13.8 million customers; 4.53 million were considered digitally active, with 72 percent of them using a mobile platform.

Additionally, through its AU$100 million venture capital firm Reinventure, Westpac has made 16 investments covering areas such as blockchain and digital currencies, payments, peer-to-peer lending, as well as big data and data analytics.

The bank also this year entered into a “strategic” relationship with Australian-listed payments firm Zipmoney, investing AU$40 million by way of a private share placement in August to allow the integration of the fintech’s products and services across Westpac’s network throughout Australia, as well as other initiatives including the provision of in-development business-to-business products and services.

In April, the bank went live with Samsung Pay, opening up the phone-based wallet to debit and credit card cardholders across both Mastercard and Visa. This came a year after it launched Android Pay, in addition to Westpac’s own tap and pay function, which was unveiled to customers in 2014.

Banks wealth models are ‘unravelling’ (Financial Review), Rated: A

Independent investment and superannuation platforms like Hub24 and Netwealth are readying to reap the rewards of the “unravelling” of the bank’s traditional wealth management models.

The best interest duty is a key plank of a package of financial advice reforms, known as the Future of Financial Advice (FOFA), introduced in July 2013. This was tested with the corporate watchdog recently ordering Melbourne-based financial planning firm to pay $1.1 million in fines and costs as part of the first civil penalty imposed for breaching its duty to act in the best interest of its clients.

Last week, BT Financial Group (BTFG) said it would expand its life insurance APL from its sole in-house product, adding a minimum of three alternative insurers by March next year.

Increasingly, these platforms are snaring a fair whack of adviser business in the $750 billion platform market, which is growing at 10 per cent a year.

Netwealth has about $16 billion in funds under advice and more than 2000 financial advisers and planners using its services. When it lists on the ASX with an $879.2 million market capitalisation late next month, it will be the second biggest IPO of the calendar year to date

Australian FinTech SelfWealth IPO Offering Self Directed Investors Alternative to Traditional Broker Trading (BusinessWire), Rated: A

SelfWealth Limited (“SelfWealth” or “the Company”), an Australian FinTech business offering a flat fee brokerage service and social portfolio construction network for Australian investors, is pleased to announce the opening of its Initial Public Offering (IPO) to raise up to A$7.5 million (with a minimum subscription of A$5.0 million).

SelfWealth is offering for issue 37.5 million shares priced at A$0.20 per new share; the indicative market captialisation of SelfWealth will be approximately A$26.1 million. The Company’s ASX ticker code will be SWF.

India

Here are four lending platforms that are helping unbanked SMEs (The Hans India), Rated: A

Despite being a major part of the Indian economy, Small and medium-sized enterprises (SMEs) in India face multiple challenges.

From inadequate banking to lack of constant cash supply, these SMEs are deprived of the smooth and consistent growth factors

These four SME lending platforms are bridging the requirements digitally:

  1. Lendingkart – The company aims to transform small business lending by making it convenient for SMEs to access credit easily.
  2. CoinTribe – Another online loan disbursement platform, CoinTribe provides quick and easy collateral-free loans to small businesses and individuals.

    It is the only online lending platform which has back-tested its credit model with large banks.

  3. Faircent – Largest peer to peer lending website, Faircent caters to retail and business loans.
  4. TAB Capital – The platform has commissioned an advanced proprietary algorithm that leverages big data and analytics to simplify and accelerate loan application, verification, approval and disbursement.

China’s Fosun leads $ 10 million round in fin-tech startup Kissht (VC Circle), Rated: A

OnEMi Technology Solutions Pvt. Ltd, which runs lending startup Kissht, has raised $10 million (Rs 67 crore) led by China’s Fosun International, a report in a financial daily stated.

In June this year, the startup raised $2 million (around Rs 13 crore) from Endiya and Ventureast.

India’s Largest Bank Goes Big on Blockchain (Cryptocoins News), Rated: B

The State Bank of India is gearing up to implement blockchain solutions in a number of financial processes including the management of its Know Your Customer (KYC) system.

SBI is now pressing ahead with its first implementation of the decentralized technology by using an enterprise blockchain solution for managing its Know Your Customer (KYC) system, via a new partnership with Intel that sees the technology giant become the consortium’s official technology advisor.

Asia

Square Peg, SIG Asia lead $ 7m round in SEA service marketplace Kaodim (Deal Street Asia), Rated: AAA

Southeast Asian service marketplace Kaodim Group has raised $7 million (MYR 29.5 million) in a funding round led by Australia venture capital firm Square Peg Capital and Shanghai-headquartered SIG Asia Investments.

A clear path to transforming Singapore’s financial services sector (Channel News Asia), Rated: A

Minister for Education (Higher Education and Skills) and Monetary Authority of Singapore board member Ong Ye Kung unveiled the Industry Transformation Map (ITM) for the financial services sector on Monday (Oct 30).

The ITM outlines key growth strategies for the financial sector that aim to generate greater productivity, attain higher growth rates, and create 4,000 jobs each year up to 2020.

These include strengthening financing channels for small- and medium-sized enterprises (SMEs), simplifying the regulatory framework for venture capitalmanagers, introducing dual class share structures for high-tech companies, and encouraging other sources of private sector financing for start-ups and entrepreneurs.

According to a Deutsche Bank report released last year, debt burdens have risen from less than 240 per cent of GDP in 2009 to 265 per cent in 2015. This is largely due to Singapore’s high levels of private sector leverage, for which there are limits to greater growth.

Singapore plays fintech evangelist on global mission (Business Times), Rated: A

IN TWO short years, Singapore has zipped into pole position in the fintech space, challenging rivals such as London in drawing intellectual and funding capital into the city-state with its open adoption of new technology and more broadly, innovation.

The strategy, led by the Monetary Authority of Singapore (MAS), is now widening to a regional and global endeavour, as MAS expands into cross-border projects that could pay significant digital dividends in time.

This will chiefly include blockchain experiments, with MAS now looking at ways to expand an inter-bank payments pilot to create a cross-border payments system between two countries, Ravi Menon, managing director of MAS, said in a wide-ranging interview with The Business Times.

Middle East

Seven in ten UAE residents unsure how to achieve their financial goals (The National), Rated: AAA

Seven in ten UAE residents are unsure of the steps needed to achieve their financial goals, a poll by National Bonds revealed on Monday, as the UAE investment company launched a new campaign to encourage better saving habits.

According to the poll of almost 400 residents conducted in the first nine months of the year, 69 per cent of respondents lack awareness about financial planning.

Despite the lack of clarity on how to save and invest their money, 53 per cent were most interested in receiving financial advice related to retirement planning. This was consistent among Arabs, Asians and Western expats, according to National Bonds, while Emiratis are more concerned with advice on financial health.

Authors:


George Popescu


Allen Taylor

Monday October 16 2017, Daily News Digest

fintech financing

News Comments Today’s main news: SoFi withdraws banking application. SoFi completes largest loan securitization to date. Retailer sues Kabbage. New UK marketplace loan deal mandated. OakNorth achieves unicorn status with 154M GBP raise. PPdai plans $350M U.S. IPO. Linked Finance gets 2M Euro equity investment. Today’s main analysis: Q3 2017 FinTech Insights Report (must-read). New generation of high net worth individuals spur […]

fintech financing

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

Africa

News Summary

United States

SoFi withdraws U.S. banking application, citing leadership change (Reuters), Rated: AAA

Student online lender Social Finance Inc said on Friday that it is withdrawing its application for a bank license in the wake of the departure of a number of senior executives, including co-founder and former Chief Executive Mike Cagney.

SoFi Completes its Largest Loan Securitization to Date (PR Newswire), Rated: AAA

SoFi announced today the closing of a $776.7 million offering of SoFi Professional Loan Program 2017-E notes.

SoFi 2017-E marks the company’s largest asset-backed securities issue to date and its 10th ABS transaction this year, bringing SoFi’s total issuance for 2017 to $5.375 billion.  Since inception, SoFi has closed 30 transactions totaling $12.4 billion in issuance.  With the closing of SoFi 2017-E, SoFi maintains its position as a top ten ABS sponsor. The recent transaction was heavily subscribed with orders totaling $2.3 billion.

Wealth Management Firm GENCapital Partners with SoFi and Celebrates One-Year Anniversary (Digital Journal), Rated: A

GENCapital is proud to announce a partnership with SoFi, a new kind of finance and lending company. In addition, GENCapital celebrated its one-year anniversary in September.

FT Partners Research Publishes Q3 2017 FinTech Insights Report (FT Partners Email), Rated: AAA

Highlights of the Q3 2017 report:

  • Q3 2017 financing volume of $5.1 bn was lower than in Q2 2017 ($8.8 bn), but higher than in Q1 2017 ($4.3 bn). This quarter saw the second highest financing deal count ever at 412 transactions, only behind Q1 2016, which had 438.
  • Financing volume year-to-date is tracking just below 2016’s record level and is on pace for the second strongest year ever. This is even more impressive considering that 2016 was skewed by a handful of megadeals in China.
  • The Banking sector continues to be the most active sector this year in both the number of transactions (356 year-to-date) and financing volume ($6.3 bn year-to-date).
  • 2017 FinTech financing volume in Europe ($5.3 bn) is already more than 2x the financing volume of 2016 for the region ($2.6 bn).
  • Q3 2017 M&A volume ($32.9 bn) was the highest since Q4 2015 ($50.5 bn), which included Visa’s $23.4 bn acquisition of Visa Europe. This quarter had eight $1 billion+ M&A deals, which is the most since Q4 2015 (which also had eight).
  • So far this year, 57% of the total global M&A dollar volume is comprised of international targets, although only 38% of the number of transactions represents international targets.
Source: FT Partners

Get the full report here.

Mass. Retailer Sues Over Alleged High-Interest Loan Scheme (Law360), Rated: AAA

A Massachusetts clothing and sports retailer filed suit in federal court Thursday alleging that financial technology company Kabbage Inc. evaded state law by offering high-interest loans through an industrial bank based in Utah, which places no ceiling on interest rates for commercial loans, all the while serving as the true lender.

NRO Boston LLC and owner Alice Indelicato accuse Kabbage and Celtic Bank Corp. of devastating the retailer with their “rent-a-bank” scheme, whereby the bank was listed as the lender for loans in order to get….

Lending Club founder Renaud Laplanche opens up on his ‘frustrating’ exit and new startup Upgrade (Business Insider), Rated: A

Renaud Laplanche tries to “keep a positive attitude rather than focus on my frustration” when it comes to Lending Club.

“It was very, very frustrating. I’m not commenting on the story, but the best way to actually understand what really happened is to read the filings. I think the press made it sound a lot worse, a lot more sensational, than it really was.”

Upgrade raised $60 million (£45.7 million) in April, the biggest ever Series A funding round for a US fintech startup. Many of Lending Club’s original investors have backed the business and Jefferies, an investment bank burned by Lending Club’s loan term scandal, has signed up to buy loans from Upgrade — a vindication for Laplanche.

Now he is focused on “what can I learn from it, what can I do better. Upgrade has been part of that.”

Global Debt Registry Verifies Over $ 1.5 Billion in Loans (AltFi), Rated: A

Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced it has exceeded a $1.5 Billion of loans issued by digital lending platforms and verified by the Company’s suite of due diligence solutions. On the heels of the GDR’s announcement of its successful SOC 1 Type 2 and SOC 2 Type 2 attestations last week, this achievement confirms the Company’s role as a leader in online lending’s ongoing expansion, driving capital growth in the sector by providing certainty and transparency around investors’ online lending portfolios and protection against risks surrounding the loan data integrity.

Amex targets Square, PayPal in small-biz lending (American Banker), Rated: A

In the digital age, a lot has changed about how businesses operate — and a lot of new data is being generated in the process.

This creates new possibilities for judging a consumer or merchant’s creditworthiness. Square and PayPal have been taking advantage of this for years with models that rely on a merchant’s sales history to determine their likelihood to repay a loan, and American Express is ready to compete.

Redpoint Capital Group, LLC Enters into Credit Services Agreement with Elevate Credit, Inc. Subsidiaries (BusinessWire), Rated: A

Redpoint Capital Group, LLC (“Redpoint”), an alternative investment company focused on providing financing across an array of asset-based strategies, announced it has entered into two additional Credit Agreements with two separate wholly owned subsidiaries of Elevate Credit, Inc.

Rise Credit Service of Ohio, LLC entered into a Credit Services Agreement with Redpoint Asset Funding Ohio, LLC (“Redpoint Ohio”) whereby Rise Credit Service of Ohio, LLC acts as a credit service organization on behalf of consumers for certain loans originated, funded and collected by Redpoint Ohio.

Furthermore, Rise Credit Services of Texas, LLC, a wholly owned subsidiary of the Company, entered into a Credit Services Agreement with Redpoint Capital Asset Funding, LLC (“Redpoint”) whereby Rise Credit Services of Texas, LLC acts as a credit access business on behalf of consumers for certain loans originated, funded and collected by Redpoint.

In addition to the agreements with Redpoint and Redpoint Ohio described above, Rise Credit Services of Texas, LLC, Rise Credit, LLC and the Company also entered into new guarantees of certain receivables of the Company and its subsidiaries held by Redpoint and Redpoint Ohio.

True Link Financial Secures $ 8 Million Series A Round (PR Newswire), Rated: A

True Link Financial, the financial services provider for seniors, announced today that it has raised $8 million in a Series A funding round led by QED Investors, with additional investment from Radicle Impact and Initialized Capital. In conjunction with the investment, QED’s Founding Partner Frank Rotman will join True Link’s Board of Directors. With this latest round True Link has raised $15.8 million since the company’s founding in 2012.

The 45 million seniors in America – the largest and fastest-growing segment of the population – are facing new challenges. Average lifespans increased by more than thirty years over the 20th Century, stretching savings further and layering in new medical costs. Since the time today’s retirees entered the workforce, the percentage of workers with a pension has dropped by more than half. 5.5 million Americans have Alzheimer’s today, and more than 16 million will have the disease by 2050. And according to True Link’s groundbreaking 2015 study, financial fraud costs the aging a whopping $36 billion a year. In short, people are living longer with fewer resources and more risks.

The company’s customer base has grown twentyfold in the last three years. Its cards division is the first Silicon Valley startup debit card issuer to turn a profit, and its robo-advisor is Silicon Valley’s first robo-advisor to turn a profit.

Could online lending become the next systemic risk? (American Banker), Rated: A

When banks resisted expanding credit in the years following the financial crisis and passage of the Dodd-Frank Act, online marketplace lending seized on what seemed like a niche opportunity: targeting the credit markets deserted by banks.

But with issuance of marketplace securitizations now exploding — rising 300% cumulatively in the past two years — the idea of online lending as a niche is quickly deteriorating.

Google and Amazon are ready to disrupt small business lending, former Obama advisor says (CNBC), Rated: A

Tech behemoths Google and Amazon are poised to put competitive pressure on traditional banks in the small business lending arena, one of former President Barack Obama‘s cabinet members said Tuesday.

Karen Mills, who served as Obama’s administrator for small businesses, told CNBC that the tech giants would probably push to disrupt the market and deal a blow to established lenders.

“I think they are going to dominate the market, and that is the next phase that’s coming,” she told the LendIt Europe fintech conference in London.

SBA Lending Activity in FY17 Shows Consistent Growth (PR Newswire), Rated: A

The U.S. Small Business Administration today announced fiscal year 2017 lending numbers showing increasing loan levels in small business lending through the 7(a) and 504 loan programs, as well as increases in lending to women, veterans and emerging communities.

SBA approved over 68,000 loans in the 7(a) and 504 loan programs in FY17.  These programs provided over $30 billion to small businesses.

In FY17, the 7(a) program supported a consistent number of loans — more than $25.44 billion combined across 62,430 loans.  The SBA continues to streamline and improve access to its loan program for small loans and emerging communities, delivering more than $5 billion in smaller loans of $350,000 or less in FY17.

7(a) lending to women-owned businesses (both majority and minority owned) grew in total dollar and volume.  FY17 lending exceeded $7.5 billion, an increase of $298 million from FY16.

FY17 504 lending to women-owned businesses reached $955.2 million, a $277 million increase over the previous fiscal year. Loans to veterans totaled $1.15 billion for 7(a) and 504 lending.

Ray Sturm of AlphaFlow (Lend Academy), Rated: A

In this podcast you will learn:

  • What AlphaFlow does and why it is unique in real estate investing.
  • The real estate platforms they are working with today.
  • Why they are looking to also work with offline hard money lenders.
  • How they decide which platforms to work with.
  • Details of their own proprietary real estate analytics platform.
  • The area of the real estate market they focus on.
  • The average duration, rate and LTV of the loans they invest in.
  • Why they decided to become a Registered Investment Advisor.
  • The types of investors coming to their platform today.
  • How they are able to get new investors a diversified portfolio with days.
  • The tech they are using to connect to the real estate platforms.
  • Some of the big names that participated in their recent seed round.
  • Ray’s view on the real estate crowdfunding space in general.
  • How Ray thinks about the long term direction of AlphaFlow.

    

P2B Investor Program Allows Community Banks to Lend More with Marketplace Lending Partnership (Crowdfund Insider), Rated: A

P2B Investor has launched an interesting partnership program that is good for banks, good for borrowers and good for P2Bi. Banks, typically smaller banks, would like to lend more to SMEs but are risk averse due to multiple reasons. P2B Investor’s new program allows the bank to buy the first half of the loan with their low cost of capital, and P2Bi marketplace buys the second half. Thus the SME has a hybrid line of credit to finance its cash needs.

Payday loans rule could change in 2019 (MSN), Rated: A

Consumers who are caught in a financial squeeze might one day be able to skip the payday loan store and turn to banks and credit unions for lower-cost, quick-fix loans.

Congress could move to overturn the rule — but some say that’s unlikely.

What could change: Lenders eventually would be required to research upfront whether borrowers could afford to repay all or most of  their short-term loans at once — including payday loans and auto title loans — and longer-term loans with “balloon” payments.

What won’t change: People who are cash-strapped still will be looking for ways to cover their bills.

AutoGravity Is Fintech’s Answer To Car Shopping (Benzinga), Rated: A

AutoGravity, a fintech platform for car shopping, has been nationally available for less than a year. The app’s been downloaded more than 750,000 times and processed more than $1 billion in financing requests.

Of the 20 largest automotive lenders, AutoGravity has some form of an agreement with 19, said chief marketing officer Serge Vartanov.

The app’s momentum is building: 100,000 of its downloads came in the month of August alone.

AutoGravity is now available in 49 states after kicking off with a soft launch in California.

While AutoGravity doesn’t disclose its overall lender portfolio, it has previously announced partnerships with Mercedes-Benz Financial Services and Hyundai Capital and a $30 million investment from Volkswagen and Daimler Financial Services.

Cardplatforms disrupts the financial services market (Biz Journals), Rated: A

The Boca Raton fintech company has grown revenues by nearly 400 percent in 2016.

CarGurus races up 72% in a week with 4 strong pops (NASDAQ), Rated: A

CarGurus and three medical device companies each had a strong debut, averaging a first-day pop of 45%.

Issuer
Business
Deal Size
($mm)
Market Cap
at IPO ($mm)
Price vs.
midpoint
First day
return
Return
at 10/13
CarGurus ( CARG ) $150 $1,798 14% 72% 78%
 Online marketplace for buyers and sellers of new and used cars.

The rise of a new kind of finance is setting off alarm bells at the Fed (Business Insider), Rated: A

The challenge is that regulatory bureaucracies in Washington, including the Federal Reserve, may be too slow to react to new technology — from cryptocurrencies and blockchain to crowdfunding — in the same way policymakers missed the risks embedded in the “innovations” in mortgage finance that ultimately fueled the worst housing bust and financial crisis in modern history.

“We’re not going to call it banking — we’re going to call it something else,” Bullard said.

The Unbanking of America, by Lisa Servon (Patheos), Rated: A

Add in the number of people suffering because of the poor economy, especially millennials in the Gig Economy, living from paycheck to paycheck, unable to accumulate enough money for emergency savings, and Americans’ use of businesses such as check cashing companies or payday lenders or other alternate lenders, is entirely rational, in her portrayal, and it’s wrong for policymakers to act as if all Americans need to do is to be told they should get a bank account and that’s that.

Servon’s research for the book consisted, in part, of actually working at a check cashing service and a payday lender.

She then concludes the book by talking about “innovators.”  She profiles a start-up that intends to provide an alternate credit-scoring model that takes into account other types of financial behavior that’s not typically incorporated into the mainstream credit bureaus’ credit scores, and a start-up that intends to make it cheaper to transfer money from one person to another, and a bank, KeyBank, that is more mission-oriented than the usual faceless big corporate bank.

One thing she entirely fails to mention is the fact that interest rates have dropped so dramatically.

A second development in the banking world that she neglects to mention is the rise in prepaid debit cards.

And the third missing item is that of competition.

Corporate Boards Should be Demanding Management Answer These 5 Questions About Company Culture (Entrepreneur), Rated: A

  1. Is the leadership team operating with a high level of professionalism and integrity? Do they value diversity and inclusion?
  2. Do legal and HR have a seat at the table in making key strategy, organizational and business decisions?
  3. Does the company have published policies, processes and trainings so employees easily understand what type of behavior is unacceptable and what to do if they have a problem?
  4. What is the company’s strategy to create a diverse and inclusive environment on the board and in the office?
  5. Does the board have oversight and access to management, so as to be informed about the company’s internal controls and policies and when the same are violated?

Is the way the CFPB handles enforcement about to change? (Housingwire), Rated: B

But regardless of what happens to Cordray, the way the CFPB handles enforcement could be changing as we speak, because the CFPB’s enforcement director is apparently leaving the bureau.

Anthony Alexis, the Consumer Financial Protection Bureau’s enforcement chief, is stepping down after more than two years overseeing the agency’s efforts to combat abuses by the financial industry, a departure certain to fuel speculation that Director Richard Cordray will leave soon to pursue the Ohio governorship.

Alexis, a former Mayer Brown partner who was named enforcement director in 2015 after holding the role in an interim capacity, announced his departure plans to CFPB staff Thursday afternoon, according to a former CFPB attorney who is familiar with the matter.

BREAKING: Auto Racer, Atty Guilty Of Running Criminal Payday Loan Empire (Lexis Nexis), Rated: B

A Manhattan jury on Friday found auto racer Scott Tucker and his attorney Timothy Muir guilty of operating a $2 billion criminal payday loan empire that preyed on millions of vulnerable borrowers and entered into sham deals with Native American tribes.

FINRA ratchets up fintech engagement (FinancialPlanning), Rated: B

FINRA was looking to ratchet up engagement with industry players, he said.

To that end, the regulator has hosted roundtable discussions around the country with fintech firms, robos, vendors, and traditional broker-dealers’ technology departments to get a better handle on how the business is changing, Cook said. Later this month, FINRA will convene a new fintech advisory committee.

United Kingdom

New UK marketplace loan deal mandated (Global Capital), Rated: AAA

The transaction, MOCA 2017-1, will be offered in three tranches and is backed by 31,153  Zopa loans with a total outstanding balance of £208.96m. The loans have an average current balance of £6,708 and a weighted average seasoning of 4.5 months. The average interest rate is 7.2%.

Challenger bank OakNorth nabs £154m, claims unicorn status (AltFi), Rated: AAA

OakNorth, a challenger bank focussed on lending to high growth businesses and property developers, has raised £154m in equity money in a round that values the company at £934m (approximately $1.3bn). The fundraise pushes the firm into “unicorn” territory – a term reserved for private tech firms with a valuation north of a billion dollars.

The money comes from The Clermont Group, Toscafund and Coltrane, which together have purchased a 16 per cent stake in the challenger bank. OakNorth says the money will be used to boost its lending by an additional £1.5bn.

This £4bn problem is stunting SME growth (City A.M.), Rated: A

Every year, tens of thousands of small businesses see their loan applications refused by the big banks.

In fact, figures from the British Business Bank (BBB) indicate that this amounts to around £4bn in loans annually – a staggering figure when you consider that this is preventing businesses from being able to reach their full potential.

SMEs are expected to contribute £241bn to the British economy by 2025, up 19 per cent from last year’s figure of £202bn, according to research from challenger bank Hampshire Trust Bank and the Centre for Economics and Business Research.

Seen and Heard at LendIt Europe: The Future of Finance (Crowdfund Insider), Rated: A

“Data that the bank holds on the consumer belongs to the consumer and not the bank.”

Imran Gulamhuseinwala OBE, Global Head of Fintech at EY

“Banks have outdated technology. To change that takes a lot of effort. From where they are starting, it is not easy.”

Jaidev Janardana, CEO of Zopa

“Users do not really care about the tech. They just know it works.”

Radoslav Albrecht, CEO and founder of BitBond

“As for Cost of Capital. Marketplace lending has access to a very wide range of cost of capital. A lot of platforms sell loans to banks. You have Credit Unions buying loans. Credit Unions have a return target of 2 to 3%. Lower than Goldman Sachs. Marketplace Lenders have access to similar cost of capital.”

Renaud Laplanche, CEO and founder of Upgrade

“The biggest myth of all is that Banks and other financial services are advantaged at this.  They have all the data. The truth is the data is fragmented across all different tech stacks and it is difficult to utilize. Very expensive and slow. The data is in the wrong place.”

Antony Jenkins, CEO and founder of 10X Future Technologies

BitRent Opens New Horizons for Investors (The Merkle), Rated: A

Blockchain platform BitRent announced a revolutionary solution in the area of new-built property: commercial and residential property shared investing at an early stage of construction and total control over construction process in real time by means of modules and structures chipping. The company operates on blockchain technology and smart-contracts protocol. BitRent platform’s mission is to make real estate investing easy, transparent and profitable all over the world.

Christine Farnish on the changing role of the P2PFA (P2P Finance News), Rated: A

There are changes ahead for the Peer-to-Peer Finance Association (P2PFA). The self-regulated trade body has been shaping industry standards for six years, but as alternative lending enters the mainstream, even the P2PFA has to be willing to evolve.

However, the next board meeting – set to be held in November – is expected to focus on an update to the P2PFA rules, membership criteria, and the association’s role in the wider regulatory community.

The departure of RateSetter and LendInvest (which no longer defines itself as a P2P lender) has brought the P2PFA’s market share down to around 50 per cent of the UK’s P2P sector. Current members include Funding Circle, Zopa, MarketInvoice, Landbay, ThinCats, Lending Works and newest member Folk2Folk but no new members have joined since February of this year. However, Farnish rejected rumours that the association is “a closed shop”.

For now, the P2PFA is focused on reviewing its own rules and Farnish confirmed that a revised version of these rules will be published before the end of the year.

Robo-advice in ten points  (London School of Economics and Political Science), Rated: A

The asset management industry is currently in a state of flux, and the manner in which individuals and institutions interact with their wealth managers is on the cusp of dramatic change. Digitisation and increased use of technology should mean that we are at the point of a low-cost revolution.

Robo-advice in ten points:

  • Robo-advice is online
  • The key is probably cost: Robo-advisors can be 60-70 per cent cheaper than traditional solutions and can provide savings of 1 percentage point per year of assets. Over a lifetime of investing, this would make £100,000s of difference to millions of investors in the UK alone.
  • Growth is strong: Whilst still only a fraction of the market, the assets under management of major players are growing between 50 and 100 per cent per year, and new entrants and concepts are developing all the time. There are currently over 100 robo-advisors in Europe with most based in either Germany or the UK.
  • There is a long way to go: Nutmeg, the UKs’ largest robo, has $1bn in assets, but Legal and General, the UK’s largest traditional asset manager, has over $1 trillion – a thousand times larger. Data in the US is similar, with BlackRock having $6 trillion under management and Betterment, the largest US robo, having a fraction of this.
  • On-boarding is a noted differentiator, but also a concern: The faster process and fact finding may not always be up to date with regulations or as rigorous as it should be.
  • Millennials are less important than predicted: Most of the original players in this nascent market targeted millennials. But older, wealthier and still tech-savvy baby boomers have become core clients.
  • Robo-advisors mainly use ETFs
  • Future robo-advisors will be more sophisticated
  • Robo-advice aids financial inclusion: Both the regulator and the industry are hoping that robo-advice will improve participation and access to the investment process.
  • Robo-advisors typically use Modern Portfolio Theory: Robo-advisors typically use mean-variance optimisation for asset selection, but future solutions are likely to use Liability Driven Investment (LDI) frameworks  for portfolio construction.

Ignoring women: Banking’s £130bn a year own goal? (AltFi), Rated: B

Financial services firms could be missing a £130bn opportunity by not winning over women, according to a new report.

UK financial institutions are failing to connect with female customers at every stage of the buying journey, from advertising to offerings and funds, finds Kantar’s latest research. It shows financial advertising and marketing strategies fail to communicate trustworthiness, dependability or understanding – particularly to women, 65 per cent of whom report low confidence in their financial institutions, compared to 55 per cent of men.

Only 38 per cent of women claim to feel ‘in control of their financial future’ compared to 51 per cent of men.

China

Chinese P2P Lending Platform PPdai.com Plans $ 350M IPO In US (China Money Network), Rated: AAA

Chinese peer-to-peer lending platform PPdai.com will seek an initial public offering on the New York Stock Exchange, the company said in a filing, marking the latest Chinese financial technology company to go public. PPdai.com is currently values as a unicorn on China Money Network’s China Unicorn List with a US$2 billion valuation.

The company aims to raise as much as US$350 million through the IPO, though it has not determined the listing price or the number of shares to be offered, according to an IPO prospectus filed with the U.S. Securities and Exchange Commission.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

This week, China Insurance Regulatory Commission (CIRC) announced that it had grant an operation license to Shenzhen Wei Min Insurance Agency Co. Ltd. Tencent owns a majority stake (57.8%) of this new insurer.

On October 10thAlipay announced to introduce house rental service in eight cities (Shanghai, Beijing, Shenzhen, Hangzhou, Nanjing, Chengdu, Xi’an and Zhengzhou). Users can enter the credit renting platform by searching “rent” in Alipay. If users’ Sesame Credit is above 650, they can enjoy deposit exemption and pay rent monthly.

Hexindai, a less well-known online consumer finance platform, is going to be listed in the US.  Hexindai plans to raise $80 million in this IPO.

October 10th marked the 92th birthday of the world-renowned Palace Museum. It was on the same day that the museum started to embrace a brand new era of digital payment. 

Li Ka-shing shows strong backing for Hong Kong’s fintech sector with MioTech funding (SCMP), Rate: A

Horizons Ventures, Li’s private investment arm, led a US$7 million Series A funding round for MioTech, one of just a few Chinese tech companies in the firm’s portfolio.

Qudian IPO: What Investors Need to Know (The Motley Fool), Rated: B

The Chinese micro-lending specialist is about to hit the U.S. stock market following an IPO early next week. Millions of Chinese consumers and businesses tap Qudian for credit, but does this make the stock a potential buy?

Qudian’s sweet spot is consumer loans. According to a study from Oliver Wyman commissioned by the company, it was the top small lender in the country in terms of number of active borrowers and volume of transactions as of June 30.

These loans are fairly small, even by local standards, and typically have short durations. There sure are a lot of them, though — in the first six months of this year, the company dispensed a total of around 38.2 billion yuan ($5.8 billion).

Over Ten Chinese P2P Lending Platforms expand to Southeast Asian Market (Xing Ping She), Rated: B

Recently, the PINTEC Group has announced a joint venture in Singapore to enter the Southeast Asian market with robo-adviser as its entry point. So far, there are more than 10 Chinese Internet finance companies layout in the Southeast Asian market,including Lufax, Dianrong.com, etc.

Yu-Hang Guo, the co-founder& co-chief executive of Dianrong.com, said that China’s internet finance companies have concentrated on the southeast Asian market, there are active plans as well as passive responses. With Chinese regulations tightening, many of them are looking abroad for growth. It is reported that cash loans, P2P and third-party data services have become the three most promising businesses in the Southeast Asian market.

Actually, before the small and medium-sized internet finance platforms have been set foot, industry faucets such as Ant Financial have already started to move and accelerate into the digital payment market in Southeast Asian.

European Union

Linked Finance Secures €2 Million Equity Investment (Crowdfund Insider), Rated: AAA

Ireland-based peer-to-peer lending company Linked Finance announced on Thursday it secured €2m in equity funding to support its plans for expansion. The funding round was led by the company’s original venture capital backers, Frontline Ventures. The platform has now lent over €34.5 million to Irish SMEs since its launch in 2013, with more than €16.9 million already repaid to its lenders.

The Revolut founder on why his people work 12-13 hours a day (Business Insider), Rated: AAA

So far this year, Revolut, which started as a foreign exchange card linked to an app, has launched business accounts, loans, loyalty offers, mobile phone insurance, a bill splitting feature, a subscription “Premium” account, a chatbot, and more. Oh, and raised $66 million.

“The vision is very simple,” Storonsky said. “At the moment in the world, all banks are very local. As a result, you always struggle with international activity. That means you always need to open new bank accounts, issue new cards, set up a new credit profile.

“Nowadays people are all international. Banks are not providing this service. The vision for us is alternative global banking. Anyone in the world can just download the Revolut app and set up a local bank account to access any services they need.”

‘A lot of people work on weekends’

It’s a bold ambition. But can the business sustain this pace? I had heard from people in the industry — startup founders, PRs, former staff — that Revolut’s working culture can be tough: long hours, aggressive targets, burn out.

“We are not about long hours — we are about getting shit done,” Storonsky said. “If people have this mentality, they work long hours because they want it.”

It should be said that all the company’s Glassdoor reviews are five-star reviews, even those that mention the hours. “This company is highly addictive,” one reads.

German fintech Compeon scoops €12m fundraise (AltFi), Rated: A

A credit brokerage platform by the name of Compeon has raised €12m in a series B fundraising round. The round was led by existing investor Tengelmann Ventures, with btov Partners and Dieter von Holtzbrinck Ventures also participating.

Compeon processed a total of €2.5bn in loan requests in 2016, with an average loan request of €700,000.

Israel’s Migdal Partners Decentralized P2P Lending Platform Lendoit (Finance Magnates), Rated: B

Lendoit, a new decentralized P2P lending platform, has announced that it has partnered with one of Israel’s biggest institutional investment firms, Migdal Investment Banking. Established in 1965 and part of Migdal Capital Markets Group, it currently manages assets valued at $9 billion for thousands of clients in the Israeli private, business and public sectors.

International

PRIVATE CREDIT INDUSTRY: SUPPLY AND DEMAND (All About Alpha), Rated: AAA

The Alternative Credit Council, an affiliate of the Alternative Investment Management Association, has put out a paper on the present state of the private credit industry, considering both the demand (from borrowers) for its services and the supply (from investors) of capital to lend.

In preparing this paper, the ACC has partnered with Dechert LLP, an international law firm that specializes in financial and regulatory intricacies, to research and present a discussion of how private credit has managed to “cement its place in the lending landscape globally.”

One of the points of the paper is that private credit so understood is no longer stuck in the midmarket. It is moving outward in both directions.

On the other side of the market, there continue to be a number of borrowers who are good risks yet whose needs are not being met by the banking system, which is undergoing its own uneasy transformation in the face of regulatory pressure.

The top three characteristics of private credit that borrowers value most are: the speed of decision making, the ability to develop complex structures, and the flexibility of terms.

FinTech builds on blockchain for international mobile payments (Computerworld), Rated: A

IBM has partnered with a Polynesian payments system provider and an open-source FinTech payment network to implement a new international exchange based on a blockchain electronic ledger.

The new payment network uses IBM’s Blockchain Platform, a cloud service, to enable the electronic exchange of 12 different currencies across Pacific Islands as well as Australia, New Zealand and the United Kingdom.

KlickEx Group, a United Nations-funded, Pacific-region financial services company, and Stellar.org, a nonprofit organization that supports an open-source blockchain network for financial services, are backing the new cross-border payments service.

How to Get a Loan with Bad Credit (The Global Dispatch), Rated: B

If your bank does not agree to your request, start exploring alternative lenders. Do not limit your options to institutions. Your friends or family members can lend you the cash you need to handle an emergency. Peer to peer lending is a great alternative to banks, which allows you to borrow from individuals instead of institutions.

You can easily access a quick loan with bad credit online if you have a stable and verifiable source of income. Online lenders run your credit history but will approve your loan request with proof that you can repay in time. In most cases, the lenders offer payday loans that fall due on your next payday. You must be careful when applying for a personal loan online. Most of the search results you will get are from marketing companies and not direct lenders.

Australia

TSYS’ ProPay Sets Up Shop In Australia (PYMNTS), Rated: A

TSYS’ merchant services company ProPay is expanding into new territory.

The company announced in a press release this week that ProPay has launched in Australia, bringing small- and medium-sized businesses (SMBs) there to its merchant acquiring payment network and enabling them to efficiently accept card payments. The solution is built for direct-selling companies, micro merchants, distributors and payment facilitators.

Australian Government Agencies Flagged For Company Card Fraud (PYMNTS), Rated: A

Australian government agencies are reportedly plagued by company card fraud and misuse, according to new analysis from media company Fairfax Media. By certain accounts, some agencies are seeing more than $100,000 in misspend.

Fairfax analysts found an array of instances in which government purchasing cards were used for personal use, including one that attempted to use a Weather Bureau card for a transaction surpassing $1,000, an Able Seaman who repaid nearly $2,350 after misusing a card and one employee at the Foreign Affairs department who was fired after spending more than $7,000 on the department’s credit card, The Sydney Morning Herald reported.

The ABS had 156 cases of inappropriate spend on its cards, Fairfax found, valuing more than $43,000 in misspend.

India

P2P lenders seek clarity from RBI on appointment of trustee (Livemint), Rated: AAA

Peer-to-peer lending (P2P) platforms in India have requested the Reserve Bank of India (RBI) to allow non-bank trust companies to act as trustees for fund transfers between the participants—investors and borrowers—on their platforms.

“It took us six months to get a trustee. Most of the bank promoted trustees were unwilling to come on board as the industry is nascent,” said Mukesh Bubna, founder and chief executive at Monexo Innovations Ltd, a Mumbai-based P2P platform.

“This creates a monopoly. A limited number of trustees managing transactions for multiple P2P firms may lead to conflict of interest and also a higher fee being charged by the trustees for managing the escrow accounts,” said Raghavendra Pratap Singh, co-founder at i2iFunding.com, a Noida-based P2P platform.

So far, the firms have informally reached out to the regulator, said two people close to the development. They requested anonymity. They are expected to send formal feedback to the regulator soon.

Email sent to RBI did not elicit any response.

Why RBI should ease regulations for P2P lenders (VC Circle), Rated: A

For the sake of brevity, below are summarised certain key issues of the P2P directions after taking into consideration various arguments in the central bank’s consultation paper:

  1. P2P entities as NBFCs
  2. Ambiguous definition of P2P lending – The term “or otherwise” in the definition does not clarify whether P2P lending is restricted only to online platforms.
  3. Net-owned fund and leverage ratio – The RBI in its directions stated that any NBFC-P2P platform needs to have net-owned funds of more than Rs 2 crore or as is prescribed by the central bank.
  4. Limit on lending – However, the P2P directions state that loans are subject to a cap of Rs 10,00,000.
  5. Exempting non-institutional lenders from regulation
  6. Are NBFC-P2Ps intermediaries for banks?

How tech has relaxed Mumbai’s monopoly on finance (India Times), Rated: AAA

Six months after he founded payment gateway company Razorpay in 2013, Harshil Mathur was looking to shift his headquarters from Jaipur. Of his three options — Delhi, Mumbai or Bengaluru, Mathur chose the tech hub of Bengaluru over the financial capital, Mumbai.

Source: Times of India

With the rise of tech startups that focus on financial services, the traditional banking landscape is transforming — and Mumbai, Delhi-NCR and Bengaluru are competing to become the country’s fintech capital. Mumbai is still the financial capital as it is home to major banks and financial institutions, but it is technology that is becoming integral to finance.

Source: Times of India

Watch out for these 5 fintech platforms to revolutionise business in India (Business Standard), Rated: B

A marketplace lending platform in India, Rubique empowers individuals and SMBs with an easy and smoother access to across a wide range of loan, credit card, and products.

LoanTap is a fintech platform delivering flexible EMI free loan products to salaried professionals.

India’s largest peer to peer lending website, Faircent is a platform where people who have spare money, use the means of lending it directly as a form of loan, thereby eliminating intermediaries and their margins.

Having started as an online mobile recharge and bill payments app. Paytm in a short span of time has scaled to over 250 million registered users.

CreditMantri is a multi-services platform that helps borrowers secure loans from its partner financiers.

Asia

A new generation of HNWIs spur shift in investment (Asia Asset), Rated: AAA

HNWIs’ wealth growth remains led by Asia, with ongoing gains from an increasingly affluent middle class, enhanced productivity, and property price gains.

As the largest HNWI market, the US has been the beneficiary of a sustained rally in the equities market, driven by capital inflow and currency appreciation. The recent resurgence in mergers and acquisitions and initial public offerings is also driving wealth growth.

By comparison, Europe remains beset by low yields and flagging economic growth, characterised predominantly by inherited wealth and ‘old money’.

Research from around 940 Asian shows a clear shift towards engagement of financial investment professionals over self-management.

Also notable is the shift in allocation from domestic to international equities. In 2013, there was a 60:40 split favouring domestic equities, but this has reversed to favour international stocks through to 2017.

HSBC, with US$112 billion of private bank client assets under management (AUM) in its core Hong Kong and Singapore markets, is building upon its existing investment platform and network as a new entrant to the Australian market as of November 2016.

Fintech Start-Up fidentiaX Introduces World’s 1st Marketplace for Tradable Insurance Policies (PR Newswire), Rated: A

Fintech start-up fidentiaX is in the developmental phase of creating the world’s first marketplace for tradable insurance policies by disrupting the status quo by empowering policyholders to monetise policies on the blockchain. fidentiaX will also be setting up fidentiaX Open Source Foundation (fSOF) to proliferate the embracing of blockchain technology for the insurance industry.

In 2016 alone, the total market size for insurance premiums in the 40 OECD reporting countries was estimated to be in the north of $3.86 trillion dollars and Asia is projected to the be fastest-growing market for life insurance with an estimated real annual compounded growth rate of 10.2%.

fidentiaX’s marketplace will be a membership-based ecosystem focusing on the key stakeholders and providing the following services:

  • Policy ledger – Break traditional reliance on intermediaries by creating a digital ledger for policyholders.
  • Trustless Marketplace – Provides a platform for buyers and sellers to connect and trade policies via the blockchain.
Middle East

Kuwaiti Fintech Startup Ajar Online Closes Second Investment Round Led by BECO Capital (Albawaba), Rated: AAA

Ajar Online, a fintech startup based in Kuwait, closed a second investment in a round led by Dubai-based venture firm BECO Capital, followed by an investment from Sharq Ventures, since late 2016.

The service allows tenants to pay their rent online, at anytime and anywhere via SMS and email in less than 60 seconds. Simplifying the rent collection process for landlords and providing efficient property management tools to save time, reduce cost and take the right decisions.

Africa

Discovery Gets Go-ahead to Operate a Bank (Tech Financials), Rated: AAA

The South African Registrar of Banks has given the go-ahead for Discovery, South Africa’s medical scheme operator and financial services group, to operate a retail bank.

The firm announced on Monday that NewDisc Limited (to be renamed Discovery Bank Limited) has been granted a banking licence in South Africa by the Registrar in terms of Section 17(1) of the Banks Act.

The company plans to operate a retail bank to be known as Discovery Bank by 2018.

Authors:

George Popescu
Allen Taylor

Thursday May 18 2017, Daily News Digest

Thursday May 18 2017, Daily News Digest

News Comments Today’s main news: Lending Club increases minimum investment to open account. Consumers pay off unsecured personal loans first. American Households Return To Peak Debt, Thanks To Booming Student Loans. RateSetter sells off bad debts. Today’s main analysis: The fast lane to better small business funding. Today’s thought-provoking articles: Consumers pay off unsecured personal loans first. American Households […]

Thursday May 18 2017, Daily News Digest

News Comments

United States

United Kingdom

China

European Union

Australia

India

Middle East

News Summary

United States

Lending Club Increases Minimum Investment to Open an Account to ,000 (Lend Academy), Rated: AAA

Until today new investors at Lending Club could open an account with as little as $25. This has now changed. Going forward to open a new account at Lending Club you must deposit $1,000. The $25 minimum investment per loan still applies but you will no longer be able to start an account with less than $1,000.

The reason for this move can be explained in one word: diversification. We have written manytimes before about the importance of diversification and Lending Club has a page on their site dedicated to this topic. With $1,000 investors will be able to invest in 40 notes; while that is still not very diversified it is a lot better than investing in, say, four notes when someone starts with $100.

American Households Return To Peak Debt, Thanks To Booming Student Loans, (Buzz Feed), Rated: AAA

American households are back at peak debt, with new data showing the highest level of household debt since 2008.

Kind of.

Americans now sit on a $12.73 trillion pile of household debt, meaning mortgages, loans, credit cards, home equity lines of credit, car loans, and student debt. That figure previously peaked at $12.68 trillion in the early days of the Great Recession.

Those numbers aren’t adjusted for inflation, and $12.68 trillion 2008 dollars would be equal to more than $14.5 trillion today. And while debt number is at it’s highest ever, the economy has grown significantly in the last nine years, meaning that as a percentage of the total economy, it’s still well below its 2008 high.

“Almost nine years later, household debt has finally exceeded its 2008 peak but the debt and its borrowers look quite different today,” said Donghoon Lee, a Research Officer at the New York Fed. “This record debt level is neither a reason to celebrate nor a cause for alarm.”

The makeup of American household debt has changed in a big way. Back in 2008, people held $10 trillion in housing debt; that has fallen to $9.1 trillion today. In its place, student loan debt has boomed, and car loan and credit card debt also rose.

Home loans have become harder to come by for middle- and low-income buyers in the decade since the housing crisis began. And as the recession kicked into high gear and unemployment spiked, people poured into colleges in huge numbers, looking to weather the storm. That led to a boom in the for-profit college industry — and a soaring national student debt pile.

When household debt peaked in 2008, Americans had $610 billion in student loan debt, about 5% percent of all consumer debt and 23% percent of all non-housing debt. Today, student debt balances have more than doubled to $1.3 trillion, 11% of all consumer debt and 37% of all non-housing debt.

But people are now defaulting on those student loans at at a higher rate than any other form of debt. 11% of all student debt is now more than 90 days overdue, compared to 7.5% for credit cards and 3.8% for home loans.

“The standout, however, has been student loans—with new serious delinquency flows that deteriorated steadily between 2004 and 2014 and have remained stubbornly high since then,” the Fed researchers said.

The Fast Lane to Better Small Business Funding (Lendio Email), Rated: AAA

Consumers Place Personal Loans Atop the Credit Mountain (GlobeNewswire), Rated: AAA

When faced with the choice of which debts to pay and which to miss, consumers in financial distress tend to prioritize unsecured personal loans ahead of other credit products such as auto loans, mortgages and credit cards. These findings were released today during TransUnion’s annual Financial Services Summit, attended by more than 300 senior-level financial services executives from around the globe.

The most recent study incorporates unsecured personal loans for the first time since TransUnion began analyzing the payment hierarchy dynamic in 2010. Beyond personal loans, this most recent analysis is consistent with prior TransUnion studies in finding that consumers have historically prioritized auto loans over their mortgages and credit cards, and have done so consistently since at least the beginning of 2004.

Personal Loan Delinquencies* Consistently Remain Lower Than Other Loan Types
Delinquency* Rates for Consumers Possessing

Auto Loans, Credit Cards, Mortgage Loans and Unsecured Personal Loans

Year Personal Loan Auto Loan Mortgage Credit Card
Q4 2012 1.10% 1.86% 3.49% 3.11%
Q4 2013 1.17% 1.84% 3.13% 3.23%
Q4 2014 1.19% 1.76% 2.63% 3.05%
Q4 2015 1.26% 1.68% 2.32% 2.87%
Q4 2016 1.49% 1.75% 2.44% 3.65%

*Delinquency rates after 12 months for consumers who possess and are current on all four credit products at the beginning of the respective performance measurement period.    

Recent TransUnion data show that average term lengths are much shorter for unsecured personal loans. For loans originated in Q4 2016, unsecured personal loans had an average term of 28 months. In this same timeframe, the length of auto loans averaged 60 months and mortgages averaged 230 months.

Why Millennials Are Interested In Real Estate Investing (Forbes), Rated: AAA

RealtyShares recently teamed up with Harris Interactive to put out the Real Estate Investing Report, surveying Americans on their investment preferences. And according to the survey results, 55 percent of millennials are interested in investing in real estate, the highest percentage of all demographics questioned. Research from Fannie Mae supports these findings, reporting that 85 percent of millennials think real estate is a good investment.

According to a recent Pew report, there are 75.4 million millennials compared with 74.9 million baby boomers.

In the RealtyShares survey results, 20 percent of millennials indicated they believe real estate has performed the best since 2000. In fact, millennials were the age group with the largest percentage with that belief. The next highest group to believe real estate outperformed the stock market since 2000 is comprised primarily of Generation X (ages 35–44), 16 percent of whom chose real estate as the top performer.

Millennials, ever-vigilant on the internet, are paying heed to online financial experts. One of these experts especially popular among millennials is personal finance blogger Financial Samurai, who recently shared his preference for investing in real estate over the stock market.

While the large down payment needed to invest in real estate is the biggest reason millennials aren’t buying real estate, thanks to online real estate investing platforms, millennials can now invest in real estate without saving tens of thousands of dollars for a down payment.

Juvo Appoints Financial Services Expert Ron Suber As Strategic Advisor (Juvo Email), Rated: A

Juvo, a pioneer in mobile Identity Scoring, today announced the appointment of Ron Suber, president of Prosper Marketplace, as strategic advisor to the company. An investor in Juvo, Suber is a prolific presence in fintech and is well known as an industry influencer around the world. In his advisor role at Juvo, he will help direct the company through its global growth, ongoing product development and expansion into new markets.

Ron’s appointment helps round out the Juvo advisory team, which includes:

  • Nils Puhlmann, leads Juvo’s security and privacy efforts: former Chief Security Officer & co-founder of Cloud Security Alliance
  • Vicente Silveira, fraud and risk management advisor: head of fraud data science at Uber
  • Allison Duncan, social impact advisor: founder and CEO of Amplifier Strategies
  • Ken Laversin, enterprise software/SaaS advisor: senior vice president, worldwide sales at Jasper
  • Monica Rogati, data science advisor: equity partner at Data Collective, former VP of data at Jawbone and LinkedIn data scientist

LendingHome Hires New CFO. Receives Fannie Mae Approval to Expand Home Loans (Crowdfund Insider), Rated: A

LendingHome says it is ready to ratchet up platform growth. The marketplace lending platform that finances residential mortgages has made two announcements today.

First, the online lender has announced that former Nationstar Mortgage CFO, Robert Stiles, has been appointed to become LendingHome’s CFO.

Simultaneously, LendingHome has been approved by Fannie Mae as a seller and servicer provider which will enable  LendingHome to expand its consumer home financing business, a bit of a big deal.

By working directly with Fannie Mae, LendingHome may streamline operations and offer better loan pricing to its customers.

Is the CSBS Vision 2020 the Answer to the OCC Fintech Charter? (Crowdfund Insider), Rated: A

Earlier this week, the Conference on State Bank Supervisors (CSBS) announced their “Vision 2020” initiative.

The CSBS outlined their initial objectives:

  • Redesign the Nationwide Multistate Licensing System (NMLS). CSBS has launched a technology effort that redesigns and expands NMLS, the common platform for state non-bank regulation. The redesign will use data and analytics to provide a more automated licensing process for new applicants, streamline multi-state regulation, and shift state resources to higher-risk cases. State regulators also will ensure transparency through NMLS Consumer Access, which was viewed 3.7 million times last year.
  • Harmonize multi-state supervision. CSBS has created working groups to establish model approaches to key aspects of non-bank supervision. The groups will work to enhance uniformity in examinations, facilitate best practices, and capture and report non-bank violations at the national level. To further streamline the process, CSBS will create a common technology platform for state examinations.
  • Form an industry advisory panel. CSBS will establish a fintech industry advisory panel to identify points of friction in licensing and multi-state regulation, and provide feedback to state efforts to modernize regulatory regimes. The panel will focus on lending and money transmission, and discuss a wide range of solutions. Individual state regulators already have been engaging the fintech industry in formal dialogue.
  • Assist state banking departments. CSBS education programs will make state departments more effective in supervising banks and non-banks. Updated standards and analytics will help states determine where new expertise is most needed, identify and address weaknesses, update supervisory processes, and compare themselves to and learn from other state departments. These higher standards will be validated through an enhanced CSBS accreditation program.
  • Make it easier for banks to provide services to non-banks. CSBS is stepping up efforts to address de-risking – where banks are cautious about doing business with non-banks, due to regulatory uncertainty – by increasing industry awareness that strong regulatory regimes exist for compliance with laws for money laundering, the Bank Secrecy Act, and cybersecurity.
  • Make supervision more efficient for third parties. Banks of all sizes work with a variety of third-party service providers, including fintech companies. CSBS supports federal legislation that would allow state and federal regulators to better coordinate supervision of bank third-party service providers.

Fintech Lawyers on State Regulators’ Possible Alternative to OCC Charter Plan (Corporate Counsel), Rated: A

Lawyers who work for and with fintechs are encouraged that the state regulators at the CSBS are at least thinking about changes to the system that they believe would modernize state regulations of nonbanks or help centralize regulation among the states.

The state banking regulators’ plan for nonbanks such as fintechs outlines six ways in which it seeks to provide “a regulatory system that makes supervision more efficient and recognizes standards across state lines” by 2020, according to a press release.

Initial actions will include: redesigning the Nationwide Multistate Licensing System, harmonizing multistate supervision, forming an industry advisory panel, assisting state banking departments, making it easier for banks to provide services to nonbanks and making supervision more efficient for third parties, according to the association.

LendUp And Beneficial State Bank Announce Major Expansion Of Credit Card Partnership (PR Newswire), Rated: A

LendUp, a socially responsible lender for the emerging middle class, and Beneficial State Bank (Beneficial State), a social enterprise bank, today announced a significant expansion of the L Card, its credit card joint venture. The move is expected to quadruple the availability of L Cards, a Visa credit card product designed by LendUp and issued by Beneficial State for consumers traditionally shut out of mainstream banking due to poor credit scores or damaged credit files. The expansion builds on the firms’ partnership that extends back to the L Card pilot in April 2015.

According to the Credit Builders Alliance, a person with subprime credit pays on average $250,000 more in interest than borrowers with good credit over the course of their lifetime — and that doesn’t even include fees on financial products. In addition, according to LendUp research, many of its own customers are currently shut out of mainstream credit card products, such as rewards credit cards (98.5%) and retail rewards cards (66.5%).

In response, LendUp created a card for Beneficial State that meets borrowers’ immediate credit needs while helping to build their long term financial health. Features include:

  • Instant decisions
  • No over-the-limit fees or security deposits
  • Reporting to the three main credit bureaus
  • Affordable payments

The L Card carries an annual fee of $0$60 and APR ranging from 19.99% to 29.99%; it has a 4.8 average star review on CreditKarma.

Addepar To Buy Alternatives Data Provider AltX (Financial Advisor), Rated: A

Mountainview, Calif.-based Addepar announced on Thursday that it is purchasing AltX, an alternatives market intelligence platform.

Addepar hopes that the acquisition will boost it’s capabilities around alternative investing by enabling advisors to make better-informed decisions, said Eric Poirier, Addepar CEO, in a statement released on Thursday.

AltX’s platform uses machine learning to gather intelligence on alternative investments, incorporating reference data, public filings and news into a database of performance, holdings and key reference data for more than 17,000 funds.

Ascentium Capital Surpasses $ 3.0 Billion in Origination Volume (Ascentium), Rated: A

Ascentium Capital LLC, the top private independent finance company in the United States by new business volume, announced surpassing $3 billion in origination volume since the Company’s inception in August 2011.

Milwaukee FinTech firms aim to help consumers (Biz Times), Rated: A

The pace of FinTech disruption is increasing in the financial industry, with about $22 billion raised by FinTech startups over the past five years, Schedler said.

Northwestern Mutual has invested in two key early FinTech leaders, Betterment and Learnvest. And with its Future Ventures program, it plans to invest $50 million in series A and series B funding rounds over the next five to six years to bring in more partnership opportunities.

Bank My Biz has 13 bank partners in Wisconsin and many more across the country, he said. So if one of those banks isn’t able to extend an equipment or working capital loan of less than $100,000 to a small business, Bank My Biz may be able to do so with its financial partner, Brookfield-based national direct lender Advantage+.

Banks earn income off the term loan and Bank My Biz earns its revenue through the interest rate spread. It charges interest rates of between 9 and 13 percent.

Looking Glass buys marketplace loans on lending sites Funding Circle, LendingClub, Peerform and Prosper. Using its custom predictive analytics software, LGI evaluates and underwrites loans it has determined are unlikely to default. The alternative investment model promises investors a less volatile environment than the equity markets.

It also runs LoansOfTheDay.com, which uses big data, predictive analytics, artificial intelligence and machine learning to distribute risk and optimize returns on peer-to-peer lending sites. LGI contributes a minimum of $25 to each loan on the site.

And its newest product is LendSight, a SaaS underwriting tool banks can use to improve their profit margins by doing predictive underwriting, while allowing Looking Glass to capture more market share, Siefkes said.

Redpoint Capital Group Names Alex Dunev as Managing Partner (BusinessWire), Rated: B

Redpoint Capital Group, LLC (“Redpoint”), an alternative investment company focused on providing financing solutions to companies in the Specialty Finance and FinTech sectors, announced today that it has added Alex Dunev as a Managing Partner. Alex will be responsible for driving Redpoint’s strategic priorities, including sourcing new investment opportunities and raising capital to deploy into Redpoint’s investment strategies. Alex will also manage Redpoint’s office in Westport, Connecticut.

Alex was previously a Managing Director in the Investment Banking Division at UBS, leading the bank’s Specialty Finance efforts in the Americas. Prior to UBS Alex also covered Specialty Finance companies at Morgan Stanley and Credit Suisse.

DiversyFund, Inc. Brings New Innovations to Real Estate Crowdfunding (Digital Journal), Rated: B

Mr. Cecilio and Mr. Lewis formed DiversyFund, Inc. to create the industry’s first online crowdfunding real estate platform where the company acts as the real estate developer on all of its investment offerings in order to deliver to its investors better quality control and more detailed and robust investor reporting, including monthly construction updates on each real estate project with pictures of all work in progress.

Because DiversyFund, Inc. acts as the developer and receives a developer fee that is paid at the project level, DiversyFund does not charge any platform fees, servicing fees or other sales commissions to its investors, enabling investors to keep 100% of their investment returns.

Additionally, DiversyFund, Inc. is the only crowdfunding real estate site that focuses exclusively on strong-performing Southern California real estate markets.

United Kingdom

P2P Lender Sells Off Bad Debts Worth £2.1 Million (iExpats), Rated: AAA

A British peer-to-peer lender has become the first platform to sell non-performing debt.

RateSetter has completed a deal with undisclosed terms to 1st Credit, a debt purchasing company.

The lender says the loans were taken out between 2010 and 2015 and that the company felt borrowers were unlikely to settle the debt.

RateSetter has a £22.23 million provision fund to cover bad debts and expects to pay out £18.78 million compensation to investors.

Landbay introduces retention fee for intermediaries (P2P Finance News), Rated: AAA

LANDBAY has announced that its intermediaries will now receive a retention fee for all customer renewals.

The peer-to-peer lender, which specialises in buy-to-let mortgages, said that it introduced the 0.3 per cent fee because of its ongoing recognition of the role of intermediaries in offering advice in the retention process of customers.

Investing in the UK’s growth when it needs it most (FT Adviser), Rated: A

The notoriety and growth of crowd funding, and its variations, has gathered a great deal of attention. For good and bad. Only last year, Lord Turner warned: “The losses which will emerge from peer-to-peer lending over the next five to 10 years will make the bankers look like lending geniuses.”

While investing in VCTs has its risks, just as any investment has, these risks are for more measured and disciplined with quality offerings. Many quality VCT providers have more recently felt lumped in the same bucket as the under fire feel peer to peer (P2P) lenders and equity crowdfunders (ECFs) both of which now the subject of a clampdown by the FCA.

Despite some of the misconceptions, VCTs raised £458m in the 2015-16 tax year, making it the third highest year for VCT investment since records began in 1995. In the tax year that has just closed, most but not all were fully funded by the end of 2016-2017.

VCTs invest in small, largely unquoted, companies in the UK of up to £15m in size.

London-based VC Notion Capital has announced a new $ 80 million startup fund (Business Insider), Rated: A

Notion Capital, a London-based venture capital firm that backs startups across Europe, has announced a new $80 million (£60 million) startup fund that will be used to back later stage companies.

The VC, which focuses on backing enterprise software and cloud companies, also announced on Tuesday the final closing of a $140 million (£107 million) venture fund to back early stage startups.

Ford: Wine, watches and cars: the rise of alternative investing (Automotive World), Rated: B

As savvy investors champion alternative commodities such as wine and watches, classic Fords have proved themselves another sound investment.

For those who think there’s no money to be made from cars, think again – total growth over the past decade was 457 per cent***. This is a bigger increase than even property, which has increased in value on average 20 per cent in the last decade and 152 per cent since 2000 across Europe*****. And it’s not just new super cars such as the latest Ford GT newly on sale in excess of $450,000 that command a hefty price tag and appreciate rapidly. Among the list of top investor car makes, Ford offers among the lowest entry costs.

In March 2016, a Ford Escort Cosworth with less than 2,500 miles on the clock sold at auction for £67,580 after originally going on sale at £22,050 in 1992. The average price of a Cosworth is now more than double that original price and the Fiesta XR2 which went on sale in 1981 for £5,150, has trebled in value since 2014 to prices well in excess of £10,000, with the best advertised at close to £20,000.******

China

Alibaba Invests In Its First Fintech Company In Hong Kong (Crowdfund Insider), Rated: AAA

As reported by Forbes today, Alibaba has invested in online invoice exchange marketplace Qupital, marking the Chinese e-commerce giant’s first foray into fintech investment in Hong Kong. Qupital raised a total of $2 million in its seed round.

Qupital bills itself as Hong Kong’s first and largest online invoice discounting exchange. The company aims to solve the problem of companies not having quick access to cash by allowing them to raise funds on the site through the auctioning off of unpaid invoices, essentially securitizing their accounts receivable.

Dianrong Announces Next Technology Agreement Outside Mainland China (Military-Technologies), Rated: AAA

Dianrong today announced a new technology agreement with Maggie Ng, a leading consumer banking executive in Asia Pacific, to launch the first global fintech marketplace connecting Asian investors with high-quality, low-volatility and largely untapped asset classes, including U.S. consumer lending. The new strategic alliance combines Dianrong’s advanced technology with Ms. Ng’s extensive consumer-lending experience.

Ms. Ng and Dianrong engineers are currently completing beta testing for the new fintech platform that will provide Asian investors with an integrated solution to access U.S. marketplace lending assets. The platform will utilize multiple U.S. marketplace lenders and a single onboarding and know-your-customer process. It will also offer advanced risk modeling capabilities, added credit enhancement and structuring features, and blockchain solutions to safeguard data integrity. Investors will also have access to real-time performance monitoring, U.S. tax-exemption filing capabilities and a secondary market for liquidity.

Chinese Celebrity-Backed Fintech Firm QuantGroup Considering US IPO (Crowfund Insider), Rated: A

Fintech company QuantGroup, which was founded by several notable Chinese movie stars, is considering a US IPO, according to an article published in Bloomberg last week. The firm is looking to raise an estimated $200 million according to unnamed sources.

The Beijing-based QuantGroup is a financial services company that provides estimated credit ratings using big data.

QuantGroup joins a growing list of Chinese fintech firms in the process of launching US IPOs. Fenqile, a Chinese online shopping mall that lets customers pay in installments, is also looking to raise over $600 million through a US IPO.

LCQ5: Regulation of online crowdfunding and lending platforms (7th Space), Rated: B

Platforms for raising funds from and lending small loans to members of the public through the Internet (crowdfunding and lending platforms) have become popular in recent years. However, some financial advisers have pointed out that investors participating in crowdfunding activities are exposed to considerable risks. In this connection, will the Government inform this Council:

(1) whether it knows the number of companies currently operating local crowdfunding and lending platforms, and the number of complaints received by the authorities in the past three years concerning crowdfunding activities, with a breakdown by type of complaints;

(2) how the current legislation regulates the fundraising and lending activities conducted through crowdfunding and lending platforms;

(3) as some financial advisers have pointed out that investors provide funds through such platforms, which in turn lend the funds to borrowers, whether the authorities will, to avoid such investors breaching the law inadvertently, clarify if such investors are regarded as money lenders under the Money Lenders Ordinance (Cap. 163) and therefore are required to obtain money lender licences; and

(4) whether the authorities will conduct public education activities on the risks faced by investors participating in crowdfunding activities; if so, of the details?

Answers:

Year No. of complaints about crowdfunding No. of complaints about lending platforms
2015 0 6
2016 4 1
2017
(as at end March)
0 0

 

(2) and (3) Depending on the specific structure and features of the relevant arrangement, some types of crowdfunding activities, in particular equity crowdfunding and peer-to-peer lending, may be subject to the provisions of the Securities and Futures Ordinance (Cap.571), and/or the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32).

(4) We will ensure that investors and consumers of crowdfunding and lending platforms will receive proper protection under Hong Kong’s regulatory rules and standards. In view of the rapid development of financial technologies (Fintech), the Investor Education Centre (IEC) is working on a series of articles to introduce various Fintech services/products, associated risks and regulatory framework to the public.

European Union

Older Swiss fintech additiv gets $ 21.3 million in new capital (CNBC), Rated: AAA

A Zurich-based Swiss financial technology (fintech) firm, additiv, has today raised CHF21m Swiss Francs ($21.3m) in capital from core investors including BZ Bank, acting on behalf of its clients, and the investment vehicle Patinex.

Additiv provides systems to help with the digitalization of banks, asset managers and insurers.

Additiv’s key software product is the Digital Finance Suite (DFS). It has offices in Switzerland, Hong Kong and Singapore, as well as an international network of reselling partners and customers around the world.

Additiv’s key software product is the Digital Finance Suite (DFS). It has offices in Switzerland, Hong Kong and Singapore, as well as an international network of reselling partners and customers around the world.

Lendity: ideal marketplace lending exposure for pension funds, asset managers, family offices, private banks (Daily Fintech), Rated: A

A sea of 300 suits is what I faced last week at the first Swiss Alternative Lending conference hosted at SIX and in partnership SIX and Lendity.

Lendity is focused on developing structures that a family office, an asset manager, a pension fund, can book on their books or a private bank can list in their private debt product offering for qualified investors. And at the same time include:

o   Global exposure – US and Europe for now (USD, CHF)

o   Asset diversification – Consumer, SME, real estate etc

o   Platform diversification

o   Tax efficiency, despite the cross-border exposure

o   Regulatory compliance, despite the cross-border exposure

o   Private debt without additional counterparty risk from the issuer.

Lendity is really solving a pain point for both marketplace lending platforms and for institutional investors.

For marketplace lending platforms, Lendity acts as a marketplace that matches them with institutional capital from Financial advisors, Private Bankers, Pension funds, Family offices, and Asset managers (the 5 “investor” types).

FinTech: the influence of technology on the future of the financial sector (Lexology), Rated: A

The European Parliament’s Committee on Economic and Monetary Affairs (ECON) has published its final report on ‘ (2016/2243(INI))’.

On the other side of the coin, the report stresses the following:

  1. Financial services legislation at both the EU and national levels should be sufficiently innovation friendly.
  2. Fintech companies should continue to contribute positively to the development of financial intermediation.
  3. There is scope for improvement in the means that can be used for cross-border payments (while noting the regret of the European Parliament that there is no EU-wide European-owned credit or debit card scheme).
  4. There are no clear European rules or guidelines for outsourcing data to the could with regard to the financial sector.
  5. It is concerned about the increased use of permissionless blockchain applications for criminal activities.

See the full report here.

Australia

Retirees are riskier investors than millennials, says ASX report (Financial Review), Rated: AAA

The latest ASX Australian Investor Study found the proportion of 18 to 24-year-olds who invested in the ASX over the past five years had increased from 10 to 20 per cent. The proportion of 25 to 34-year-olds had also increased, from 24  to 39 per cent.

The survey shows that 81 per cent of 18 to 24-year-olds are seeking guaranteed or stable returns, compared to 67 per cent of 25 to 59-year-old investors and 60 per cent of retirees.

Millennials have grown to recently become the largest generational cohort in Australia, with 4.9 million people, eclipsing Gen X (4.8 million) and baby boomers (4.1 million), Roy Morgan Australia says.

According to the ASX research, 44 per cent of 18 to 24-year-old investors hold cash, 31 per cent hold shares and 25 per cent have investment properties.

The ASX survey also revealed that the proportion of 18 to 24-year-old investors using professional financial advisers was 37 per cent, but Mr Mahony said the number of people who used Google to see where they should be investing was 48 per cent.

NAB’s fintech arm brings robo-advice to home loans (AltFi), Rated: A

The fintech arm of Australian banking giant NAB, UBank, has unveiled a robo-advisor aimed at helping customers complete their home loan applications.

In a national first, “RoboChat” will offer real time help for online home loan applications available 24/7. The robot will answer FAQs, such as “what term do you offer on home loans?” and “do you offer redraws and how do they work?”, as well as stupid and unrelated questions with a sense of humour.

India

Robo advisors: Stay relaxed while getting accurate financial advice (DNA), Rated: A

Robo advisors give users access to advice by highly qualified experts who have multiple decades of financial experience with them as against serviced by a 22-25 year sales executive, or a family member. Also, since this is available online and requires minimal human intervention, it is the best and most economical way to make customised expert financial advice available to the masses.

Capacity (Who will cater to masses?): Bank relationship managers and advisors are a privilege of the rich as reduction in distributor commissions have made intermediaries vacate the low/ medium end of the market.

Robo-advisors reduce a lot of unpleasant experience of interaction. There is no pressure for you to buy right now, in addition to having the option of doing it at your own convenience. The design and UX at certain platforms are created to engage users without being too intrusive.

The unbundling of banking (CB Insights), Rated: A

Paytm, the private Indian mobile payment unicorn, is now coming for the banks.

Middle East

Abu Dhabi Global Market admits first five fintech start-ups into its Reglab sandbox (CNBC), Rated: B

Abu Dhabi Global Market (ADGM) has announced its first batch of financial technology (fintech) regulatory laboratory (Reglab) companies that will go through its new innovation center.

They are:

  • Now Money – UAE: provides mobile technology to allow low income migrant workers in the UAE to access banking and remittance services, which would otherwise be out of reach.
  • Titanium Escrow – UAE: This is an automated escrow service that aims to increase trust in counterparties and stabilize the cash cycle for small businesses.
  • CapitaWorld – India: A one-stop digital platform that automates the entire loan value chain from loan application to credit appraisal and post-disbursement credit monitoring. Rather than needing to physically visit multiple banks to apply for a loan, the CapitaWorld platform allows a borrower to submit a loan application just once online, and its platform will use analytics to carry out verification and credit risk scoring. It will then match the borrower with multiple banks that have signed onto the platform and ensure that the credit risk appetite matches the borrower’s profile.
  • Rubique – India: Rubique is an online platform that connects banks and fund seekers/borrowers via a smart financing process that links to a range of loan, credit card and financing options that attempt to bridge the gap between lenders and borrowers.
  • Finalytix -US: This is a robo-advisory platform for wealth management applications that seeks to help clients optimize their holdings, mitigate risks and costs, and identify new investment opportunities.

Authors:

George Popescu
Allen Taylor