News Comments Today’s main news: SoFi offers 6-month grace period for SoFi ReFi. Zopa to build Open Banking infrastructure. Faircent secures $4M funding round. Assetz Capital launches IFISA. Ping An make big bet on technology. Ant Financial partners with Standard Chartered. Today’s main analysis: Student loan borrowers prefer payments over iPhone X or bitcoin. Who are LendingClub borrowers? (A must-read market […]
Are instant loans helpful or hurtful? AT: “The one thing I never hear the critics say about these products is the possibility for the consumer to pay the loans off within the first 30 days, like many consumers do with credit cards.”
Zopa to build an Open Banking infrastructure. AT: “There is a shuffle for firms to place themselves at the center of open banking all across Europe. It will be interesting to see what happens once the system is in place and open banking has matured. I’m glad to see Zopa making moves.”
From 2007 through 2017, LendingClub has matched $31 billion investor dollars with 2 million borrowers’ loans.
Today, outstanding credit card and personal loan balances in the U.S. are approximately $960 billion. Of that, two-thirds, or roughly $600 billion, represents interest-earning balances carried month-to-month —the overall addressable population. About half of the addressable population (more than $300 billion) currently meets LendingClub’s target credit profile—a market that we have only just begun to penetrate.
Read LendingClub’s Marketplace Insights report in full here.
Online credit marketplace LendingClub Corporation (NYSE: LC), announced on Tuesday it has appointed Patty McCord as the newest member of its Board of Directors, effective December 13, 2017.
McCord spent 14 years creating the unique and high-performing culture at Netflix and as the video streaming giant’s Chief Talent Officer, she helped create the Netflix Culture deck and experimented and cultivated new ways to work.
Interest in marketplace loan ABS from the buyside picked up in 2017, but some investors are now saying that they could sit things out in 2018 as credit concerns grow and a lack of data presents problems in the late stages of the credit cycle.
ABS volumes doubled from $3.4bn in 2016 to $7bn in 2017, with SoFi issuing more than $3bn in deals this year, according to data from JP Morgan. The introduction of multi-seller platforms from SoFi, Lending Club, Marlette Funding, Prosper Marketplace also drove liquidity for the sector, while new …
LendEDU asked 1,000 people repaying student loans if they would prefer a popular holiday gift or a loan payment of equal value. And, despite the hype surrounding tech trends, they wanted loan payments more.
Bankers agree voice will be the biggest and most important channel to their business after mobile, only this time, it won’t sneak up on them like mobile did. They’re looking at 2018 as a year to get their companies more involved with voice by adding features to their Alexa skills, creating an Alexa skill if they haven’t done so already or expanding Alexa capabilities to other parts of the organization. But for the most part, they’re looking for a clearer sense of how people even use Alexa.
In 2017, USAA, Ally Bank and U.S. Bank launched Alexa skills. Before this year, Capital One was the only bank with the feature, which it launched in 2016.
Earlier this year, we announced an initiative to bring the industry’s first Software as a Service (SaaS) lending platform to market, which we call “Powered by Upstart”. Now we’re excited to announce that BankMobile is the first bank to launch their personal loan program on the Upstart platform. Beginning today, BankMobile offers consumers in 43 states personal loans from $5,000 to $30,000, with no origination fees and interest rates starting at 5.99%.
We are an early investor in the company ‘Kabbage” and Kabbage to me is a major disruption in the fund-lending and risk-analysis market. Established in 2009, Kabbage supported the emerging companies that were suffering the blow of a financial crisis. Banks were declining to lend money to small businesses and entrepreneurs had no access to capital to support their businesses. What aggravated the problem is that even if they did get access to money, the procedure for evaluating the risks of money lending were strictly based on scrutinizing the company’s financial background and fico scores instead of probing into the business. Deviating from the established model of risk analysis, Kabbage stepped into the market at a time of financial distress and operated on a completely different strategy. They would evaluate your UPA shipping data, ebay seller reviews, and other bits of information that are generated on different platforms and then assess credit card risks based on these factors and not just credit card fico scores. Kabbage started off by accumulating a ton of third party data which they ingested, analyzed and then created a solution. Over time, the company has gathered a substantial amount of primary data that they can use to tweak and refine their risk-analysis model. The company efficiently leveraged big data to provide an entire new service in the risk-analysis industry.
It’s a space that started out with Mint ten years ago, with a new way to look at all of one’s finances in one place. The field has now grown to accommodate an ever-expanding number of direct-to-consumer PFM apps, including apps like Digit, Clarity Money, Penny and Qapital, and banks are now folding PFM capabilities into their mobile apps.
Banks have been folding in PFM features and competing apps are having trouble differentiating. Where do you see the PFM market right now? A lot of PFM will continue to move to a business-to-business, or business-to-business-to-consumer model. Things [business-to-consumer PFMs] struggle with are being able to monetize and with customer acquisition.
What’s the problem with business-to-consumer PFM? The market is really crowded and it’s hard to provide that extra value to really distinguish themselves from other platforms in the space.
An $800 mattress for your bed. A $600 sofa for your living room. A vintage designer bag as a Christmas gift for your best friend. They’re all pretty big purchases to buy online, but now you can get an instant loan for any of them right at checkout.
Ingle says the payment plans are different than credit card options. Companies like Affirm partner with certain retailers to offer the loans, which are installment loans with interest rates, and set payments are made over time.
In a statement Faircent said it will utilise the newly acquired funds towards strengthening the platform’s technology and creating greater awareness about P2P lending’s significance as a new and highly rewarding asset class.
The race is on to become the top global app for international money transfers.
Fintech startups including WorldRemit Ltd., TransferWise Ltd. and Remitly Inc. are pulling ahead of the pack of the dozens of companies trying to disrupt the remittance industry, using the latest technology to send money internationally.
More than $600 billion is remitted world-wide every year, mostly by migrant workers from places like India, Mexico and the Philippines, who have traditionally had to deal with long lines and high fees to send money home.
Chandigarh-based Finvasia, a fintech company offering zero brokerage, has received the Certificate of Registration (CoR) from RBI to operate as a non-banking financial corporation (NBFC). This extension will allow the company to offer loan-based products to retail and corporates alike. The company plans to develop block chain technology based P2P (peer-to-peer) lending platform.
News Comments Today’s main news: LendingHome surpasses $100M in monthly loan volume, secures $57M in Series C-2. KBRA assigns preliminary ratings to Prosper Marketplace Issuance Trust, Series 2017-3. RateSetter says FCA authorization merely a milestone. Qudian raises $900M in biggest listing by Chinese fintech firm. BBVA focuses on U.S.-Mexico remittances with money-transfer app. New Zealand paves path for robos. SoftBank considering second […]
Goldman puts Lending Club, Prosper on its radar. AT: “Goldman Sachs is the legacy player to watch. With their financial might, they will likely be the digital banking force to beat in a few short years. If the Big 4 tech companies go fintech, Goldman could make the fifth giant in a land of global digital tidal forces. This is a must-read analysis from CB Insights.”
Less than a week after announcing its new office in Pittsburgh, real estate marketplace lending platform LendingHome announced it has surpassed $100 million in monthly loan volume and secured $57 million during its Series C-2 funding round, which included participation from Sberbank and Noah Holdings Limited.
The online lender also revealed the closing of the LendingHome Opportunity Fund II, which was managed by LH Capital Management, with $100 million in commitments from more than 40 investors including asset managers, international funds, family offices, and high net worth individuals. An additional credit facility of up to $300 million brings the fund’s total potential assets to $400 million.
Georgia companies scored the most venture dollars in the third quarter, since first quarter 2000. Fintech Kabbage and access management technology firm Core Security raised a combined $450 million, or about 60 percent of total venture capital invested in Atlanta companies in the third quarter.
As its bond trading revenue plummets, Goldman has undergone a major strategic shift, looking to grow the revenue opportunity from its consumer digital finance operation.
Goldman Sachs has changed a lot through its 148-year history. But as technology continues to roll through the financial services industry, Goldman is one of the few bulge bracket banks today that is staking its reputation and future on new strategic bets in digital finance.
When Goldman announced it would be entering the online lending business in 2015, Lending Club‘s then-COO Scott Sanborn quipped, “We are looking forward to competing with Goldman Sachs on customer experience.” More recently, when Goldman bought $2.8B worth of bonds held by Venezuela’s struggling central bank at a 70% discount to market price, Ribbit Capital founder Micky Malka tweeted, “This is why @GoldmanSachs won’t become a consumer first brand.”
46% of Goldman Sachs job postings are in technology.
Goldman Sachs’ online lending arm Marcus lent $1 billion in the first 8 months of operation. Now it is taking its digital finance brands global.
Goldman Sachs is one of the top two most active US bulge bracket banks investing in fintech startups.
Goldman has pushed investments into Brazil.
Goldman made its first fintech acquisition in 2016 and is looking for more.
Goldman’s cryptocurrency patent made headlines, but most of its patents have focused on improving its systems.
BACKGROUND ON CORE GOLDMAN SACHS
Goldman Sachs makes money in five primary areas: investment banking, equities, investment management, investing & lending, and FICC client execution.
Digital finance initiatives
Notably, Goldman seems to believe that its digital consumer lending and deposit platform has as large of a net revenue growth opportunity as its FICC trading unit. This is a remarkable shift in strategy that only materialized in the last three years, and the strategy is still in the extremely early innings of its growth potential for Goldman.
Another advantage Marcus has over other bank incumbents looking to launch a competing initiative is its non-legacy IT architecture and the fact that Goldman does not have an existing consumer credit card business for Marcus to cannibalize.
Marcus reportedly passed $1B in loan origination in its first 8 months and is expected to originate $2B by the end of 2017. While data on number of loans doled out is hard to find, Goldman reached its first billion in consumer loans significantly faster than competing online personal loan companies (Lending Club launched in 2007). At the CB Insights Future of Fintech conference, Talwar noted that Marcus’s average loan size was “around $14,000.”
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Prosper Marketplace Lending Issuance Trust 2017-3 (“PMIT 2017-3”). This is a $501.05 million consumer loan ABS transaction.
This transaction represents the eighth securitization collateralized by unsecured consumer loans originated through the online marketplace lending platform operated by Prosper Funding LLC (“Prosper” or the “Company”).
Preliminary Ratings Assigned: Prosper Marketplace Issuance Trust, Series 2017-3
eOriginal, Inc. and Quicken Loans today announced a partnership to complete the final steps of the online mortgage process – to digitally create an electronic note, and securely store it as an authoritative copy with delivery to both custodians and the secondary market. This advancement accelerates the time between origination and replenishment of capital.
Quicken Loans, the country’s largest online mortgage lender, closed more than $7 billion in mortgage volume through Rocket Mortgage, the nation’s first fully online mortgage process, in 2016 – its first full year in market. The rapid growth of Rocket Mortgage comes from its appeal to a new generation of homebuyers. In fact, two-thirds of Rocket Mortgage clients used the online process to finance a home purchase, and 80 percent of those consumers were first-time home buyers.
eOriginal’s platform delivers a fully digital mortgage and supports every type of digital closing strategy.
Modo, the payments fintech working with Bank of America Merrill Lynch, Alliance Data, FIS, Verifone, and Klarna, today announced they’re ready to break their self-imposed silence and discuss the work they have been doing to deliver innovative payment solutions for their clients in Q4 2017.
Modo has already announced support for three payment event types, in diverse areas of payments with Klarna, Verifone and FIS, and Bank of America Merrill Lynch (respectively):
Payout Events: Enable your corporate and commercial customers to send money globally using the ever growing number of digital wallets to accelerate the last mile of disbursements.
Checkout Events: Checkout anywhere, using any method of payment. Whether you are a merchant or a payment provider, offer consumers any way to pay.
Loyalty Events: Earn and burn loyalty in entirely new ways in entirely new experiences. Combine multiple rewards and loyalty programs to make a purchase or send a gift.
J.P. Morgan Chase & Co. (JPM) said that it agreed to buy payments company WePay Inc. in the bank’s first sizable acquisition of a financial-technology startup.
The banking giant plans to roll out WePay’s technology to J.P. Morgan’s four million small-business customers, said Matt Kane, CEO of Chase Merchant Services. WePay, which has roughly 200 employees, helps online marketplaces and crowdfunding websites like GoFundMe process payments.
The two companies didn’t disclose terms of the deal. But a person familiar with the matter said the price was above the roughly $220 million valuation that Redwood City, Calif.-based WePay achieved in a 2015 fundraising.
Bank of America processed $4 billion in Zelle transactions in the third quarter of 2017 alone, CEO Brian Moynihan reported on the bank’s earnings call Friday morning. Digital payments volume increased nine percent to $324 million. Within that, person-to-person payments growth was about 67 percent with the addition of Zelle this summer, reporting 13.6 million transactions and $4 billion in volume. The bank recently processed half a billion dollars in a single week, Moynihan said.
The bank’s digital users grew 5.2 percent to 34.5 million on a year-over-year basis. Mobile banking users grew 10.8 percent to 23.6 million.
Over at Wells Fargo, CEO Tim Sloan said during that earning call that third-quarter peer-to-peer payments increased 46 percent, but didn’t provide a Zelle-specific number.
At many times in history there have been finance companies that made loans that banks chose not to make. Such finance companies have thrived in good economic times and tended to fail in major recessions. I predict the same will be true of the newer editions.
But second, let us ask why are the banks not making these loans? The answer is simple. The combination of the costs of marketing and administration and the credit risk is too great to make money on a consistent basis. Therefore the banks are funding a large part of the loans by lending to the lenders and taking a senior position, cushioned by the equity of other investors and shielded from the marketing and loan acquisition costs (as well, perhaps, as some of the consumer regulatory risks). Smart banking, it seems to me. The banks have a lower cost of funds than the new lenders, so they can make money at a lower effective interest rate on the money they lend, so long as it is safer.
I have been shocked at the levels of expenses being incurred by some of the new lenders.
Not finding a mortgage lender you like? Try borrowing from a friend – or several of them – instead. According to reports, a new platform called Celsius could make P2P mortgage lending a viable option.
Using blockchain technology, Celsius is in the process of building a peer-to-peer lending network specifically aimed at the Millennial market. According to Alex Mashinsky, founder of the company, the platform will allow younger buyers to secure funding using their social circle, rather than big banks and financial institutions.
So how will it work? To start, each user creates a digital profile. They’ll need to upload FICO scores, online transaction histories and other non-traditional financial data. Then, Celsius will assign each profile a credit score that’s unique to the site.
To protect lenders, Celsius will offer insurance that covers a percentage of the principal loan amount in case of default.
Digital Asset Holdings LLC has raised $40 million in a Series B round, bringing the enterprise blockchain startup’s total funding so far to $110 million.
AlphaPoint Utilizes Intel Security Technology to Deliver Enterprise-Ready Blockchain Platform (AlphaPoint Email), Rated: A
Today, AlphaPoint announces the AlphaPoint Asset Digitization solution making illiquid assets liquid by facilitating the digitization of assets and launching new markets. AlphaPoint also announces the release of the AlphaPoint TrustedVM, a trusted virtual machine enabled by Intel Software Guard Extensions (Intel SGX) technology which allows smart contracts and blockchain services to run securely.
The latest release of the AlphaPoint Asset Digitization solution with AlphaPoint TrustedVM adds additional enterprise-class capabilities by securing access to information from intermediaries and network participants, thereby enhancing privacy and security to the AlphaPoint Distributed Ledger Platform. AlphaPoint has been working with some of the largest Fortune 100 financial institutions since 2013 to launch markets on blockchain technologies.
Enterprise-ready Blockchain Platform
In collaboration with Intel, the AlphaPoint Asset Digitization solution as designed at its core to help enterprises efficiently deploy blockchain solutions that implement business initiatives with world-class privacy and security. This solution was architected to create Trusted Virtual Machine, or TrustedVM, that leverages the trusted execution environment (TEE) that Intel SGX enables. AlphaPoint’s solution utilizes the security and privacy capabilities of Intel SGX, thereby allowing customers to benefit from several key technology and business advantages:
Faster time to market – Quickly develop and deploy blockchain applications with proven technology.
Hardware–enforced privacyand secure consensus – Execution and validation inside the TrustedVM, ensuring data is not visible to any unwanted parties.
Lower and predictable costs – With linear scalability, this technology improves total cost of ownership (TCO) and operational efficiencies.
IBM is using the technology behind bitcoin to help farmers and other small businesses in underdeveloped countries participate in global trade.
The companies will use IBM’s blockchain technology to process financial transactions across borders and currencies — a process which is often prohibitively slow and costly for small business owners, especially when they are in developing regions with smaller banking infrastructures.
The project is focused on what Stellar calls “underdeveloped payment corridors” — countries like Samoa and Fiji, where monetary policies, currencies, and economic instability make it difficult for businesses to move money internationally.
Minorities are more likely to turn to a financial technology firm when seeking a business loan, but they may pay higher interest rates, according to the preliminary results of a congressional investigation released Monday.
A fintech startup with no mobile app does a fundraising round. It secures $8 million. How is that even possible?
True Link, a retiree-focused hybrid advice platform, had a simple pitch to investors: elderly clients like the convenience of digital advice, but want to talk on the phone. The firm claims it received 1.6 million client calls last year.
Now they are actually doing something about it, by launching a new framework for corporate governance, investing and trading called the Long-Term Stock Exchange. Backed by top Valley figures such as venture capitalist Marc Andreessen and LinkedIn co-founder Reid Hoffman, the LTSE says it plans to seek regulatory approval by the end of this year to become the newest U.S. stock exchange.
Its key feature: a system in which the voting power of shares increases the longer investors own them.
A year ago Lending Club launched a deal for new investors with United Airlines. New investors could earn 1 MileagePlus frequent flier mile for every $2 invested in a new Lending Club account.
Well last week Lending Club sweetened the deal. They basically doubled the amount of miles you can receive. So, instead of 1 mile for every $2 invested it is now 1 mile for every $1 invested. This deal is only valid until January 9, 2018 whereas the last deal had a three year expiration date.
whoa: blockchain, blockchain, blockchain (CB Insights Email), Rated: B
First, we’ve teamed up with Fortune Magazine for a joint review of Blockchain Trends & Opportunities. Robert Hackett of Fortune will be joined by CBI Intelligence Analyst, Arieh Levi.
RateSetter applied for full authorisation in October 2015 and cofounder and CEO Rhydian Lewis said in a statement the process has been “a long but positive journey during which we have learnt a lot, improved our infrastructure and implemented important changes, notably making the business more transparent.”
According to data gathered by AltFi lending volumes through P2P platforms achieved a staggering compounded annual growth rate of 110% between 2011 and 2016 and shows little sign of letting up this year.
However, there are some indications this honeymoon period for the industry may be over as the UK’s inflation rate hit 3.0% last month piling pressure on the Bank of England to raise interest rates. This is an understandable worry for the industry, as much of the lending it facilitates is higher risk than that of the traditional banking sector.
Furthermore, there are several emerging industry trends, which are likely to boost its resilience to deteriorating economic circumstances.
Consolidation- While nearly 100 platforms are operating in the UK a resilient oligopoly is emerging. This is made up of the markets four largest lenders: Zopa; Funding Circle; LendInvest and Rate Setter who cumulatively facilitate over 70% of lending volume.
Securitisation – Previously, P2P platforms lacked the scale to make securitisation economic and this new trend will likely provide a further edge to the industries established participants.
Zopa, the world’s oldest “peer-to-peer” lender, has long focused on low-risk borrowers. The weighted average interest rate the 12-year-old company charges its British customers has never gone higher than 10 per cent and was as low as 5.6 per cent in 2013. While startups like Wonga focussed on the high returns available from borrowers who are under-served by financial institutions, Zopa has largely competed at the “prime” end of the spectrum with high street banks. The returns are lower, but so too are the risks, including to its reputation.
In recent years, Zopa has added riskier borrowers to help drive growth. (It’s worth saying that it is still miles from Wonga territory.) The weighted average interest rate across its portfolio has grown from 5.8 per cent in 2014 to almost 8.8 per cent in 2017:
Zopa has been taking on more risk to achieve pretty much the same returns as when it made fewer risky loans.
Britain has seen its population of small housebuilders shrink by 80% in a single generation as market dominance has passed to an entrenched group of major players – among the top 10 UK housebuilders, none was founded after 1990. The disappearance of small and medium-sized housebuilders from the UK – defined as companies that complete between one and 100 units a year – has seen their numbers fall from more than 12,000 in the mid-1980s to about 2,400 today, according to research by the non-bank mortgage lender LendInvest.
Chinese online micro-credit provider Qudian Inc said it raised about $900 million in an IPO that priced above expectations, underscoring robust U.S. investor demand for fast-growing Chinese companies.
The offering from Qudian represents the biggest-ever U.S. listing by a Chinese financial technology firm. It is also the most high-profile company to take part in a resurgence of U.S. listings by Asian firms this year.
Qudian , an online microlender backed by e-commerce giant Alibaba’s financial unit, priced its U.S. listing above its expected range on Tuesday, says Reuters.
It offers fast growth, low default rates and, unlike many tech startups, is already profitable. At $24 per share, the final price represents a 2018 PE of 13.8, compared to 13.0 for smaller U.S.-listed online lender Yirendai.
China’s household debt relative to income is still low, and consumer credit is underpenetrated at 7 percent of gross domestic product, versus 20 percent in the United States, says Goldman Sachs.
Backed by Alibaba’s Ant Financial, Qudian lends cash to young Chinese consumers such as white collar workers, and advances credit so they can buy goods online and pay for them in monthly installments. The company provided $5.6 billion to 7 million active borrowers in the first half of 2017.
The sale of 37.5 million shares in Qudian has already raised about $900 million, making it the biggest U.S.-listing by a Chinese company this year, the report said. The offering values Qudian at as much as $7.9 billion, the report added.
Online micro-lending company Qudian is about to go public at the New York Stock Exchange on Wednesday, and it’s set to be one of the largest U.S.-listed floats by a Chinese company this year.
In its prospectus, Qudian said it was offering 37.5 million American Depository Shares with a float price range of $19-$22 per share. The company said it could offer up to 43.1 million shares if underwriters exercised an option.
In recent years, raising funds through crowdfunding activities is becoming increasingly popular among enterprises worldwide, and the governments of quite a number of countries have introduced legislation to regulate raising funds through crowdfunding activities. On the other hand, the Financial Services Development Council (FSDC) released on March 18 last year a report entitled Introducing a Regulatory Framework for Equity Crowdfunding in Hong Kong, which explored options for establishing a framework and a regulatory regime to promote and, at the same time, regulate equity crowdfunding activities in Hong Kong. So far, however, the Government has not yet announced any specific measures to promote equity crowdfunding activities.
(1) We note that crowdfunding activities might come in different forms, including equity crowdfunding (ECF) and peer-to-peer (P2P) lending. The regulatory approaches towards these activities vary globally across jurisdictions in view of the nascent nature of the business. While some economies have developed dedicated new regimes, others leverage existing rules to regulate such activities.
(2) At present, parties engaging in crowdfunding activities in Hong Kong (e.g. where the activity involves an offer to the public to purchase securities, including shares, debentures or interests in collective investment schemes, or where the platform offers its own funds to borrowers) may be subject to the provisions of the Securities and Futures Ordinance (Cap. 571), the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) and the Money Lenders Ordinance (Cap. 163), depending on the specific structure and features of the relevant arrangement.
Israeli startup Innovative Assessments (IA) says financial lenders like banks are missing out on huge numbers of potential clients because their criteria for handing out credit are too stringent and do not take the full picture of the client into account.
As a result, banks are effectively cutting themselves off from lending out money to large segments of the population, and many borrowers are denied access to affordable credit.
IA wants to help solve this problem. Banks should not only look at financial information to assess creditworthiness, IA says, but also at personal character, which is a whole new dimension of data that is missing from today’s credit scores. So, IA has come up with an idea to help lenders do this.
IA has developed patent-pending software that uses advanced psychometrics for credit scoring.
“Our algorithms look at people’s preferences towards certain financial behaviors,” added Fine. “And while there are no right or wrong answers, we can also identify people who may be responding insincerely.”
SeerGate, a real-time payments firm, was acquired by MyCheck in May 2015 while Ramat Gan-based Sling, whose platform allows micro-merchants to accept electronic payments from consumers via smartphones, was snapped up by Avante in July last year.
NSKnox has created a Digital Notary based on cooperative software that allows a secure transaction approval for banks and organizations, the company says. The software, which uses algorithms, allows two or more blind witnesses — who are actually financial or other kind of organizations — to help independently authenticate, authorize and detect fraud while verifying business transactions.
A total of 68 startups, including nine in the latest brew, have taken part in Citi’s Israel Accelerator program since it was set up in November 2013 in Tel Aviv.
Citi provides the entrepreneurs access to experts within the company globally to bounce ideas off of and the opportunity to use the bank’s huge infrastructure as beta sites. The banking giant does its mentoring and fostering pro bono, without taking any stakes in the companies it fosters.
The graduates of Citi’s program, which include startups like Paykey, Paybox and Vatbox, have raised a total of $300 million to date, according to data provided by Citi, and there have been two exits, with Sling and SeerGate having been acquired.
BBVA, Spain’s second-largest bank that snatched up mobile banking startup Simple for $117 million back in 2014, is now entering the mobile money transfer business with today’s launch of a new app called Tuyyo. The app, which is available on both iOS and Android, is focused on the $73 billion annual market for remittances to Latin America and the Caribbean from the U.S.
However, the service is initially launching with money transfers from the U.S. to Mexico, where the average amount sent by U.S. workers is about $1,900 per year, says BBVA. It also notes that the U.S. to Mexico corridor sees over $27 billion flowing between the countries annually, making it one of the world’s largest.
Many of the world’s poor in developing countries — nearly 2 billion, according to the World Bank — struggle to lift themselves out of poverty simply because they don’t have a bank account or financial services.
Leveraging the power of the Interledger Protocol (ILP), Mojaloop offers a way for financial providers, governments and mobile network operators to simplify and reduce the cost of developing inclusive payments platforms.
Financial technology has the potential to radically transform the securities industry. The fast pace of change could lead to disintermediation, according to an Iosco study.
Key trends identified in the report include:
Greater availability of data
Exponential growth in computing power allowing the analysis of ever larger data sets
Broader access to and the decreasing cost of goods and services
Increasing disintermediation and re-intermediation
Demographic and generational changes
Innovative fintech business models are disintermediating and re-intermediating certain regulated activities. For example, online equity crowdfunding platforms intermediate share placements and disintermediate stock exchanges and underwriters; peer to peer lending platforms intermediate or sell loans and disintermediate banks and lenders, and robo-advisers provide automated investment advice and thereby disintermediate traditional advisors.
Beginning with bitcoin in 2009, cryptocurrencies have also seen their prominence rise due to some of the qualities that they share with gold, the most prominent of which is their scarcity.
With the emergence of today’s digital age, a startup called GoldMint is seeking to alter this trend with a new means of exchange for physical gold, with transactions occurring over a blockchain-based platform.
GoldMint’s platform will leverage the private and individual gold trading market, including potentially the management of larger physical stocks such as those in central banks. It will also deliver an electronic payment solution tethered to physical gold, as well as a gold-backed peer-to-peer lending system.
There are two options for trading GOLD for fiat or cryptocurrencies. First, there is a method for seeking a GoldMint-guaranteed buyback. And second, a loan can be requested. For either option, the process is as follows:
Through the use of a special app which is not yet available, GOLD can be transferred as collateral to a designated GoldMint account.
GoldMint utilizes the current price of gold, as set by the LBMA, to fix the rate of a loan.
GoldMint requires the customer to undergo its know-your-customer (KYC) process as well as consent to GoldMint’s loan terms to receive the loan. Various repayment options for the loan amount and the means of repaying it are then offered.
If a customer defaults on repayment, their GOLD cryptoassets are transferred to GoldMint.
GoldMint also has a process for converting gold into GOLD tokens and reconverting these tokens into gold for cross-border passages.
The Financial Markets Authority has decided to allow financial services companies to provide so-called “robo-advice” to individuals.
Such methods are widespread around the world, but New Zealand law requires any financial advice to be given by a human adviser, and law changes to allow advice to be given by a computer programmes are not expected to be passed until 2019.
Companies wanting to offer robo-advice will have to apply to the FMA for an exemption.
The Financial Markets Authority will let Kiwis access personalised automated financial advice, known as robo-advice, with an exemption kicking in before a legislative overhaul of the sector.
The market watchdog sought feedback on the proposal in June and today decided to expand the range of products robo-advice can cover to include mortgages and personal insurance, it said in a statement. Providers wanting to offer the service will need FMA approval on the good character of directors and officers and satisfy the regulator of their capability and competence. Another round of consultation is needed to finalise the exemption and the FMA is aiming to start the process early next year.
Big banks are planning roboadvice services, but only BNZ has revealed how far advanced it is.
Westpac and BNZ have both told the Financial Markets Authority (FMA) they expect to launch roboadvice services, which could close the “advice gap” by using artificial intelligence (AI) systems to give customers advice on things like KiwiSaver, insurance and mortgages.
The banks’ intentions were revealed in submissions on whether the FMA should use its “exemption” powers to allow roboadvice services to operate despite current law only allowing personalised advice to be given by a human being.
ANZ and Kiwibank’s intentions were blacked out in their submissions, released by the FMA.
Submissions to the consultation focused on a number of themes:
Strong support for an exemption from the current laws preventing personalised robo-advice.
Opposition to financial limits and product exclusions.
Robo-advice should meet the same standards as those that apply to authorised financial advisers (AFAs).
Exemption applicants should be pre-approved or licensed.
Exemption conditions should be aligned with new advice regime requirements.
The FMA has decided not to impose financial limits on personalised robo-advice and the eligible product list has been expanded to include mortgages and personal insurance products.
Companies seeking to offer personalised robo-advice will have to provide the FMA with good character declarations for directors and senior managers as well as information showing they have the capability and competence to provide the robo-advice service. The exemption conditions will also be designed so that the robo-advice service is provided in a manner that is consistent with AFA requirements.
A summary of the submissions can be found here. 49 submissions were received by the FMA. 47 are being published.
Mumbai-based peer-to-peer lending platform Lenden Club has raised $500,000 almost Rs 3.5 crore in equity investment from three major investors Venture Catalyst, Anirudh Damani and an Indian venture capital fund. Venture Catalyst and Anirudh Damani had put in seed investment of Rs 1.5 crore in the company as well in May last year.
The Reserve Bank of India’s notification on peer to peer (P2P) lending issued on October 4 this year (“Regulations”) seems to have only added an element of ambiguity in the minds of stakeholders. Eighteen months since the RBI issued the consultation paper and it is not certain how and whether stakeholder comments have been internalised in the paper.
The definition of a “peer to peer lending platform” as an intermediary providing the services of loan facilitation, may unintentionally bring into the purview, a wide variety of operators. As a literal construct, this does not seem to take into cognizance the various types of business operations in the industry simply because it doesn’t clarify whether this excludes a model that doesn’t provide syndication. Theoretically even an internet search engine, business correspondents and lead generators could fall under this definition.
This must be the first category of Non-Banking Financial Company (NBFC) to not function in the manner in which it has been typically designed. The new Regulations set a precedent to regulate entities as NBFC’s that undertake neither lending nor credit enhancement.
The new Regulations also seem to bring into its ambit, an “off-line” P2P: the very essence for P2P start-ups has been low transaction costs thereby resorting to the online medium for such lending.
Japanese Internet conglomerate SoftBank is in early discussions to launch another fund that can possibly be larger than its existing $100 billion Vision Fund, Recode reported, citing anonymous sources.
The Information, in its report, noted that SoftBank got the right to prevent online lender Kabbage, in which it led a $250-million investment in August, from selling parts of itself, buying other companies, selling stock below a certain price or borrowing money beyond a certain level.
The fintech revolution sweeping finance will lessen the profitability of banks in the GCC when it comes to parts of consumer banking – such as money transfers and foreign exchange – but overall it is unlikely to hurt the ability of regional lenders to make money.
The rating agency noted that the GCC banks that it assigns ratings to get about a quarter of their revenues from fees and commissions and foreign exchange gains and, while a big portion that is generated from lending and advisory activities, some of that money comes from transfers and currency exchange.
Investments in technology and digitisation are also timely for UAE banks as profitability has been on the wane in the wake of the biggest oil price slump since the 2008 financial crash. Lenders are fortunate that this country has one of the highest smartphone penetration rates in the world.
The rising influence of financial technology (fintech) firms in the Gulf could eventually threaten jobs and profitability at the region’s banks, warned ratings agency S&P Global.
“This would push some banks to adjust their operations through increased digitalization, branch network reduction, and staff rationalization,” said Mohamed Damak, S&P Global Ratings credit analyst in the report.
Already, the region’s banks are starting to rethink their business model.
In early October, Mashreq launched one of the region’s first full service digital branchless bank — Mashreq Neo — as well as a new new digital mobile wallet service called Mashreq Pay — that can be used to make purchases around the world.
The Dubai-based bank has also started to use robotics in the third quarter to manage open account trade payments, according to the bank’s Q3 statement.
Snakes & Lattes has entered into an EXCLUSIVE partnership with Lending Loop, Canada’s first fully regulated peer-to-peer lending platform focused on small businesses. This partnership will fuel and facilitate the mass expansion of the Snakes and Lattes brand across North America, while simultaneously preserving shareholder value. This is the first time in history that Lending Loop has made a direct partnership to finance a growing company, and they will be conducting a mass marketing/advertising campaign to promote both Lending Loop and Snakes & Lattes.
In contrast, Amfil is collaborating with financial innovator, Lending Loop, to fuel the subsidiary’s growth at a fair market rate with flexible cash repayment terms.
Internet pioneer Sir Tim Berners-Lee looks at the fintech landscape today and sees something familiar — a creative ferment that reminds him of the early web. He also sees some mistakes in danger of being repeated.
News Comments Today’s main news: RateSetter surpasses $150M in loans. New York AG requests cybersecurity safeguards from Experian, TransUnion. Point72 Ventures leads AlphaFlow’s $4.1M seed round. Cross River appoints VP of Government Affairs to focus on regulatory framework. Clarity Money passes 500,000 user milestone. MarketInvoice’s losses doubled last year. Raisin expands into the UK with acquisition. Today’s main analysis: Millennial investors don’t […]
AlphaFlow, an automated alternative investment platform for real estate, announced today the closing of a $4.1 million seed round funding, led by Resolute Ventures and Point72 Ventures, the venture capital arm of Steve Cohen’s Point72 Asset Management. Other investment partners include Upside Partnership, Social Capital, Y Combinator, Clocktower Technology Ventures, an affiliate of Drobny Capital, Red Swan Ventures, and more.
AlphaFlow’s seed round comes two years after the company was established by CEO and former RealtyShares Co-Founder, Ray Sturm. AlphaFlow plans to use the funding to continue scaling successful partnerships with lenders and investors, both accredited individuals and investment managers.
AlphaFlow Optimized Portfolios are available for investment professionals such as endowments, pension funds, RIAs, and wealth managers, as well as by independent investors seeking uncorrelated returns through short‐term, higher‐yielding real estate loans backed by properties.
To date, AlphaFlow’s flagship product, AlphaFlow Optimized Portfolios, boasts broad diversification across hundreds of loans in 29 states, average LTV of 72%, and target net returns between 8 to 10%. With this seed round funding, AlphaFlow intends to continue to innovate in the application of sophisticated finance mechanisms to scale within the investment industry.
Millennial investors are woefully underprepared for the next financial crisis according to a survey conducted by online real estate crowdfunding service Fundrise.
The Fundrise survey suggests that 67.2% of millennial investors are not prepared for the next crisis, and 47.1% feel that there is nothing that they can do to prepare for it. With 83 million millennials in the US holding an average of $75,500 in assets, this means the largest generation is at risk of losing $3.1 trillion in the next financial crisis assuming a repeat of the 50% drawdown seen last time around.
77.8% of respondents said that they had no interest in investing outside of the stock market while 42% of millennials surveyed said that they did not know whether it was important to invest outside of the stock market.
Cross River, the financial services organization that merges the established expertise of a bank with the innovation and product offering of a technology company, announced today the appointment of Phil Goldfeder as VP of Government Affairs. Goldfeder will lead a team at Cross River working with regulatory agencies and policy makers in Washington, D.C., as well as state governments across the U.S., to implement appropriate regulatory frameworks that will encourage innovation while ensuring consumer protection.
TransUnion and Experian, two of The Big Three credit reporting companies, have received letters from New York Attorney General Eric Schneiderman inquring them about their cybersecurity safeguards in the wake of the massive data breach at rival Equifax.
According to a news report inThe Associated Press, the attorney general wants the two companies to describe what security systems they have in place and what changes they are implementing since data on 143 million U.S. customers at Equifax was breached.
New York’s attorney general wants to know if the companies would waive fees for consumers that needed credit freezes because of the hack.
Asking bankers to comment on the Equifax data breach generally evokes a cone of silenceforged out of a combination of sympathy and fear — I’m not going to speak about it because it could happen to me.
A few, though, will acknowledge the toll the breach has taken on their customers and their security departments, which have scrambled to ensure they won’t share (or haven’t shared) Equifax’s fate.
Another banker, Jim Hanlon, the chief technology officer at Dedham Savings Bank in Boston, was astounded that Equifax did not catch its breach more quickly.
“We have 60,000 customers,” he said. “If somebody came into our network and was looking at 100 files, that would raise a flag with us. If somebody’s accessing millions of records, how is something not alerting them to that fact? That’s the concerning piece to me. The documentation said they take network security seriously. But there should have been a red flag somewhere.”
Equifax’s security team detected and blocked suspicious network traffic associated with its U.S. online dispute portal web application on July 29. But the company’s investigation found that hackers had access to certain files containing personal information from May 13 through July 30.
While I don’t have all the answers, financial/debt attorney and author of Life & Debt Leslie H. Tayne of Tayne Law Group, P.C., has some great suggestions.
Q: What can consumers affected by the breach do now to protect their information?
A: For starters, sign up for credit monitoring so that future account fraud and identify theft attempts will be noted and immediately brought to your attention. Next, get in the habit of regularly monitoring your bank and credit cards on your end for any suspicious activity. While you’re online, update your account passwords using long, strong, unique passwords for every single account.
Q: Should you freeze your credit so that no one can use your information illegally?
A: There are pros and cons to freezing your credit. The biggest pro of freezing your credit is that no one can apply for credit in your name. But that no one includes yourself, meaning it could create delays and problems when credit is needed quickly in the case of applying for a loan, credit cards or jobs or if seeking insurance, looking to buy or rent a home or contracting with a utility company during the freeze period. Yes, you can unfreeze your credit at any time, but this is also time consuming and may involve having to pay a fee.
Q: It doesn’t sound like freezing your credit is the best option right now.
A: With these types of drawbacks, a better avenue to consider may be signing up for a fraud alert.
Q: What else do consumers need to know or be on the lookout for going forward?
A: A key concern emerging from the Equifax security breach that consumers need to watch out for are cons and phishing scams. They need be wary of anyone who may approach them impersonating financial or government institutions or general companies who may come across offering support in resolving their data breach.
While it may not be the oldest credit union around, the Boeing Employees Credit Union (BECU) of Tukwila, Washington, has been in business since the days of the Great Depression. Founded in 1935, BECU began as a credit union for employees of the Boeing Company aircraft manufacturing firm. Today, at 82 years old, BECU is looking pretty fit for its age. It currently holds more than $17.2 billion in assets and services more than 1 million members, placing it in among the top five U.S. credit unions for cash assets — and that’s without a steady diet of kale and spinach smoothies.
But, a common element with which older financial institutions must contend is new players arriving on the scene and throwing older players’ relevance into question.
Should older institutions treat these younger upstarts as rivals or as potential partners?
Doug Marshall, BECU’s senior vice president of retail, recently told PYMNTS that BECU has chosen the latter approach.
BECU has approached approximately 60 organizations in the FinTech space to explore opportunities for collaboration, Marshall said. Among the companies approached is Even, a supply-side marketplace lending company. An official partnership has not yet been established, but BECU turned to the company to explore innovations for the credit union’s own lending habits and to help members “smooth their cash flow.”
A few years ago, BECU launched an updated mobile app in partnership with MX, a technology solutions provider for financial services companies. Marshall said BECU was excited to see how members would embrace the newly-launched app. When it went live, however, it became clear they weren’t thrilled.
“We did quite [a lot] of research before we deployed,” Marshall said. “But, in some ways, we didn’t ask one of the most fundamental questions.”
According to Marshall, one of the important lessons that younger FinTechs can teach older credit unions about staying relevant is to not be afraid to fail.
“Lesson three is pivot quickly,” Marshall said. “That’s the magic of a FinTech partnership. We were able to respond and [quickly] deploy a fix.”
Imagine financial technology that can create personal portfolio indexes for individual investors or a computer program that can assign forward-looking performance ratings for mutual funds and ETFs.
That’s the way Morningstar CEO Kunal Kapoor thinks when he imagines where technology is heading, and why he believes financial advisers need to run toward technological innovation to avoid being left in the digital dust.
Impact Housing REIT, LLC (ImpactHousing.com), a new apartment real estate investment trust led by Edward (“Eddie”) P. Lorin, a 30-year multifamily real estate veteran, is pleased to announce that its $35 million direct public offering under Regulation A+ has been qualified by the Securities and Exchange Commission (SEC) and is now open for investment. All investors – accredited and unaccredited, domestic and international – can invest directly in Impact Housing REIT Series A equity round for as little as $1,000.
Poor housing conditions due to a rising economy, extreme weather conditions, and poverty is effecting our health, quality of life, and country, as a whole. Impact Housing is the first REIT in the country using the new equity crowdfunding laws to focus on America’s housing crisis, specifically on creating affordable, livable, distinctive multifamily communities for America’s working people and their families.
Employing a strategy that Mr. Lorin has refined over decades, Impact Housing plans to buy neglected, poorly managed apartment buildings throughout the U.S., and transform them into thriving, healthy, family-oriented communities. Upgrades typically include new amenities, refreshed and upgraded interiors, resort style pools, playgrounds, state-of-the-art fitness centers, BBQs, dog parks, community gardens and open space social areas.
The technology enabling this online investment offering is backed by CrowdStreet, a leading provider of real estate fundraising and investor management solutions.
Long before chatbots popped up as interesting business-use cases, long before mobile banking applications offered military-grade secure transactions, and much before focused analytics tools for banking made themselves known, AI apps for banks augmented by machine learning and deep learning began creating an impact in the world of banking.
The following factors make the financial sector a highly targeted market for all kinds of AI apps for banks:
Massive amounts of structured data from the past.
Consistency in data recording and archiving practices across financial institutions.
Quantitative nature of finance and banking business practices and operations.
Accuracy in data records.
AI apps for banks: Smart portfolio management for end users
These applications help banks build an online accessible tool that considers user preferences, personal demographic information, earning power, and wealth sources, and then matches these with their financial goals. In parallel, these systems take real-time market data and factor in parameters like a customer’s credit history, risk aversion, and lifestyle practices, creating a very robust portfolio of investment and saving instruments across asset classes.
Mobile banking applications like Moven and Simple leverage the idea of using algorithms that grow smarter with time. More precisely, they grow smarter by handling more data and measuring more results.
These AI-based applications can integrate with a user’s online bank accounts, debit and credit cards, and e-wallets to track their expenses, present advice on better expense management practices, and help them choose more suitable financial products that sit well with their financial habits, liquidity requirements, and short-term saving goals.
Automated hedge fund management
These models collate inputs from several sources of real-time financial information from the major financial markets of the world. Also, these models incorporate quantified inputs regarding sentiments in the financial markets.
Self-learning security systems for fraud detection
AI-based fraud detections tools of today leverage the principles of deep learning and machine learning, and are already beginning to incorporate the benefits of neural learning, and hence have tremendous potential in cybersecurity, particularly for the banking sector.
LendUp, a socially responsible online lender on a mission to redefine financial services for the emerging middle class, announced on Wednesday it has appointed Jotaka Eaddy as its new Vice President of Policy, Strategic Engagement, and Impact. Eaddy previously served as LendUp’s Head of Government Affairs.
LendUp has now saved borrowers nearly $135 million in interest and fees. The lender expects to surpass $200 million by the end of the year.
There’s an extremely fine line you have to walk when scaling. If you expand too quickly, hire too many employees, and order excess inventory, you could deplete your financial resources and crash. But if you don’t take any chances or prepare your business for growth, you won’t be able to respond in an efficient manner when you finally get the big break you’ve been waiting for.
So, what, exactly, can you do when you are ready and need money to expand? Here are four options.
1. Online lenders
If you need a sizable loan, you’ll still need to go through a traditional bank or lender. However, if you need only a modest amount of cash, online lending msy be the way to go.
2. Personal installment loans
If you’re really in a bind and need some quick cash, a personal installment loan might be the way to go. A lender simply checks your credit score and processes your request.
3. Line-of-credit loans
With a line of credit, your business gets approved for a certain amount of money for a specified period of time — typically one year.
4. Receivable financing (factoring)
The factor advances a portion of the receivables — likely 75 to 90 percent of the value — and then holds on to the remaining portion. It’s a good solution for businesses that have orders coming in, but don’t have the money to fill those orders.
A leading European deposit marketplace has acquired Manchester-based fintech PBF Solutions as part of its entry into the UK market. Raisin will target UK savers with its marketplace of savings accounts, while also offering an end-to-end deposit raising solution for UK banks and other firms.
Founded in Berlin in 2013, Raisin is already partnered with 40 banks and financial institutions across Europe. In the past four years the firm has also attracted over €4.3bn in what it calls “marketplace deposits”.
PBF will become Raisin UK, and will significantly increase the size of its UK-based operations over the coming months. CEO Kevin Mountford will take charge of Raisin’s UK expansion.
By taking advantage of the large amount of data available in the UK at a time when consumer lending was evolving fast, Kissinger and his team conceived of a new kind of online lending that they claim is faster and more efficient than larger peer-to-peer lenders Zopa and Ratesetter.
Since 2014, they have built the third largest unsecured consumer lending platform in the UK by 2016 volume, even though – at 4.6 per cent – their market share is still small. So far it has lent a comparatively small £80m to around 20,000 borrowers. Zopa, by comparison, has approved £2.62bn in loans since 2005.
But with a growth rate of 430 per cent in the last year, Lendable is expanding quickly. It aims to be the fastest lender to decide on applications and transfer cash in the market, getting funds of between £1,000 and £15,000 in the borrower’s account in as little as two hours.
But for many rural businesses, Folk2Folk has been a saving grace. The peer-to-peer (P2P) lending platform has helped struggling companies in a time of need, and in some cases prevented an entire community from caving in on itself.
“We don’t exist as a platform that wants to talk solely about interest rates,” says Giles Cross, the company’s chief marketing officer. “Rather, our purpose is to sustain local and rural communities around the UK – where people want to club together to make a difference.”
A large proportion of the businesses that use Folk2Folk are startups that have been starved of funding, largely because they don’t have a long-standing track record.
The House Crowd, a UK property crowdfunding platform, is reporting “record levels of investor confidence”. According to the platform, the House Crowd is experiencing high demand for its property-backed peer-to-peer lending products, with over 1,270 people having invested in one. The House Crowd states that 66% of its investors now repeatedly reinvesting their capital through the business.
Shares of CICC jumped by a record after it said Tencent is paying HK$2.9 billion ($372 million) for roughly 5 percent of China’s oldest investment bank. The companies will team up on marketing and data analysis, according to an exchange filing.
Ping An Securities has implemented FusionCapital from Finastra throughout its operations in Greater China.
The business, part of China’s Ping An Group, is now using the flexible Finastra platform to help extend its securities brokerage capabilities on a global scale – meaning it can boost revenues as it enters new markets.
China Ping An “simple life” conference held in Shanghai. Ping An Bank mobile banking business – “safe pocket bank” launched a smart investment service (referred to as “safe intellectual investment”), the first open to ordinary investors to use. The service uses the Black-Litterman model (BL model) and the quantitative asset allocation method, which are widely used by overseas investment bankers, and develop personalized investment plan according to the customer’s risk appetite.
Japan’s push to attract innovative financial technology startups to the country could spell trouble for the US.
On Wednesday at the New York Stock Exchange, Japanese Prime Minister Shinzo Abe said the government was moving forward with a plan to roll back regulations on some fintech startups to help spur the development of emerging technology and drive growth in the country.
As such, Abe is pushing for a regulatory sandbox program that would allow fintechs, startups looking to automate or digitize aspects of financial services, to operate and scale without meeting existing regulations.
While such an environment is understood to exist in Silicon Valley more broadly, Berenguer said, those hoping to break through specifically in the financial industry in the US are often required to subscribe to the same regulations as their much larger peers.
That often means paying lawyers to ensure compliance, costs that can force entrepreneurs to put off investing in their product and team. This creates a sort of Catch-22 for some startups. Venture-capital backers are less likely to give entrepreneurs money without a product, but it’s more difficult to create a product with less money when also paying legal costs. Berenguer says this has made financial technology harder to break into relative to the overall tech industry.
The Softbank Vision Fund was unveiled less than a year ago, backed by Saudi Arabia and Japan’s SoftBank (SFTBF). By May it had raised $93 billion, out of a planned $100 billion, to spend on technology businesses of the future.
Peer-to-peer lender RateSetter has now reached the $150m mark in loans facilitated thanks to a rapid influx of lenders into the platform.
Millennial investors have helped to drive this growth, especially in RateSetter’s one-month market where these younger demographics make up 72% of the lender’s investors since the firm launched in 2014. This is followed by the one-year market where Millennials make up 40% of all investors.
Investment in the platform has risen by 50% over the last five months alone after RateSetter hit the $100m loan milestone in March. There are now more than 7,700 investors registered with the platform, making RateSetter the largest P2P lender in Australia.
For the one-month market, the average amount invested has increased from $3,777 two years ago to $11,483 today.
Amit Parker, 26, needed money for his father’s heart surgery. Banks refused to lend as he had delayed repayments on a motorcycle loan three years ago. The travel firm executive tried his luck at Lenden Club (Lenden isHindi for give-and-take), an online portal that connects individual borrowers with lenders. He managed to get Rs 70,000.
Most of these are small-ticket transactions, and the market is small. A few hundred such loans are disbursed a month with only the young with poor credit record or the tech-savvy borrowing, Rajiv Raj, co-founder of credit-scoring platform CreditVidya, told BloombergQuint. Adoption could improve once the central bank comes out with guidelines.
The Reserve Bank of India on Wednesday provided that clarity, bringing P2P lending platforms on a par with non-bank finance companies. And the opportunity is huge. More than 30 such startups have come up in the last four years, including Faircent, i2ifunding, Lenden Club and Billionloans.
Yet, since it involves lending to people with poor credit scores, interest rates can go as high as 28 percent. That didn’t deter Parker from taking another Rs 1.5-lakh loan on Lenden Club. He wishes to continue borrowing on the platform.
Millennials are the most active lenders and borrowers, Rajat Gandhi, co-founder of Faircent, said over the phone. About 60 percent of its 18,000 members are below 35 years. For its Mumbai-based rival Lenden Club, more than two-thirds of its users are 30-40 years old.
Does the launch of your mobile app mean that you are shifting your focus to individual borrowers from SMEs?
From day one, we have maintained that our take on the opportunity in the financial space is not focused on retail or SME. The Indian financial sector is largely influencer-driven. Whenever, someone wants a loan, they go through an influencer, whether a chartered accountant or a financial advisor.
How much have you disbursed through your platform so far in FY18?
Last year, we did Rs 1,000 crore in disbursements, of which 60% was in the SME category and 40% in the retail category. This year, as a company, in the first four months (April-July), we did Rs 500 crore worth of disbursements and we have been clocking very healthy revenue. This month, we are touching around Rs 3 crore in revenue. We had been going at a monthly average of about Rs 2 crore in revenues so far. This year, we are targeting almost 250% growth over last year (in disbursements) and a healthy revenue growth. Last year, the revenue was Rs 15.5 crore. This year, we are targeting an almost 300% jump and we expect to cross `45 crore.
Many people wait for the festival season to make big-ticket purchases like buying a car. That is because banks and non-banking finances companies (NBFCs) usually lower their lending rates on car loans and even have offers such as writing off processing fees.
“The only benefit of availing a car loan through the dealer is the slight convenience. Dealers tend to push the customer towards their captive finance arms or towards banks where they get higher commissions. So, when a customer compares the offer from the dealer with more banks or at online marketplaces, they will typically find lower interest rates and better terms than those offered by the car dealer,” says Gaurav Gupta, CEO, MyLoanCare.in, an online loans marketplace.
A recent Statista report estimates that fintech will be worth around US$20 billion by 2017.
For instance, 2016 GCC-wide figures by Statista showed that a full 57 per cent of banks and financial services providers saw fintech startups in their operational space as potential partners, while only 22 per cent saw them as competition.
Fintech start-ups tend to be technologically led. They harness mobile tech, social networks and a well-designed user interface to bring services directly to customers. But this technology-first model is most useful in the first and last mile fulfilment, ie, when a customer requests a transaction, or is notified of its completion. When it comes to actual transaction processing, fintech startups often lack the size, scale and well-developed treasury functions needed to fulfil global requests.
But mutually beneficial fintech partnerships can be a game changer. We are heading for what might be called a hybrid model – where a transaction is initiated in-app but is then handled by conventional partners through systems that are already compliant with regulations and have a robust track record of transaction fulfilment.
A USED-CAR dealership has tapped fintech to offer a paperless and hassle-free one-stop service to buyers, who can make an electronic deposit for a preferred model and submit an online car loan application, complete with insurance cover.
Orchard Credit, best known for its four decades in the vehicle financing business, recently set up a dedicated used-car showroom to provide the full range of car services to its customers.
Orchard Credit also pioneered the car loan aggregator. It is the only dealer which offers online car loans from nine banks and financial institutions – DBS, Hitachi Capital, HL Bank, Maybank, OCBC, Standard Chartered, Sing Investments and Finance, Tokyo Century and UOB.
The widespread use of algorithmic trading has lessened the need for interaction between the buyside and sellside, and brought with it increased reliability, faster speeds and lower costs. However, it also brings technology-related risks and a lack of transparency.
The widespread use of algorithmic trading – basically the process of using computers programmed to follow a defined set of instructions for placing a trade – means that it is no longer necessary for the buyside traders to speak to their counterparts every time they make a trade.