Friday April 13 2018, Daily News Digest

Friday April 13 2018, Daily News Digest

News Comments Today’s main news: Kabbage to acquire Orchard Platform. Zopa to raise 50M GBP. RateSetter investors wait to file taxes. Shanlin Finance being investigated. Kaleidofin raises $2.8M. Today’s main analysis: Hedge funds depend on public information. Today’s thought-provoking articles: Online lenders adopt the model they disrupted. How Plaid became the happy plumbers. How hedge funds depend on public information. United […]

Friday April 13 2018, Daily News Digest

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United States

Kabbage to Acquire Startup Backed by Wall Street Titans (Bloomberg) Rated: AAA

Orchard Platform Markets LLC, a provider of lending data and services backed by the former heads of Citigroup Inc. and Morgan Stanley, is set to be acquired by small-business lending platform Kabbage Inc., said people familiar with the deal.

Kabbage plans to use Orchard’s technology, and some of the employees are also expected to move to Kabbage’s New York office, said the people, who asked not to be identified because the plans are private. It’s unclear how much Kabbage will pay, and the transaction could still fall through. Kabbage and Orchard declined to comment.

FUNDS USE PUBLIC INFO TO COMPLEMENT PRIVATE SIGNALS (All About Alpha) Rated: AAA

Alan D. Crane and two colleagues have written a paper on whether and how hedge funds profit from publicly available information, in particular from SEC filings.

To choose the most likely among the other three, the Rice authors looked at so-called “scrapers,” that is, funds whose essentially strategy is the systematic scraping of the SEC website. Scrapers perform best when filings are long and complex. A long and complicated filing will likely contain important information in the details – information that only a scraper is likely to find.

Source: Do Hedge Funds Profit from Public Information?

Read the full report here.

See where Cincinnati ranks for fraud alerts (Cincinnati Business Courier) Rated: A

The bad news is Cincinnati made the list of 50 U.S. cities, according to Charlotte, N.C.-based LendingTree. The good news is the Queen City finished near the bottom of the list, tied for 45th place with Kansas City, Mo.

See where Denver ranks for fraud alerts (Denver Business Journal) Rated: A

The bad news is that Denver made the list of 50 U.S. cities, according to Charlotte, N.C.-based LendingTree. Among LendingTree users in Denver, 6.2 percent have fraud alerts on their credit reports.

Online lenders adopt the model they sought to disrupt (American Banker) Rated: AAA

This week, at the online lenders’ largest annual conference, much of the talk was about building something closer to a full-service bank, albeit one designed for the digital age.

“If the only thing you’re doing is lending money online, it’s going to go the way of the dinosaur,” said Rob Frohwein, the CEO of Kabbage, which started in loans but has added more products for its small-business customers. “Our objective is to sit at the financial nerve center of small businesses.”

Source: American Banker

MoneyLion, a New York-based online lender that focuses on consumers who lack a financial safety net, announced plans to start offering deposit accounts.

Payday Lenders Sue the CFPB Over Consumer Protection Rule (LendEDU) Rated: A

Community Financial Services Association of America (CFSA), the main trade association for payday lenders, filed the lawsuit on April 9 in the U.S. District Court for the Western District of Texas, according to The Washington Post.

At issue is a CFPB rule, effective in August 2019, that could alter the way payday lenders do business. Lenders will be required to verify if borrowers can afford their requested debt prior to receiving money, and the number of times borrowers can take out consecutive loans will be capped.

How Plaid Became Fintech’s Happy Plumbers — And Built A Business Approaching $ 1 Billion (Forbes) Rated: AAA

Plaid software acts as a kind of plumbing, connecting apps to each new user’s bank to quickly confirm an account holder, without any penny deposits or paperwork.

PLAID HOOKS INTO around 10,000 banks. Its internal fortunes have improved, with $59 million in funding from investors such as Spark Capital, NEA and the venture arms of Citi and American Express. In 2016, its $44 million Goldman-led Series B valued the company at $250 million. Today, with sales quadrupled, the company has recently received funding interest valuing the company at $1 billion, according to a source with knowledge of its finances.

Look under the hood at startups like Acorns, Betterment, Coinbase and Clarity Money, and you’ll find Plaid humming away. Developers love Plaid’s fast tech; founders and their investors like saving money by not having to build their own connections. “We built this for ourselves,” Hockey says, “solving problems that were incredibly hard to do.”

Plaid’s own public status page reveals connections to banks with uptime of 98% or even 95%—meaning that 5 out of every 100 authentications with that bank will fail in that moment, a rate that would be unacceptable were it not for the difficulties imposed by the banks.

Fly now, pay later: Are travel loans a good deal? (WTOP) Rated: A

Travel lenders say they appeal to people with average credit scores who may not qualify for travel reward cards that require excellent credit. The loans also can make sense for people who are building credit and prefer the discipline of fixed payments over credit cards’ revolving payments.

White Oak Partners with C2FO on New Venture (Nasdaq GlobeNewswire) Rated: B

White Oak Global Advisors, LLC on behalf of its institutional clients (collectively “White Oak” or the “Company”), announced today that it has partnered with C2FO, the world’s largest market for working capital, to offer new and innovative receivable financing options to C2FO’s extensive network of businesses throughout the U.S.

With the White Oak partnership, C2FO can provide businesses access to additional funding options when early payment is not available from out-of-network customers.

Premium Title Expands National Footprint by Securing Escrow Licensing in Four New States (Altisource) Rated: B

Premium Title, a national provider of title and escrow services, today announced it has secured escrow licensing in Idaho, New Mexico, Oregon and Washington. This additional licensing expands the business’ footprint and allows Premium Title to now provide clients with direct title/settlement services in 45 states plus Washington, D.C.

 

United Kingdom

Zopa is Raising £50 Million, Shuffles Board as it Preps for Bank Launch (Crowdfund Insider) Rated: AAA

The grande dame of peer to peer lending in the UK, Zopa, is raising £50 million at a valuation of £400 million, according to several reports.  SkyNews states this most recent funding round will be led by current investors including Wadhawan Global Capital out of India. The report does not preclude new money joining the round.  Zopa raised £32 million last summer to help fuel its transition into the next generation digital bank. A forthcoming initial public offering is said to be in the queue as well.

The company also revealed a restructuring of boards. The bank and the online lending vertical will now have separate boards to help guide strategy.

Christine Farnish, the founding Chairperson of the UK P2PFA, will become the Chair of Zopa’s peer to peer lending board. Farnish is widely respected within the global P2P industry as well as with public officials and thus represents a significant addition to Zopa’s leadership.

On the banking side, former Standard Chartered executive Richard Goulding, Paul Cutter of  Paddy Power Betfair and former Tandem CEO Peter Herbert will be joining the board. Herbert will reportedly become Zopa Bank board chair.

RateSetter investors facing wait to file tax returns early (Peer2Peer Finance News) Rated: AAA

RATESETTER investors looking to file their tax return early have been stifled by the platform removing its tax statement functionality for enhancements.

The deadline for paper tax returns is at the end of October this year or it can be done online by 31 January 2019, but some may want to file at the start of the tax year in April if they are owed a tax refund.

 

LendInvest Syncs with IRESS & Twenty7Tec: Bringing BTL Loans to Wider Market (Crowdfund Insider) Rated: A

LendInvest, the specialist property finance lender, has partnered with mortgage sourcing partners Twenty7Tec and IRESS’s TriGold system to bring its Buy-to-Let product to more intermediaries. These sourcing systems now bring LendInvest BTL loans to the market in a faster, more efficient way to reach a wider range of customers.

Landbay Surpasses £1.4 Million Through Latest Seedrs Campaign & Announces Funding Round Closing Date (Crowdfund Insider) Rated: A

UK-based peer-to-peer lender Landbay announced on Thursday it is set to close its latest equity crowdfunding round on Seedrs next Tuesday (April 17th). The campaign quickly secured its initial £1.25 million and has successfully raised more than £1.4 million thanks to over 250 investors.

Landbay reported that more than 25% of mortgages on its platform have been originated in the last three months. The lender has had no defaults and no losses to date.

JustUs launches investment opportunity with Mersten (Manchester Business News) Rated: B

JustUs has partnered with property developer, Mersten, to launch the Innovative Finance ISA (IFISA) investment.

Initial funds will be used to renovate and develop a property in south-west London, which will help house residents with learning disabilities and those that require 24/7 care.

Founder Gandesha steps down as chief executive at Property Partner (Property Week) Rated: B

Real estate crowdfunding platform Property Partner has announced RFIB Group chief executive Marshall King as its new top man replacing outgoing chief executive and founder Dan Gandesha.

Gandesha founded the crowdfunding platform in 2015 and overseen year-on-year revenue growth of more than 100% since then as chief executive. He will remain in the company as a member of the board but has stepped down from the top position ahead of plans to relocate to Ireland with his family at the end of the month.

REITs still offer a huge opportunity for the sector (Inside Housing) Rated: A

Combined with the greater flexibility enjoyed by private investors since the pensions freedom reforms of 2015, this has spawned the rapid growth of a new investment class known as “alternative income”.

Although these funds are structured as equity, investors are looking for something which is more akin to a fixed income product, ie stable sources of income (dividend yields are usually 5% or more and sometimes index linked) backed by secure revenues from real assets or other receivables.

More recently another REIT called Fundamentum launched a £150m fundraising in spite of recent sharp falls in the share prices of two social housing REITs.

How to master investment portfolio diversification in 2018 (IG) Rated: B

1. Invest via funds

Funds offer instant diversification, by spreading your investment across a range of stocks and shares which are all linked by a common theme. If you have an interest in one particular sector or geography, a dedicated investment fund is a great way to introduce your money to new areas without taking on too much risk.

2. Create a balanced portfolio

Traditionally, a ‘balanced’ portfolio refers to a portfolio which is largely split between equitiesand bonds, with a small amount of money held in cash.

3. Review your portfolio regularly

As your portfolio matures, you will find that your risk appetite or investment goals change significantly.

China

Private P2P Lender Shanlin Finance Under Investigation (Capital Watch) Rated: AAA

On April 10, Shanghai-based peer-to-peer lending company Shanlin Finance, which reportedly has over $2 billion in assets under management, was shut down by Shanghai authorites. On the same day, investors reported difficulities withdrawing money from Shanlin’s homepage, and the Shanlin Fortune App, which officially launched on May 10, 2016, could no longer be opened.

On that evening, reporters from a website, ndb.com, went to Shanlin’s headquarter in Shanghai and found the office area was still brightly lit, and a display screen in its lobby was still playing Shanlin Finance’s promotional videos. However, there were no employees working in the office, except several security personnel, and at least five workers were using carts to carry a number of packed carton boxes to a truck parked outside the building.

India

Indian fintech Kaleidofin raises $ 2.8 million for services to unbanked (Impact Alpha) Rated: AAA

About 200 million households in India have no access to formal banking, insurance and investment services. Chennai-based Kaleidofin uses algorithms to tailor financial services to the needs of the unbanked. Investors includes Omidyar Network, Blume Ventures and individual investors.

Asia

PublicInvest maintains outperform on N2N Connect (The Star) Rated: A

PublicInvest Research said it is favourable on N2N Connect Bhd‘s prospects and maintained its outperform call on the stock while awaiting more details on its latest stake acquisition plan.

N2N had announced that it plans to acquire 28% interest in Australian-based OurMoneyMarket Holdings Pty Ltd for A$2.8mil cash.

Authors:

George Popescu
Allen Taylor

Tuesday September 26 2017, Daily News Digest

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News Comments Today’s main news: SoFi’s CTO leaving the company. World Business Lenders buys BizFi assets. Zopa improves loan sale processing times. Fintech startups, banks face off on new European payments rules, data access. Klarna wins international ANDY award. Today’s main analysis: How MoneyTap is tackling the unbanked problem in India. Today’s thought-provoking articles: Fundrise, Wealthfront spar over real […]

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United Kingdom

China

European Union

India

APAC

Africa

News Summary

United States

SoFi’s chief technology officer to step down (Daily Mail), Rated: AAA

June Ou, chief technology officer of online lender Social Finance Inc and wife of its former CEO Mike Cagney, plans to leave the company, according to a source familiar with the situation.

The exact date of her departure from SoFi, has yet to be decided, according to the source. Ou did not immediately respond to requests for comment.

Ou, who joined SoFi in 2012 and is also the company’s vice president of engineering, is the latest senior executive to depart the embattled financial technology firm.

A pair of investing startups are in a public spat about the future of real-estate investing (Business Insider), Rated: AAA

It all started when Andy Rachleff, the CEO of Wealthfront, a California-based roboadviser with nearly $8 billion under management, went after the business model of Fundrise, a Washington DC-based real-estate crowdfunding company. , Rachleff said professionals who run managed real-estate funds fare poorly compared with low-cost index-tracking ETFs, such as Vanguard REIT Index Fund.

Fundrise’s CEO Benjamin Miller says this is a misrepresentation of how Fundrise works. “Amateur investors” on the platform aren’t picking individual projects, but rather strategies managed by the company.

“We operate like a Blackstone, but we democratize it and lower costs,” Miller told Business Insider.

Miller points to the recent initial public offering of Invitation Homes (INVH) to illustrate how expensive the public markets can be. INVH priced 215% higher in the public markets than in the private markets, according to data from Google Finance.

Source: Business Insider

Bizfi Survives, Thanks to World Business Lenders Asset Purchase Deal (deBanked), Rated: AAA

The Bizfi marketplace is slated to live on, according to Stephen Sheinbaum who joined World Business Lenders (WBL) as a managing director in July. On Wednesday, WBL purchased several assets from Bizfi including the brand, the marketplace, the Next Level Funding renewal book, and other related pieces of the company, he says. Sheinbaum founded Bizfi (then Merchant Cash and Capital) in 2005.

WBL, a Jersey City-headquartered small business lender will also be a lender on the platform.

The Tech Revolution Has Arrived For Alternative Lending (Bisnow), Rated: A

The growth of alternative sources of capital has opened a door for online and marketplace lenders, combining the availability and flexibility of capital with speed and transparency.

“Upward of $100B in loans are coming due and there is a gap,” Money360 President Gary Bechtel said. “The banks, life insurance companies, agency lenders, can only provide so much capital, and this is the void that nonbank lenders like Money360 are filling. And many of these firms have a technology component to them.”

Marketplace lending has become a popular alternative for student loans, credit card and small-business debt, but the commercial real estate industry has yet to fully participate. For Bechtel, it is a missed opportunity.

Money360 lifts those constraints. Because it does not have the same balance sheet requirements and regulations as traditional lenders, borrowers seeking financing for any asset class can apply for a loan on the platform. The platform offers loans between $1M and $20M on both bridge and permanent loans, with competitive terms and features similar to traditional lenders. Bridge loans are interest-only, and like banks, permanent loans utilize 25- to 30-year amortization schedules.

Worthy Financial Announces the Closing of Its Seed Financing Round (BusinessWire), Rated: A

Worthy, a digital investment app that redefines how Americans access investment products, diversify their portfolios and save for retirement, announced the successful closing of its seed financing round. The funds will be used for the full-scale roll-out of the Worthy mobile app, and will enable Worthy to expand its growing user base as well as to broaden the array of investment product options it offers retail investors.

Although yield-starved sophisticated investors have been increasingly allocating more and more of their capital to alternative asset classes such as real estate and private company debt, most retail investors are still unaware that modern technology and a new regulatory regime allows them to access these products online in very small aggregates.

Acting Comptroller of the Currency Keith Noreika Addresses Online Lending & Fintech Innovation (Crowdfund Insider), Rated: A

Speaking at the Online Lending Policy Summit in Washington, DC, Acting Comptroller of the Currency Keith Noreika discussed the online lending industry and his perspective on responsible innovation. Noreika told the conference participants;

“I see the growth of online lending and marketplace lenders as the natural evolution of banking itself. Your industry demonstrates a certain entrepreneurial spirit to seize economic opportunity that begins with your new idea. The idea may be leveraging the lending power of groups or using new data to assess creditworthiness. Or, the idea may be a way to make decisions faster or to give consumers more control of their financial lives.”

Noting that US marketplace lenders have originated about $40 billion in consumer and small business loans in the past ten years, Noreika said that online lending represents a substantial portion of all consumer unsecured credit in the US.  Some prognosticators expect that online lending will top $1 trillion by 2020.

What’s Hot and What’s Not in U.S. Fintech (Finovate), Rated: A

Here are the rules– we shouted out a list of 20 fintech trends and our cocktail-fueled audience shouted their opinion on whether the trend is hot or not*.

The hottest

  • Regtech
    I was fairly surprised to hear the audience react so strongly to this trend, since the U.S. is lagging in regtech startups and adoption.

What’s hot

  • AI  As we close out 2017, players in the fintech sector seem to be in all out hype mode on the subject.
  • Open Banking  Though the U.S. doesn’t have any pending open banking regulation, folks still seemed quite optimistic about this trend.
  • Mobile account opening  Certainly a necessity for mobile-centric onboarding, mobile account opening has been around for awhile. It seems to have received new life with many enabling technology developments and IoT device launches throughout the years.
  • Challenger banks  With the lack of challenger bank launches in the U.S. (that is, compared to the U.K.), it was surprising to see the group cheer on challenger banks so vociferously. Perhaps a sign that more challenger banks are coming to the U.S.?
  • Insurtech – The audience seemed to heavily favor this trend over others, despite the relative lack of insurtechs in the U.S.

Not hot

  • Chatbots
  • Roboadvisory
  • ICO’s
  • Alternative credit scoring
  • Voice banking
  • Mobile wallets
  • Biometric authentication
  • Alternative lending

Payday lender operators forced to forgive $ 12M in loans (New York Post), Rated: A

New York on Monday announced a settlement with two payday lender operators — barring them from working in the state and forcing them to forgive roughly 20,000 loans worth roughly $12 million.

While payday lending is illegal in New York, state residents can fall prey to the predatory loans through out-of-state lenders trolling online.

Vullo called out E-Finance for making “unlawful misrepresentations” to New Yorkers when requesting payments and negotiating payment agreements.

TAR, headed by Jeremy Schaffer, and E-Finance, headed by Joshua Mitchem, according to court papers, will pay a $45,000 penalty plus as much as $15,000 to cover the cost of sending notices to consumers whose loans were forgiven.

After ending payday lending, group looks for alternatives (Argus Leader), Rated: A

South Dakotans for Responsible Lending will hold a meeting Thursday aimed at creating a nonprofit to help South Dakotans get small-dollar loans without taking on debt.

The effort comes months after South Dakota voters opted to cap interest rates on payday lenders, crippling the industry in the state.

The grant and donation-funded Minneapolis group helps participants pay back loans over a 12-month period with no fees or interest. Since 2015, the group has helped 131 loan participants refinance $90,072 and save $355,042 in interest.

Sara Nelson-Pallmeyer, the group’s executive director, said South Dakota voters have already taken a significant step in reducing payday loan debt by eliminating the industry. In its place, banks and credit unions should look to offer additional loans, she said.

The Great “Sexism in FinTech” Debate (FintekNews), Rated: A

Although I would never diminish it or deny its existence, I just don’t see sexism as an escalating problem in FinTech – or anywhere in the developed world for that matter. In fact, what I see trending is the exact opposite.

Extraordinary women in FinTech are all around us. I read about them every single day – not only in leading industry rags like FintekNews, Bankless Times and Crowdfund Insider, but also in long-established financial periodicals. In fact, FintekNews, which is published by Cindy Taylor, an accomplished FinTech visionary in her own right, devotes an entire section just to 

Breaking Banks: How men can support women in fintech (American Banker), Rated: A

Brett King is back on the show, talking about diversity in fintech with Anouska Streets, head of engineering at Finkit, a unit of digital banking software company Monitise, which was recently bought by Fiserv; and Colleen Wilson, founder and CEO of consulting firm Collaborate Chicago.


Women in Banking: The Most Powerful in 2017 (American Banker), Rated: B

The Most Powerful Women in Banking

1. Cathy Bessant, Bank of America
2. Marianne Lake, JPMorgan Chase
3. Ellen Alemany, CIT Group
4. Nandita Bakhshi, Bank of the West
5. Diane Reyes, HSBC

16. Hannah Grove, State Street

23. Teresa Tanner, Fifth Third Bancorp

The Women to Watch

1. Mary Mack, Wells Fargo
2. Thasunda Duckett, JPMorgan Chase
3. Heather Cox, USAA
4. Yolande Piazza, Citigroup
5. Ellen Patterson, TD Bank

19. Jane Russell, TD Bank

Andy Hinrichs of AutoGravity (Lend Academy), Rated: A

Our next guest on the Lend Academy Podcast is the CEO and co-founder of AutoGravity, Andy Hinrichs. After spending two decades in auto finance Andy decided he wanted to do something to finally bring the car buying experience into the 21st century. He started AutoGravity less than two years ago but they are already seeing great traction.

First Associates Broadens Service Offerings to Offer Additional Client Support (Benzinga), Rated: B

First Associates Loan Servicing announced a new lineup of loan support and lending solutions today to better serve the expanding needs of their industry–leading clients.

New solutions include:

Primary Loan Servicing

  • Reduced delinquencies & defaults
  • Low-risk, cost-effective
  • Omnichannel communication to maximize reach
  • Top-notch investor, credit bureau & regulatory reporting
  • Secure fund flow & control

Capital Markets Support
Backup servicing, Contract Verification, Borrowing Base Calculation or Validation, Custodial Services & Treasury Services (Collateral & Payment Agent)

Pre-Funding Support
To help ensure loans are properly originated and funded: Applications by Phone, Customer Service Call Support, Borrower Verification Calls & Document Verification

Post-Funding Support
Customer Service Call Support, Multi-channel Collections Support & Borrower Verification Calls

Futurist Jack Uldrich to Speak on the Future of Wealth Management and Banking in Four Cities in Four Days (Life Pulse Health), Rated: B

Starting tomorrow, acclaimed financial futurist and best-selling author Jack Uldrich will begin a series of four separate presentations on the future of finance in four consecutive days. His first presentation will be for leaders with Atlantic Trust in Denver, Colorado, followed by presentations in Chicago, Washington D.C., and ending in Toronto on Sept. 29th.

Uldrich is a prolific speaker on future trends in wealth management, finance, and banking, speaking to dozens of finance groups globally each year, including some of the biggest names in these industries.

United Kingdom

Zopa improves loan sale processing times (P2P Finance News), Rated: AAA

ZOPA investors are now able to sell their loans within a few days on the secondary market, after the peer-to-peer lender made improvements to speed up processing times.

Earlier this month, Zopa promised a “large change” to address investor concerns about the time it is taking to sell loans.

UK peer-to-peer lending is about to face its toughest test since the sector was born (Business Insider), Rated: AAA

GLI Finance, a listed investment company that backs fintech businesses, on Monday wrote down the value of its investments in eight peer-to-peer lending platforms by £12.6 million to £28.9 million, citing “concerns over the collectability of some platform loans.”

The disclosure came after concerns were raised above fast-growing peer-to-peer lender Lendy Finance over the weekend.

Meanwhile, Zopa, the UK’s oldest peer-to-peer lender, last month wrote to investors telling them to expect higher-than-forecast losses as a result of deteriorating credit conditions. And peer-to-peer platform Wellesley & Co. last year raised £2.5 million to “absorb impairment losses that would otherwise have been passed on to peer-to-peer investors.”

The backdrop to all these disclosures is a surge in unsecured consumer borrowing and rising inflation in 2017, factors which are combining to fuel fears people may be unable to pay back all they have borrowed. Unsecured consumer borrowing hit £202 billion in July, the highest level since 2008. Meanwhile, inflation is running at 2.9%, well above wage growth.

Can’t afford to buy a property? You can now borrow your deposit (The Sun), Rated: A

Property Pact aims to help those who are struggling to get together a deposit for their first home.

To apply for a loan with Property Pact, you must meet the following:

  • Have a good or excellent credit rating
  • An annual salary of £30,000 or more
  • No County Court Judgements (CCJs) against you
  • Have at at least one year of continuous employment with the same employer
  • Must be employed in a profession or managerial role or a key job leading to a professional qualification or managerial role.

To register your profile on the site, you’ll need to pay £150.

Investors can then browse your profile and decide if they want to lend the money to you.

If an investor then agrees to lend, you’ll pay a 5 per cent arrangement fee – on a loan of £30,000 that would be £1,500.

The loan will be repaid at a rate of 5.5 per cent above base rate – so currently 5.75 per cent.

Britain’s first Small Business Commissioner is needed now more than ever (SME Web), Rated: A

With this in mind, let’s look at the three main challenges that the Small Business Commissioner will need to address in the coming year:

  1. Late payments: Time and time again we are reminded of the late payments crisis damaging small businesses, who are owed a collective £26.3 billion. Research from the FSB shows that poor payment practices are on the rise, causing 50,000 business deaths each year.
  2. Funding: SMEs bring a combined turnover of £1.8 trillion to the UK economy and we must encourage people to follow their dream of running their own business. In addition, some will need educating about using alternative finance methods, such as P2P lending, invoice financing and crowd funding.
  3. Rising costs
China

A Missing Piece in China’s Economy: Consumer Credit Ratings (WSJ), Rated: AAA

The world’s second-largest economy doesn’t have a widely accepted system to gauge creditworthiness among a fast-expanding middle class with growing paychecks, a hunger for consumer products and little or no credit history.

Chinese household debt is growing rapidly, outpacing broad credit growth every year since 2013 and reaching 38 trillion yuan ($5.7 trillion) by the end of the second quarter of this year. But household debt remains relatively low by global standards, at about 44% of gross domestic product, and the absence of a widely used standard of creditworthiness is keeping consumer borrowing from growing even faster, hampering access to credit for some 500 million potential borrowers.

China’s central bank has sought for nearly three years to put in place an answer to the FICO credit-scoring system predominant in the U.S., created in 1989 by data firm Fair Isaac Corp.

Technology giants Ant Financial Services Group and Tencent Holdings Ltd., along with several smaller companies, are developing competing credit-rating systems. Tencent began testing its system in August, two years after Ant, an affiliate of e-commerce giant Alibaba Group Holding Ltd. , launched its Sesame Credit personal scores.

But none of these projects has emerged as a single standard that’s widely used and trusted by lenders nationwide.

Paving the way?

Regulators in March set up a new clearinghouse, Wanglian, to centralize the processing of online payments.

Meanwhile, Ant’s Sesame Credit has a head start on its competition. Launched in 2015, Sesame derives a person’s credit score—which the individual can view on Ant’s popular Alipay payment platform—by mining data on the consumer’s e-commerce activity and other online behavior. Higher ratings confer perks such as waived deposits at some hotels and faster security screening at Beijing’s airport.

There are small credit bureaus in major cities including Beijing and Shanghai, but they have never gained traction and often lack access to borrowers’ financial data. Such bureaus reach only a third of Chinese borrowers, compared with 90% of borrowers in the U.S. reached by credit bureaus there, according to consulting firm Oliver Wyman.

Source: The Wall Street Journal

Hong Kong ‘falling behind’ in race to build up automated financial adviser platforms (South China Morning Post), Rated: A

Operators of automated, algorithm-driven financial planning services, or so-called robo-advisers, in Hong Kong need to significantly step up their game if they are to compete with Chinese and US institutions, according to Freeman Tsang, head of China and Hong Kong for asset management firm Legg Mason.

Only a few securities brokerages have entered Hong Kong’s robo-advisory market, which unlike the one in the US, lacks an open, computer interface that allows access to investors’ portfolios across different companies to develop an overall view of their financial status.

Such a foundation is vital for robo-advisers to be able to offer more customisable financial advice and support transactions across different investment tools and firms.

European Union

Fintech startups and banks face off on new rules over European payments and data access (Tech.eu), Rated: AAA

A large group of over 70 European fintech companies are warning that new EU rules on payments processing could unfairly pit them against large banks and decimate the industry if they are passed into law.

The rules are part of the European Union’s Payment Services Directive (PSD) and would ban the practice of “screen scraping,” a common practice used by fintech companies to “scrape” display data from one application (like an online banking service) and display it on their own.

In their manifesto, the 71 fintech firms argue that the ban on scraping is unreasonable and a backdoor method for traditional banks to claw back control as the Fintech revolution threatens to upend their business models.

Revised payment services directive

The European Union’s Payment Services Directive (PSD), originally passed in 2007, built a single market for cashless payments in Europe, making cross-border payments as easy and efficient for European consumers and businesses as domestic transfers.

Most importantly, the revised PSD (also known as PSD2) mandated that banks loosen their grip over customer account data and allow third parties to be able to access it with customers’ permission.

Klarna “Smoooth” Ad Campaign Wins International ANDY Award from Ad Club of New York (PR Newswire), Rated: AAA

Klarna, a global payments provider, has been honored with an International ANDY Award by the ADVERTISING Club of New York for its 2016 “Smoooth” campaign that illustrates how ‘smoooth’ payments can be for consumers and online merchants using its platform.

The award was presented at the 14th annual “Stars of Madison Avenue” luncheon.

The AD Club’s International ANDY Awards jury chose this year’s six honorees for making an impact on marketing, commerce, culture and social responsibility through brave and creative advertising and marketing campaigns.

Klarna’s “Smoooth” campaign kicked off with a series of critically acclaimed ad spots. Samples of the campaign are available here and here.

Europe’s top venture capital investors by country (Banking Technology), Rated: A

 

At the top of the list, High-Tech Grunderfonds has made nearly 200 deals to 150+ German companies since 2012, making it the top investor in European tech VC by a long shot. Notable recent deals include a $3.4 million seed round to POSpulse (shopper intelligence platform) and participation in a $2 million seed round to MoBerries (HR and workforce management company). Since 2012, German tech companies have seen more than 1,600 deals worth over $10 billion.

The UK has seen the highest number of deals and total funding deployed to tech companies, at more than 3,200 deals worth nearly $20 billion since 2012, according to CB Insights.

Top investors in European tech by country (as of 30 August 2017), according to CB Insights:

  • Austria – SpeedInvest
  • Belgium – PMV
  • Cyprus – SingulariTeam
  • Czech Republic – Credo Ventures
  • Denmark – SEED Capital
  • Estonia – SmartCap
  • Finland – Lifeline Ventures
  • France – Alven Capital
  • Germany – High-Tech Grunderfonds
  • Greece – PJ Tech Catalyst
  • Iceland – Frumtak Ventures
  • Ireland – AIB Seed Capital Fund
  • Italy – LVenture Group
  • Latvia – Imprimatur Capital
  • Lithuania – Practica Capital
  • Luxembourg – Mangrove Capital Partners
  • Netherlands – Newion Investments
  • Norway – Investinor
  • Poland – SpeedUp Venture Capital Group
  • Portugal – Portugal Ventures
  • Romania – GECAD Group
  • Slovakia – Neulogy Ventures
  • Spain – Caixa Capital Risc
  • Sweden – Almi Invest
  • Switzerland – Swisscom Ventures
  • Turkey – Aslanoba Capital
  • UK – LocalGlobe

 

New10 open for business! (ABN-AMRO), Rated: B

Starting today, SMEs looking for a loan online can go to New10, an initiative of ABN AMRO. New10 lets them know within 15 minutes whether they qualify for a loan and under what terms and conditions. New10 meets the needs of this group of SMEs that want to take out a loan entirely online.

New10 provides loans ranging between EUR 20,000 and EUR 1 million.

India

Consumer Lending Startup MoneyTap Is Shooting For The Stars (Inc42), Rated: AAA

Ensnared by the allure of entrepreneurship, Bala ventured into the promising world of fintech with MoneyTap, a consumer lending startup that was launched last September.

Touted as India’s first app-based credit line, the fintech startup is working to democratise credit in a country where 19% of the total population is still unbanked.

“The reason we started MoneyTap was that we wanted to solve the problem of consumer credit. Clearly, India is very credit starved. Less than 1% of Indian consumers have access to any form of unsecured credit from a bank or any financial institution. Most people, whether it’s from middle class or lower middle class, need credit, but they have to use informal methods,” explains Bala.

Based on his interactions, he concluded that there are four main reasons behind this pervasive inadequacy of consumer credit in the country:

  1. Historical baggage/legacy
  2. Lack of data
  3. High overhead in small-ticket loans
  4. Finally, the emergence of a new class of demanding consumers

Between 2003 and 2007, a number of banks in India were issuing loans without doing any detailed checked. At the time, there was no credit bureaus or Aadhaar. Even PAN was not widely used. When the subprime crisis hit in 2008, all these banks got burned. In the period prior to that, around 24 Mn credit cards were sanctioned in India, of which nearly 10 Mn crashed.

In a country with a population of over 1.31 Bn, only 220 Mn people have PAN cards. Other forms of KYC (know your customer), including voter ID, Aadhaar and ration cards are not considered as the sole identity proof, especially when it comes to financial activities. Credit information companies (CIC) – such as TransUnion Credit Information Bureau Ltd. (CIBIL), Experian India and Equifax India – still do not have records of a large section of the country’s banked populace.

As per Bala Parthasarathy, the cost of evaluating and issuing a credit line/loan/credit card for a bank is extremely high and thus they prefer to give big-ticket loans to few people rather than small ticket loans for a large group of people. The average loan ticket size in this country is between $4,629 – $7,715 (INR 3 Lakh-INR 5 Lakh).

If you think of India as a pyramid in terms of the net worth of people, all these banks focus on only around 12 to 15 Mn customers at the top of the pyramid because they are capable of applying for a loan worth $4,629 to $7,715. The problem, according to him, arises when someone wants a $463 (INR 30,000) loan because the overhead, in this case, is too high for the bank to make any profit.

The consumer lending startup claims to currently cater to customers with monthly income ranging between $308-$1,080 (INR 20,000-INR 70,000).

On the MoneyTap platform, consumers can borrow anywhere between $46-$7,715 (INR 3,000 to INR 5 Lakh) with an option to choose the repayment duration from as little as two months up to three years.

At present, MoneyTap charges a one-time setup and origination fee of $7.7 (INR 499) plus tax.

Source: Inc42
APAC

Fintech experts to discuss the future of finance in Phnom Penh (Southeast Asia Globe), Rated: AAA

Inspire Asean is back on 29 September at Sofitel Phnom Penh Phokeethra for an afternoon of presentations, exchanges and networking. One of our larger events, this edition will have six engaging presentations from top Fintech startups, infrastructure providers and international banks to discuss digital wallets, big data, blockchain technology, cryptocurrencies and alternative lending models.

The speaker lineup includes:

  • Brad Jones, chief executive officer of Wave Money in Myanmar and previously CEO of Wing in Cambodia.
  • Hong Samarkkeenich, regional sales director at Lenddo, is responsible for bringing the company’s technology to new and underserved market segments in Indochina.
  • Sim Chankiriroth is the founder and CEO of BanhJi, a free and localized online accounting software, built for Asean MSMEs.
  • Vincent Ling, deputy general manager of UnionPay International SEA, is responsible for regional brand and communications as well as the Core Products portfolio.
  • Steve Miller is the founder of CryptoAsia, a growing Bitcoin startup based in Phnom Penh.
  • Tomas Pokorny is the CEO of PiPay, a Cambodia-based fintech company that combines payment and lifestyle (social) application solutions.

Big Data, a Key Factor in Decision-Making (FiNews), Rated: A

A survey conducted by Deloitte showed that the respondents feel that analytics will become more important to their organizations in the next three years and that its greatest benefit is a key factor in making better decisions, and Singaporean companies are picking up on this.

This trend is great news for the local data analytics sector. In Singapore, the industry is expected to contribute at least $1 billion to the economy this year alone according to the Economic Development Board.

However, being in the service industry, these firms often lack significant physical collateral and assets, leaving them unable to turn to banks and similar financial institutions for financing. This results in cash flow issues that could limit the growth of these companies, if not hamstring them completely.

How Can Data Analytics Persevere?

  • P2P Financing
  • Equity Crowdfunding
  • Receivables Financing

10 Fast Growing Fintechs in Philippines (Fintech News), Rated: A

Acudeen

 

Acudeen is an organization opens its business to small and medium enterprises (SMEs) looking to boost cash flows, thereby answering an unsolved business need.

Ayannah

Ayannah is a leading provider of digital financial services to the world’s emerging middle class, most of whom are migrants or unbanked coming from the base of the pyramid.

BloomSolutions

Bloom makes money smarter by combining modern technologies like cryptocurrency with traditional infrastructure such as SWIFT and SMS.

Lendr

Lendr is an end-to-end loans origination and loans management platform that you can access via your desktop or mobile device.

LoanSolutions.ph

Loansolutions provides loans via our network of partner banks and lending companies.

Mynt

Mynt is a leader in mobile financial services focused on accelerating financial inclusion through mobile money, micro-loans, and technology.

PawnHero

PawnHero now lets you pawn online, anytime and anywhere.

PayMaya

PayMaya Philippines, Inc. (formerly Smart eMoney, Inc.) is the pioneer in mobile money and payments, having established brands such as PayMaya, the first prepaid online payment app that enables the financially underserved to pay online without a credit card; PayMaya Business, the company’s system solutions provider that allows businesses to receive online and card payments anytime, anywhere; Smart Money, the world’s first e-wallet linked to a mobile phone; and Smart Padala, the leading remittance network in the Philippines with over 15,000 agents across the country.

Ripple Supports Singapore’s Fintech Hub Aspirations With New Office (Ripple), Rated: B

Singapore has publicly stated ambitions to be the world’s leading fintech and innovation hub. It is also one of the biggest and busiest global trade centers with many large, multinational companies basing their regional treasury offices in the country. For these reasons, and to support our rapidly-growing customer base across Asia-Pacific markets – including Standard Chartered, a Ripple investor, member of the RippleNet Advisory Board, and early adopter of blockchain technology to power payments – we are excited to announce we have opened a new office in Singapore.

Africa

Riby aims to transform the way over 20 million West Africans use co-operatives (Techpoint), Rated: AAA

Mr. Lanre used to be hesitant about loaning his colleagues at work money, having suffered from bad debts. Luckily for him, his organisation launched a co-operative scheme to manage employees’ finance. Among other things, the co-operative allows anyone with an urgent financial need to easily request and get assistance.

It is estimated that 63% of Kenyans derive their livelihoods from co-operatives, while in New Zealand, 22% of the gross domestic product (GDP) is generated by co-operative enterprise. And while 50% of sugar-cane planters are grouped into co-operatives in Mauritius, the co-operative movement in Columbia accounts for as much as 697,006 jobs in the country.

Nonetheless, as CEO of a financial management service platform, Salami Abolore reveals that over a million co-operative bodies exist in Nigeria.

He says this with confidence because his company, Riby, helps co-operatives and their members remotely control both their finance and financial operations.

Riby happens to provide the technology that helps Mr Lanre’s company to manage their (employee) co-operative scheme.

The Riby peer-to-peer lending module allows companies to run internal co-operatives within their fold. A case in point is a savings rotation mechanism that auto-debits employees and credits whoever is due to receive money for the month. For both modules, Riby charges a per-user fee of ₦200 upfront, amounting to ₦2000 per annum and ₦500 on a quarterly basis.

The agent management platform, Riby’s third module, is another exciting proposition that raises an innocent suspicion as to whether Riby is taking the competition to the commercial banks. This is apparent in their overall quest to include everyone in the system.

About 40% of Nigerians are yet to register with any financial institution in the country, according to the Central Bank of Nigeria. Statistics from the Nigeria Inter-Bank Settlement System (NIBSS) further show that there are only about 40 million registered bank accounts across the country. These accounts are enrolled by just 20.8 million customers, some having more than one account. It is therefore apparent that co-operatives can be used to reach the unbanked.

Fintech startup MaTontine wins Seedstars Senegal (Disrupt-Africa), Rated: A

Fintech startup MaTontine was named winner of the Senegal round of the global Seedstars World competition over the weekend, earning the chance to represent the country at the global final in Switzerland next year to compete for up to US$1 million in equity investment.

MaTontine emerged the overall winner for its solution that provides access to small loans and related financial services like microinsurance by digitising traditional savings circles.

Authors:

George Popescu
Allen Taylor

Tuesday September 19 2017, Daily News Digest

Multifamily REITs

News Comments Today’s main news: Equifax cans two executives. Credit Karma to launch free ID monitoring tool. Funding Circle’s new lending options now in effect. Wealthsimple expands into the UK. HighRadius raises $50M. ID Finance launches Mexico operations. Today’s main analysis: Multifamily REITs reduce leverage, development pipelines. Today’s thought-provoking articles: The next crisis will start in Silicon Valley. RateSetter’s Rhydian Lewis […]

Multifamily REITs

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Africa

Latin America

News Summary

United States

Equifax hack claims two executives (American Banker), Rated: AAA

The Equifax data breach has claimed its first two executives. The company late Friday announced the immediate retirement of David Webb, its chief information officer, and Susan Mauldin, its head security officer. They will be replaced, respectively, by Mark Rohrwasser, who joined Equifax last year as head of the company’s International IT operations, and Russ Ayres, most recently vice president of IT.

Credit Karma to launch free ID monitoring following Equifax hack (Reuters), Rated: AAA

Credit Karma Inc is launching a new free service that will alert customers if their identity data has been compromised in hacks, the San Francisco-based fintech company said on Friday in the wake of massive breach at credit monitoring agency Equifax Inc(EFX.N).

The new ID monitoring service is being tested and will be available in October, the company said on Friday.

CreditKarma saw a 50 percent spike in sign-ups to its platform in the weekend after the hack, it said.

Multifamily REITs Reduce Leverage and Development Pipelines as Fundamentals Downshift and Supply Peaks (Morningstar), Rated: AAA

Key takeaways:

  • Stronger credit profiles and balance sheets provide the multifamily REITs rated by Morningstar Credit Ratings, with flexibility to withstand substantial market disruptions.
  • New apartment supply is pressuring multifamily fundamentals, and REITs on average are lowering their exposure to new construction.
  • Morningstar expects net operating income among multifamily REITs to moderate after years of solid gains.
  • Since 2016, Net Operating Income (NOI) growth has slowed amid additional supply.
  • Multifamily REITs rated by Morningstar reduced their leverage and their exposure to new construction, positioning themselves for the impending completions and an environment where borrowing rates are expected to rise.
  • Rental growth among multifamily properties should be subdued for the next two years. While fundamentals remain sound, surplus inventory of new units likely will keep rent increases in check.
Source; Morningstar
Source: Morningstar

Read the full report here.

The Next Crisis Will Start in Silicon Valley (Bloomberg), Rated: AAA

It has been 10 years since the last financial crisis, and some have already started to predict that the next one is near. But when it comes, it will likely have its roots in Silicon Valley, not Wall Street.

Since 2007, a tremendous wave of innovation has swept across the financial sector, affecting almost every aspect of finance. New robo-adviser startups like Betterment and Wealthfront have begun dispensing financial advice based on algorithmic calculations, with little to no human input. Crowdfunding firms like Kickstarter and Lending Club have created new ways for companies and individuals to raise money from dispersed networks of individuals. New virtual currencies such as Bitcoin and Ethereum have radically changed our understanding of how money can and should work.

But revolutions often end in destruction. And the fintech revolution has created an environment ripe for instability and disruption. It does so in three ways.

First, fintech companies are more vulnerable to rapid, adverse shocks than typical Wall Street banks.

Second, fintech companies are more difficult to monitor than conventional financial firms.

Third, fintech has not developed the set of unwritten norms and expectations that guide more traditional financial institutions.

Enova Announces $ 25 Million Share Repurchase Program (PR Newswire), Rated: A

Enova International (NYSE: ENVA), a financial technology company offering consumer and small business loans and financing, today announced that its Board of Directors has authorized a share repurchase plan for up to $25 million of its common stock through December 31, 2019.

Prime Meridian Ranks High on the Prestigious INC5000 List as one of Fastest Growing Companies in America (PRWeb), Rated: A

Inc. magazine ranked Prime Meridian Capital Management 554 on its 2017 annual Inc. 5000, which ranks the fastest growing private US companies in all industries. Amongst asset managers in the finance industry, Prime Meridian ranks near the very top of the list. The list represents a unique look at the most successful companies within the American economy’s most dynamic segment— its independent small and midsized businesses. Companies such as Microsoft, Dell, Domino’s Pizza, Pandora, Timberland, LinkedIn, Yelp, Zillow, and many other well-known names gained their first national exposure as honorees of the Inc. 5000.

The 2017 Inc. 5000, unveiled online at Inc.com is the most competitive crop in the list’s history. The average company on the list achieved a mind-boggling three-year average growth of 481%. The Inc. 5000’s aggregate revenue is $206 billion, and the companies on the list collectively generated 619,500 jobs over the past three years.

60-Second Market Review and Insights (Credit Chronometer), Rated: A

Regulatory uncertainty will continue to be a significant challenge going forward. Practices will be shaped by the standards imposed on fintech and other non-bank entities, which in turn, depends in part on the outcome of the tussle between the Office of the Comptroller of the Currency (OCC), which has begun offering a special purpose national charter, and state regulators who believe they are best suited to protect consumers.  The industry may soon also be impacted by legislation introduced recently in the Senate and the House that would overrule the 2nd Circuit’s Midland v. Madden decision denying purchasers of high-interest loans the benefit of preemption of state usury laws afforded their sellers under federal law.  Despite the ongoing debates, there appears to be momentum for more uniform and streamlined laws in the future that will provide greater certainty and, consequently, cost advantages for marketplace lenders.

dv01 Launches Cashflows for Securitizations (Business Insider), Rated: A

dv01, the data management, reporting, and analytics platform that offers institutional investors transparency and insight into lending markets, today announced the launch of a cashflow engine for securitizations, with full waterfall and collateral model support. dv01’s cashflow engine is available for a library of 30 consumer unsecured, student, and small business deals, covering over $10 billion of securitizations from originators including Avant, Lending Club, Marlette, Prosper, SoFi, and Upstart.

dv01’s cashflow engine is powered by deal waterfall models that operate on loan level data sourced directly from originators. All projections are performed at the loan level and tied out to trustee reports, ensuring accuracy across the entire waterfall, down to the residual.

Within the cashflow engine, investors have access to full deal structure models to generate tranche and residual cashflow projections. This includes a wide array of functionality, including cohort-level control over assumptions; price, yield, and spread re-computation directly from the results screen; and price-yield matrix calculations. The output computations include a projected paydown chart and cumulative prepay/loss plots, all of which show both historic actuals and projected values.

The cashflow engine is integrated directly into dv01’s Securitizations solution, which offers investors 24/7 access to a reporting and analytics portal populated with loan level securitization data. When analyzing a securitization, users have access to deal-specific detail, collateral, and performance pages, as well as the ability to download updated loan tapes to track the evolution of a pool over time. Additionally, users can use dv01’s Pool Explorer to construct curves using historical platform data.

Fintechs get another alternative to IPOs (Business Insider), Rated: A

US-based VC firm Social Capital — whose portfolio includes fintechs Wealthfront, CommonBond, Jetty, and Cover — has 

Source: Business Insider

Small Business Crowdlending Fund Offers Startups Loan Opportunities (WYSO), Rated: A

Mom and pop business owners often struggle to find enough capital to get their ideas off the ground and succeed, research shows. Kiva Dayton’s recently launched crowdlending platform aims to help solve this problem.

Now, the Downtown Dayton Partnership is offering to commit the first 20 percent of each Kiva loan to help potential business owners build buzz and raise more funds through the platform.

According to a study by the U.S. Small Business Administration’s Office of Advocacy, inadequate capital is the major obstacle facing small businesses when it comes to growth, expansion and wealth creation.

All Kiva loans are zero percent interest and they’re small, with no loans over $10,000.

Younger Americans More Likely to Invest in Bitcoin (Coindesk), Rated: B

New survey data from online student loan marketplace LendEDU suggests that younger consumers in the United States are more interested in investing in bitcoin.

Of those between the ages of 18 and 24, 35.9% said they plan on investing in bitcoin, versus 43.5% who said no and 20.5% who weren’t sure. For the 25-34 age group, the “yes” figure grew to 40.4%, with 31.7% of respondents in that demographic saying no.

United Kingdom

Funding Circle New Lending Options Go Into Effect (Crowdfund Insider), Rated: AAA

Less than a month after Funding Circle announced the new versions of its existing Autobid and Autosell lending tools, the online lender revealed the new changes have officially gone into effect.

As previously reported, as part of these changes, Funding Circle will be eliminating the option to manually choose which businesses an investor may lend to and which loan parts to sell will be withdrawn. This is a significant shift in operation of the peer to peer lending platform as it begins to operate more like a fund.

Wealthsimple Brings Simple, Accessible Investment Advice to the UK (PR Newswire), Rated: AAA

Wealthsimple, a digital wealth manager, continues to make smart investing accessible and low-cost to more people with today’s announcement of the company’s expansion to the United Kingdom. UK residents can now open an account and have access to diversified investment portfolios in less than five minutes on wealthsimple.com or by downloading the iOS or Android app.

At launch, clients are able to open ISAs (Individual Savings Account), JISAs (for children) and personal accounts with a 0.7% management fee.

The London-based team is led by Fintech entrepreneur Toby Triebel, the former CEO and co-founder of the global online lending platform Spotcap. Triebel joined the Wealthsimple team in September 2016, leading the company through regulatory approval and initial beta testing, which saw over five thousand people sign up for early access to Wealthsimple through an online waitlist.

In May, Wealthsimple raised an additional C$50 million from Power Financial group of companies, a strategic partner, bringing Power’s total investment to C$100 million thus far in support of Wealthsimple’s global ambitions.

Rhydian Lewis on ‘dinosaur’ banks and making RateSetter the ‘crowdsourced Libor’ (SpearsWMS.com), Rated: AAA

Since he and co-founder Peter Behrens set up the online exchange from a flat in 2010, it has handled the loans of £2 billion.

‘I’ve come to realise the importance of emotional intelligence to give other forms of intelligence the chance to come out right.’

It makes so much more sense for lending to be funded by investment as opposed to by an instrument called the deposit’ – not least because of the strictures imposed by regulators.

So far, 50,000 people have lent money through RateSetter, with £1.3 billion of loans repaid. Turnover this year should be £30 million; the headcount is 260. ‘Our ambition is that in due course the rates exchanged on RateSetter will be seen as benchmark rates,’ he says. And one day he would like peer-to-peer lending be ‘a crowd-sourced Libor’.

Clever Lending partners with LendInvest (Mortgage Strategy), Rated: A

Clever Lending has been made a strategic partner of bridging specialist LendInvest.

The firm will be able to distribute LendInvest’s specialist bridging and development finance products.

Brokers can now deal directly with Clever Lending to gain access to LendInvest’s range.

Pollen Street completes merger with MW Eaglewood (P2P Finance News), Rated: A

POLLEN Street Capital has completed its acquisition of a controlling stake in MW Eaglewood, creating one of Europe’s biggest alternative finance-focused investment managers.

The deal, first announced in May, sees Honeycomb Investment Trust manager Pollen Street become the majority shareholder of the combined group, which has assets of around £2bn.

Downing-backed report tackles ‘misconceptions’ over debt-based securities (P2P Finance News), Rated: A

A REPORT has been published that aims to tackle advisers’ confusion and misunderstanding of debt-based securities (DBS), following their acceptance into the Innovative Finance ISA (IFISA) in 2016.

The CPD-accredited report, published by Intelligent Partnership, identifies some of the opportunities in the market and the role DBS can play in a diversified portfolio.

The term is used to describe a variety of different models for deploying capital, usually involving a borrower, lender and interest rate over an agreed period. DBS are increasingly arranged through crowdfunding platforms.

The report explains the investment types available, how to evaluate risks in varying market conditions, tax wrapper options, fees and returns, the difference between DBS and peer-to-peer lending, and due diligence issues.

‘Vital advisers understand debt-based securities’ – report (Professional Adviser), Rated: B

Alternative debt-based securities (DBS) will become more popular thanks to regulatory pressure and greater demand for diversification, therefore it is vital advisers understand the products, research provider Intelligent Partnership has said.

Time is running out to save this iconic Welsh pub from closure (Wales Online), Rated: A

A Welsh community has just weeks to raise enough money to save an iconic pub after the current owners set a deadline for when they intend to pull their last pints.

Despite raising £130,400 of an initial target of £300,000 so far – including £50,000 in the first few weeks of the campaign – time is now running out after a deadline was set of Saturday, October 28.

In a fresh attempt to raise more money, a Peer to Peer (P2P) lending scheme is being proposed whereby people can loan £5,000 to the scheme which, the group say, would generate a 4% gross interest return per annum.

China

Too Little, Too Late? China Can’t Seem to Get a Grip on Fintech Regulation (WSJ), Rated: AAA

In recent weeks, Chinese central bank officials, banking and securities regulators have tightened oversight of a range of investing and technology platforms used by individuals to trade virtual currencies, invest in online loans and rapidly shift cash in and out of mutual funds.

A surge of Chinese investment—possibly more than $600 billion in the past two years—has gone into these so-called retail products, according to data from online platforms, financial information aggregators and cryptocurrency research houses.

In August, regulators placed limits on the growth of mutual funds made wildly popular via China’s mobile-payment platforms.

More than 700 online-loan platforms, known as peer-to-peer lenders, closed in the last year ahead of new caps on their operations that take effect this month that dimmed their prospects for profitability.

Source: The Wall Street Journal

HK needs crowdfunding-friendly regulatory regime (EJ Insight), Rated: A

However, despite the fact that Hong Kong is one of the major global financial hubs, so far we still don’t have clear guidelines or any specific regulatory regime for crowdfunding, thereby hindering the development of our tech industry.

As far as equity crowdfunding and P2P lending are concerned, since they involve financial returns and yields, they are usually subject to legal regulation. Yet, in order to ride the global crowdfunding wave, major financial markets such as the US, Britain, Japan, South Korea, Singapore and Australia have all eased restrictions on crowdfunding in recent years.

At present, Hong Kong doesn’t have a single and comprehensive piece of legislation that deals specifically with crowdfunding. Instead, it is regulated separately by different existing laws such as the Securities and Futures Ordinance, the Money Lenders Ordinance as well as the Companies Ordinance.

Nevertheless, according to the same study, Hong Kong is lagging far behind other major financial centers when it comes to crowdfunding volume. In 2015, we raised a mere US$9.3 million (HK$72 million) through crowdfunding compared to US$28.4 billion, US$4.33 billion, US$360 million and US$240 million in the US, Britain, Japan and Australia, respectively.

As such, I suggest that the new regulatory framework for crowdfunding be more flexible. For example, the administration can consider exempting crowdfunding initiatives that involve less than HK$20 million from certain requirements that currently apply to public companies such as the need to submit a prospectus to the Securities and Futures Commission for scrutiny before launching any investment offering for sale to the public.

China hit by financial scam ‘epidemic’ (BBC), Rated: A

Li Wenxing was starting a new life. In May, the young university graduate left his home in rural China on the offer of work with a software company in the city of Tianjin.

But the job was a scam and Mr Li was swept into the web of a gang running a pyramid scheme.

Two months later he was dead.

The tragedy, which is being investigated, sparked national outrage and has illuminated the growing problem of financial fraud and its devastating impact on communities in China.

Pyramid schemes

Pyramid schemes are flourishing in parts of the country where education levels are low.

Peer-to-peer lending and virtual currencies have fuelled the spread of other investing scams, luring victims with little financial knowledge.

Government crackdown

As part of the crackdown, more than 100 arrests were made in southern China last month, targeting individuals over their suspected links to a 360m yuan (£42.3m) pyramid scheme.

Authorities had at least one major bust last year – breaking up a 50bn yuan online finance scam which was suspected of defrauding 900,000 investors.

European Union

Peer-to-peer lending: Information externalities, social networks, and loan substitution (VOXEU.org), Rated: AAA

The evaporation of trust in the banking system following the financial crisis fostered the growth of digital platforms offering peer-to-peer investment opportunities in the US, Europe, and China. In Europe, as the debate about the capital market union progresses (European Commission 2017), policymakers see the possibilities for the digital investment and lending industry to help foster a unified capital market, which has been missing for so long.

Data show instead that over the years, default rates in the platforms have decreased steadily and are much lower than those in the traditional banking system. Lending rates have gone down (though still remaining attractive for investors), and trade volumes have steadily increased.

Brexit Raises Doubts Over Britain’s Fintech Future (Bloomberg), Rated: A

Britain’s impending exit from the European Union has put a “question mark” over the country’s attractiveness to financial technology firms, according to the head of France’s biggest peer-to-peer lender.

The French firm, Younited Credit, has just raised an additional 40 million euros ($48 million) to finance its expansion into another seven European countries, only to postpone its decision on entering the U.K. until the economic consequences of Brexit become clearer.

Maiden PE ICO Light on the Blockchain (Invezz), Rated: A

A new private equity ICO resembles a typical PE fund structure more than it does any blockchain innovation. Ethereum-based FundCoin (FND), which was developed by Dutch fund of hedge fund manager Finles Capital, is scheduled to make its debut as the industry’s maiden private equity token ICO on Sept. 30.

FundCoin, which is targeting EUR 100 million in its ICO, describes itself as bridging the gap between the blockchain and private equity, but there’s one problem. FundCoin doesn’t appear to have attached itself to any blockchain innovation.

Citing a lack of clarity on the designation of digital tokens as securities, U.S., Singaporean and EU investors are excluded from the FundCoin crowdsale, as per the white paper. Finles Capital says the ban will be revisited as regulation takes shape.

Monthly origination summary for August 2017 (Bondora), Rated: B

Loans issued in August 2017 came in at €2,926,457. The figure is well above the running average for the year. August was the third strongest month for originations in 2017 outpaced by only January and March.

As usual Estonia was the leader on loans issued amounts. However, the total share of the country was slightly lower than many previous months. The country represented less than 60% of the total share reaching 59.91%. Meanwhile, Spain came in at 17.57% and Finland represented nearly a quarter of the total with 22.51%.

Source: Bondora

 

International

Alpha Payments Cloud rebrands as Alpha Fintech (Finextra), Rated: B

Alpha Payments Cloud is unveiling its comprehensive rebranding and new corporate identity as Alpha Fintech.

The rebrand aims to crystalize Alpha’s positioning as fintech‘s first end-to-end middleware, connecting the merchant buyer and vendor supplier across the entire payments, risk and commerce spectrum through a single API and UI.

India

HighRadius Raises $ 50 mn (YourStory), Rated: AAA

Hyderabad-based HighRadius, a player in cloud-based integrated receivables software space, announced that it had raised $50 million in growth funding from Susquehanna Growth Equity. Founded in 2006, this is the first external funding round that HighRadius has raised in its journey and the company aims to leverage it to grow its global footprint and also expand the team.

Fastforward to 2017, HighRadius works with hundreds of Global 2000 companies, including brands like Adidas, Starbucks, Procter & Gamble, Johnson & Johnson and Warner Bros. Their integrated receivables platform optimizes cash flow through automation of receivables and payments processes across 6 categories- credit, collections, cash application, deductions, electronic billing and payment processing.

HighRadius currently employs over 500 people across US, India, and Europe. Narahari explained that USA is currently their largest market, with about 90 percent of their business concentrated there and a small percentage in Europe.

Asia

China’s JD.com announces $ 500M e-commerce and fintech joint ventures in Thailand (TechCrunch), Rated: AAA

Following on from Alibaba’s $1 billion deal with Lazada and a $1.1 billion round in Tokopedia led by Alibaba, rival Chinese e-commerce firm JD.com has announced a $500 million investment that will create e-commerce and fintech businesses in Thailand.

Southeast Asia, a region of 600 million consumers, is forecast to see its internet economy grow to $200 billion by 2025 thanks to rising internet access. That potential has attracted investment dollars from Chinese giants lie Tencent and Alibaba, and now JD.com is upping its own efforts.

Africa

Fintech defines new trends in financial services offerings for farmers (AFGRI), Rated: A

For agriculture, the rise of Fintech means easier access to funds, new competitors in financial services and a global reach. Selling cattle or produce? Fintech and digital markets can now connect farmers directly to buyers on a mobile platform, doing away with the middleman. Important to note is that Fintech not only minimises the dependency on traditional banks as the middlemen, but increases the use of peer-to-peer lending, growing and strengthening the sharing economy model. Good examples are M-Pesa and FarmDrive in Kenya, where FarmDrive connects smallholder farmers to loans and financial management tools through their mobile phones.

In Mozambique, the Institute of Cereals of Mozambique (ICM), which is responsible for regulating and promoting agricultural production and commercialisation under the remit of the Ministry of Industry and Trade, recently joined forces with FinComEco to link agriculture to the latest financial technology.

Latin America

ID Finance grows footprint in Latin America with launch of Mexico operations (ID Finance Email), Rated: AAA

19th September 2017 – 

Mexico readies bill to regulate fast-growing fintech industry (Reuters), Rated: A

Mexico would regulate its fast-growing financial technology sector, including firms that use crypto-currencies like bitcoin, to protect consumers and spur competition, under a proposed bill seen by Reuters.

The proposed legislation, which Mexican President Enrique Pena Nieto said this month would be unveiled in the Senate before Sept. 20, seeks to ensure financial stability and defend against money laundering and financing of extremists.

Financial services firms envisage massive potential growth in Latin America’s No. 2 economy by reaching the more than 50 percent of Mexico’s roughly 120 million citizens without bank accounts.

Authors:

George Popescu
Allen Taylor

Tuesday September 14 2017, Daily News Digest

Goldman Sachs

News Comments Today’s main news: Equifax CEO vows to make changes in USA Today op-ed. dv01 closes Series A with big name investors. SmartBiz Loans surpasses $500M in SBA loan funding. stREITwise rolls out first REIT, focused on institutional-quality office buildings. Klarna completes BillPay acquisition. Wish Finance intros SME lending on blockchain in Singapore. Today’s main analysis: What millennials would give […]

Goldman Sachs

News Comments

United States

United Kingdom

European Union

International

India

Asia

News Summary

United States

Equifax CEO: ‘We will make changes’ (USA Today), Rated: AAA

Last Thursday evening we announced a cybersecurity breach potentially impacting 143 million U.S. consumers. It was a painful announcement because of the concern and frustration this incident has created for so many consumers. We apologize to everyone affected. This is the most humbling moment in our 118-year history.

Equifax Security first discovered the intrusion on July 29. Understandably, many people are questioning why it took six weeks to report the incident to the public. Shortly after discovering the intrusion, we engaged a leading cybersecurity firm to conduct an investigation.

At the time, we thought the intrusion was limited. The team, working with Equifax Security personnel, devoted thousands of hours during the following weeks to investigate.

dv01 Closes $ 5.5M Series A Led by OCA Ventures (PR Newswire), Rated: AAA

dv01, the data management, reporting, and analytics platform that offers institutional investors transparency and insight into lending markets, today announced a $5.5M Series A round, led by OCA Ventures. Ribbit Capital, Illuminate Financial, and CreditEase Fintech Investment Fund also participated in the round, joining existing dv01 investors Leucadia National Corporation and Pivot Investment Partners.

OCA advisor Jack Lavin has joined dv01’s board, and will work alongside existing board members from Jefferies LLC, a subsidiary of Leucadia National Corporation, and Quantum Strategic Partners Ltd., a private investment vehicle managed by Soros Fund Management LLC.

SmartBiz Loans Surpasses $ 500 Million in Funded SBA Loans (BusinessWire), Rated: AAA

SmartBiz Loans, the first SBA loan marketplace and bank-enabling technology platform, today announced that it has surpassed half a billion dollars in funded SBA loans. This milestone comes on the back of other recent successes for SmartBiz, including the addition of a fifth bank to its software platform and ranking as the number one facilitator of traditional SBA 7(a) loans under $350,000 for the 2016 fiscal year, over Wells Fargo and other major banks according to SBA lending data released in November, reflecting its 2016 fiscal year.

The company’s first-of-its-kind software platform automates a bank’s underwriting to cut time and costs by up to 90 percent for processing SBA loans under $350,000. By automating the underwriting process, the platform helps banks get low-cost capital into the hands of small business owners in a matter of weeks instead of months. This is vitally important to any busy, small business owner who needs capital.

The $500 million in funded SBA loans reflects not only continued growth for SmartBiz, but also for the entire market of bank-originated, small-sized business loans. Post-2008, banks reduced the number of smaller business loans they made because they couldn’t process them efficiently enough to make a profit.

Survey Reveals What Millennials Would Rather Deal With Than Paying Student Loans (Credible), Rated: AAA

The number of people with student loan debt is staggering. According to the latest numbers from the U.S. Department of Education, 42.3 million Americans are paying back $1.33 trillion in federal student loan debt. Lenders are collecting payments on another $64 billion in private student loans. A survey of borrowers by the Federal Reserve puts the median student loan debt balance at $17,000, with monthly payments of $222. Student loan debt can be suffocating for those who are struggling to make payments each month.

  • A staggering 49.8% of all respondents said they would give up their right to vote in the next two presidential elections in order to have their debt forgiven
  • Ride-sharing services like Uber or Lyft don’t seem to matter to millennials quite as much as some of the other options in the survey. According to the results, 43.6% were willing to give up these services forever in exchange for debt forgiveness
  • Interestingly, 42.4% of respondents would also give up traveling outside of the country for 5 years, while only 27.0% said they would be willing to move in with their parents for 5 years
  • Millennials seem to value texting more than the other options – only 13.2% reported being willing to give up texting and any mobile messaging equivalent for the next year in exchange for having their debt forgiven
  • Only 8.2% of respondents chose to select none of the above and said they would rather keep paying off their student debt

Working to Expose Silicon Valley’s Dark Side (Again) (The New York Times), Rated: AAA

Even before the ink was dry on an article Nathaniel wrote last year about an online lending start-up, Social Finance, and its unusual success — headlined “SoFi, an Online Lender, Is Looking for a Relationship” — he began hearing from people who painted a very different picture of what life looked like inside the company.

But in the intervening months, tales of sexual harassment and wrongdoing in Silicon Valley took center stage, in part because of Katie’s own reporting, which exposed a dark side to an industry known for growth, wealth and fantastic employee perks. Companies like ZenefitsTheranos and Uber made it clear that many venture capitalists and the companies they funded were incentivized to focus on growth at any cost, with good governance and corporate culture getting short shrift.

We are already getting more emails and phone calls that point to where the story might go from here — both with SoFi and the issue of bad behavior in Silicon Valley more broadly. These issues aren’t going away anytime soon.

stREITwise Announces Regulation A+ Offering to Lead New Era of Real Estate Crowdfunding (PR Newswire), Rated: AAA

stREITwise is introducing a new way to invest in real estate online commission-free by allowing direct investment on its website. Today they announced a Regulation A+ initial public offering for their first Real Estate Investment Trust (REIT) – 1st stREIT Office – which seeks to provide a diversified portfolio of institutional-quality office buildings with a revolutionary low-cost structure. Because it’s filed as a Regulation A+ offering, 1st stREIT Office will allow accredited and non-accredited investors alike the opportunity to participate.

This announcement comes shortly after 1st stREIT Office successfully raised over $20 million in a private offering to acquire the Panera Bread HQ Property in St. Louis, MO. At 99% occupancy in three separate buildings, the Panera Bread HQ Property includes over 290,000 square feet of Class “A” office space that is leased to many large tenants, including Panera Bread (World HQ), New Balance (Regional HQ), Wells Fargo, Edward Jones, Nationwide Insurance, and others.

With the Panera Bread HQ Property acquisition, 1st stREIT Office has been able to make 10% annualized dividend distributions to its existing investors. The company seeks to acquire more high-quality, stabilized office buildings in undervalued markets across the United States.

While Non-Traded REITs typically charge upfront fees of 10-15%1, stREITwise caps its upfront fee at just 3% by cutting out the middleman, eliminating financial advisor commissions, and passing the savings on to investors.

Goldman Banks on Lending to Grow (WSJ), Rated: A

The New York firm said Tuesday that loans to wealthy clients, companies and consumers would contribute almost half the $5 billion in revenue growth it is projecting by 2020.

Harvey Schwartz, a top lieutenant to Goldman Chief Executive Lloyd Blankfein, on Tuesday said persistently low volatility in financial markets meant that the third quarter would be a “challenging” one in terms of trading. J.P. Morgan Chase JPM 0.29% & Co. CEO James Dimon and executives at Citigroup Inc. and Bank of America Corp. projected trading declines of between 15% and 20% for the quarter.

Goldman on Tuesday laid out a detailed plan to grow revenue, which has remained flat since the financial crisis. Its target of $5 billion in new revenue by 2020 hinges on businesses that have been footnotes for most of the firm’s 147-year history: lending, asset management and tending to the mundane needs of corporate clients and money managers.

Lending to wealthy clients, companies and consumers could add $2 billion of new revenue over the next three years, said Mr. Schwartz at a global financial-services conference hosted by Barclays PLC.

Source: The Wall Street Journal

Lenda to expand in more states, invest in software platform (Mortgage Professional America), Rated: A

Online lender Lenda has announced plans to expand its reach to more states along with increased investment in its software platform, which offers a complete refinancing or mortgage origination transaction online.

New Pave’s Decentralized Global Credit Profile (GCP) Unlocks Access to Credit for Millions of Americans (BusinessWire), Rated: A

Pave, Inc announces an initial coin offering (“ICO”), scheduled for mid-October to fund Pave’s Global Credit Profile project, which could provide a ground-breaking solution to the problems associated with credit reporting worldwide. Based on its deep knowledge of lending to individuals with limited credit history (“thin files”), Pave’s GCP will give consumers and credit institutions access to richer and more accurate personal financial data than traditional credit bureaus provide, while significantly improving data security. GCP has the potential to unlock access to credit for millions of people — such as millennials and immigrants — who are marginalized by the current financial system.

While the centralized systems of companies such as Experian, Equifax and TransUnion continue to perform a valuable service by acting as a reliable source of information for third parties, they are plagued with systemic problems including a lack of transparency and control over personal data, vulnerability to fraud and data theft and unnecessary administrative costs. Using blockchain and related technologies, Pave’s GCP will decentralize the storage and ownership of an individual’s financial data by placing the user in control. The GCP thereby removes the reliance on a singular record keeper making security breaches infinitely less likely.

DigiFi Announces Launch of Next-Generation Digital Loan Origination System (PR Newswire), Rated: A

DigiFi, an enterprise financial technology company, announced today the launch of its cloud-based digital loan origination system (“LOS”) for banks, credit unions and consumer finance companies.  DigiFi’s next-generation LOS enables the automated online delivery of multiple consumer lending products through a single platform, driving better customer experiences and lower operating costs.

DigiFi’s proprietary technology was built over three years to digitize the consumer lending process, offering consumers immediate feedback and funding from any device at any time.  The platform supports multiple products including Personal Loans, Credit Cards, Personal Line of Credit, and Student Loan Refinancing, and DigiFi is adding additional products, including Home Equity, Auto and Mortgages.

The platform is highly configurable, empowering banks, credit unions and consumer finance companies to utilize their own risk models, documents and procedures.

Meet two fintech innovators showcasing their work at Finovate (Biz Journals), Rated: A

Two entrepreneurs who jumped up on the stage Tuesday were Lisa Shields and Ellison Anne Williams.

Shields, a longtime purveyor of payment technology, is the founder and former CEO of Vancouver-based Hyperwallet Systems Inc. After handing the reigns of that company over to Brent Warrington in 2015, she went on to launch Fi.Span, a provider of cloud-based platforms for commercial banks.

In the second half of the podcast, data mining expert Ellison Anne Williams also addressed the predominantly male demographic of her field. The effect it has on her approach is next to none, she said.

As the CEO and founder of data securitization startup Enveil, Williams brings more than a decade of experience in large scale analytics, information security and privacy.

U.S. banking regulator not ready for fintech charter applications (Reuters), Rated: A

The U.S. banking regulator, the Acting Comptroller of the Currency, said on Wednesday that he is not ready to accept applications from financial technology companies seeking a special purpose federal charter.

His comments underscore the broader difficulties faced by regulators globally as they attempt to keep up with dramatic changes in banking industry brought about by the increasing use of digital technologies which threaten to undermine traditional financial services businesses.

Samsung is working with banks to roll out retail pop-ups (Tearsheet), Rated: A

Banks may soon be experimenting with a new way to engage with customers: retail pop-ups.

Samsung’s head of sales for financial services, Reginald Jones, told Tearsheet that the company is in talks with its financial services customers about rolling out retail pop-ups “sooner than in a year.”

Those could be in a variety of formats, he said: a bus promoting a certain bank that drives a number of customers to an NFL game; a university campus presence where banks look to attract customers as they become of banking age; a shopping center that normally just has ATMs where banks could roll up for a weekend service to attract these potential new customers. Samsung, the consumer electronics giant, provides the devices that change how bank employees conduct business — to better influence the customer outcome.

Samsung has been working with bank branches for the last five years, incorporating its display screens into retail spaces as they take old signage and posters and move them to digital platforms. In some branches, greeters and bankers are also using Samsung tablets, he said.

How Fintech Is Reshaping the Small Loan Market (GuruFocus), Rated: A

Fintech companies around the world have moved swiftly to fill the gap left by mainstream lending institutions due to constraints related to interest rates and profit margins. Big lenders in the market are under constant pressure to increase profit margins, which limits the size of their addressable market, especially when trying to woo small and medium-sized business borrowers. Their interest rates are often high as they seek to remain competitive in the larger spectrum of the financial services industry.

One of the largest beneficiaries is LendingClub Corp. (NYSE:LC), which has seen its revenue increase 1,278% in under five years, from just over $37 million to over $500 million as of June 30 on a trailing 12-month basis.

Brazilian-based fintech companies are paying investors about 22% returns per year while borrowers are charged interest rates from as low as 1.7% to as high as 6.3% per month based on their credit profiles.

Fintech entrepreneur launches digital advice platform for retirees (Smartbrief), Rated: B

Matt Fellowes has launched United Income, an automated retirement-planning tool for retirees.

Federal Reserve Bank Of Philadelphia To Hold Conference On Blockchain’s Impact On Regulatory Policy (ETHNews), Rated: B

The Federal Reserve Bank of Philadelphia announced that it will hold a FinTech seminar in conjunction with the Journal of Economics and Business on September 28-29, 2017, focused on consumers, banking, and regulatory policy.

Aptly named FinTech: The Impact on Consumers, Banking, and Regulatory Policy, the conference will feature keynote speeches and research from industry experts on consumer protection; roles of alternative information; FinTech lending; blockchain-based currencies; machine learning and artificial intelligence; the new FinTech landscape; and marketplace lending and crowdfunding. The conference will also focus on the disruptive factors of blockchain technology and to what measure they continue to shape regulatory policies.

Erik A. Falk Joins Star Mountain Capital as Senior Advisory Board Member (BusinessWire), Rated: B

Star Mountain Capital, LLC (“Star Mountain”), a specialized investment manager focused exclusively on the large and underserved U.S. lower middle-market, is pleased to announce that industry veteran Erik A. Falk has joined the firm as a strategic personal investor and Senior Advisor.

Mr. Falk is a senior executive focused on strategic initiatives at Magnetar, a $13+ billion alternative asset management firm. Until early 2017, Mr. Falk oversaw the private funds as a Head of Private Credit within KKR’s (Kohlberg Kravis Roberts & Co.) $35 billion credit business and served on the Private Credit Investment Committee, the Leveraged Credit Investment Committee and the Portfolio Management Committee. He also oversaw KKR’s investment in Star Mountain. Before joining KKR in 2008, Mr. Falk spent eight years at Deutsche Bank where he held several roles including founding the Special Situations Group and Co-Heading the Global Securitized Products Group. Mr. Falk began his career in the Asset-Backed Securitizations group at Credit Suisse First Boston where he knew Star Mountain’s Chairman, Brian Finn, whose prior roles include Co-President of Credit Suisse First Boston and Head of Credit Suisse Alternatives (with approximately $100 billion in AUM at the time).

United Kingdom

UK Inflation Rate Jumps More Than Expected in August (Kirklin News), Rated: AAA

The UK’s annual inflation rate climbed to a higher-than-expected 2.9% in August, matching a four-year high reached in May, the Office for National Statistics (ONS) said on Tuesday, two days ahead of a key meeting by members of the Bank of England’s monetary policy committee.

The consumer prices Index (CPI) climbed from 2.6% in July, the ONS said on Tuesday. The August reading matched the highest since April 2012 and beat the 2.8% average forecast by economists polled by investing.com.

The annual core inflation rate, which strips out volatile food and fuel costs, also jumped to 2.7% from 2.4% in July, topping the 2.5% expectation by economists in an investing.com survey.

Chapters Financial to enter AI arena with chatbot technology (FT Adviser), Rated: A

Advisory firms need to do more to attract the next generation of clients or risk selling themselves short, financial adviser Keith Churchouse has said.

His firm Chapters Financial is developing a chatbot platform for its online advice business Saidso.

The chatbot will be aimed at the generation of clients who are more comfortable with changing and emerging technology. They are usually 45 years old or younger; the typical age group of customers who already use the Saidso website, which has been operational for the past two years.

UK regulator sounds alarm over initial coin offerings (Financial Times), Rated: A

The UK City watchdog has warned investors of the “high risk, speculative” nature of initial coin offerings as their popularity booms, becoming the latest global regulator to sound the alarm.

The Financial Conduct Authority warned that ICOs are mostly unregulated and potentially fraudulent, while investors may be provided with “unbalanced, incomplete or misleading” documents by the ICO issuer.

Even if an ICO is not fraudulent, the regulator said, investors still had “a good chance” of losing their entire investment.

10 Tips for New P2P Lending Investors – How to start (P2P-Banking), Rated: A

  1. Advantages of platforms with a track record  I prefer platforms that have a track record and have operated at least 1 or two years.
  2. Loan term and loan types – There are three main types: consumer loans, SME loans and property secured loans. SME loans has further subtypes like invoice financing. It can be a good idea to diversify over different loan types and different platforms.
  3. Diversification – Diversification can be achieved faster on platforms with very many comparable consumer loans, and will take longer on property platforms which launch only few large property loans.
  4. Autoinvest – Before you use the autoinvest I suggest to spend the first days/weeks making manual investments on the primary market to get a better understanding of the loans on offer.
  5. Secondary market – Before you use the secondary market, I suggest you first spend some time investing on the primary market to deepen your understanding of how the platform works.
  6. Cash drag – Investors only earn interest on money invested into loans. Cash deposited, but not (yet) invested will earn no interest.
  7. Unsecured vs. secured loans – Consumer loans listed on platforms are mostly unsecured (exception some car loans). SME loans offer no or or some type of asset as security and property loans typically offer a first or second charge on the property as security. Usually it is preferable to lend with some kind of security offered.
  8. Recovery process – A certain percentage of loans will default. This is normal in p2plending and nothing to worry about as long as this percentage stays in a healthy relationship to the interest offered for the risk.
  9. Tax – If the country you live in does not allow you to offset default losses against interest income earned, it may be a good idea to invest into loans with lower interest rates, but also lower default rates, to achieve higher returns after tax than with a more risky strategy.
  10. Final tip – Start slow. P2P lending has somewhat of a learning curve.
European Union

Klarna Announces Completion of Acquisition of BillPay (Klarna), Rated: AAA

Klarna Bank AB (publ) today announces that the acquisition of German online payments company BillPay has been completed. This will strengthen Klarna’s position as one of the leading e-commerce payment providers in Europe and further accelerate its growth in Germany, Austria, Switzerland and The Netherlands.

VISA reportedly owns almost one percent of Klarna (Business Insider), Rated: A

However, it wasn’t clear how much money had been invested. Now Swedish tech site Di Digital has revealed that Visa took part in Klarna’s $75 million euro acquisition of Billpay, a German competitor, in February.

Out of the $57 million euro share emission that went to financing the deal, Visa paid roughly a third, or $22 million.

Goldmint Is Unlocking Liquidity in Gold to Allow P2P Lending (Cointtelegraph), Rated: A

GoldMint is a comprehensive P2P solution that allows businesses like pawnshops to raise credit.

Recently, a Time article revealed that 28 percent of college educated millennials between the ages of 23-55 have accessed short-term lending from pawnshops and payday loan providers in the last five years.

Dmitry has had an eye on the pawnshop segment since 2015, when he noticed that while the pawnshop business was immensely profitable, it was void of technological progress. He worked with a team of four people in 2016 to address the four main issues that faced the pawnshop businesses:

  • realization of unclaimed pledges
  • wired payments
  • funding of pawnshops (lending)
  • the introduction of unified standards (consolidation)

GoldMint is holding an initial coin offering (ICO) in less than a week’s time starting Sept. 20, 2017. They have published a detailed whitepaper which lays the details of their crowdsale.

Interview with Stanislav Kulechov: 14 Facts About ETHLend (Coinspeaker), Rated: A

4. How did you start building ETHLend?

We started by developing the Smart Contract. It was ideal to begin with the token escrow contract, which allows the collateral to be held securely in the Smart Contract until the borrower repays the loan. If the borrower does not repay, the lender can claim the tokens and realize any losses. We made many interesting findings during the development and wrote the white paper after Alpha DApp. We believe this is a big advantage for us since practice does not always follow theory. Also, delivering an Alpha for the Ethereum main-net is important proof-of-concept wise.

7. Do you think the system will be more popular among individuals or companies?

Hard to tell since at the moment individuals are more keen on using cryptocurrencies. ETHLend has received a lot of interest from miners who want to expand their mining facilities or purchase more rigs. There are also growing tendencies for companies to use blockchain technology. We have received inquiries about pledging some of the ICO tokens for financing pre-sale marketing efforts. What I would like to see is that merchants who use cryptocurrencies would adopt ETHLend for financing and increasing their business.

8. What is the difference between the type of crediting ETHLend offers and the scheme “have sold the possessed currency-have bought ETH for raised money”.

Good point. Since our main financing instrument is pledging digital tokens, it provides opportunity to receive ETH when one does not want to sell digital tokens. Such might be the case when one has a token portfolio, investment funds like TaaS or ICONOMI. Funds or individuals could easily keep the possession of the token positions and still get more liquidity for growing their portfolio. On the other hand, a blockchain startup might keep more tokens at their possession when pledging the token before an ICO for a loan and repaying the loan after an ICO. A strategy like that leaves more tokens for the startup to recruit more talent.

11. How much time do you think you need to launch the project in case you obtain sufficient financing?

ETHLend has an extensive roadmap that stretches to the late 2019. At the moment we are still developing the ETHLend DApp. However, we need further resources to comply with the features set in the roadmap. We are also looking to add more developers and financial experts to the team. The basic collateral based lending is available on ETHLend but there are lot of functions that require more time to develop, such as being able to borrow Bitcoin or to use the price feed for the collateral value. We aim to  have a fully sophisticated DApp by the end of 2019.

14. The last tricky question: is lending good or bad?

Lending is an instrument that should be used in the correct circumstances and for the correct funding goals. Lending could be compared to other products – when consumed wrongly, they might be bad and vice versa.

A new Form of Real Estate Investment for Estonia: Crowdfunding (PropertyShowrooms), Rated: A

Igors Puntuss, co-founder of Bulkestate.com, explained that as wages rose rapidly and with it “population welfare”, meaning disposable income and savings, people living in Baltic countries began to look for safe and profitable ways to invest their spare cash. But banks are not able to provide smaller investors with attractive interest rates on deposits and, as the market of real estate crowdfunding is far from maturing, there are opportunities to be had.

He added that high reliability does not equate to low profit, when it comes to real estate crowdfunding. The website offers an annual interest rate of 14% at a low threshold for those who are risk adverse, and the minimum investment required is just 50.00 euros at Bulkestate.com.

Starling and Zopa CEOs to speak at LendIt Europe (Specialist Banking), Rated: B

Anne Boden of Starling Bank and Zopa’s Jaidev Janardana will be speaking at LendIt Europe, which brings together fintech experts from across the continent.

The conference takes place on 9-10th October at the InterContinental London – the O2, where more than 120 speakers will take to the stage with experts from banking, lending, technology and regulation.

Anne will be speaking on LendIt’s keynote panel, which will look at the digitalisation of finance and how customer expectations are changing.

International

How Banks Are Driving API-First Strategies (PYMNTS), Rated: A

The latest edition of the PYMNTS.com B2B API Tracker™, a FI.SPAN collaboration, examines how APIs are helping both banks and smaller businesses address their fears and embark on new ventures in new markets.

Recent research indicates merchant anxiety over non-payments is widespread. According to a study by Payoneer, 75 percent of small- and medium-sized businesses (SMBs) have backed away from global trade over concerns of not getting paid for their services.

India

OpenTap aims to lend ₹100 cr. by Dec. 2018 (The Hindu), Rated: A

OpenTap, a fintech firm that enables peer-to-peer lending for middle and low income borrowers, aims to facilitate ₹100 crore in short term loans by the end of 2018.

The Chennai-based fintech firm provides alternate financial services to blue-collared workers, which is two times of net salary. As on date, it has provided credit worth ₹3 crore to 1,200 borrowers.

Asia

Wish Finance Introduces Blockchain-Based Lending for SMEs, Schedules ICO (Crowdfunding), Rated: AAA

Wish Finance, based in Singapore, has announced the launch of its blockchain-based lending platform for small and medium businesses. The company has reportedly issued 100+ loans in 2017 during a soft launch with every loan successfully repaid and 0% default rate. Wish Finance plans to keep its entire portfolio on the public blockchain, anonymized, so investors can audit its performance at any given time.

Wish Finance is offering merchant cash advances and business loans with interest rates based on the company’s real cash flow, not assets. Wish Finance said it has direct access to POS terminals infrastructure to see real time financial transactions, which it combines with the local market data for scoring. Wish says it issues a loan in 24 hours, and then deducts a few percents of the merchant customer’s’ payments to automatically repay the loan. In this way, repayments are made seamless and effortless for SMEs. Each loan is said to be insured from customer’s bankruptcy.

Trade finance gap narrows amid minimal fintech impact (Global Trade Review), Rated: A

The global trade finance gap has fallen from US$1.6tn to US$1.5tn, but the impact of fintech has been minimal to date.

But despite the industry’s zeal for digitisation, just 20% of firms reporting have used digital finance platforms. In line with global trends, peer-to-peer lending is the most-used fintech model (23%).

74% of rejected trade finance transactions are for SME and midcap applicants, with 29% of these being rejected over KYC concerns. Last year’s survey showed that 56% of SME trade finance proposals are rejected, compared with 10% of multinationals.

Fintech firm SixCap responds to complaints about its investing strategy game (CNBC), Rated: A

Singapore-based financial technology company Six Capital Groupresponded Thursday to complaints from users who say they’re unable to cash out from the firm’s web-based strategy game.

The game, called Tagg Switch, works similarly to how trading currencies works: Players purchase one of six types of so-called “Nodes” that represent a different currency — either the U.S. dollar, Singapore dollar, British pound, euro, yen or the Australian dollar.

But a report from Singapore’s The Straits Times last week said users have complained online about facing problems cashing out of the game. However, the report added that there weren’t yet any complaints registered with the Consumers Association of Singapore, a consumer protection group.

Authors:

George Popescu
Allen Taylor

Tuesday August 22 2017, Daily News Digest

Peter Renton investment results

News Comments Today’s main news: PawnHero lands $9.7M financing. AltFi Data scoops equity investment, appoints advisory board. Funding Circle to launch new Autobid, Autosell lending features. SocietyOne celebrates fifth anniversary. Today’s main analysis: Peter Renton’s MPL results for Q2 2017. Today’s thought-provoking articles: How Amazon’s Alexa will upend wealth management. The future of banking investments. Will finance businesses jeopardize the credit quality […]

Peter Renton investment results

News Comments

United States

United Kingdom

China

European Union

International

  • Instant gratification and real-time vacations. AT: “In 2005, my wife and I toured Germany by train. At that time, we had our laptops and managed to book hospitality services using the public railway system’s free wi-fi. We thought it was cool that we could plan a two-week vacation on the fly and move from one city to the next with minimal planning. Today’s technology is even better and more readily available for this type of ‘vagabonding’.”
  • International REITs.

Australia

APAC

Middle East

News Summary

United States

My Quarterly Marketplace Lending Results – Q2 2017 (Lend Academy), Rated: AAA

One could almost say my returns are in a downward spiral. Since peaking in Q1 2014 at 12.44% my returns have decreased pretty much every quarter and for the last two years that decrease has averaged around 0.5% per quarter.

This past quarter my overall returns stood at 7.28% and the returns for my original six accounts were 5.07%. My worst Lending Club account was my original account there and it came in at 1.95% for the year. The only good news, if there was any, was that I did not have a negative quarter in any of my accounts this quarter unlike in Q1.

Source: Lend Academy
  1. All the account totals and interest numbers are taken from my monthly statements that I download each month.
  2. The Net Interest column is the total interest earned plus late fees and recoveries less charge-offs.
  3. The Average Rate column shows the weighted average interest rate taken directly from Lending Club or Prosper.
  4. The XIRR ROI column shows my real world return for the trailing 12 months (TTM). I believe the XIRR method is the best way for individual investors to determine their actual return.
  5. The six older accounts have been separated out to provide a level of continuity with my earlier updates.
  6. I do not take into account the impact of taxes.

Lending Club

While Lending Club shows an 8.19% return I ignore that number and do my own calculation. My TTM return here is at an all time low of 1.95% but at least I have reversed what happened in Q1 when I had a negative quarter.

Prosper

Source: Lend Academy

Direct Lending Income Fund

The Direct Lending Income Fund continues to be my most consistent performer returning solid double digit returns every quarter since I started investing back in 2013.

How Amazon’s Alexa will upend wealth management (Financial-Planning), Rated: AAA

Advisors wondering how Amazon will enter wealth management should look to its cloud computing arm, Amazon Web Services, which is pitching the natural language processing, machine-learning brain behind its voice interactive service to wirehouses, broker-dealers and robo advisors.

Already, UBS has partnered with Amazon to enable clients and non-clients of the bank to get answers to financial and economic questions through Alexa.

The Future Of Banking Investments (Modest Money), Rated: AAA

I’ve actually had this subject on my mind for awhile. In my article “Customer Experience And Retail Banking: Why Banks Need To Enter The Modern World”, I discussed a day where my district manager came to show us the ABSOLUTE IMPORTANCE OF LOBBY LEADERSHIP!!!!!!! I was rather underwhelmed by its importance, but overwhelmed by the fact that the banks were all putting such a heavy focus on greeting customers at the door and making each trip to the bank “an experience”

One of the downsides of the future of banks—and one of the things that might compel someone to avoid bank stocks—is that they are slow to change. They are loathe to change.

Other businesses are trying to please their customers. Banks are trying to please their regulators. Because customers don’t issue multi-million dollar fines on banks when they don’t get what they want.

A New Challenger Has Entered The Battle!

Businesses always have competition within their field. Banks are no exception. Banks compete with other banks to provide their services to the global market.

Except now, with fintech growing at a record pace, banks face competition from small fintech companies and major technology giants such as Google and Apple.

We’ve seen companies like Lending Club take the world of lending andinvesting by storm with their peer-to-peer lending services. LendingTree has changed the way people shopped for mortgages, and LendKey is fast becoming a leader in student loans by acting as a broker for not-for-profit lenders and providing full after-funding services. I wrote a review about LendKey here.

For non-lending companies that aren’t brought to you by the letter “L”, there’s PolicyGenius (an online life insurance broker). There’s Acorns, a “micro investment” company that takes each of your debit card purchases, rounds them up to the nearest dollar, and invests the spare change into your investment portfolio. And of course, there’s PayPal, the legendary online payments/money transfer company.

Of course, the fintech firms aren’t even the largest future competitors! Ironically, it’s non-financial technology giants that pose the greatest threat to the future of traditional banks!

Why I Think Bank Stocks Are A Great Future Investment

No, I’m bullish on banks because I think that they will adapt, in their own unique way.

Read the rest of this snarky analysis.

What Key’s fintech investments say about commercial payments (American Banker), Rated: A

Last week the Cleveland-based bank announced it had taken an equity stake in the fintech firm Billtrust, which provides digitized and automated accounts receivable capabilities for companies. The investment is one of a series the $134 billion-asset Key has made in the space in the last two years.

Other banks are also making an effort to enhance commercial payments capabilities. Wells Fargo, for example, in June announced that receipt imaging would be available for commercial card customers who use the bank’s commercial card expense reporting service, which allows them to upload and manage receipts directly on mobile devices. U.S. Bank also began offering corporate clients a virtual payments service, for employees who need to make a one-off work-related payment or who make purchases rarely enough that they don’t need a physical plastic corporate card.

Key is hoping that B-to-B payment solutions will make it stand out in the competitive landscape of commercial banking.

Making Friends with Fintech: Tips for Bankers (ABA Banking Journal), Rated: A

Time and reality have since set in, and the tone of the conversation has shifted away from “compete” toward “collaborate.” Banks increasingly see the value of capabilities developed by fintech firms, and those companies in turn are becoming better acquainted with the challenges of regulation and other barriers to bringing their products to market.

For banks, the wakeup call has been the realization that customers are coming to value—and expect—a frictionless banking experience. And if banks can’t provide that kind of frictionless experience, Henrichs says, they’ll turn to alternate solutions.

Keys to building a successful fintech strategy

1. Adopt the right cultural mindset.

First and foremost, the bank must have an appetite for innovation.

For some banks, this may involve a shift away from viewing fintech companies as simply third-party vendors or service providers, and instead as collaborators working side by side to develop something new.

2. Do something.

And size isn’t an excuse to sit back and wait, Henrichs adds. Rather, it’s about choosing an area of focus that makes sense for the bank in terms of available resources. While that may not always be a big, sexy innovation, banks can start by achieving smaller, incremental change—something as simple as building and beta testing a new email delivery system can help build up the bank’s “try and fail muscle” and help lay the groundwork for future, larger-scale projects.

3. Be forward-looking.

Consumers’ demands are shifting every day, and new products will continue to hit the market at an unrelenting pace. Knowing that, bankers must be able to keep an eye on the horizon.

Will the human-robo approach to wealth management become best practice? (WhatInvestment.co.uk), Rated: A

According to the quarterly Fiserv “Expectations & Experiences: Borrowing and Wealth Management” survey conducted in June 2016, 49 per cent of consumers are interested in receiving financial advice from a robo-advisor.

However, there are limits to a robo-only approach. That is why we are witnessing an increase in wealth management firms that incorporate both digital advice and human advice to create a hybrid model, which is likely to become best practice in the industry.

Property Partner adds student assets to portfolio (Property Week), Rated: B

Real estate crowdfunding platform Property Partner has added student accommodation assets to its portfolio for the first time due to its high returns.

Online financial websites abound with free information (Lebanon Democrat), Rated: B

Annualcreditreport.com is a free website and app which will allow you to get a free copy of your credit report every 12 months from each credit reporting company.

Nerdwallet.com is another free website and app. The site offers financial tools and objective advice to help people better understand their financial options and make the best possible financial decisions.

Mint.com is a free website and app that helps you create budgets that make sense today and set you up for success tomorrow.

Bankrate.com is a free website and app that will help you find and compare rates on financial products like mortgages, credit cards, car loans, savings accounts, certificates of deposit, checking ATM fees, home equity loans and banking fees.

United Kingdom

Funding Circle to Launch New Version of Autobid & Autosell Lending (Crowdfund Insider), Rated: AAA

On Monday, Funding Circle announced it is set to launch a new version of its existing Autobid and Autosell lending tools. Funding Circle will be eliminating the option to manually choose which businesses an investor may lend to and which loan parts to sell will be withdrawn. This is a significant shift in operation of the peer to peer lending platform as it begins to operate more like a fund.

Funding Circle created a new section on their web site dedicated to the explanation as to why they were moving away from peer to peer lending and becoming more like a fund by eliminating manual selection.

While many investors have enjoyed manually choosing loans, there are some drawbacks to it:

  • Many investors do not currently benefit from lending to all types of businesses.
  • It can mean your lending is not spread evenly across lots of businesses.
  • It can be confusing for investors.73% of new investors who join Funding Circle choose Autobid, and 80% of Funding Circle investors* say simplicity of lending is important to them.”

Regulatory spotlight on crowdfunding & P2P lenders (Moore Stephens), Rated: A

The FCA has launched a crackdown on peer-to-peer (P2P) lending, in the coming months, aiming to ensure protection for retail investors within this heavily risk-associated market.

China

Finance businesses may jeopardise credit quality of internet companies, Moody’s says (SCMP), Rated: AAA

These operations could weaken the internet companies’ credit quality, especially if their finances are consolidated on the technology companies’ accounts, Moody’s Investors Service said.

That’s because most internet companies don’t generate enough profits from operating these businesses, and they lack a track record of holding borrowers accountable for timely payments on their loans, Moody’s said.

Source: South China Morning Post

Unruly and unregulated, nation’s Internet finance sector urgently needs supervision (Global Times), Rated: A

After years of explosive but unruly growth, the online finance market requires cooling through tighter regulation.

On the contrary, there were few regulations to guide or hamper China’s Internet finance industry, with no such requirements as reserve levels or loan-to-deposit ratios. The near-absence of regulation greatly lowered the barriers to entry for the sector, which witnessed both explosive expansion and high failure and fraud rates as it grew. Take P2P lending platforms, for example. As of the end of July, 5,916 P2P lending platforms had been set up in China, but only 2,090 were operating normally, with the rest either encountering liquidity problems or simply closing, according to statistics from wangdaizhijia.com, a P2P industry portal.

Views on Yu’E Bao: easy for payment but difficult in credit! (Xing Ping She), Rated: B

Ant Financial has a big market share in the online payments industry in China. However, its ambitions go far beyond that. Recently, Ant Financial was known to get involved in the credit market.

Ant Financial seeks to merge the gap between the Yu ‘E Bao account and the general bank account through the online merchant bank. It hopes to connect the supply and demand side of the credit in its own account system, just as the bank account do.

But it won’t be easy. The biggest difference between the credit business and the payment business is that the credit business is a heavy capital business and a highly regulated licence business with a strong social spillover effect.

European Union

Sweden Cryptocurrency Boom: Top 3 Swedish Fintech Startups To Watch (IBT), Rated: AAA

The Swedish startup Klarna made waves this summer by launching its own peer-to-peer payment app called Wavy and acquiring a full banking license, which sets Klarna apart as one of the few fintech companies able to compete with traditional banks head-on. TechCrunch described it as a $2 billion startup working the  700,000 e-commerce sites. In June, Visa Inc. announced it is buying a stake in Klarna plus forming a payments partnership. Klarna is now widely considered one of the world’s most promising fintech startups.

The Stockholm Fintech Hub is less than a year old and is now reportedly home to more than 200 startups, plus representatives from a few global players like IBM and Microsoft.

There is a small but growing demand for bitcoin in Sweden. Sweden’s central bank is even considering the merits of making its own national cryptocurrency. In the meantime, Safello aims to become the “ Coinbase of Europe,” since the European bitcoin landscape is far more diverse than North America in terms of regulation and user habits. Coinbase, arguably the world’s best funded bitcoin exchange, is already available in Europe. However, Safello sets itself apart by focusing exclusively on the needs of European users, including support in nine different languages.

So far, Schuil said Safello has facilitated $10 million worth of transactions involving tens of thousands of European users.

Klarna and Safello aren’t the only Swedish startups with the potential to completely overhaul how people interact with money. Among all the startups buzzing around Stockholm, Biohax International certainly stands out. Biohax CEO Jowan Osterlund told IBT his team has implanted 3,000 microchips in people’s bodies, usually their hands, most of which happened in the past year.

These microchips can be used for purchases like train tickets and food. The Wisconsin company Three Square Market now lets employees buy office snacks with the swipe of a bio hacked hand, while also using the chip as a workplace ID for office equipment.

AltFi Data scoops equity investment, appoints advisory board (AltFi), Rated: A

The transparency agenda in online lending has taken a step forwards, as another analytics firm raises capital. AltFi Data has raised an undisclosed sum of equity funding, in tandem to forming a new advisory board.

Roger Spooner and Peter Wilson will join existing backer and executive board-member Michael Baptista on the newly established advisory board. Spooner was most recently a member of the management committee at global data firm Markit, where he was head of global client management. Following a 20 year career in private equity, Wilson was the inaugural CEO of British Business Bank Investments, where he was responsible for £1.5bn of government investment. In this role he oversaw a number of early institutional investments within the UK’s marketplace lending sector.

Funding campaign aims to establish new co-working space in Dublin (Irish Times), Rated: B

Sona 10 Newmarket, which is located next to the Teeling Whiskey Distillery, is being created in collaboration with the long-established Dublin Food Co-Op and will be hosted on its premises.

The brainchild of Adrian O’Connor, a Canadian entrepreneur who has lived and worked in the area for about a decade, Sona 10 has already raised some private funding to get the building open with some tenants already coming on board.

It is now seeking to raise an additional €25,000 via the Irish crowdfunding platform Flender to kit out the premises.

International

Real-Time Vacations: The Instant Gratification Of Fintech (Forbes), Rated: AAA

Being able to transfer money between accounts in real-time has become part of our daily lives, so much so that when these automatic services do not work, it becomes a problem.

Smartphones have become global standard: ‘conventional banking meant writing traveler’s checks and exchanging physical currency ahead of a trip, both of which are very expensive for the average consumer. Since then, new fintech providers – even in emerging markets – have dramatically increased the acceptance of foreign credit and debit cards,’ Likar said.

Vacationing in real-time is here: ‘you can now rent an apartment for same-day arrival on Airbnb or HomeAway, find last-minute dinner reservations through OpenTable, borrow a car near your location with Turo, and even book by-the-minute hotel rooms through the Recharge app.

Another aim of the fintech industry, in the same vein of the eradication of cash, is helping those that are unbanked and underbanked pay for services only available for those with credit cards. ‘Most airlines today accept payments from alternatives like PayPal. Other financial services companies, such as Affirm, offer three, six and twelve-month financing plans for customers who cannot afford to pay for the flight up front.’

WeSwap is a multi-currency card that can hold up to 18 different currencies, ensuring that consumers can lock in the exchange rate upfront rather than after the purchase,’ Likar mentioned.

International REITs: An Overlooked but Surging Asset Class (Investopedia), Rated: A

In the U.S., the real estate sector is one of the smallest groups in the S&P 500, but real estate investment trusts (REITs) are popular among income investors.

As WisdomTree points out in a recent note, a massive chunk of global real estate investments are actually found outside the U.S. (See also: Eyeing Emerging Markets REITs? See These ETFs.)

Australia

SocietyOne Celebrates Five Year Anniversary Of Helping Customers (Crowdfund Insider), Rated: AAA

Australia-based online lender SocietyOne announced on Monday it is celebrating its five-year anniversary of helping customers achieve their lending needs. This celebration comes less than two months after the lending platform surpassed $300 million in total originations. The lender revealed that more than 13,000 customers thanks to $325 million provided by its investor funders.

APAC

PawnHero bags $ 9.7m financing, partners PLDT fintech arm (Deal Street Asia), Rated: AAA

Southeast Asia’s first digital pawn shop PawnHero has closed a $9.7 million (P500 million) financing deal with a Philippine investment bank even as it signed a partnership agreement with the fintech arm of telco giant PLDT.

Middle East

Ever a lender or a borrower be… (Khaleej Times), Rated: AAA

The key to the banks’ risk taking ability is aggregation. The bank is able to get the deposits at scale and at the same time lend to a large number of customers most of which are likely to pay back. In a portfolio of loans, historically, only a small percentage is non-performing. The individual lender has so far not had the ability to create a portfolio. The start of crowdfunding a few years ago began to change that. Crowdfunding works in the area of providing returns through some level of ownership of either the product itself or the company which is promoting it. For individual investors seeking a stream of steady income on the other hand, P2P Lending or Marketplace Lending makes more sense.

However, the speed of growth of P2P lending outstrips that of traditional banking. An excellent December 2014 whitepaper, A Trillion Dollar Market By the People, For the People published by Foundation Capital, describes the blistering pace at which P2P lending grew from a base of $870 million dollars in 2012. Estimates of the size of the industry vary from between $100 billion to $200 billion. The whitepaper predicts that the market size will be about $1 trillion by 2025.

On average, P2P lending platforms like Beehive are able to reduce interest rate spreads between sourcing and lending money by about 400 basis points (4 per cent). That’s because players in this space do not keep the loans on their balance sheets.

Authors:

George Popescu
Allen Taylor

Wednesday April 26 2017, Daily News Digest

robo-advisors deal share

News Comments Today’s main news: Wela pairs AI with financial advisors in mobile app. KBRA assigns prelim ratings to Avant Funding Trust 2017-A. Assetz Capital to launch property-only, longer-term accounts. Mint Bridging ups development as FC exits market. China Creation Ventures leads $16M IceKredit round. Today’s main analysis: Affordability of houses in U.S. cities relative to income. Today’s thought-provoking […]

robo-advisors deal share

News Comments

United States

  • Wela launches mobile app pairing AI with real financial advisors. GP:”In online lending the equivalent would be mixing AI underwriting and human underwriting. “AT: “It won’t be long before everyone is managing their finances with mobile apps: Household income, investments, savings, college education expenses, you name it. Artificial intelligence will be a major part of that movement.”
  • Kroll assigns preliminary ratings to Avant Loans Funding Trust 2017-A. GP:”Avant continues to securitize and the securitization continues to perform well. This is great news for Avant and their peers.”
  • Affordability of houses in major U.S. cities relative to income. GP:”Afforability of housing, as it is the largest budget item in most people’s budget, is correlated with all kind of useful parameters like affordability,etc. However, the correlation is not always in the direction one would expect: if housing is cheap it could mean people have no credit/only expensive credit options/no good income , etc. “AT: “While interesting data, this says nothing about whether these markets are good investment markets for real estate. Rather, its says a lot more about whether John Q. Homeowner can afford to buy a home in these markets. Looking at median incomes, I’d say the majority of income earners all across the country would have a difficult time buying a home in most of these markets. But the data can also be misleading. For instance, in Dallas, the median house value is $162,300, but the average middle-class home purchaser can get a home for half that. Medians don’t give a realistic view of on-the-ground reality, in my opinion.”
  • Upgrade to hire up to 300 in Phoenix. GP:”Renaud Laplanche is hiring up to 300 people after barely opening doors. Lending Club I believe has about 1,000 employees. In my personal experience in growing companies I made the mistake of hiring too many too fast and I now prefer to see what I can do with as few people as possible.” AT: “Upgrade is expanding fast. I wonder why they chose Phoenix.”
  • Reliamax now services $275M in private student loans. GP:”A decent size portofolio. We encourage as much transparency as possible. I wish more companies published their portofolio size and numbers.”
  • RIP MPL? AT: “This is an apologia for Misys, which I think is trying too hard to convince people that banks can compete with fintech companies on technology. One problem: They haven’t proven it yet, and it doesn’t appear as if they are working at it real hard. In order for the premise to be true, community banks will have to follow the larger banks in adopting emerging technologies, and very few of them are. I don’t even think it’s on their radars.”
  • Lending Technologies introduces Leads2Lend. GP:”We have on our database close to 20 tech companies who provide platforms to lenders. How many more will enter this space? Is this a crowded space yet?”
  • Banks to overhaul their technology. AT: “There are some valiant efforts here, but big banks are not agile. I don’t see these changes happening as rapidly as their digital competitors in fintech can operate.”
  • How the CRE industry is adapting to fintech.
  • Comparative look at REITs and MPL. GP:”REIT is very tax efficient.”
  • Roostify names Frank Gelbart as CRO.

United Kingdom

European Union

China

International

  • Mapping robo-advisors around the globe. GP:”Robos market is well correlated with online lending.” AT: “That the wealthiest nation in the world would lead in WealthTech funding is not surprising. But this is about investment. U.S. consumers have not adopted robo-advice as quickly as consumers in other nations, especially Asia.”
  • Fintech patents jump, U.S. leads. GP:”I am surprised China comes in as #2.” AT: “I think U.S. creators care more about protecting their intellectual property than creators in other parts of the world, or it could be that the U.S. mechanism for protecting patents is much more sophisticated and effective than in other parts of the world. Either way, you can’t judge the size of the fintech sector by patents alone. Otherwise, the UK would be way down the list.”

Australia

News Summary

United States

Wela Launches World’s First Financial Advice App Pairing Artificial Intelligence with Real Advisors (Yahoo! Finance), Rated: AAA

Wela today announces its free mobile app changing the way financial advice is delivered by pairing real financial advisors with Artificial Intelligence (AI) through the personification of its digital advising algorithm, Benjamin. The first true digital advisor, Benjamin utilizes AI to track users’ daily, weekly and monthly spending habits and provides personalized advice based on their financial needs and goals. Unlike other free consumer finance apps on the market, Wela pairs AI capabilities with a human touch, offering access to real financial advisors via phone, video chat or in-person at no additional cost.

The Wela iOS app enables users to track all their financial accounts in one place, protecting user privacy by leveraging bank-level security, as well as 256-bit SSL encryption and two forms of secure authentication. Capable of aggregating data from more than 13,000 financial institutions, Wela’s digital advising algorithm, Benjamin, uses linked account information to run a complete analysis, helping users take steps toward financial health based on three main pillars: creating an emergency reserve, paying off debt, and implementing an investment strategy. In addition to Benjamin’s foundational metrics, the algorithm delivers custom insights on demand, helping users stay on track to reach their short- and long-term goals.

Wela’s in-app budgeting tool, Benjamin, makes budgeting tangible and prevalent on a day-to-day basis. Once Benjamin is activated, the onboarding process begins with the creation of a personalized ‘Daily Spend Limit’. Benjamin then compares that number to actual daily spending and other transactions so users can understand how they are progressing toward the customizable goals they have set for themselves within the app. With real-time analysis of daily spending, rather than an end-of-month review, users are empowered with a better budgeting method and reassurance in their progress.

“Wela is the first free app to give comprehensive financial advice in real time in real-world scenarios personalized for you,” said Matt Reiner, Wela CEO and co-founder.

KBRA Assigns Preliminary Ratings to Avant Loans Funding Trust 2017-A (Yahoo! Finance), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Avant Loans Funding Trust 2017-A (“AVNT 2017-A”). This is a $192.6 million consumer loan ABS transaction that is expected to close on May 4, 2017.

This transaction represents Avant, Inc.’s (“Avant”, the “Servicer” or the “Company”) fourth rated securitization collateralized by a trust certificate backed by unsecured consumer loans originated through its online marketplace lending platform (“Avant Platform”). There have been four prior unrated securitizations, in which Avant or Avant’s institutional investors were the sponsors and the collateral was unsecured consumer loans originated under the Avant Platform.

Avant has a strategic partnership with WebBank, whereby WebBank, a Utah chartered industrial bank, originates loans through the Avant Platform. Avant utilizes technology and customized scoring models to assign credit grades. The Avant website is designed to provide customers with an easy interface and quick online loan decisions at competitive rates compared to traditional lending platforms.

Avant retains a portion of loans originated through the Avant Platform. Avant does not fund loans through a peer-to-peer platform, but instead partners exclusively with institutional investors for whole loan sales.

Affordability Of Houses In Major U.S. Cities (Relative To Income) (Investment Zen), Rated: AAA

Using median income data from the U.S. census and median home prices from Zillow, this map shows how many years of median income it costs to purchase a median house in each of these cities.

DETROIT

#1

  • Median House Value: $38,200
  • Median Household Income: $25,764
  • Amount of Income Needed to Purchase: 1.5x

SAN FRANCISCO

#27

  • Median House Value: $1,147,300
  • Median Household Income: $81,294
  • Amount of Income Needed to Purchase: 14.1x

California finance startup opening downtown Phoenix office, hiring up to 300 (Biz Journals), Rated: A

San Francisco-based financial services startup Upgrade Inc. is opening its first expansion office in downtown Phoenix, with plans to potentially hire up to 300 people.

The startup is opening an operations center in July on two floors of the Renaissance Square Building One at 2 N. Central Ave.

ReliaMax Now Services $ 275 Million in Private Student Loans (Yahoo! Finance), Rated: A

ReliaMax, the complete private student lending solutions provider for banks, credit unions and alternative lenders, says it services $275 million in loans, an increase of nearly 670 percent from the close of 2015, driven by portfolio conversions that helped banks, credit unions and alternative lenders enter the private student loan asset class.

The ReliaMax loan servicing platform was built with the latest technology and exclusively for private student loans, making it unencumbered by the infrastructure constraints facing other student loan servicers whose platforms were designed to principally serve federal student loans or other consumer loans.

Marketplace lending RIP? (Bankless Times), Rated: A

Once banks master financial technology, the marketplace lending industry is in deep trouble, Jean-Cedric Jollant believes. And the bad news is that’s starting to happen.

“The (fintech) challengers made the move by trying to build a hybrid model where they may not own 100 per cent, 50 per cent or even zero per cent of a loan, but the need the technology to do that,” Mr. Jollant said. “They need new underwriting material and servicing software which they don’t necessarily have.”

Once more banks embrace new technology, they will be able to capitalize on a long list of advantages they have over marketplace lenders, Mr. Jollant said. Their abilities to process payments, service credit and onboard customers are superior. Close the technology gap and the banks can provide much better service at competitive rates.

“So (the marketplace lenders) are just intermediaries. Eventually they will not be able to compete with banks. The only difference between what the marketplace lenders are doing today and the banks really is the underwriting model and that gap will be breached really fast.”

Mr. Jollant believes the venture capital industry will soon begin to sour on marketplace lenders, possibly as soon as later this summer. Those surviving that will then have to withstand the next downturn, which many models have yet to be tested by.

Lending Technologies Corp Introduces Leads2Lend CAM Solution (PR Newswire), Rated: A

B2B fintech firm Lending Technologies Corp, a pioneer in loan origination technology, announces Leads2Lend, its new marketing platform for alternative lenders. Produced in cooperation with Lead One Marketing, Inc. the Leads2Lend program provides alternative finance companies with an all-in-one digital solution to identify and engage with potential new customers—ultimately leading to a stronger bottom line.

The Leads2Lend platform combines Lending Technologies Corp’s white-label customer acquisition management (CAM) technology with a digital marketing program that connects alternative finance firms with new clients. Using Lending Technologies Corp’s proprietary digital onboarding and loan building tools, designated agents can individually download leads and create bespoke lending solutions for the clients. Other functionalities include tools to expedite credit decisions and facilitate loan package construction.

Lending Technologies Corp’s white-labeled CAM technology, serving customers in the U.S. and Switzerland, provides a fully digital, mobile-responsive, end-to-end process for banks and alternative finance companies that allows lenders to save time and money while reducing the risk associated with underwriting loans to small- and medium-sized enterprises. Lending Technologies Corp provides a seamless, paperless solution to all users and gives loan officers the latest digital tools for lenders to issue credit decisions—all with a comprehensive back end.

An omnichannel overhaul in 5 steps (American Banker), Rated: A

U.S. Bank and Bank of Montreal have begun multiyear overhauls of their websites, mobile apps, call centers and ATMs.

Fix what’s broken. Both U.S. Bank and Toronto-based BMO are starting with the “dissatisfiers” — the things that vex customers or make them give up on one channel (say, mobile) and switch to another (such as the call center). JPMorgan also made this part of its approach when it rewrote its mobile app last year.

Make incremental enhancements. 

U.S. Bank’s mobile app was improved 27 times in the past two years, with the help of so-called agile development methods.

BMO also has adopted agile development. “Gone are the days when our tech people took months and months and built detailed requirements,” Badarinath said.

Create a “unified customer experience.” For years, banks have talked about having a consistent experience across mobile apps, websites, branches, ATMs, video kiosks, call centers and text messages. Yet you would not want to talk with a teller the same way you tap on a mobile app or withdraw cash from an ATM.

This fits with recent Javelin research that found most consumers would prefer to apply for credit cards in digital channels: 48% said online, 13% mobile, and 34% said they would prefer a branch. For a checking account it was 41% online, 8% mobile and 49% in a branch.

Today, only 8% of successful applications start and finish in a smartphone or tablet.

Establish an innovation team.

BMO has a group whose job is to look for interesting fintechs the bank can partner with to augment his group’s work.

Test emerging technologies.

And it is exploring options for using chatbots to let people use text messages to request and perform transactions.

Gaston envisions using augmented reality to help customers who want to purchase a car, a house or a boat understand their options.

He foresees using machine learning in the bank’s decisions about online accounts.

How is the CRE Industry Adapting to the Emergence of Fintech Solutions? (NREI Online), Rated: A

NREI recently spoke with Frank Muhlon, head of transactions at CrediFi Corp., to hear more about what’s ahead for this segment of the market.

Frank Muhlon: For sales and financing, technology allows for faster and broader market reach, meaning you have the ability to get to multitudes of investors and lenders. Being able to get to those people faster is really helping to drive the business.

The other area is risk mitigation and the opportunity to reduce your risk, which goes hand-in-hand with more transparency and more information.

Frank Muhlon: At its heart, it has always been a people business and I really don’t foresee that changing. But tech and innovation have been a hallmark of commercial real estate for some time. Eight to 10 years ago we went through a significant and humbling downturn and going through that adversity brought innovation and numerous opportunities. Institutional capital, debt and equity capital got reshuffled, and it presented some opportunities in the marketplace.

I think there is a segment of our industry that is not completely convinced that tech is necessarily disrupting our business in the way that it is disrupting other industries.

Frank Muhlon: In the last five years, the crowdfunding space has grown. There were fewer than 10 pioneering real estate platforms focusing mostly on equity investment. Now there are arguably over 100 sites covering the entire capital stack.

Five years ago, crowdfunding as a whole was a few billion [dollars] in activity globally. In 2016, it was well over $50 billion. Real estate is a more modest piece of that, but it has grown substantially as well. There was about $3.5 billion in activity on real estate crowdfunding sites in 2016. That has been a tremendous growth market, and alternative financing and lending is seeing similar trends.

The online lending industry was about $40 billion last year and it could be upwards of $1 trillion in the next five years.

Frank Muhlon: CredifX is the first cloud-based and data-driven commercial real estate financing marketplace for borrowers, brokers and lenders. The platform focuses on loans of $1 million and up across all major property types nationally. We leverage technology to match loan applicants with financing based on their criteria and the extensive loan product offerings in our lender network.

Comparative look into REITs and Marketplace Lending (Realty Biz News), Rated: B

One reason to invest in REITs is the favorable tax treatment and dividend payouts. Unlike investing in businesses where you expect to see increasing profits from continued growth, 90% of the profits have to be issued in dividends from investments in REITs. Instead of waiting for a business venture to show profits before receiving a dividend, investors get their share quarterly or annually in regular dividend checks.

With Marketplace lending, investors can expect to receive monthly disbursements throughout the lifetime of the loan. Principal investments are typically returned to investors between 6 months to 24 months, depending on loan payoff dates and loan extensions. Servicing fees vary by marketplace lending platform, but typically range from 1% – 3%, compared to REIT management and servicing fees from 3% – 15%.

Finally, REITs instantly diversify your portfolio resulting in better returns. In one REIT you may be invested in a commercial building, an apartment building, and a couple of warehouse distribution centers. The more diverse the portfolio, the better the returns, and the better the hedge against volatility.

While this style of diversification may work to the benefit of experienced REIT investors. marketplace lending allows portfolio diversification controlled by the investor.

Roostify Names Frank Gelbart as Chief Revenue Officer (Yahoo! Finance), Rated: B

Roostify, a provider of automated mortgage transaction technology, today announced it has named Frank Gelbart as Chief Revenue Officer. Frank will be responsible for driving new and existing revenue streams as well as managing partner relationships for Roostify.

United Kingdom

Assetz Capital to launch property-only and longer-term accounts (P2P Finance News), Rated: AAA

ASSETZ Capital is launching two new investment accounts to capitalise on the surge of demand it has experienced on both the investor and the borrower side.

The peer-to-peer lending platform is expanding its account range to seven offerings, adding a longer-term and a purely property-backed account to its existing 30-day access, quick-access, green-energy, “great British business” and manual loan accounts, it told Peer-to-Peer Finance News.

The longer-term account will offer investors an interest rate of about 4.75 per cent over one-year investments, while the new specialist account, which caters for investors who want to focus exclusively on loans secured against property rather than other assets, will target returns of around five per cent.

Mint Bridging ups development lending as Funding Circle exits market (Financial Reporter), Rated: AAA

Mint Bridging has reported an “influx” of development finance business after Funding Circle announced plans to stop lending in this area earlier in the month.

Its product ranges can accommodate up to £5,000,000 at 80% LTV, with heavy refurbishment projects up to 100% of the purchase price & 100% of the refurbishment costs.

P2PGI keeps NAV growing through UK asset-backed market (P2P Finance News), Rated: A

P2P GLOBAL Investments (P2PGI) continued to shore up its finances in March, posting a 0.55 per cent increase in net asset value, from 0.38 per cent in February, which brings first-quarter growth to 1.17 per cent.

The P2P investor’s shift away from US and unsecured assets, as well as a share buyback last month, was the main driver of the improvement.

US consumer assets now dropped to 45.1 per cent of the London-listed fund’s portfolio, down from 46 per cent a month earlier and 48.4 per cent at the start of the year.

The firm is targeting a further reduction to 30 per cent of total investment, to boost its focus on UK property and asset-backed products, where it said new origination from partnering with P2P lenders has increased significantly in the last quarter

Growth Street Reports Rapid Growth as 600 Investors Sign Up in Just 5 Months (Crowdfund Insider), Rated: A

Peer to peer lender Growth Street is reporting solid growth. The online lender said it has captured over 600 investors since platform launch at the end of 2016. Growth Street is a platform that provides online financing options for UK SMEs. The company also touted its review on 4thWay that categorized the P2P lender as one of the lowest risk platforms in the industry.

High earners log-on for robo-advice (Finextra), Rated: A

The demand for robo-advice rises with income, despite it being widely seen as a low-cost financial advice solution, according to Deloitte, the business advisory firm.

Deloitte’s research shows over half (51%) of people earning £45,000 to £70,000 would use a robo-adviser for investments, compared with just 30% of those on incomes under £15,000.
Demand is highest amongst millennials, but the research suggests other age brackets could be interested in using robo-advice. Over two-fifths (43%) of 35-44 year old workers with a pension would use robo-advice on pensions, as would one-quarter (24%) for the 45-54 year olds and a fifth (21%) of those aged 55 and above. Also, 35% of defined contribution pension holders – more than three million people – would be willing to pay for robo-advice to invest their pension pots, with demand highest (45%) among those with the smallest pensions pots, many of whom cannot afford traditional advice.

An MBA Graduate Left Banking To Launch Online Lender Spotcap Overseas (BusinessBecause), Rated: A

When Niels Turfboer enrolled in the MBA program at IE Business School in Madrid, he looked beyond a traditional career in banking. He decided to join the fast-growing fintech industry instead.

Having worked at institutional lenders for over a decade, his MBA training enabled him to spot an opportunity in the business banking space. Four years after graduation, he joined fintech startup Spotcap as managing director.

Spotcap offers working capital lines of credit — up to £250,000 — to small and medium-sized companies online. Spotcap has a run rate of £100 million in loans per year. The company operates in Spain, the Netherlands and Australia. Spotcap also opened a branch in the UK last year, despite Brexit. The business employs 100 people and has raised €75 million in venture capital.

Q. Did you know you wanted to work in fintech before the MBA? 

I’m a traditional banker. I worked for over a decade in the banking industry. But I wanted to be more entrepreneurial. There were opportunities to be entrepreneurial in banking, but after the crisis, this was gone. I chose a very particular school — IE — because it is known for having a strong focus on innovation and for being entrepreneurial. A large part of the MBA course is focused on teaching people to build and run a company.

Q. You’ve launched in the UK. After the Brexit uncertainty, are you reconsidering?

No. We moved in after Brexit. We were surprised at the result, but having analysed the situation, we concluded it’s not a negative. I see downsides, but not for our business model. We know there will be two years of deal making and uncertainty over trade barriers and freedom of movement. It tends to be bad for the economy, and this has had an impact. But we already had this knowledge moving into the market. We might be able to be more selective about lending to companies in industries that are hit hardest by the uncertainty. We are not going to do cherry picking, but we might take precautions in lending money. At the same time, during uncertainty banks are risk-averse and take a step back, and that opens up opportunities for the alternative finance sector to fill that gap.

Q. Is the MBA curriculum relevant to entrepreneurs?

Yes, at least the MBA I’ve done. At IE, 30% of the courses I did had an entrepreneurial focus.

The House Crowd Celebrates Five Years of Property Crowdfunding (Crowdfund Insider), Rated: A

Manchester property crowdfunding, the House Crowd,  is celebrating five years of operations having raised more than £44 million since it launched it 2012. According to the platform, the House Crowd now serves over 15,000 investors who have received over £9 million in returns. The House Crowd received the ‘Crowdfunding Platform of the Year’ award at this year’s inaugural Property Wire Awards, in recognition of its position in the alternative finance industry.

Lend and earn annual returns of up to 6% with Kuflink (Property Investor Today), Rated: B

The Kuflink Group is offering investors an opportunity to earn up to 6% a year through its peer-to-peer (P2P) lending platform, while also providing short-term finance for those looking to invest in property.

When it comes to the option to lend against various properties on Kuflink’s P2P platform and earn up to 6% gross pa for short-terms, up to 12 months usually, interest is paid monthly.

Secondly, Kuflink offer short-term lending against property for business purposes for terms of up to 24 months.

European Union

The FT 1000: The complete list of Europe’s fastest-growing companies (Financial Times), Rated: AAA

7 Optal United Kingdom Fintech 6,161%

 

21 iZettle Sweden Fintech 3,036%

 

46 Epos Now United Kingdom Fintech 1,579%

 

65 Lemonway France Fintech 1,260%

 

78 RateSetter United Kingdom Fintech 1,176%

 

146 Innofis Spain FinTech 781%

 

150 Fonix United Kingdom Fintech 761%

 

167 orderbird Germany Fintech 703%

 

198 YouPass France Fintech 615%

 

242 Trustly Sweden Fintech 501%

 

335 Prepaid Financial Services United Kingdom Fintech 367%

 

433 Paymentsense United Kingdom Fintech 261%

 

763 Smart Currency Exchange United Kingdom Fintech 114%

 

780 Deus Technology Italy FinTech 110%

 

923 HPD United Kingdom Fintech 76%
China

China Creation Ventures Leads $ 16M Round In SME Credit Firm IceKredit (China Money Network), Rated: AAA

China Creation Ventures, a newly founded venture firm established by several former KPCB executives, has led a RMB110 million (US$16 million) series A round in IceKredit Inc., a Shanghai-based credit assessment service provider catering to small and medium-sized enterprises (SMEs).

Founded in 2015, IceKredit applies machine learning algorithms and big data related technologies to make all-rounded credit evaluations for individuals and SMEs in China.

Its products include an SMEs credit evaluation system and an individual credit assessment system, which consists of an anti-fraud engine, personal credit portrait and missing customer contact information restoration.

China’s new illegal fundraising topped $ 36 billion last year (Daily Mail), Rated: AAA

Chinese authorities vowed on Tuesday to step up a crackdown on illegal funding scams, after reporting 5,197 new criminal cases last year involving 251.1 billion yuan ($36.5 billion), state-run Shanghai Securities News reported.

More than 30 percent of illegal fundraising cases were related to private investment and financial intermediaries, including unlicensed investment advisers and providers of third-party wealth management products, the report said.

Moreover, financial fraud spread last year from China’s east to rural areas, where funds approached unsophisticated Chinese farmers, the office of the joint meeting said.

Last year China approved the arrest of 9,441 people on suspicion of illegal soliciting public deposits and prosecuted 14,745, according to a separate Shanghai Securities News report on Tuesday.

P2P Giant Dianrong is Preparing for Full Blockchain Integration (Coindesk), Rated: A

Already, Dianrong has co-founded a blockchain lending platform called Chained Finance; now, less than a week after the firm hired IPO expert Yawen Cui, he has revealed comprehensive plans to swap over much of the startup’s services to a blockchain.

By January of this year, Dianrong had released a statement showing that 3.62 million investors had originated a total of ¥16.2bn in loans last year alone, a 148% increase over the previous year, and its fourth year of growth.

Then, last month the firm revealed it had joined Taiwan-based Foxconn to launch Chained Finance, a blockchain trade finance platform built using technology from the Linux Foundation-led Hyperledger Project.

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

P2P Lending Funds Depository Cooperation Fair was held in Chengdu
On 24th April, “P2P Lending Funds Depository Cooperation Fair”was held in Chengdu by NIFA. The Fair is aiming at building bridges between P2P Lending institutions and banks.
Owing to the Fair, over 11 commercial banks, including Xingwang Bank, Ping An Bank, Beijing Bank, Shanghai Bank, Baoshang Bank, etc., reached agreements with over 50 P2P Lending institutions and five fintech companies. Officials from People’s Bank of China (Chengdu branch), Bureau of Finance of Sichuan Province, Chengdu financial services office and other relevant departments attended the Fair, with nearly 170 participants.
Chinese:
中国互联网金融协会首办P2P存管对接洽谈会
4月24日,中国互联网金融协会在成都举办“全国网贷机构资金存管对接洽谈会”。据悉此次洽谈会在网贷行业尚属首次,旨在搭建网贷机构与银行的沟通桥梁,促进双方合作。据透露,本次对接洽谈会共有新网银行、平安银行、北京银行、上海银行、包商银行等11家商业银行,与到会的全国50多家网贷机构、5家金融科技公司实现了对接洽谈。参会人数近170余人。人民银行成都分行、四川省金融工作局、成都市金融服务办公室等相关部门领导出席会议。

P2P Lending industry may acquire a bank-like license in the future
On April 22nd, China Fintech 50 Forum(CFT50) was found in Beijing. According to Yang Dong, the vice president of Renmin University Of China Law School and the director of Fintech and Internet Security Research Center(FTCS), who involved in making CBRC Regulations on P2P lending industry, revealed that although P2P is currently playing the role of Internet information intermediary, it may develop to a bank-like institution acquiring a new type of license and the industry also has huge space in the future.
Chinese:
行业整顿后,P2P或将获得类银行牌照
4月22日,在中国金融科技50人论坛成立现场,参与银监会网贷管理办法等新规制定的中国人民大学法学院副院长、金融科技与互联网安全研究中心主任杨东透露,尽管目前P2P定位于网络信息中介,但P2P下一步的发展可能会发放许可,是类似银行的新型牌照,未来的政策空间很大。

The scale of cash loan over 600billion RMB, who will be knocked down by regulations?
Due to the low threshold, lacking of supervision and disorderly development, problems such as violent collection, high commissions and usury, etc., cast a shadow on cash loan.
According to the instructions of the State Council and the requirements of Internet Financial Risk Special Rectification Office, cash loan has been incorporated into the rectification work of controlling Internet financial risk. In addition, Notice on carrying out the rectification work of “cash loan” business activities and its supplementary documents have been issued. Regulators also began to start the cash loan risk investigation.
Chinese:
现金贷规模超6000亿元 上千家平台谁会被监管重拳击倒?
由于门槛低、缺乏监管,无序发展所带来的暴力催收、砍头息、高利贷等问题在现金贷背后投下一片阴影。
根据国务院领导批示及互联网金融风险专项整治工作领导小组办公室要求,现金贷已纳入互联网金融风险专项整治工作,并下发了《关于开展“现金贷”业务活动清理整顿工作的通知》和《关于开展“现金贷”业务活动清理整顿工作的补充说明》两份文件。各地监管部门也由此开始启动现金贷风险排查。

Half-hearted crackdown dents case for Chinese P2P (NASDAQ), Rated: A

A half-hearted crackdown dents the investment case for Chinese peer-to-peer lending. While P2P lender China Rapid Finance is set for a $100 million initial public offering in New York, the timing looks bad. Sector heavyweight Lufax, last valued at $18.5 billion, is unlikely to list soon.

Instead, lending has accelerated and there are still more than 2,000 online platforms in operation, according to industry tracker Wangdaizhijia. Loan volumes in March hit a new record of 251 billion yuan ($36 billion), bringing the total outstanding to 921 billion yuan – up 83 percent in a year.

Shoddy local enforcement is the obvious culprit. Provinces and cities interpret the rules differently, according to an industry insider.

Investors are cautious too. China’s only U.S.-listed lender, Yirendai <YRD.N>, trades at just above 6 times forward earnings, down from more than 15 times last summer.

E.Sun launches new AI chabot to offer futuristic financial advice (The China Post), Rated: B

E.Sun Bank’s (玉山銀行) AI Chatbot (玉山小i) is the latest artificial intelligence financial advisor that Taiwan-based banks have launched to assist locals with any finance-related issues.

The AI Chatbot utilizes the IBM Watson Conversation Service to interpret commands and generate responses, local media reported.

At this stage, the AI Chatbot’s responses are limited to inquiries regarding exchange rates, mortgage assessments, and credit card recommendations. It has yet to acquire the knowledge to answer questions regarding personal financing.

International

Mapping Robo-Advisors Around The Globe (CB Insights), Rated: AAA

Since 2012, private robo-advisors have raised over $1.32B globally across 119 equity investments. Robo-advisors make up the largest sub-category of companies in wealth tech and account for roughly 30% of total funding.

Three of the earliest robo-advisors firms and largest in terms of total funding are Betterment, Personal Capital, and Wealthfront. Though they lead in the US, expanding internationally is a challenge because of the complex international regulatory environment, differing investment practices, and other barriers to entry.

US-based robo-advisors have received 57% of the global deal share since 2012. Germany took second with 9%, followed by the United Kingdom, and China.

The two largest robo-advisor deals outside the US went to Wacai, a robo-advisor and personal wealth management technology company based in China.

The third and fourth biggest deals went to UK-based Nutmeg, with a $37.5M Series C in Q4’16 preceded by a $32M Series B in Q2’14 that included Armada Investment Group, Balderton Capital, Pentech Ventures, and other investors.

Fintech patents jump in “arms race” between banks and startups: These are the 10 countries filing the most (City A.M.), Rated: B

Global fintech patents have grown by 49 per cent in the past five years, reaching 9,545 in 2016 according to official global filings.

The US led the way in terms of numbers of fintech patents with 4,523, more than double the number of the next country, China. The UK boasted more fintech patents than any other country in Europe, ranking seventh with 89 patents, in areas such as banking, exchanges, investment, insurance and payments architecture.

The top 10 countries filing fintech patents

  1. US
  2. China
  3. Korea
  4. Australia
  5. Japan
  6. Singapore
  7. UK
  8. Russia
  9. Canada
  10. Germany
Australia

Fintech firms that walk the talk (The Australian), Rated: A

The rush to judgment about the disruptive power of fintech is premature, given it’s not even clear which part of the financial services value chain will be most affected.

Also, no matter how you cut it, the fact remains that by the end of last year there were 39 fintech companies around the world with valuations in excess of $US1bn, including Xero, which offers cloud-based accounting software for small and medium-sized businesses and is the sole Australasian representative.

Not surprisingly, the dominant vertical where 16 of the 39 companies with valuations in excess of $US1bn ply their trade, is so-called alternative finance, which includes marketplace lending and crowd-funding.

“Consumer lending in the US is a $US1.5 trillion opportunity, and in Australia it’s $100bn and the leading players are yet to crack $1bn.

Authors:

George Popescu
Allen Taylor

Monday March 6 2017, Daily News Digest

Monday March 6 2017, Daily News Digest

News Comments Today’s main news: Lending Club wins motion to compel arbitration, avoids class action.  Orchard: Q3 originations move up. A quiet crash in bank lending? Abundance IFISA attracts nearly 10m GBP investment. Dubai regulates first P2P lender. Today’s main analysis: The Velocity of money. Today’s thought-provoking articles: SFIG Vegas 2017 recap. Legacy banking systems are the risk. Indian FinTechs attracting […]

Monday March 6 2017, Daily News Digest

News Comments

United States

  • Lending Club (LC) wins motion to compel arbitration, avoids class action. GP:”While the agreement between Lending Club and the borrower was supposed to compell arbitration, the industry was concerned that a ruling could override that clause of the contract. Had that been the case the cost of disputes would have been much higher, which is great for the attorneys but not that good for anybody else. We are glad the arbitration clause held the scrutiny of the court.” AT: “This is a huge plus for Lending Club, and for all platforms.”
  • AltFi adds Prosper to AltFi Data Analytics platform. GP:” A good validation point for AltFi Data. We continue to believe that data transparency is a must in order for the industry to succeed. We would like to see more student loan, SMB lending data and Real Estate Crowdfunding Data. I strongly believe that Lending Club’s openness with their data put this industry on the map. And for Prosper having a 3rd party independent company validate and publish their own research on their raw data also should serve as an addition point of confirmation and comfort for anybody doing business with them.”
  • How the velocity of money affects economic growth. GP:” Inflation is controlled by inventory of money and velocity of money. This piece means that inflation is still nowhere in sight, which should affect decisions on central interest rates. And interest rates are at least a little bit important for our industry. ” AT: “Some interesting points, but it isn’t good news for optimism.”
  • SFIG Vegas 2017 recap. GP:” MPL ABS issuance up 59% YoY.”
  • Money360’s unique variable for real estate lending success.
  • REITs vs. RECF. AT: “Again, a good read, but not favorable toward RECF. Actually, this piece attacks head on the selling point RECFs use to attract investors over REITs. Investors shouldn’t make decisions based on sales pitches, anyway.”
  • Cinch is the Uber of financial advice.

United Kingdom

European Union

Australia

India

Asia

MENA

 

News Summary

United States

Lending Club Wins Motion to Compel Arbitration. Avoids Class Action. (Crowdfund Insider), Rated: AAA

Lending Club (NYSE:LC) has was a significant court victory regarding its ability to compel arbitration. The case Bethune v. LendingClub Corp. was filed in the Souther District Court of New York in 2016.

The issue pertained to the interest rate a New York resident was being charged (29.5%). The amount was higher than the statutory limit of 16% under New York’s usury laws. The judge presiding on the case sided with the defendant, Lending Club, by granting the motion the motion to compel arbitration on an individual basis and thus stayed the case pending the outcome of the arbitration. The decision also means Lending Club will dodge a class action lawsuit.

 

Lending Club Bethune Case 1:16-Cv-02578-NRB Document 46 Filed 01.30.17 by CrowdfundInsider on Scribd

AltFi Data Announces the Addition of Prosper Marketplace to the AltFi Data Analytics Platform (AltFi Data Email), Rated: AAA

AltFi Data today announced that it has added the Prosper loan portfolio historic origination data to AltFi Data Analytics USA. The data for loans originated through the Prosper platform can now be presented according to AltFi Data’s established standards. This allows investors to review a track record of net return, together with all supporting metrics, to perform like-for-like analysis against the other marketplace lending platforms that make up AltFi Data Analytics UK – including Zopa, Funding Circle, RateSetter and MarketInvoice.

The availability of standardized data will further facilitate the due diligence that ultimately drives investor adoption of this asset class. The addition of loan data from the Prosper platform also represents the first time that a viable comparison has been made available across geographies.

Prosper Marketplace Net Return to the AltFi Data Marketplace Lending Returns Index methodology

The 12 month trailing net return that investors have achieved through Prosper Marketplace can now be reviewed based on the same standard as the major UK platforms.  In addition to analysis of net return, AltFi Data also provides further analytics covering lending rates, bad debt, arrears, term, gross origination, and net lending/change in outstanding principal.

Champagne corks pop as a ‘Trump rally’ sends Wall Street stocks parabolic (Generatioal Dynamics), Rated: AAA

Back in the 1980s and 1990s, politicians could always count on having their debts and spending programs bailed out by economic growth. Politicians are expecting the same thing today. All they talk about is how they will spend money to grow the economy, and the economic growth will wipe out the debt. It’s a fairy tale that used to work at the end of the last century, in a generational Unraveling era, but stopped working about 13 years ago when we entered a generational Crisis era.

What nobody wants to talk about is the velocity of money. This indicates the rate at which people are willing to spend money. You can’t have economic growth if people aren’t willing to spend money, which means that the velocity of money would have to increase. Instead, we have this:

When the real estate bubble burst in 2007, and the financial crisis occurred, millions of people went bankrupt or lost their homes. At that point, people stopped spending money. They used what money they had to pay off their debts and save money. As a result, the velocity of money has continued to fall steadily since then, just as it did during the Great Depression and World War II.

Investors who are pushing the stock market to new parabolic heights are completely oblivious to the fall in the velocity of money, and in fact have the vaguest clue what it means. Similarly, they’re oblivious to the debt ceiling crisis that’s approaching.

Orchard Publishes Quarterly Online Lending Report: Originations Move Up From Q3 (Crowdfund Insider), Rated: AAA

Orchard’s platform published their quarterly report a few days back covering Q4 of 2016. According to Orchard, loan volume increased in Q4 reversing a trend that began in Q4 of 2015.  While originations ticked up in Q4 versus Q3, they are still nowhere close to where they were back in Q4 of 2015 where they hit an all-time high of more than $3.8 billion.

According to Orchard:

  • Loan originations totaled $2.045 billion in Q4. In Q3 of 2016, loan originations came in at $1.85 billion
  • 2014 and 2015 vintage charge-offs have increased more steeply than in prior years.
  • Borrower rates continued their decline in Q4, falling another 42bps from Q3 levels, largely due to a sharply falling share of subprime originations in the second half of 2016.

SFIG Vegas 2017 Recap (PeerIQ), Rated: AAA

The SFIG Vegas conference set an attendance record this year, mirroring improved investor sentiment amidst an improving economic backdrop. Several participants drew comparisons to the 2004 environment which also featured a rising rate environment, deregulatory agenda, and conditions leading to an acceleration in ABS volumes.

On the regulatory front, the US District Court of the Southern District of New York issued a decision in Madden v. Midland on remand.

Money360’s Unique Variable for Real Estate Lending Success (Crowdfund Insider), Rated: A

Money360 is experiencing rapid growth in the marketplace lending sector for real estate. Recently Money360 announced it had surpassed $200 million in commercial real estate loans after exceeding $100 million last August. Money360 expects to top $500 million in real estate financing by the end of the year representing a rapid acceleration for the peer to peer lending site. Money360 launched in California in 2010 and expanded across the US two years later.

The company looks to provide financing for real estate loans between $200,000 and $5 million.

REITs Vs. Real Estate Crowdfunding (Seeking Alpha), Rated: A

When searching for ‘REITs versus Crowdfunding’ on Google, one can quickly find many different Crowdfunding websites trying to sell their product in a very biased manner relative to REITs. The main arguments that they seem to make are always the same: REITs are not real estate, REITs are riskier, and REITs are therefore less attractive than real estate crowdfunding investments. I disagree with all these points and will aim to explain why REITs offer in fact much superior investment characteristics compared to any crowdfunding platform.

MYTH #1: REITs are not real estate

Crowdfunding websites make sure to quickly point out that REITs are traded in the form of stocks to try to scare investors away from these supposedly “highly volatile and risky” investments. On the other hand, crowdfunded real estate investments are independent of the stock market and are hence pure real estate.

While this is true, it is in my opinion very unreasonable to assume that REITs are less of a real estate investment than crowdfunded deals simply because of how they are traded.

MYTH #2: REITs are riskier

REITs offer the opportunity for investors to invest in broad and widely diversified portfolios of properties in a liquid and cost efficient manner. Crowdfunding websites, on the contrary, allow you to invest in a concentrated, illiquid and often cost inefficient manner with potentially higher conflicts of interest between sponsor and investor.

Crowdfunding investors are also able to diversify by investing small sums in multiple deals. But this will never achieve the same scale as investing in REITs, which (often) own thousands of properties across different property types and geographical locations.

MYTH #3: Crowdfunding is superior to REIT investments

You are at the mercy of the deal sponsor and pure luck. Real estate is a local business and if you are not actively involved in the local market, you simply cannot assess an individual property investment. You need to be able to analyze the macro and micro location, the surrounding infrastructure, the growth trends, the demand and supply factors, etc.

This is the beauty of REITs: You do not need to know everything; you have a professional management team taking care of all the operational work.

My conclusion: If you are not a professional real estate investor, forget any form of private real estate investing including crowdfunding. And even if you are a professional investor, you might be better off investing in REITs.

Uber Of X: Cinch Is The Uber Of Financial Advice (PYMNTS.com), Rated: A

One company looking to help with that advice is Cinch with its on-demand app. We sat down with Cinch’s cofounder and head of company development, Kerri Moriarty, to learn more about how the company is helping guide everyday financial consumers with on-demand finance advice.

KM: Cinch is about making it easy for everyone to have access to unbiased financial advice, specific to their personal situation.

KM: Cinch comes with a free trial and then has a monthly fee for continued use. We think of it like a true client and advisor relationship. To truly remain unbiased, we ask customers to pay a fee.

KM: There are some budgeting and credit card tools like Mint or NerdWallet that we consider competitive that offer on-demand financial recommendations, but hardly any do so in the context of consumers’ entire financial situation. We think there is a big opportunity for Cinch to be one of the first companies in the FinTech space to offer a dedicated and unbiased financial advisor anytime it’s needed.

KM: We’ve definitely learned a lot along the way. I think one of the most important lessons learned, especially when it comes to tech or software, is that it’s important to just get something out in front of users. The longer you wait to test designs or features or even launch your product, the more risk you have of something “better” coming along or the needs of your customers changing.

United Kingdom

A quiet crash in big bank lending? (AltFi), Rated: AAA

Net loans to small businesses by the largest UK banks fell by a hefty £536m from December to January, according to the latest statistics from the Bank of England. It’s by far the biggest retrenchment in SME lending in the past two years, which is as far back as the data set stretches.

Gross lending by the banks in question fell further still, nosediving from approximately £5.1bn in December to £4.05bn in January. The figure for January is, again, by some distance the lowest figure for monthly gross lending by the banks to SMEs over the past two years.

Brexit may well lie at the root of the problem. It’s no secret that the banks have been pulling back from certain segments of the small business lending space since the UK’s vote to leave the European Union, but the January drop-off is by far the sharpest we’ve seen.

Funding Circle, the world’s largest marketplace lending firm for small businesses, lent £103m in January (£50m net). Meanwhile the peer-to-peer lending sector as a whole lent £208m during that same period, according to AltFi Data. There are then a raft of balance-sheet based alternative lenders, which are also lending millions of pounds to SMEs each month.

Abundance receives £10m boost from IFISA (P2P Finance News), Rated: AAA

ABUNDANCE has attracted almost £10m of investment into its Innovative Finance ISA (IFISA), the peer-to-peer lending platform’s managing director has revealed.

Davis said £6.5m has now been invested and £3m is being held in a new cash holding account launched last month, which pays two per cent interest, in anticipation of new projects coming onto the platform.

Crowdstacker last month revealed it was attracting £7,000 on average in its IFISA, which is just above the average subscription of £6,338 across cash and stocks and shares ISAs in the 2015-16 tax year.

It’s the end of Crowdfunding 1.0… but that’s a good thing (Property Week), Rated: A

Crowdfunding platforms have recently enjoyed great successes, with Simple Equity having raised £1.4m in a handful of days for East Eight Developments.

Only last week, Cogress confirmed that it had already raised £4m for Bellis Homes’ latest project in Chalk Farm. Two years ago, fundraises of this size were almost unthinkable.

Consequently, some retail investors – and some ‘sophisticated’ ones too – are going to lose money in the next 24 months as the effects of Brexit show up some very poor underwriting.

Another problem for the platforms is the number of them currently in the market, particularly in the lending space. The sheer competition for deals is forcing platforms to take on riskier positions than they should or alternatively investing in or lending against security that is highly illiquid.

I predict that only a few well-established operators in the market will survive the next 18 months.

I still believe that property crowdfunding is here to stay in the long term and will become a dominant funding method over the next 10 years. In many ways, the end of Crowdfunding 1.0 is a good thing.

I have £1,000 to invest in buy-to-let: Should I opt for peer-to-peer or invest in a property Isa? (This Is Money), Rated: A

Bricklane.com offers a property Isa that buys buy-to-lets with cash and provides a return based on rental income and capital appreciation.

Landbay, on the other hand, is a peer-to-peer lender that allows landlords to borrow from private investors so they can purchase buy-to-lets. Returns are generated as the landlord repays the loan with interest.

It’s possible to put some peer-to-peer investments into the new innovative finance Isa, with many of these set to launch in April.

If you do consider investing, make sure that you do your own research, question any suggested returns carefully and weigh up the fees that are charged, which will eat into any money that you make.

Simon Heawood, chief executive of online Property ISA Bricklane.com, replies: People often like the security of investing in real bricks and mortar, and it has historically delivered strong returns – around 9.6 per cent a year through a combination of price growth and rental income.

You should remember though that property prices can rise and fall, and rental income isn’t guaranteed, so as with all investing, you need to do your research and invest sensibly. Any investment platform should clearly explain the risks to you and you need to make the decision that’s right for you.

If you’re looking for a simple way to invest your money in the property market, then you might want to have a look at something like our residential property Isa, which launched last autumn.

It is similar to an investment Isa and offers the same tax benefits as both a cash and stocks and shares Isa.

However, rather than returns being linked to interest rates or stock performance, they come from rental income and property price changes. As an example, whilst the best cash Isas are currently offering returns of between 0.9 per cent and 1.3 per cent, our Bricklane.com property Isa is presently delivering an average return of 3.5 per cent from the rental income alone.

Unlike crowdfunding, it can be included within a £15,240 2016/7 Isa allowance. If you find a property Isa that also uses the Real Estate Investment Trust (REIT) structure, then it will give you even greater benefits, with zero tax to pay on property price increases and rental income.

John Goodall, chief executive of buy-to-let peer-to-peer lender Landbay, adds: Your situation sounds similar to that faced by a growing number of people, keen to reap some of the well-publicised rewards from the UK property market, but without getting directly involved with the demands of owning, renovating or renting yourself.

As you rightly say, investing through a platform that lends to property developers, such as LendInvest is one obvious option – these loans help finance mid to large scale developments and offer returns of around 4 to 8 per cent depending on the risk you’re willing to take on.

Property development is a relatively higher risk investment than buy-to-let, there all manner of complications that could potentially derail a development project, but the returns do typically reward the higher risk.

For those after a more secure route into property-backed peer-to-peer, the buy-to-let sector is another option. A few platforms now allow investors to lend money to a diversified pool of buy-to-let mortgages lent to experienced and professional landlords.

Not only has this proven itself to be statistically the lowest risk sector in the peer-to-peer mix, but the demand for rental property is growing at pace, as the UK’s housing shortage leaves millions of people unable to buy a property outright.

Landbay for example lends solely to experienced and credit-worthy landlords and as such is positioned at the conservative end of the market, offering interest of up to 4 per cent, with many layers of protection for investors’ money.

4 in 5 British housebuilders have gone out of business in the last 30 years (Business Insider), Rated: A

A report by LendInvest, an online property marketplace, found that in 1988 — when Britain’s last housebuilding boom stalled — the number of smaller UK housebuilders stood at 12,200.

That figure fell to 5,700 by 2006, and to 2,400 by 2014.

It says that, by driving that figure back over 5,000, Britain could build 25,000 more homes every year. Currently, just over 140,000 are built every year.

How to work out which Isa is right for your money (BT), Rated: A

With four adult Isas now available, you could be confused as to which one is right for you.

The total amount of money you can invest in one or more Isas is capped at £15,240 for the 2016/17 tax year. However, this limit will rise to £20,000 for the new tax year, which starts on 6 April.

Cash Isas

You can save all or part of your annual Isa allowance into a cash Isa.

These accounts are available from banks, building societies and credit unions and can take the form of an easy access account, notice account or a fixed-rate bond.

Right now the top rate on an easy access account is 1.05% from Paragon Bank which you can open with £1.

Suitable for: Anyone uncomfortable with risk and willing to accept a lower rate in return for security.

Stocks & shares Isas

Alternatively you can invest all or part of your annual ISA allowance into a stocks and hares Isa.

You should only really invest in a stocks and shares Isa if you are happy to take a risk with your savings as investments can go down as well as up in value.

Suitable for: Long-term investors who are happy taking on an element of risk in order to get a potentially better return.

Innovative Finance Isas

Investors can use an Innovative Finance Isa to get tax-free returns from the money they put into peer-to-peer loans made via platforms like Lending Works and Landbay.

What kind of returns can you get? Annoyingly, most of the biggest peer-to-peer lenders, including Zopa and RateSetter, have yet to launch their Innovative Finance Isas.

However, you can get a rate of 7% at Crowdstacker.

Suitable for: Investors who understand the risks involved with peer-to-peer lending and crowdfunding.

Help to Buy Isas

The Help to Buy Isa was launched to help first-time buyers save a deposit for a home worth up to £450,000 in London or up to £250,000 in the rest of the country.

You can save up to £200 a month into a Help to Buy Isa (or £2,400 a year) and when you first open an account you can deposit a lump sum of £1,200. The money you save will boosted by a government bonus of 25% when you come to buy your first home.

Suitable for: Aspiring first-time buyers trying to build up a deposit. Ideally able to set aside money each month rather than in a lump sum.

European Union

It’s legacy banking systems that are the risk, not fintech (BANKNXT), Rated: AAA

Every once in a while the financial community gets itself in a fluster about fintech. Mark Carney, governor of the Bank of England, is the latest person to raise concerns about the technology. Speaking at a G20 conference in Berlin, Carney said fintech presented “systematic risks” to the banking system, hinting that the next financial crisis could be caused by tech. The usual reasons were rolled out: liquidity, risk of cyber attacks, and the ability to subvert anti-money laundering laws.

Many bankers are mortally scared of new technology; of changing their systems or reforming the way things are done.

Secondly, you can’t ‘contain’ the reach of fintech.

The truth is that technology can actually make banks and the financial system safer.

Regtech allows regulatory officers in investment banks to detect suspicious figures submitted by potentially rogue employees; banks to detect hidden signals in their data which might suggest fraudulent activity or money laundering; and regulators to monitor the early warning signs of crises.

New machine learning technology also gives us the power to monitor the financial markets in real-time, looking for telltale warning signs of crises, and alerting regulators and officials when something needs investigating more thoroughly with a human eye.

The irony is that the real risks lie in the legacy core banking systems that many of our banks run on.

The result is that three quarters of a bank’s IT budget is now spent on maintaining legacy systems rather than acquiring new technology that could make their systems safer.

Australia

Ex-ING chief Richtor joins RateSetter board (The Australian), Rated: AAA

RateSetter, the nation’s second-biggest peer-to-peer lender, has wooed former ING Direct chief Vaughn Richtor to accelerate the fintech company’s quest to gain scale and take on the big banks.

The appointment expands RateSetter’s board to five, including co-founder of the British group Peter Behrens, chief of the Australian arm Daniel Foggo, Stratton Finance boss Rob Chaloner and Martin Dalgleish.

India

Gender Agnostic Fintech Space Inducting More Women Entrepreneurs (Entrepreneur India), Rated: AAA

When money and technology is gender agnostic, then any space of the business cannot be gender bias towards women, be it fintech. However, the smart phone penetration happening rapidly across the country and fintech has become a vibrant space before and after the demonetization. Now we see more number of women entrepreneurs venturing in fintech space.

There is no more talk of absence of women entrepreneurs instead the focus is on their competencies and equipping them to be more competitive and exploring the potentials.

Indian women are very good money manager, responsible investors and wealth creators in the world. In the fintech space women can be a great leader and rise to the top of the hierarchy with the help of regular mentorship.

In India Inc the participation of women as an entrepreneur and board of director is just 8 percent compared to 33 percent globally.

Asia

Credit Suisse Partners with Singapore based Fintech Firm Mesitis (Crowdfund Insider), Rated: AAA

Credit Suisse has announced, “enhancements” to its digital private banking platform in Asia by partnering with Fintech company Mesitis Pte Ltd to provide its clients the ability to access “Canopy”, an automated account aggregation platform and reporting solution through Credit Suisse’s digital private banking platform.

MENA

Dubai’s DFSA regulates first peer to peer lender (Reuters), Rated: AAA

Dubai-based Beehive said on Sunday it had become the first peer-to-peer lender to become regulated by the Dubai Financial Services Authority (DFSA), the regulator for the Middle East and North Africa’s largest financial centre.

Beehive is one of the few peer-to-peer lenders in the region. Nearly 4,500 investors have provided more than 75 million dirhams in loans via Beehive since the platform launched in November 2014.

The DFSA last month launched a consultation on its proposed framework for regulating loan-based, crowdfunding platforms.

Authors:

George Popescu
Allen Taylor

Thursday February 23 2017, Daily News Digest

robo-advice

News Comments Today’s main news: RealtyMogul unveils new retirement investment options for MogulREIT. Funding Circle tops 2B GBP in lending. Today’s main analysis: Jury still out on robo-advice. Today’s thought-provoking articles: Twino enters Spanish market. China Lufax shifting its business focus. Savills bullish on global REITs. United States RealtyMogul adds retirement investment options to MogulREIT & new assets. […]

robo-advice

News Comments

United States

United Kingdom

European Union

Australia

China

Asia

Africa

United States

RealtyMogul.com Unveils New Retirement Investment Options for MogulREIT I & Adds Two New Assets (Crowdfund Insider), Rated: AAA

Real estate crowdfunding platform RealtyMogul.com announced on Wednesday it will now be accepting retirement funds from self-directed IRAs as a new investment option for its MogulREIT I trust. The funding portal reported that the new investment option would allow investors to gain exposure to commercial real estate and enjoy potential benefits of passive income in their retirement accounts.

In addition to the investment options, RealtyMogul.com also announced a new feature that allows investors in MogulREIT I to automatically reinvest their dividends, thereby offering the possibility of compounded returns, making the REIT even more investor friendly. The platform noted the addition of two new properties to its REIT including Parkway Plaza, a $3.4 million mezzanine debt investment related to the acquisition of a office complex with national tenancy located in San Antonio, Texas.

Everything You Need to Know About Real Estate Crowdfunding (Dough Roller), Rated: A

In a sense, crowdfunding is doing for real estate investing what Lending Club and Prosper are doing for personal loans. They are acting as online peer-to-peer marketplaces that match investors with borrowers, often under better financial terms than what they can get through traditional lending institutions, such as banks.

The platforms are primarily used by individual investors. However, they are growing more popular with institutional investors, such as banks and insurance companies.

Real estate crowdfunding offers a  number of great benefits. But real estate crowdfunding is not without its drawbacks either. Some of those include:

  • Capital calls. Due to the complexity of real estate projects, an investment may require more capital than originally anticipated.
  • You must typically be an accredited investor.
  • Investments aren’t liquid. Real estate investments tend to be long-term in nature, and are not traded on national exchanges. Once you commit money to an investment, you will usually be required to remain invested until it matures.
  • Your investment isn’t guaranteed. Though you can make higher investment earnings, you can also lose your initial investment.

RealtyShares is an online real estate investment platform that focuses its business on smaller projects. These include things like single-family house fix-and-flips, rather than large projects, such as retail shopping centers or apartment complexes.

RealtyMogul is an online real estate capital marketplace. The platform was launched in 2013 and now has more than 100,000 investors holding more than $250 million in real estate, and has paid out $55 million to investors.

PeerStreet is open to accredited investors who can invest in high-quality private real estate loans. Those loans are typically secured by first liens on real estate.

6 Ways to Make (Legit) Money While You Sleep (PalmBeachPost), Rated: B

Also known as “marketplace lending,” peer-to-peer lending is the practice of individuals loaning money to others in place of a bank or other financial institution. In recent years, platforms like Prosper and Lending Club have made these crowdfunded loans more widely available to borrowers and opened the possibilities for investors.

“New, technology-driven intermediaries have been coming in and replacing banks to make small loans to businesses or individuals, and they offer many comparative advantages,” Brown says.

Remember, though, that while investing through a peer-to-peer marketplace can pay off, there are still risks involved and borrowers may default on their debts. One way to protect yourself, Brown says, is by requiring that borrowers’ credit quality is above a certain level, depending on your appetite for risk. You can also reduce risk by diversifying your investment across many different loans.

How Xero + Kabbage power a bright idea (Xero), Rated: B

By combining Xero’s business insights with Kabbage’s flexible access to funding, Adam and Jamie can effectively understand and manage their cash flow needs to avoid dipping into their profits as they grow.

United Kingdom

Funding Circle Has Topped £2 Billion in Lending (Crowdfund Insider), Rated: AAA

SME lender Funding Circle has reportedly topped £2 billion in lending. The SME marketplace lender is closing in on UK’s largest online lender Zopa that announced in January it had surpassed the £2 billion mark. Of course Funding Circle is an international operation with lending occurring in the US and elsewhere in continental Europe. So far, Zopa has satisfied itself with just the UK market.

The jury is still out on robo-advice (Pensions expert), Rated: AAA

For those unable to afford the cost of face-to-face financial advice, robo-advice, which provides algorithm-based digital financial advice with minimal human intervention, offers a lower-cost alternative, but the new technology comes with its own caveats.

Eighty-three per cent of consumers are concerned about cyber security, with 89 per cent of consumers saying it was important for them to recognise and trust the online brand, according to research conducted by Altus Consulting.

By 2020, many retirees will be asset-rich, cash-poor and “much more engaged digitally than they have been in the past”, Evans explained.

Robots cannot replace face-to-face advice

However, Evans noted that many people are not going to be able to afford this, resulting in robo-advice inevitably becoming a necessity. “Robo-advice will become the default for the mass market” and artificial intelligence “will have a large part to play in how that pans out in the next few years”, he said.

Buy to Let Club adds MTF and LendInvest to bridging panel (Financial Reporter), Rated: A

Buy to Let Club has added MTF and LendInvest to its panel and appointed an in-house bridging specialist to extend its offering to Club members.

The panel expansion has been accompanied by the appointment of a new in-house bridging specialist, Victoria Barnard, to further improve Buy to Let Club’s offering to its members.

P2P lending news midweek roundup (altfi), Rated: A

UK P2P business lending Growth is still in rude health as proven by AltFi Data’s number crunching, in the same week that Funding Circle tops £2bn mark.

In the funds world, P2P GI has continued its share buyback strategy while the SME Loan Fund may be about to see an investment management change by New York-based SQN.

European Union

Twino enters Spanish market (ArcticStartup), Rated: AAA

Peer-to-peer lender Twino has started to offer investors short-term Spanish consumer loans, offering its investors a chance to further diversify their portfolios, the Latvian startup said on Wednesday.

The Spanish short-term loans will have a maximum duration of one month and will offer investors a return rate of 8% per annum. The loans will be covered by Twino’s  buy-back guarantee, which protects investors from borrower default risk.

Australia

Savers may be turning backs on bank deposits (RNZ), Rated: A

The country’s biggest banks, ANZ, and ASB, saw deposits shrink in the September quarter.

The associate professor at the School of Economics and Finance at Massey University, David Tripe, said savers turned to other investment classes to bolster returns, including property and stocks.

The banks took notice.

They slowed lending by voluntarily tightening lending restrictions on investors following a Reserve Bank consultation paper released on 19 July, and excluded foreign income from affordability calculations for home loans.

They also boosted deposit rates.

KPMG’s John Kensington suspects the dip in bank deposit growth will be temporary.

But he thinks savings habits may be changing.

Mr Kensington added that some younger New Zealanders were turning to riskier, but potentially more lucrative, investments like peer-to-peer lending to get a foot on the increasingly unaffordable housing market.

China

Top P2P lender shifting to new business (China Economic Review), Rated: AAA

China’s Lufax, short for Shanghai Lujiazui International Financial Asset Exchange Co., is valued at $18.5 billion, far more than peers like San Francisco-based LendingClub. At the end of October, it had an estimated 13% share – the largest – of China’s $109 billion market for matching small borrowers with lenders. But the company is pivoting away, shifting into China’s booming retail-investing market with online accounts that let clients trade stocks, mutual funds and fixed-income products.

Asia

Savills bullish on global REITs in face of market uncertainty (The Asset), Rated: AAA

Investors are looking to global REITs (real estate investment trusts) as an alternative asset class in the face of market volatility and uncertainty in 2017.

Although investors can invest directly into individual REITs, by providing them with a fund that invests in a portfolio of global REITs, Savills gives them more liquidity, better distribution, and more diversification compared to if they invest directly into individual REITs.

Most REITs generally provide about 5% return annually and a steady income stream that is not subject volatility and market uncertainty.

Savills recently won two mandates to invest in Japanese real estate. These mandates, with a combined total of US$600 million, were awarded by an existing client and a new client.

Malaysian uses Harvard business know-how to crowdfund for SMEs (Free Malaysia Today), Rated: A

A Malaysian-born entrepreneur and his Indonesian business partner have started a crowd-funding company to provide financial assistance to local small and medium enterprises (SMEs).

Harvard business school graduate Kelvin Teo has embarked on an online lending platform called Funding Societies Malaysia which hopes to help Malaysian SMEs thrive and allows the average person an opportunity to become an investor.

Teo and his partner, Reynold Wijaya, whom he met at Harvard, started the company in June 2015. In less than two years, the company has arranged more than 400 loans in Singapore and Indonesia, worth a total of almost RM90 million.

Today, Teo launched the Malaysian chapter of his company, targeting 200 SMEs in 12 months, with an average of RM100,000 to RM200,000 per loan.

Africa

How these two SA startups made it onto the world’s best 100 fintech companies list (SME South Africa), Rated: AAA

Zoona and Wealth Migrate, have just been named in the 2016 Fintech100, an annual top 100 Fintech Innovators list that compiles the leading 50 established fintech companies across the globe, as well as the most intriguing 50 ‘Emerging Stars’.

Who is Zoona: Launched in 2009, Zoona is a Cape Town-based money transfer company operating primarily in Zambia and other Sub-Saharan countries.

2012: The company raises US$4 million in an international Series A round led by Omidyar Network and Quona Capital allowing the business to not only expand its planning horizon but also giving them resources to concentrate on ideas and innovations that, according to CEO Mike Quinn, resulted in a big inflection point in their growth.

2016: Having grown from a team of 2 to over 150 people with 25 nationalities across four countries, Zoona successfully raises $15-million (R200-million) in a second round of financing led by the International Finance Corporation (IFC), a member of the World Bank Group, as well as first round investors Accion, a global nonprofit and pioneer in the field of financial inclusion, and Omidyar Network, an impact investment firm started by eBay founder Pierre Omidyar.to scale our operations into new markets and develop new innovative products.

Who is Wealth Migrate: This is a global online real estate investment marketplace that was launched in 2010 and aims to give investors direct access to real estate investment opportunities in markets around the world. It is, according to research firm Massolution, the tenth-largest global real estate crowdfunding platform.

2015: Wealth Migrate raises $3.99 million (USD) in a seed round of funding from real estate, technology and other investors.

2015: With offices already in Singapore and Hong Kong, Wealth Migrate open new offices in Shanghai further expanding its reach into the lucrative Asian market, according to founder Scott Picken.

2017: The platform’s management team is hoping to use the power of crowdfunding to fill the funding gaps present in many prime real estate markets.

Authors:

George Popescu
Allen Taylor

Thursday January 12 2017, Daily News Digest

p2p loan investing

News Comments Today’s main news: Funding Circle raises another $100M, praised by chancellor. Today’s main analysis: Brussels, London form FinTech bridge. Today’s thought-provoking articles: What every entrepreneur needs to know before starting a business. United States What every entrepreneur needs to know before starting a business. AT: “Sharestates CEO Allen Shayanfekr shares from his own […]

p2p loan investing

News Comments

United States

United Kingdom

India

International

  • Global loan servicing software market to grow over 14% through 2021. AT: “This is a come-on to sell a report, but the interesting thing is that the software we’re talking about is software that can be used by MPLs and other financial services in the alt lending space. If the software market goes up, it’s a good sign that the industry is moving in the same direction.”

News Summary

United States

What Every Entrepreneur Needs To Know Before Starting a Business (Fortune), Rated: AAA

As the founder of a real estate crowdfunding startup, I have learned a lot over the last two years and am eager to share that information with other entrepreneurs.

The first tip I would give any entrepreneur is to forget the concept of a 9-5 work day. If you start your company thinking that all of your responsibilities will be handled in an 8-hour day, you are setting yourself up for failure.

Without a solid operations team, the inefficiencies from department to department will end up costing much more in the long term.

The capital raising environment is volatile and the key to survive a raise is to find the quickest path to profitability even if it means growing slower. Because raising capital is a long and tough process, you should make every single penny count. Sharestates started out with a $25,000 family loan and now has originated over $200 million in real estate loans since its inception in 2014. Until your company is ready to raise capital, be sure to be in touch with each department’s spend to ensure you are maximizing each dollar.

Make sure you consult an attorney to ascertain all regulatory and compliance risks – not everyone is aware that sometimes their line of business is subject to some form of scrutiny. This is especially important in an industry as new as marketplace lending.

SoFi: A Financial Services Provider That Is So Not Wall Street (TheStreet), Rated: A

In the old days, banks were imposing granite buildings housing massive vaults and offering 3% on savings and 6% mortgages. Later they morphed into unassuming suburban branches distinguished from fast-food outlets primarily by having multiple drive-through lanes. 21st Century banks increasingly live online, and the chief exemplar of that is SoFi.

Another difference is that SoFi relies less on credit scores when deciding to grant a loan compared to mainstream lenders. “We’re looking primarily at free cash flow — do you have enough money at the end of the month to pay us back for this loan?” Macklin says.

Perhaps the most marked divergence between SoFi and mainstream banks is its interest in customers’ personal lives. The company hosts meet-and-greet singles events and community dinners and provides career planning and job search assistance. It even offers coaching to help would-be entrepreneurs launch businesses.

Roseman says SoFi appears to seek refinancing business with borrowers whose student loan balances are $80,000 and up. “With that type of loan balance, they’re looking at the Ivy Leagues and the Stanford grads, more of the private college folks,” he says.

On life insurance, he suggests looking at other options before signing up for SoFi’s. SoFi doesn’t require medical exams from applicants. which means the insurer shoulders more risk, which generally means higher premiums.

He also cautions against refinancing government student loans as part of a mortgage refinance without accounting for the fact that government loans may allow for modifying payments or forgiving part of the loan.

Why You Should Invest In Peer-To-Peer Loans In 2017 (Forbes), Rated: A

Most lenders spread their loans across a variety of rankings—with the bulk in the highest-quality ratings (lowest default risk) and some in the lower quality, where yields can top 20% to offset the higher risk.

One of the big advantages of P2P lending is the very low correlation these loans have to traditional stock and bond markets.

Due to the nature and number of the loans you’ll make, the correlation to the stock market for a P2P portfolio is just 0.19. For US bonds, the correlation is even less, -0.13.

There are also add-on services you can use to improve your overall returns while better managing your risk. One tool we analyzed in our report consistently provided a net annual return of over 14%.

WILL THESE TECHNOLOGIES KILL CASH ONCE AND FOR ALL? (Ozy), Rated: A

Financial technology (fintech) is a young but $78.6 billion–strong industry, and legal precedents can only help it thrive. Unethical business practices by one company can ruin opportunities for all, and that would be a tragedy given that alternative finance holds the power to transform the industry, bringing services to millions who have long been excluded from the system.

Traditional firms like Goldman Sachs will capitalize on Lending Club’s missteps by arguing that point of sale is where it’s at — and they’ll be right.

Mobile apps aren’t merely add-ons for banks trying to appeal to younger generations; they’re now baseline requirements.

2017 will be the year of alternative payments. Heavy hitters like PayPal, Apple Pay and Google Pay will continue to flourish as merchants increasingly encourage customers to pay via their phones or digital wallets. But smaller companies will emphasize mobile payments as well, using new apps and streamlined systems to drive more widespread adoption among consumers.

The natural next step from alternative payments is for smartphones to become people’s go-to personal finance management systems. Individuals will pay their bills, monitor their budgets and make purchases almost exclusively through mobile apps and notifications.

Approximately 24 million U.S. households rely on services like pawnshops and payday loans to access cash and credit. Fintech companies will target these millions through new products and underwriting models that look beyond traditional credit indicators.

Improved efficiencies will empower consumers and hold banks and fintech companies to higher standards of transparency and ethics.

Enhancements in financing will also enable individual verticals or marketplaces build cooperative microeconomies, thanks to improved access to capital.

Does Funding Circle’s 0M Round Signal A Return To Boom Times For Online Lending? (Fast Company), Rated: A

Last spring, following a loan-doctoring scandal at Lending Club—at the time, the industry leader—capital for online lending startups became harder to come by and many suffered layoffs. Avant, Prosper, and Lending Club cut staff by the hundreds.

Funding Circle weathered the storm, closing 2016 on a high note with $485 million in Q4 loans to small businesses. In total last year, the company lent $1.4 billion. According to Hodges, Funding Circle is cash-flow positive in its home market, the United Kingdom (where it benefits from the support of the government-owned British Business Bank), and expects to make its U.S. business profitable in 2017.

Online lenders also face increased competition from banks, many of which have shiny new platforms thanks to partnerships with startups. Kabbage, for example, has made bank partnerships central to its strategy; CEO Rob Frohwein says that licensing Kabbage technology to banks has grown to become an “eight-figure business” for his organization.

LQD Business Finance Announces Breakout Business Results In 2016 (PR Newswire), Rated: A

LQD Business Finance, an alternative lender that uses a proprietary credit-scoring algorithm to underwrite business loans, announced standout business results in 2016, its first full year of operations. Last year, LQD grew its flow of loan applications to over $140 million and loans closed to $33 million. In addition, the company closed a significant Series A funding round, complementing the $30 million credit facility secured in 2015.

Looking ahead, Souri said LQD anticipates growing its origination run rate to $80 million by the end of 2017 and to more than $200 million over the next 24 months, largely by expanding its data-driven lead generation and targeting the $200 billion market of prime and near-prime loans between $250,000 and $2 million. That market is underserved by both banks and existing alternative lenders. Additionally, LQD is in partnership talks with several banks interested in the company’s underwriting platform.

Professional Bank Services and Austin Associates Announce Strategic Merger (ProBank Email), Rated: B

Professional Bank Services, Inc. (PBS) and Austin Associates, LLC (Austin) announced today they have completed a strategic merger to create the nation’s premier bank consulting and investment banking firm. The resulting firm will operate under the name ProBank Austin, with offices in Louisville, KY, Nashville, TN and Toledo, OH.

Transaction terms are not being disclosed. ProBank Austin will continue to be privately-owned by the management and employees of PBS and Austin.

PwC Launches Blockchain & FinTech Program for Young Entrepreneurs (Coin Telegraph), Rated: A

PricewaterhouseCoopers (PwC), one of the Big Four auditors and a multi-bln dollar professional services firm, launched a program called “Startup Collider” in early September of last year. The program, which begins today, will support young entrepreneurs and startups working within the Blockchain and fintech industries.

By the end of the program, PwC hopes to see its startups cooperate with industry leaders and introduce their technologies to mlns of users and consumers. Dissimilar to many venture capital firms or accelerators, PwC also allows startups to test their technologies with its multi-bln dollar clients and partner corporations. If startups wish to pivot away from their focal point to another market within fintech or Blockchain, PwC will support the decision.

United Kingdom

Chancellor hails ‘vote of confidence’ in UK economy as Funding Circle raises £82 million (Business Insider), Rated: AAA

Chancellor Philip Hammond has praised Funding Circle as “a real success story” after the British peer-to-peer lender raised a further $100 million (£82 million).

The company announced its sixth funding round on Thursday, which takes its total equity funding to over $370 million (£300 million).

The latest funding round was led by existing investor Accel Partners, with participation from other existing backers including Baillie Gifford, DST Global, Index Ventures, Rocket Internet, Temasek, and Union Square Ventures.

UK MD and co-founder James Meekings told Business Insider that the money will go towards building out Funding Circle’s technology platform and hiring more staff.

Brussels and London Form ‘Fintech Bridge’ (Fortune), Rated: AAA

“B-Hive,” the part-government-owned platform set up to facilitate innovation between Belgium’s fintech sector and the traditional financial and technology sectors, has signed a memorandum of understanding (MoU) with Innovate Finance, the trade body for Britain’s fintech sector, it said on Wednesday.

In 2015 Britain’s fintech sector, whose ranges from app-based payment services to crowdfunding and peer-to-peer lending firms, employed over 60,000 people and generated 6.6 billion pounds ($8 billion) in revenue, according to the Treasury.

Crowdstacker Claims the Title of Biggest UK Crowdfund (Crowdfund Insider), Rated: A

Yesterday we published an article about BrewDog raising £10 million on Crowdcube.  The funding round via Mini-bonds was described as the largest ever on a UK crowdfunding platform.  Later in the day, Crowdfund Insider was contacted by Crowdstacker saying not so fast – they believe they have the largest crowdfund record for a UK platform.

Their new record-breaking claim to a single raise has been undertaken via its peer to peer lending platform for leading specialist lender, Amicus Finance plc.  To date, £12 million has been invested.

P2P Platform Flender Surpasses £485,000 During the Final Week on Seedrs (Crowdfund Insider), Rated: A

With less than a week until its Seedrs campaign comes to an end, P2P lending platform Flender has secured 98% of its £500,000 funding target (more than £485,000) from 225 investors.

Funds from the equity crowdfunding campaign will be used for key hires, including a direct sales team and in-house software developers; marketing, including online targeting and above-the-line advertising; product development, specifically native iOS and Android versions plus roadmap features for all channels. Flender’s Seedrs initiative is currently scheduled to close next Tuesday (January 17th). 

iBAN Seeking £100,000 on Seedrs to Create Crowdlending App iBAN Wallet (Crowdfund Insider), Rated: A

Online lending platform, iBAN, recently launched an equity crowdfunding campaign on Seedrs with a mission to raise £100,000 to create its new crowdlending app, iBAN Wallet.

The lender stated that the app would connect lenders and borrowers directly, helping them to control their finances and transfer money while on the go. Through the app, iBAN users will have a modern money management tool, integrated with gamification, and risk management.

4thWay Predicts UK P2P Lending Market to Grow Up to 50% in Coming Year (Crowdfund Insider), Rated: A

4thWay, a P2P ranking site, has published a report on the UK peer to peer lending market.  According to their numbers, delivered another “record year”, with a total of £3.02 billion facilitated via 35 various platforms in the UK.

The totals are as follows:

  • Consumer loans £1.27bn
  • SME loans including invoices £1.01bn
  • Development and short-term property loans £690m
  • Asset-backed (HNW pawnbroking) £40m
  • Rental property £10m

4thWay said investors typically received returns of 3%-7% net of costs and bad debts. Lower returns went to investors who desired greater liquidity and the higher returns to those lending for up to five years.

Bad debts at the majority of P2P lending platforms remained consistently very low at less than 1%.

LandlordInvest gains ISA manager status from HMRC (P2P Finance News), Rated: A

LANDLORDINVEST has been approved by HMRC as an ISA manager, paving the way for the launch of its Innovative Finance ISA (IFISA), Peer-to-Peer Finance News has learnt.

At present, just 18 companies are authorised to offer IFISAs, most of which are very small firms. Out of the eight members of the Peer-to-Peer Finance Association, only Lending Works has HMRC approval. Just before Christmas, Landbaygained full authorisation from the FCA, meaning that HMRC permission is the next step.

LandlordInvest has said that its IFISA will offer investors annual returns ranging between five and 10 per cent.

P2P to “explode” in 2017, but some platforms may close (P2P Finance News), Rated: A

PEER-TO-PEER lending will grow by 50 per cent this year driven by the Innovative Finance ISA (IFISA), but some platforms will fall by the wayside, predicts new research.

Just five IFISAs have been launched so far, but independent P2P analysis firm 4th Way is forecasting a total of 16 by the end of the year, which will boost lending.

“Interest rates in peer-to-peer lending will continue to fall in 2017, benefiting borrowers at the expense of lenders,” he said. “However, we believe P2P has been kind to lenders, as they have been rewarded generously for low risk.

“Over the long term, the amount of interest lenders can earn will be aligned to risk. The high-quality of the loans that most lenders are lending in means more lenders will pile in to push rates closer to a fairer level.”

India

Crowdfunding versus REIT: Crucial differences (MoneyControl), Rated: A

Crowdfunding, the world over, has been about peer-to-peer funding. However, there are many challenges in the Indian real estate market, such as the absence of an organised trust/agency, which make crowdfunding a non-starter. So, what makes crowdfunding different from a Real Estate Investment Trust (REIT)?

With REITs, investors only know the portfolio and not the properties. However, in crowdfunding, individuals can single out a particular building or builder to invest in, he explains.

David Walker, MD of SARE Homes, points out that REIT has already gained official sanction, while crowdfunding is still not officially recognised in India, unlike in the developed nations.

International

Global Loan Servicing Software Market to Grow at a CAGR of Over 14% Through 2021 (Yahoo! Finance), Rated: A

Technavio market research analysts forecast the global loan servicing software market to grow at a CAGR of more than 14% during the forecast period, according to their latest report.

The market study covers the present scenario and growth prospects of the global loan servicing market for 2017-2021. The report also presents a detailed analysis of the key vendors in the market, along with a comprehensive analysis of the emerging trends and challenges faced by the vendors.

The increasing demand for the lending market has given rise to efficient loan servicing software that helps the lenders in managing loan databases and debt collection activities.

Loan servicing software enables lending organizations to minimize financial risk exposure in addition to increasing their operational efficiency. Loan servicing software also supports a wide variety of loan industries and lending products that include SME lending, peer-to-peer lending, mortgage lending, payday loans, credit unions, microfinance, retail lending, POS financing, auto lending, and medical financing. Loan servicing software handles the mortgage, home equity, and other consumer loans on one platform. All these factors are collectively increasing the adoption of loan servicing software.

Authors:

George Popescu
Allen Taylor

Wednesday November 30 2016, Daily News Digest

uk personal loan effective annual returns

News Comments Today’s main news: Ron Suber joins eOriginal advisory board. Why most P2P lenders have not offered IFISAS. Today’s main analysis : The value of P2P lending to investors. Today’s thought-provoking articles: LendingTree launches small business grant contest. LendInvest reduces minimum loan size. Meet the new Chinese middle class investor. Malaysia is ready to […]

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United States

Prosper Marketplace President Ron Suber Joins eOriginal Advisory Board (PR Web), Rated: AAA

Ron Suber, president of Prosper Marketplace, has joined the advisory board of eOriginal, Inc., the expert in digital transactions. Suber will leverage his deep-rooted relationships with banks, mortgage companies, marketplace lenders and other financial services leaders to accelerate eOriginal’s growth, while articulating the importance and necessity of digital transaction management and eOriginal’s unique solution.

Seen as a thought leader in the financial technology space, Suber joins eOriginal at its hyper growth phase. The company recently completed a funding cycle led by private equity firm, LLR Partners, to support the demand and expand its product development and customer services. In addition to Suber, Jon Barlow, founder and former CEO of Eaglewood Capital Management, also joined eOriginal’s advisory board as the company continues to expand its expertise in marketplace lending and financial services.

“The industry is seeing a convergence of marketplace lenders and traditional lenders moving toward digital lending environments and platforms,” said Stephen Bisbee, president and CEO of eOriginal. “Ron’s experience and knowledge of marketplace lending as well as his foresight of industry trends will be invaluable to eOriginal as we continue to scale and focus on bringing fully digital transactions to a variety of industries.”

LendingTree Launches $ 50,000 Small Business Grant Contest (Yahoo! Finance), Rated: AAA

Small business owners face a long list of challenges, and for many, the obstacle of securing financial resources needed to grow a business claims the top spot on the list. That’s the driving force behind LendingTree’s inaugural $50,000 Small Business Grant Contest, where LendingTree will present the winning small business a $50,000 grant to help fund future growth.

“Since LendingTree launched its small business loan marketplace, LendingTree has been committed to helping small businesses thrive by simplifying the loan shopping process and matching the right businesses with right lenders to meet their financial needs,” said Doug Lebda, founder and CEO of LendingTree. “We wanted to take our commitment one step farther by granting $50,000 to help one small business achieve even more success.”

The contest submission page, along with disclosures and details can be found here:

Small businesses interested in participating in LendingTree’s $50,000 Small Business Grant Contest can submit their registration online from November 29, 2016 through January 13, 2017. The registration form consists of 20 questions, collecting information on historical business performance, future plans, why the business deserves the $50,000 grant and how the grant money would enable future growth. Once the registration submission period closes (5:00pm EST on January 13, 2017), LendingTree’s team of small business experts will evaluate, select and notify the winning small business.

This Startup Is Changing The Way People Invest In Single Family Homes (Forbes), Rated: A

Omri Barzilay: For the ones who are not familiar with the company, what is Roofstock?

Gary Beasley: We believe every investor has a right to invest in real estate, and Roofstock is focused on making it broadly accessible to investors large and small.

Barzilay: Does Roofstockbuy the properties on the website itself?

Watson:  As a marketplace and transaction platform, Roofstock does not own any of the homes on the site.

Barzilay: Do you guarantee a certain yield to your investors?

Beasley: A yield guarantee is something we are considering and may offer in the future as we get more and more data and scale.  Since the homes we offer on Roofstock are already rented, and the tenants have been certified to ensure an acceptable income to rent ratio and payment history, this provides an additional level of comfort for investors not available on other platforms. We do selectively offer rent guarantees, however, which gets investors part of the way there, and continue to evaluate and consider other guarantees and insurance products that could reduce investor risk.

Barzilay: We have seen many crowdsourcing solutions in recent years, including Fundrise, Realtyshares and others which raised a lot of capital. How are you different from them and from other, more traditional, turnkey companies?

Watson: We do one thing, which is rental homes, and we do it very well.  Roofstock allows investors multiple ways to invest in this sector.  The majority of our transactions today have been whole ownership, but we also offer fractional ownership in a basket of homes.

Barzilay: Gary, what opportunities do you see in the real estate technology market?

Beasley: The real estate sector is perhaps the largest financial services vertical that has yet to be transformed by technology.  In my opinion, this is inevitable, although structural inertia makes adoption a bit slower in real estate than many sectors.  Given the high fees, Byzantine processes and long timelines for closing, the sector is ripe for innovation.

Barzilay: What should we expect from Roofstock in the near future?

Watson: We recently launched two new markets and will be launching others in the near future. We are also very excited about the asset management app which is in development and combines machine learning and market analytics to provide a powerful tool for the retail investor.

Financial Poise™ Webinars Announces “INVESTING IN REAL ESTATE THROUGH CROWDFUNDING,” Premiering December 14th, 2pm CST (Benzinga), Rated: A

Investors considering making an investment in real estate have a variety of choices: retail, office buildings, industrial, raw land, and, of course residential. More and more investors are turning to the real estate market to invest their funds. This Financial Poise webinar series will cover several types of real estate classes that one may choose to invest in, explaining where to look for opportunities; how to diligence them; and best practice for execution.

Episode #4 of the REAL ESTATE INVESTING 2016 series is “Investing in Real Estate through Crowdfunding” airing on December 14, 2016 at 2pm CST (Register Here). Moderator Bill McGuinn of Sugar Felsenthal Grais & Hammer will be joined by Elizabeth Braman of RealtyMogul.com, Jessica Healy of Syndicated Equities, and Allen Shayanfekr of Sharestates. Episodes 1-3 are also available On Demand through West LegalEdcenter.

Sold Out: Fundrise’s Income eREIT Nears $ 50 Million Cap (Crowdfund Insider), Rated: A

Fundrise has announced that is Income eREIT is “almost sold out” with less than 10% of the $50 million cap available for investors.  The debt based real estate crowdfunding vehicle has recently declared a dividend of 11.25% through December 2016.

Fundrise’s eREIT approach has replaced its single-property crowdfunding strategy.

GDS Link to Exhibit at Marketplace Lending & Alternative Financing Summit 2016 (IT Business Net), Rated: B

GDS Link, a global provider of risk management solutions and consulting for multiple verticals within the financial services industry including marketplace lending, retail finance, alternative financial services, credit card, auto, and business leasing, will be exhibiting at the upcoming conference at Marketplace Lending & Alternative Financing Summit 2016 in Dana Point, Calif., Dec 4-6, 2016.

United Kingdom

The value of P2P lending to investors (Altus Consulting Email), Rated: AAA

The image of a meteorite approaching awaiting dinosaurs is the cover art which illustrates a new report from UK-based Altus Consulting. The report asks how traditional financial service firms can “benefit from the change rather than risk extinction.” The change here is the rapid expansion of P2P lending with close to 100 firms and business volumes growing at 70% per annum (1). Clearly, an obvious attraction for investors is the high return, especially in the current low interest rate climate. The report underlines this by showing a 5.37% average growth in P2P lending since 2006 (2) and noting the positive stimulus offered by the recent introduction of tax free Individual Saving’s Accounts for the P2P market (3). At the heart of the report, is the prediction on how development through to 2020 will affect investment in the P2P lending market.

But first, to underline the longer run investment potential of P2P lending, the report looks beyond the current economic cycle, back to 1995, using UK personal loan effective annual returns net of servicing fees. It finds that on this basis “the Liberum data shows that, since 1995, not only is the yield an average of 6%, but, even through two major economic crises, there has not been a single year of negative net returns. Lending has performed more consistently through recent economic stress tests than either equities or bricks and mortar”.

With the historic value of P2P lending established, the report takes a clear-sighted look at what are the possible obstacles blocking further growth, before considering what form future development might take. The key blockers to growth identified by the report are:

  • Economic: with typical loan sizes in the tens of thousands and spread across hundreds of borrowers, it means the cost of advising a client on individual P2P loans is likely to outweigh the scale and returns on the investment.
  • Regulation: currently, many firms are operating on interim permissions pending full approval, which may be putting off advisors recommending them.
  • Operational standards: given the relative youth of the P2P industry, there is a lack of tried and tested operational standards.
  • Potential conflict of interests: due to having institutional and retail investors, there are potential conflict of interests.
  • Client underwriting and recovery: the majority of platforms don’t have standard or optimised processes; this is therefore “an area of concern for intermediaries who find it difficult to assess whether one P2P platform is better or worse than another”.
  • Standard risk definitions: the P2P lending industry lacks common risk definitions, which makes it difficult for retail investors to compare performance of loans of the same ‘risk’ type across different platforms.
  • Data feeds: the normal data feeds used by financial advisers such as FE and MorningStar do not currently include P2P data.
  • Risk rating vs established asset classes: as P2P loans are regarded as ‘non-correlated’ assets, this means an adviser has a challenge if they’re to analyse the risk of a client’s portfolio, if it includes P2P assets.
  • Over-complicated marketplace: the P2P sector has yet to see the emergence of a convenient ‘supermarket’ for purchasing its financial products

Putting these impediments aside the P2P market currently has two main sources of capital; namely individual investors looking for a better rate of return on their investments, and institutional investors, “predominantly the investment trusts and British Business Bank”. Currently, up to 60% of investment into P2P lending comes from individual investors.

As indicated in the introduction, at the core of this report aimed at financial advisers, is the prediction on how development through 2020 will affect investment in the P2P lending market. Firstly, Altus expect to see “new open ended funds enter the market encouraging new pools of capital, especially from the corporate pensions sector”. Shifting from the current status quo, the report believes institutional investors, with fewer restrictions than retail investors, allowing them to adopt P2P “relatively easily”.

Secondly, the report sees a major development in the emergence of ‘aggregators’ providing a one-stop-shop with access to multiple P2P services. The report’s authors predict that it’s probable “the majority of P2P business, both retail and institutional, will be transacted through them by 2020”.

While the FT’s Khadim Shubber ponders whether this will mean that “maybe the P2P lenders are the dinosaurs after all?” (4) for founder and CEO of Welendus Nadeem Siam, the future for P2P lending is still at its growth stage: “There are still gaps in the credit market that peer-to-peer lending haven’t exploited, which mean the peer-to-peer sector will continue growing over the next few years. This is in addition to the general public awareness of peer-to-peer lending, which is still very low. Bring these two factors together and you can get an idea of the scale of growth the peer-to-peer lending sector will face.”

References

(1) AltFi, 28th July 2016.
(2) AltFi Data shows the average returns since 2006 for P2P loans is 5.37%.
(3) From April 2016, lenders in the UK enjoy tax-free interest thanks to the Innovative Finance ISA (IFISA), which includes loans arranged through peer-to-peer (P2P) platforms that have full FCA authorisation, and ISA management approval from the UK’s tax authority, HMRC.
(4) ‘P2P will destroy the world, and soon’

Download the ‘Peer to peer: the meteorite approaches an Altus Consulting whitepaper’.

Why Most P2P Lenders Have Not Yet Offered IFISAS (Crowdfund Insider), Rated: AAA

P2P lending rating agency 4thWay is highlighting that 77 IFISA applications are in limbo at the Financial Conduct Authority waiting for full authorisation.  Within this group, ten of the largest UK P2P lenders are still in the queue.  In what was expected to be a big boost for P2P lenders has ended up being a slow-paced process. So what gives?

After many months of the new Innovative Finance ISA (IFISA) being approved there are only several leading peer to peer lenders participating in the savings program. Crowd2Fund and Crowdstacker were approved in April 2016. Another 15 have received the authorisation required to offer IFISAs, two significant ones being Lending Works and Downing. Lending Works has confirmed it will start offering its IFISA soon.

Some, but apparently not all, P2P lending providers that lend their own money on their own platforms might have to change their structure or desist in doing this. Funding Circle and RateSetter are among those that have lent their own money. We do not know if they too have been told to stop.

Funding Circle, RateSetter and Zopa – may not be approved until the regulator is just about ready to give all three of them the nod, in order to ensure none of them get an unfair advantage. So there’s a wait for the lowest common denominator.

The providers have to show that lending is demonstrably directly between a lender and a borrower, and not between the P2P lending platform and the borrower. Otherwise, they need to change their contracts. Growth Street is just one example of an already convincing platform that changed its contracts recently in order to make this direct relationship clearer.

LendInvest reduces minimum loan size (Mortgage Strategy), Rated: AAA

LendInvest has cut its minimum loan size to £75,000 from £100,000 as it expands to become a nationwide lender.

The lender says it is making the change after launching into both Northern England and Scotland, with lower average property values.

Why financial health apps are natural allies for marketplace lenders (alt fi), Rated: A

It’s no surprise, then, that we’re now hearing rumours of further collaborations between financial health tools and online lenders. Nothing signed and sealed yet, but certainly there are conversations going on.

You’d be forgiven for thinking that these firms sound a lot like robo-advisors, but my opinion is that they sit more comfortably within the “financial health” sub-sector of fintech, because they’re as much interested in creating savings as they are in the distribution of them.

The apps could well refer their users to the marketplace lending sector as either borrowers or as investors, and my conversations with some of those in the financial health space would suggest that they already understand the appeal of marketplace lending as an asset class.

So what’s the hold up? Scale, primarily. The apps themselves are fairly early stage, and while they’re growing fast and raising capital, they have some way to go in terms of establishing a solid foundation of users.

EIGHT years to buy a turkey – how to fight back against the banks stuffing savers (Mirror), Rated: A

A new study from peer-to-peer lending firm Octopus Choice has highlighted the pitiful returns on offer from high street savings accounts.

It looked at how long it would take to pay for a range of Christmas staples, using only the interest earned from £1,000 saved in one-year accounts with a range of high street lenders, including HSBC, Royal Bank of Scotland and Barclays.

Octopus found that savers would have to wait a whopping eight years before they could afford a turkey from Marks & Spencer, seven years to buy a Christmas tree, and almost TWO DECADES to cover the cost of a kid’s mountain bike from Halfords.

European Union

French Real Estate Crowdfunding Platform Immovesting is Now Prefunding Deals (Crowdfund Insider), Rated: A

Immovesting, a Paris-based real estate crowdfunding platform, has initiated pre-funding of deals to help support developers / sponsors listing projects on their platform. The “garantie de collecte” or collection guarantee program assures that funds are received on-time regardless of the funding status. This was said to be a first for the French real estate crowdfunding market.

The pre-funding will be utilized on two new listings: The first is for the construction of a luxury residence in Fréjus (83) by IPGest, a specialist developer for the region of Fréjus Saint-Raphaël. The second involves the creation of a commercial complex of 3,200 m2 in the center of Jouy-le-Moutier (95) by the SOPPEC group.

China

CreditEase Wealth Management Releases Survey of Chinese New Middle Class Investment Habits (PR Newswire), Rated: AAA

CreditEase Wealth Management, the wealth management unit of CreditEase, one of China’s largest fintech Companies, announced the results of a report conducted jointly with Bloomberg Businessweek China surveying Chinese new middle class investment habits. Among the results, the report showed that:

  • 76% of new middle class investors are willing to accept investment advice through digital channels
  • 73% prefer low volatility products
  • 62% prefer personalized investment products
  • 61% prefer investment products with low service fees

China’s new middle class is an important contributor to the country’s RMB 50 trillion in total savings and nearly RMB 100 trillion of investable money — estimated to rise to RMB 200 trillion by 2020. However, with only 12% of Chinese investors using investment advisors, as compared to 67% of US investors, the need for reliable wealth management and investment advice is mushrooming. Combined with widespread use of the mobile internet for daily transactions, and relative lack of “traditional” investment advisors, there is a potentially enormous market opportunity for innovative new solutions.

CreditEase Wealth Management believes that “robo-advisors”, which provide automated, algorithm-based portfolio management advice, will play an increasingly important role in filling the “advice gap” for new middle class investors.

“In China’s dynamic investment environment, planning a long-term investment strategy has always been challenging,” said Mr. Tang Ning, CEO and Founder of CrediteEase. “And in recent years, the number of new investment products and options available to new middle class investors has expanded tremendously. By providing powerful, user-friendly tools to create intelligent and balanced portfolios, we believe that sophisticated robo-advisors will help guide investors towards realizing long-term, sustainable wealth creation.”

CreditEase Wealth Management recently launched Toumi RA, its own robo-advisor product to help investors build cross-regional, cross-border portfolios with diversified asset classes. Based on modern investment portfolio theory and advanced back-end algorithms, Toumi RA provides global ETF portfolio asset allocation by tracking stock, bond and property market indexes in China, the U.S. and other countries in real time.

China’s banking regulator asks peer-to-peer lenders to register (Reuters), Rated: A

China’s banking regulator has issued new guidance to tighten control over a fast-expanding peer-to-peer (P2P) lending sector, the regulator said in a statement to Reuters on Tuesday.

The guidance, which the China Banking Regulatory Commission (CBRC) said was aimed at building a comprehensive industry database to lay the foundation of future regulation, requires P2P lenders to register with the government, the commission said.

India

Disruptive Fintech Startups Lassoed (Business World), Rated: A

Financial transactions used to be the domain of behemoth banking institutions, till financial technology (fintech) startups began to disrupt the space. All of a sudden in 2013, fintech startups started leveraging the Internet, with the result that customers began paying for groceries through mobile phones, instead of cards or cash. They even started buying insurance policies with guidance from robo advisories instead of their friendly personal counsellor.

The regulators didn’t know what to make of it then. Was fintech a fad? Weren’t banks too conventional to run on virtual platforms? Banks and financial institutions had to concede, though, that fintech had led to savings on both operational costs and time.

The growth of Peer to Peer lending (P2P lending) has skyrocketed and fast. The past year alone spawned about 20 P2P lending platforms. The industry estimates about 57.7 million small businesses in India, which offer a huge market for P2P fintech startups.

To protect borrowers and lenders on these online platforms, the RBI now proposes that the insufficiently regulated P2P lenders register as non-banking financial companies (NBFCs).

In August, the Securities and Exchange Board of India (Sebi) cautioned investors against online platforms like GREX that raise funds. The market regulator said these platforms were “neither authorized nor recognized” by law. According to industry estimates, close to 200 companies have raised about Rs 350 crore to Rs 450 crore across online platforms in the past year and a half.

Asia

Malaysia: Ready to embrace alternative lending (Enterprise Innovation), Rated: AAA

On May 2016, Malaysia’s Securities Commission (SC) issued its guidelines on how peer-to-peer (P2P) lending is to operate in the country, including requirements for the registration and obligations of a P2P operator as provided in the revised Guidelines on Recognized Markets.

In 6 November 2016, the SC had registered six P2P lending platforms – B2B FinPAL, Ethis Capital, FundedByMe Malaysia, ManagePay Services, Modalku Ventures (aka Funding Societies Malaysia), and Peoplender.

Are the guidelines provided by the Securities Commission of Malaysia sufficient to drive growth in the P2P lending space?

Kevin Teo: The Securities Commission of Malaysia has established a fair set of guidelines to ensure not only consumer protection, but also sufficient room for innovation. As an applicant of the license, we found the selection process to be rigorous and frankly quite intimidating, especially given that there were more than 50 applicants for a handful of licenses.

This ensures that the selected licensees deliver quality service to the public and earn their trust. Consistent education from industry stakeholders is needed to tell the public about such services, and a stamp of approval from a regulatory body adds to the credibility and legitimacy of the budding industry.

Will P2P lending disrupt Islamic banking in Malaysia?

Kevin Teo: Nope, we don’t think so. In fact, we believe it would help Islamic banking, as P2P financing matures and platforms begin to structure their products to be Syariah-compliant, offering Muslim business owners an additional avenue to grow their business.

What is your prediction for P2P lending in Malaysia and Southeast Asia in 2016?

Kevin Teo: P2P financing is a capital-intensive business. Most platforms do not earn a single cent until years after.

To grow in an over-crowdfunded market, they would be tempted to slash interest rates below borrowers’ risk level to attract borrowers, approve loans recklessly and embark on a cycle of negative competition, ultimately resulting in huge loan defaults to investors. Hence in recent months, many smaller or poorly managed P2P financing platforms in other markets had shut down under the weight of loan defaults and economic downturn.

Malaysia is in a uniquely fortunate situation that the Securities Commission evaluated and limited the number of P2P financing platforms. This reduces the chance of poor management and insufficient resources for platforms in Malaysia.

Canada

Peer-to-Peer Pressure: Next Steps for Canadian Fintech (Mondaq), Rated: A

It’s likely we will see more legislation for fintech in 2017.

Like those countries, Canada is seen as being a global fintech hub – with renowned national financial institutions pioneering projects with blockchain technology and fintech startups increasingly popping up across major cities. Regulation, however, is not moving at quite the same pace.

There was something of a milestone in September of this year, when the Ontario Securities Commission (OSC) decided to grant an exempt market dealer registration to an online lender, Vault Circle Inc. This was a significant step forward for peer-to-peer lending platforms in Ontario, which are currently subject to strict securities legislation. The exempt market dealer licence for Vault Circle Inc. means it now has regulatory approval to participate in the accredited investor marketplace.

Authors:

George Popescu
Allen Taylor