Thursday October 17 2019, Weekly News Digest

LendingClub

News Comments Today’s main news: Zopa launches tool to compete with credit bureaus. KBRA assigns preliminary ratings to Marlette Funding Trust 2019-4. OnDeck Capital financial results. ID Finance raises 1.7M euro on Crowdcube in minutes. Canada’s fintech adoption rate has doubled since 2017. Today’s main analysis: LendingClub account performance (A MUST-READ). LendingTree’s Personal Loan Offers Report […]

The post Thursday October 17 2019, Weekly News Digest appeared first on Lending Times.

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News Comments

United States

United Kingdom

European Union

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News Summary

United States

KBRA Assigns Preliminary Ratings to Marlette Funding Trust 2019-4 (Business Wire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Marlette Funding Trust 2019-4 (MFT 2019-4). This is a $326.27 million consumer loan ABS transaction.

Preliminary Ratings Assigned: Marlette Funding Trust 2019-4

Class

Preliminary Rating

Initial Class Principal

A

AA (sf)

$260,298,000

B

A (sf)

$30,117,000

C

BBB- (sf)

$35,854,000

On Deck Capital Inc. Financial Results Comparing With Consumer Portfolio Services Inc. (Mesa Weekly), Rated: AAA

On Deck Capital Inc.’s volatility measures that it’s 85.00% more volatile than S&P 500 due to its 1.85 beta. Consumer Portfolio Services Inc. on the other hand, has 1.53 beta which makes it 53.00% more volatile compared to S&P 500.

Earnings & Valuation

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
On Deck Capital Inc. 3 0.12 45.93M 0.45 7.99
Consumer Portfolio Services Inc. 4 0.55 13.97M 0.50 7.37

Profitability

Net Margins Return on Equity Return on Assets
On Deck Capital Inc. 1,349,850,114.62% 12.2% 3.1%
Consumer Portfolio Services Inc. 396,042,410.84% 7.6% 0.6%

Global cooling; Upgrade Card (PeerIQ), Rated: AAA

In industry news, Upgrade led by CEO Renaud Laplanche released the “Upgrade Card”. The product is a cross between credit card and an installment loan. How does it work? Every month any new charges on the card transition into an installment loan of 12, 24, or 36 months. Customers can select the default payback period when applying for the card and they have the option to change the term for new charges at any time. Upgrade Card offers true risk-based pricing with a range of 6.49% to 29.99%. LendIt Co-Founder Peter Renton has a nice summary here.

In macro news, the Fed is expected to cut rates for a third time later this month to a range of 1.5% to 1.75%.

Source: OECD Interim Outlook Projections, Blackstone, PeerIQ
Source: WSJ, Cantor Fitzgerald, PeerIQ

New LendingClub Account Performance (Lend Academy), Rated: AAA

In April 2018, LendingClub provided us with $5,000 to open a brand new account. Since then we have been chronicling the status of the account on a quarterly basis. Below are links to the full series of blog posts in chronological order:

Source: Lend Academy
Source: Lend Academy

Personal Loan Offers Report – September 2019 (LendingTree), Rated: AAA

At 1,270 basis points, the spread between the highest and lowest offered APRs offered to the same consumers were especially stark for high-score borrowers.

  • The average spread for those with scores of 760 or higher was 1,270 basis points, amounting to a difference of 58.5% on the average loan amount offered for a three-year personal loan.
  • Consumers with scores between 720 and 759 saw an average offer spread of 1,145 basis points, representing a 49.9% difference in interest paid.
  • For those with scores between 680 and 719, the average spread was 971 basis points, representing a 37.3% difference in interest paid.
  • Borrowers with scores between 640 and 679 had an average spread of 860 basis points, representing a 28.2% difference in interest paid over the three years of the loan.
Source: LendingTree

Kiva Lending Team: Lendio Gives (Kiva), Rated: A

Lendio has provided over 10,000 Kiva microloans through its

Source: Kiva

There’s Never Been a Better Time to Consolidate Credit Card Debt (Credible), Rated: AAA

According to data collected by the Federal Reserve, borrowers who were assessed interest on their credit card accounts paid 16.97% on average during the three-month period ending Sept. 31. But the average rate on personal loans was only 10.07%.

That’s a spread of 6.9 percentage points — an all-time high in Federal Reserve records dating back to 1998.

Apple and Goldman Sachs aren’t reporting Apple Card information to credit bureaus (MarketWatch), Rated: A

Apple and Goldman Sachs have yet to start reporting consumers’ payment information for the Apple Card to the major credit bureaus, a source close to Goldman Sachs confirmed to MarketWatch on Monday. The source later said that the companies will begin reporting to the credit bureaus later this quarter.

Goldman Sachs CEO says Apple Card is the most successful credit card launch ever (CNBC), Rated: B

“In three short years, we have raised $55 billion in deposits on the Marcus platform, generated $5 billion in loans, and built a new credit-card platform and launched Apple Card,” Solomon said, adding “which we believe is the most successful credit card launch ever.”

Rise of fintech weakens law to prevent lending discrimination (Roll Call), Rated: AAA

As online banking threatens to make in-person banking at brick-and-mortar branches as archaic as video rental stores, it may do the same to a 1977 law created to counteract decades of underinvestment in minority neighborhoods.

Fewer branches, more online

While that includes some wholesale banks or limited purpose institutions, like credit card banks, online banking is driving the sector’s growth.

At the same time, the number of bank branches with an obligation under the CRA to provide loans and other services is falling. Branches have declined every year since a peak in 2010, at 99,550, according to data from the Federal Deposit Insurance Corporation. Banks closed 1,700 branches in 2018, dropping the total number to 86,375.

After steadily rising to a peak of $505 billion in 2016, the number of CRA-compliant loans that banks issued dropped in 2017 to $482 billion, according to the Office of the Comptroller of the Currency.

CNB Bank Moves to Revolutionize its Retail Lending with nCino (PR Newswire), Rated: A

nCino, the worldwide leader in cloud banking, today announced that Pennsylvania-based CNB Bank will utilize nCino’s Bank Operating System to digitize its retail lending process from end-to-end to enrich the customer experience.

California has reformed consumer loan interest rates. But will lenders find loopholes? (Cal Matters), Rated: A

Gov. Gavin Newsom has signed into law Assembly Bill 539 by Assemblywoman Monique Limón, Santa Barbara Democrat. The measure sets an annual interest rate cap of roughly 36% on consumer loans from $2,500 to $10,000 made by non-bank lenders.

For the prior 34 years, under state law, the sky was the limit on rates charged for such loans. Last year, 333,416 non-bank consumer loans in the $2,500 to $10,000 range had annual percentage rates of 100% or higher. That represented 40.7% of such loans. In the $2,500-$4,999 range, the triple-digit APR ratio was 55.5%.

DrawBridge Lending CEO Discusses Risk and Compliance for Lending Capital to Bitcoin Holders (Crowdfund Insider), Rated: A

Earlier this month, DrawBridge Lending (DBL Digital), a digital asset lending, borrowing and investment management firm, partnered with Kingdom Trust, a qualified custodian providing a self-directed IRA incorporating several digital assets with property and traditional asset investments.

To be eligible to invest, investors must be eligible contract participants (ECPs), which means they should have a minimum net worth of $1 million. The minimum investment in Drawbridge Lending’s series fund is $1 million, which can be met with the contributions of multiple investors.

There are more than 600,000 millennial millionaires in the US, according to report (CNBC), Rated: A

There are 618,000 millennial millionaires in the U.S. and their wealth is only expected to grow.

Currently, 93% of millennial millionaires have a net wealth between approximately $1 million and $2.5 million, according to the report. Nearly 60% live in either California or New York and they are investing more in real estate than their elder-millionaire counterparts.

The Pros and Cons of Using Peer-to-Peer Lending When Investing in Real Estate (The Motley Fool), Rated: A

Today’s real estate investors have many financing options at their disposal. There are traditional options like government-backed loans, home equity lines of credit (HELOCs), and investment property mortgages. But on top of those, you also have new-age choices like crowdfunding and peer-to-peer (P2P) lending platforms.

Real Estate Earnings: What To Watch For This Quarter (Seeking Alpha), Rated: A

The “REIT Rejuvenation” of 2019 has restored the coveted NAV premium for most sectors, giving these REITs the currency to re-open the acquisition pipeline. This valuation premium has allowed REITs to kick-start external growth, which has historically been responsible for more than half of FFO per share growth across the REIT sector. REITs were net buyers again in 2Q19, buying $12.5 billion in assets while disposing of $6.6 billion. The $5.9 billion in net acquisitions was the largest quarterly “buy” since 4Q17, and we expect this trend to continue into 2020 given the favorable valuation environment. We break down the acquisition activity for each of the REIT sectors later in this report.

Source: Seeking Alpha

AMERICAN FINANCIAL RESOURCES AND FINICITY PARTNER TO SIMPLIFY THE MORTGAGE EXPERIENCE (Finicity), Rated: B

American Financial Resources, Inc. (AFR) announced today it is working together with Finicity—a provider of real-time financial data access and insights, to provide its business partners and their borrowers with a faster, simpler and more secure way to verify assets and income while originating loans.

Roofstock Accelerates Innovation with New Chief Product Officer at the Helm (Yahoo! Finance), Rated: B

Roofstock, the marketplace for investing in real estate, announced the addition of Ketan Babaria to the fintech’s leadership team as Chief Product Officer. Formerly the Head of Product for LifeLock and Capital One’s D3 incubation unit, Babaria will enhance Roofstock’s current offerings and introduce new, creative ideas to accelerate the fintech’s growth and make real estate investing radically accessible.

Director of Operations Joins Fintech Startup LenderClose (DS News), Rated: B

Des Moines fintech startup company LenderClose has welcomed Andrew Deignan as Director of Operations. Deignan will manage the Operations and Vendor Relationships group, ensuring LenderClose delivers the highest level of service to its credit union and community bank lender users.

United Kingdom

Zopa launches tool to dispel “mystery” of credit worthiness (AltFi), Rated: AAA

Zopa, the first ever peer-to-peer lending platform, is launching the tool, called Borrowing Power, as it says that lending decisions and credit worthiness have been “shrouded in mystery” for too long.

The tool, which is free of charge, works by giving Zopa customers a borrowing score between one and ten. Customers are shown why they are given the score and how they can help improve the score.

In the Spotlight with Mario Lupori, RateSetter (Financial Reporter), Rated: AAA

We spoke to Mario Lupori, chief investments officer at RateSetter, about whether there is more consolidation to come in the peer-to-peer market and whether forthcoming regulatory changes will hinder the sector.

Samsung.com partners with Klarna to offer pay later payment plans (IBS Intelligence), Rated: A

Samsung.com has partnered with payment provider Klarna in the UK to provide customers service to make purchases from its website and pay later. The customers will get a convenient and hassle-free way to pay later at Samsung.com.

Klarna: too good to be true for students? (Mancunion), Rated: A

Klarna is perfect in those situations, giving you a ‘try before you buy option’. You can get as many items as you wish, in as many sizes, returning all the items you don’t need before a penny leaves your bank account. There’s no waiting around for refunds to reach your depleted bank account – you only pay for what you actually keep.

Octopus Choice’s P2P loans now available within a SIPP (AltFi), Rated: A

The firm has announced that its P2P investment platform is now accessible within a SIPP wrapper.

Could banks become redundant in the future? (Finextra), Rated: A

P2P lending as it right now stands absolutely no chance in competing with traditional banking, as it requires a bit too much time from the lender’s side.

However, should technology such as Artificial Intelligence be successfully implemented on these platforms, it’s likely that P2P lending will occupy a large percentage of the financial market share.

Starling launches TV ad campaign after reaching 900,000 customers (AltFi), Rated: A

Today Starling Bank will premiere its first TV ad on ITV and Channel 4 during England’s UEFA Euro 2020 qualifier against Bulgaria, and Jamie’s Meat Free Meals.

Celsius Now Offers up to 10% Return on TrueUSD Lending Service (Finance Magnates), Rated: A

Celsius Network, a cryptocurrency lending and borrowing platform, has partnered with TrustToken, the team behind dollar-pegged TrueUSD (TUSD), to offer up to 10 percent interest on four new stablecoins.

Casa Italia to expand its restaurant in Liverpool following £650k loan from OakNorth Bank (Fintech Finance), Rated: B

China

PayPal wants to help Chinese online shoppers buy from overseas (Business Telegraph), Rated: AAA

By the end of this year, Chinese online shoppers will have a new way to buy things from abroad: PayPal.

Despite the tensions between Beijing and Washington, China’s central bank has allowed the US company to take a toehold in the country’s valuable payments market by buying a majority stake of Chinese payments group Gopay.

European Union

Barcelona-based fintech ID Finance secures €1.7 million within minutes on Crowdcube (EU-Startups), Rated: AAA

Barcelona–based ID Finance, a fintech that operates in Europe and Latin America, has raised over €1.7 million in crowdfunding within minutes of its campaign going live on Crowdcube, amidst strong demand from investors. The data science, credit scoring and digital finance company has a target of €2.3 million.

The company has a well established global team and over 3 million users, with over 40,000 new users joining each week. It is on track to double revenues this year to €90 million – up from €13 million in 2017 – and is targeting over €267 million in revenue by 2021, with the goal of becoming the number one digital lending platform in Hispanic and Latino markets.

Fintech exits have raked in €83bn since 2013 amid European funding boom (sifted), Rated: AAA

The sale of European fintechs via initial public offerings or acquisitions has pulled in €83bn over the past six years, according to a new report by Dealroom.co and Finch Capital. This is twice as much as the next biggest category, enterprise software, and highlights the scale of opportunity for investors as well as the growing maturity of the fintech market.

Some of the biggest exits were the €7.1bn flotation of Dutch payments company Adyen and the sale of Swedish start-up iZettle to Paypal for $2.2bn last year.

The same report also estimates that the continent’s remaining private fintechs have an “unrealised” value of €43bn combined, including companies such as N26 and Starling Bank.

Source: sifted
Source: sifted

Which P2P Lending Marketplaces in Europe Accept American Investors? (P2P-Banking), Rated: A

European p2p lending services are growing. And yields of 10+% are achievable on some of the platforms. This attracts international investors.

Here is an overview of 5 services (sorted aplphabetically) that do allow US investors.

Assetz Capital is a marketplace for UK SME and property development loans. The liquid ‘access’ products offer 4.1% to 5.75% interest.

Bondora is an Estonian p2p lending marketplace for consumer loans. The highly liquid Go&Grow product offer yields 6.75%. With other products higher yields of 10+% are achievable.

Estateguru is an Estonian marketplace for property loans. Typical interest rates are 10-12%.

Flender is an Irish marketplace for SME loans. Typical interest rates are around 10%.

Mintos is a Latvian p2p lending market place. A wide range of loan types is offered. The fairly liquid ‘Invest&Access’ product currently promotes around 8% rate. Yields of 10+% are possible with manual and autoinvest.

Europe’s top tech startups to know (sifted), Rated: A

Europe’s startup scene is often overshadowed by Silicon Valley, but the continent is gaining ground with more than 160 tech firms valued at over €1bn.

Klarna
Founded 2005 — Stockholm, Sweden — Unicorn

In 2019 it launched a new $460m fundraising round, giving the company a post-money valuation of $5.5bn and making it the highest-valued private fintech company in Europe. That was a 250% increase on its last valuation at the beginning of the year.

Starling Bank
Founded 2014 – London, UK – Rising Star & Female Led

Led by Anne Boden, Starling has made a dent in the UK’s thriving fintech ecosystem. As of August 2019 the bank has just shy of 800,000 customers, including around 60,000 business accounts. The company says it’s on track to pass a million this year and already has £1bn in deposits.

These numbers are not quite as impressive as Monzo, which boasts 3m customers, or Germany’s N26 with 3.5m.

Greensill
Founded 2011 — London, UK — Unicorn

Former British Prime Minister David Cameron is an advisor to the firm, which is backed by Softbank’s vision fund. The most recent funding round of $800m valued the company at $3.5bn — firm unicorn territory.

Its working finance solution is funded through issuing its own bonds, making it one of the largest bond issuers of the world, with an average of 47 bonds a day.

Nigerian SME Digital Lender Lidya Expands to Europe (Forbes), Rated: A

In an increasing trend where African technology companies are finding a global audience, Nigerian digital SME lending platform Lidya has expanded to Poland and the Czech Republic.

International

London-based finance platform Divido inks deal with US payment company Splitit offering point-of-sale finance (AltFi), Rated: A

Divido, the London-based consumer finance platform which lets consumers take out credit at the point of purchase to help spread the cost of purchases, has signed a deal with US payment company Splitit to offer a monthly instalment option to customers.

4+ INTERNET BANKING OPTIONS FOR GAMING (One Vale Fan), Rated: B

Klarna has become famous among the players in many countries since its creation in 2005. This virtual bank is seductive for its fast transactions and its privacy. The gamblers will remain anonymous when they deposit or withdraw funds utilizing Klarna as a method. In fact, this Swedish company does not ask any personal details or private information. What’s more, Klarna is also an excellent service to the mobile casino allowing the users to move funds at their convenience.

India

How Can Neobanks Potentially Transform SME Lending? (Inc42), Rated: AAA

Neobanking is a relatively newer concept in India as compared to the West, and is still on a take-off mode. However, market experts observe the gradual and steady adoption of Neobanks and credit their fast growth to its lender and SME-friendly characteristics.

IN CONVERSATION WITH CRIF’S ATRIDEB BASU & HOW HE SCALED DATA & ANALYTICS PRACTICE IN INDIA (Analytics India Mag), Rated: A

CRIF is an Italian company, based out of Bologna and caters to more than 6K banks and financial institutions across 30+ countries globally. In India, CRIF has two broad arms – one is the 100% subsidiary (called CRIF Solutions India) – which focuses on consulting, analytics and products and the other is the credit bureau where it has major ownership (CRIF Highmark) – which focuses on multiple services on retail and commercial side.

Asia

Investors Pour Record $ 735 Million Into Singapore Fintech Deals (Bloomberg), Rated: AAA

Investors poured a record $735 million into financial-technology ventures in Singapore in the first nine months of this year, according to research from Accenture Plc, which analyzed data from CB Insights, Pitchbook and Tracxn.

That’s up 69% from the same period a year earlier and exceeds the $642 million raised in all of 2018, the study found. Investments in payments startups and those in lending made up the bulk of fintech fundraising, accounting for 34% and 20% of the total, respectively. Insurance technology deals comprised 17%.

MENA

Region’s P2P lending platform Beehive funds first SME in Bahrain (Statup MGZN), Rated: A

Beehive, the region’s first regulated peer-to-peer lending platform announces that it has funded its first SME in Bahrain.

The funding was granted to Bahrain-based Mira Packaging Factory, which manufactures disposable cups in addition to other food packaging solutions for the GCC, and the African F&B industry.

Canada

FinTech adoption in Canada has increased from 18% to 50% since 2017, according to the EY Global FinTech Adoption Index 2019. Among the reasons driving consumers to FinTech services are better rates and fees (42%), ease of setting up an account (19%) and more innovative products and services (10%).

Authors:

George Popescu
Allen Taylor

The post Thursday October 17 2019, Weekly News Digest appeared first on Lending Times.

Tuesday November 6 2018, Daily News Digest

Data from Bank of America, Wells Fargo, JP morgan and US Bank shows unbanked us online and mobile banking when banked

News Comments Today’s main news: Preview of OnDeck’s Q3 earnings. Credit Karma acquires Noddle from TransUnion, expands into UK. Lufax to move P2P lending to the blockchain. WeBank hits $21B valuation. Linked Finance loans up 63%. Nubank now worth $4B. Today’s main analysis: The unbanked approaches banking like everyone else. Today’s thought-provoking articles: HSBC, Barclays bucking the trend. International P2P lending […]

Data from Bank of America, Wells Fargo, JP morgan and US Bank shows unbanked us online and mobile banking when banked

News Comments

United States

United Kingdom

China/Hong Kong

International

Other

News Summary

United States

On Deck Capital’s Q3 Earnings Preview (Benzinga) Rated: AAA

On Deck Capital ONDK 26.01% releases its next round of earnings this Tuesday, Nov. 6. Get the latest predictions in Benzinga’s essential guide to the company’s Q3 earnings report.

Earnings and Revenue

Based on On Deck Capital management projections, analysts predict EPS of 12 cents on revenue of $97.33 million.

On Deck Capital EPS in the same period a year ago totaled 1 cent. Sales were $83.66 million. Revenue would be up 16.33 percent on a year-over-year basis.

Source: Benzinga

Strong Wage Growth, HSBC / Barclays Bucking the Trend (Peer IQ) Rated: AAA

QED Investors has raised its largest fund to-date. QED raised $175 Mn in its fifth fund which is focused on early-stage FinTech. QED also released their first quarterly newsletter. (Subscribe here) Matt Burton, the founder and CEO of the Orchard platform, joined as a partner and will lead QED Belay, the newly formalized founding stage investment platform.

SoFi and Marlette are issuing their fourth Consumer Unsecured deals of 2018. SCLP 2018-4 is a $549 Mn securitization. KBRA has rated the tranches A to D AAA, AA+, A+ and BBB respectively. SCLP 2018-4 is the first consumer unsecured deal to receive a AAA rating. MFT 2018-4 is a $266 Mn securitization. KBRA has rated the tranches A to C AA, A, and BBB- respectively.

HSBC and Barclays Leaning In, Marcus and Discover Pulling Back

HSBC and Barclays are launching new unsecured personal loan products. These products will complement the banks’ existing US credit card offerings while competing head-on with Marcus on its home turf. HSBC and Barclays are looking to capture a piece of the $140 Bn personal loan market, that is growing at an annualized rate of eighteen percent.

Discover and Marcus are cautious about the growth in personal loans and the potential for higher lossesGS will temper Marcus’s origination growth and not “chase volume targets”. We note that GS is the only bank whose provision for loan losses increased in Q3 – GS provisions rose by 172% YoY to $174 Mn, while loans grew by 72% – far outpacing loan growth (and what might be expected from loan seasoning).

There’s no excuse for ignoring the unbanked, big banks’ own data shows (American Banker) Rated: AAA

When community advocates ask banks to provide accounts for the estimated 63 million people in the U.S. who are unbanked, bankers typically raised two concerns.

Both arguments appear to be shot down by a new trove of data collected from four of the largest banks: Bank of America, JPMorgan Chase, U.S. Bank and Wells Fargo.

Seventy-four percent of the 3 million previously unbanked people who opened accounts at the four banks in the past year are digitally active. In fact, they are heavy users of online and mobile banking. They are statistically no more likely to call or walk into a branch than existing bank customers.

Source: American Banker

Credit Karma expands into insurance with auto policy service (Reuters) Rated: A

Financial technology startup Credit Karma said on Tuesday it is expanding into insurance through a new service that makes it easier for users to find cheaper auto insurance policies.

The tool generates suggestions by analyzing government information on drivers and vehicles together with data from credit bureaus and public insurance rate filings, bypassing the need for users to manually input information into long forms, the company said.

Kathryn Petralia of Kabbage (Lend Academy) Rated: A

In this podcast you will learn:

  • How Kabbage has changed since they launched 10 years ago.
  • The biggest challenge they have found as they have grown.
  • Their approach to data analytics and the different data sources they use.
  • Why it is important to have a complete picture when a business seems to be struggling.
  • Why they have not pursued direct lending outside of the U.S.
  • Why their banking clients have been outside the U.S.
  • How Kathryn views the competitive business lending environment today.
  • Why banks are not going head to head against Kabbage yet.
  • What Kabbage is doing to foster more gender balance throughout the organization.

ForwardLine Accelerates Growth and Achieves a 350% Increase in Loan Originations (PR Newswire) Rated: A

ForwardLine, a nationwide direct lender providing affordable loans to small businesses, has announced strong results for third quarter 2018, achieving a 350% increase in loan originations over third quarter 2017. The company attributes its growth trajectory to strategic investments in technology, enhanced analytics, and an improved overall customer experience.

Majority of Americans Expect to Use a Robo Adviser (Plan Advisor) Rated: A

Fifty-eight percent of Americans expect to use a robo adviser by 2025, Charles Schwab learned in a survey, summarized in its report, “The Rise of the Robo: Americans’ Perspectives and Predictions on the Use of Digital Advice.” In addition, 45% say robo advice will be the technology that will have the biggest impact on financial services.

In addition, by the year 2025, 57% expect to use robotics, 55% artificial intelligence, 54% virtual reality, 53% big data, 43% augmented reality, 36% blockchain and 36% cryptocurrency.

However, when it comes to financial advice, people still want the human touch, with 71% of people wanting a robo adviser that also gives them access to human advice. Among Millennials, this jumps to 79%. This is true for 73% of Gen Xers and 64% of Baby Boomers.

Forty-six percent of Baby Boomers using a robo adviser say it is perfect for their life stage, and 45% of this demographic group expect to use a robo adviser by 2025.

Is This Community Bank’s Bold Digital Play The Model Of The Future? (The Financial Brand) Rated: A

Online mortgage lending has been a very large part of NBKC Bank’s business model, and remains so.

Now, people in all 50 states can apply online for a mortgage from NBKC. Its originations run between $2.5 and 3 billion annually, and the bank is one of eight mortgage lenders on Costco’s nationwide platform.

AGORA Announces Release of First-Ever Loan Validation Report for Seasoned Loans (PR Newswire) Rated: A

AGORA Data, Inc., a secondary loan marketplace based in Arlington, Texas, announced today, the release of the first-ever Loan Validation Report for seasoned loans. AGORA’s proprietary technology enables car dealers and finance companies to avoid compliance issues with the Truth in Lending Act (Regulation Z), by assessing in real-time any issues with the terms of a loan, either at the portfolio or individual loan level. This includes assessment of the loan APR, Finance Charges, Principal Balance, Total of Payments, Unearned Interest and Gross Balance. Violation of Regulation Z can lead to significant penalties and other legal issues.

Roostify Names Courtney Keating Chakarun as New Chief Marketing Officer (Business Wire) Rated: B

Roostify, a leading digital lending platform provider, announced today that Courtney Keating Chakarun has joined the company as Chief Marketing Officer. Chakarun comes to Roostify from CoreLogic, where she served as Senior Vice President, Marketing & Innovation.

PeerIQ Announces Agreement with Liberty Lending (Globe Newswire) Rated: B

PeerIQ, the leading provider of risk analytics for consumer credit, today announced that Liberty Lending, a leading online platform that provides innovative borrowing solutions to deserving consumers, has entered into an agreement to license two PeerIQ products: Consumer Credit Suite and Analytics Platform.

United Kingdom

Credit Karma acquires Noddle from TransUnion and expands to the UK (Tech Crunch) Rated: AAA

Credit Karma, the US startup with 85 million users that offers credit reports and a platform to browse and buy other financial services, has made an acquisition to help it kick-start its first overseas expansion beyond the US and Canada: it has acquired Noddle, a UK-based credit reporting service with 4 million users, from TransUnion.

Financial terms of the deal are not being disclosed, but Valerie Wagoner, Credit Karma’s VP of International (who had previously been at Twitter), said that it will be a full acquisition of tech and employees — 35 in all — and TransUnion is not taking any stake in Credit Karma as part of this deal, although the two will continue to work together with TransUnion providing data to Credit Karma, as it had done before.

As a point of reference — and a sign of the consolidation and competition in the market — earlier this year Experian acquired another credit scoring service in the UK, ClearScore, for the equivalent of $385 million. That service has 6 million users compared to Noddle’s 4 million. Competition authorities are still investigating that deal, and Credit Karma’s will also have to get the pass from regulators before closing.

Experian to Offer a New Trended Data ‘Multi-Dimensional View’ of UK Consumer Finances with the Launch of Credit 3D (Business Wire) Rated: A

Experian is launching a new range of services to help lenders evolve their approach to making consumer credit decisions, so businesses can make more informed decisions and deliver fairer, more affordable outcomes for their customers. It’s now possible to take a multi-dimensional view of a borrower’s financial health with Experian Credit 3D.

Knowing a consumer’s credit information at a single point in time only offers a snapshot of their financial behaviour. However, by using innovative trended and alternative data sources via Experian Credit 3D, businesses can access an unparalleled set of insights, enabling faster decisions based on a more rounded picture of affordability.

Insolvency reforms may hinder P2P loan recoveries (Peer2Peer Finance News) Rated: A

REFORMS to the way HMRC is treated as a creditor will make it harder for some peer-to-peer lending platforms to recover bad debts, an insolvency practitioner has warned.

Chancellor Philip Hammond announced in his 2018 Budget last week that HMRC would be given preferred creditor status in business insolvencies to ensure tax is collected.

Simon Bonney, a partner at Quantuma, told Peer2Peer Finance News this would impact any P2P platforms accepting floating charges, such as stock, receivables or cash at the bank, as security on loans.

Goji launches SIPP wrapper for direct lending bonds (Peer2Peer Finance News) Rated: A

GOJI has made its direct lending bonds available in a self-invested personal pension (SIPP) wrapper.

Investors can now access the specialist investment manager’s direct lending bond through both an Innovative Finance ISA (IFISA) and a SIPP.

Its diversified lending bond targets returns of more than five per cent by investing in loans sourced by alternative finance providers in the property, small business and education sector.

Lloyds Banking Group to add 2,000 jobs in digital shake-up (The Guardian) Rated: A

Lloyds Banking Group is planning a major restructuring of its workforce, adding 2,000 jobs as it refocuses its operations on digital technology.

Britain’s biggest high street lender will cut 6,000 jobs but create another 8,000 as part of a £3bn reorganisation over the course of the next two years.

The job losses will be spread across the group transformation division, corporate banking, retail and community banking, Sky News reported. New roles will be oriented towards digital technology.

Alternative Airlines: “Spread the cost of a flight over monthly instalments” (Travel Daily) Rated: A

UK based flight search site Alternative Airlines, has put the cat amongst the pigeons with an announcement of a new deal with Affirm to roll out what the American company describes as its “fair and honest alternatives” to traditional payment options.

The new partnership will see customers pay for their flights in instalments, instead of one single tranche. Giving them the opportunity to plan ahead and even open up a travellers horizons by giving them a chance to experience more wide-ranging trips, with the US customers able to divide fees over three, six and 12 months instalments.

China/Hong Kong

Chinese Wealth Manager Lufax Eyeing P2P Lending with Blockchain (Blockchain Reporter) Rated: AAA

Lufax is transferring its entire peer-to-peer (P2P) lending portfolio worth “tens of billions US dollars” onto the blockchain platform, according to a post on South China Morning Post.

Tencent-Backed WeBank Hits $ 21 Billion Valuation (Caixin Global) Rated: AAA

Tencent-backed online lender WeBank Co. Ltd. has reached a sky-high valuation of 147 billion yuan ($21 billion) after less than four years in operation, becoming one of the world’s largest “unicorn” companies.

The new valuation is based on a legal document  attached to an auction notice on Taobao.com, which described the upcoming auction of a minor stake in WeBank.

WeBank’s latest valuation makes it the fifth most valuable privately-held company in the world, based on the CB Insights list.

Hong Kong’s appeal as a virtual banking hub is about to be put to the test as first online lenders arrive (South China Morning Post) Rated: A

Of the 29 virtual bank licence applications before the HKMA, submissions have been made by WeLab, HKT, Standard Chartered Bank, as well as an alliance between Australia’s Airwallex, Bank of East Asia (BEA), and mainland firm Sequoia Capital China.

There are 21.43 bank branches and 50.09 ATMs for every 100,000 residents in Hong Kong, higher than the global city average of 12.6 and 47.55 respectively in 2016, according to World Bank data.

European Union

Linked Finance’s loans up 63% in first nine months of 2018 (RTE) Rated: AAA

Peer-to-peer lending platform Linked Finance has facilitated loans of over €28m in the first nine months of this year, an increase of 63% on the same time last year.

The lender said it was on track for record growth this year.

It also noted that loans in the quieter third quarter covering the summer holiday months were up more than 62% to €9.3m, while average loan size also rose significantly – up 33% to €62,000.

International

Nubank is now worth $ 4 billion after Tencent’s $ 180 million investment (Tech Crunch) Rated: AAA

Nubank, the Brazilian financial services company, has raised $180 million from the Chinese internet giant, Tencent.

With the $4 billion valuation, it also makes Nubank one of the most highly valued privately held startups in Latin America.

International P2P Lending Volumes October 2018 (P2P Banking) Rated: AAA

Zopa leads ahead of Mintosand Ratesetter. The total volume for the reported marketplaces in the table adds up to 481 million Euro. This month I added Crowdproperty.

Dofinance crossed 50M EUR total volume lent since launch.

Source: P2P Banking

The Fintech 250: The Top Fintech Startups Of 2018 (CB Insights) Rated: AAA

12 QED portfolio companies named to CB Insights’ Fintech 250 list of the most promising financial services start-ups: Shout outs to AvidXchange, blooom, CircleUp, Credit Karma, Creditas, Flywire, Klarna, LendUp, Nubank, Roofstock, Signifyd, and SoFi! (Credit: QED inaugural newsletter)

Source: CB Insights

Credit Karma

The company provides individuals with credit scores and reports and makes recommendations based on data accordingly

Klarna

Klarna offers safe and easy-to-use payment solutions to e-stores with the ambition to make e-commerce safer, simpler, and more fun.

LendUp

LendUp’s mission is to provide anyone with a path to better financial health. Through its proprietary software, it designs safe, transparent products that expand access, lower costs, and provide credit building opportunities for the population of Americans who currently have limited options within the traditional banking system because of low credit scores and income volatility.

Roofstock

Roofstock runs an online marketplace where retail and institutional investors can buy and sell homes in the United States occuped by renters.

The entire Fintech 250 list and report is available here.

Australia

New giants Afterpay and Revolut are redefining trust for the fintech generation (Australian Financial Review) Rated: AAA

More than 500 fintech aficionados hit the swanky Peninsula event space in Melbourne’s Docklands last week for the third annual Intersekt festival.

The three-day shindig, organised by FinTech Australia, debated topics such as how start-ups can capitalise on the loss of trust in incumbent institutions (exacerbated by the banking royal commission); and the extraordinary rise of “neobanks” around the world.

Anthony Eisen, co-founder of local payments star Afterpay, and Chad West, the marketing head of globally focused neobank Revolut, explained how they have lured customers by reinventing traditional fee models.

Unexpected expenses hit many of us, so here’s how to handle them (News) Rated: A

LARGE unexpected expenses are hitting the household budgets of two-thirds of Australians, and many are resorting to dangerously expensive credit cards to get themselves out of a financial jam.

Cars are the biggest cause of unpleasant financial surprises, according to new research by marketplace lender SocietyOne, followed by travel costs and medical bills.

The lender’s When ‘It’ Happens report reveals that 40 per cent of people would cover unexpected costs by borrowing money from family and friends, almost 20 per cent would add the expense to their mortgage, 31 per cent would sell stuff, and 28 per cent would take on extra credit card debt.

Asia

21 Remarkable Fintech Founders Under 35 in Southeast Asia (Fintech Singapore) Rated: AAA

Iwan Kurniawan, 28, Indonesia; Reynold Wijaya, 29, Indonesia Co-Founder, Modalku

Together with Kelvin Teo, Iwan Kurniawan and Reynold Wijaya founded Indonesia-based Modalku, called Funding Societies in its sister operations in Singapore and Malaysia, a peer-to-peer (P2P) digital lending platform that connects cash-strapped SMEs with lenders. The startup is backed by Sequoia, Softbank Ventures Korea, and Alpha JWC Ventures, and recently passed the US$110 million mark through more 3,000 loans to businesses in the region.

Rachel De Villa, 25, Philippines  Founder and CTO, Cropital

Rachel De Villa is the co-founder and CTO of Cropital, a crowdfunding platform that helps finance local Filipino farmers. Established in 2015, Cropital aims to improve the income and productivity of farmers through crowdfunding, providing scalable and sustainable financing. Through Cropital’s online platform, investors choose a farm or farms to invest in. Cropital manages the fund for the farmer making sure it goes to the right resources, assuring as well that investors will get a return on investment.

Abraham Viktor, 25, Indonesia  Co-Founder and CEO, Taralite

Abraham Viktor is the co-founder and CEO of Taralite, a P2P lending platform. Taralite’s loans are issued by financial institutions other than banks, also known as multi-financers, which allows it to reduce the interest rate up to 2% and extend the loan period of up to three years. The platform accepts houses, cars or motorcycles as collateral. Founded in January 2015 as Wedlite, Taralite graduated from startup incubator program Global Entrepreneurship Programme Indonesia (GEPI) in November 2015. Previously, Viktor was an investment banking analyst, first with Boston Consulting Group and later at Nomura investment banking.

Mohamed Abbas, 27, Singapore Co-Founder, Rely

Mohamed Abbas is a tech entrepreneur and the co-founder of Rely, a startup that enables online shoppers to shop and pay for their purchases by splitting their cost into manageable monthly payments, interest-free. Abbas is also the co-founder of Onelyst, an online marketplace that helps users from lower-income brackets compare loan rates across different licensed moneylenders. The website allows users to find loans for different purposes, such as medical or rental expenses, and produces a list of personalized options in minutes.

Gov’t To Launch Crowdfunding Platform To Help Home Buyers (Property Guru) Rated: A

The federal government announced during the tabling of Budget 2019 on Friday (2 November) that it will introduce a “property crowdfunding” platform by Q1 2019 to help Malaysians buying their first homes, reported Bernama.

On Sunday (4 November), Prime Minister Tun Dr Mahathir Mohamad said the scheme is the first of its kind in the world, and will enable people to buy a home as long as they can a pay the 20 percent down payment, which can be financed via savings, debts or withdrawals from their Employee Provident Fund (EPF) account. The remaining 80 percent will be funded by investors via peer-to-peer lending supervised by the Securities Commission.

Dubbed as FundMyHome.com, the property crowdfunding platform is expected to help the Pakatan Harapan administration fulfil its election promise of one million low-cost housing within 10 years.

Malaysia teams up with The Edge on property financing portal (Tech in Asia) Rated: B

CIMB and Maybank are the participating institutions that will contribute towards the externally funded 80-percent portion of the house price, with more expected to sign up in the future.

The site – developed by finance and real estate media platform The Edge – will list about 1,000 homes costing less than US$120,000 during the first phase of its rollout. All properties listed will be completed or near completion, and buyers looking for rental income will be allowed to “buy to rent” through the portal.

Authors:

George Popescu
Allen Taylor

Tuesday October 23 2018, Daily News Digest

FREED Upgrade bond characteristics

News Comments Today’s main news: OnDeck to add PNC to ODX platform. FICO to add alternative data to credit score. PeerStreet named to CB Insights Fintech 250 list of fastest-growing fintech startups. Lendy asks for help. Pintec Technology shoots for $41M IPO. Today’s main analysis: Zelle sees record earnings, FREED 2018-2 and UPGR 2018-1 compared. Today’s thought-provoking articles: Funding […]

FREED Upgrade bond characteristics

News Comments

United States

United Kingdom

India

Other

News Summary

United States

OnDeck Announces PNC Will Be The Second Bank On The ODX Platform (Lend Academy) Rated: AAA

It was back in December of 2015 that we first learned about OnDeck’s partnership with JPMorgan Chase. This was the first significant partnership between a large American bank and an online lending platform and it caused a lot of excitement in the industry back then.

A couple of times this year we have heard OnDeck CEO Noah Breslow hint that a second major bank was coming on as a partner soon. Today, we learned who that partner will be: PNC Bank. They are the ninth largest bank in the country, so this gives OnDeck two of the top ten largest banks as clients.

I caught up with Noah and Brian Geary, who heads up OnDeck’s new ODX division (we covered the story of ODX just last week) to talk about this new deal.

FICO Plans Big Shift in Credit-Score Calculations, Potentially Boosting Millions of Borrowers (Wall Street Journal) Rated: AAA

Credit scores for decades have been based mostly on borrowers’ payment histories. That is about to change.

Fair Isaac Corp., creator of the widely used FICO credit score, plans to roll out a new scoring system in early 2019 that factors in how consumers manage the cash in their checking, savings and money-market accounts. It is among the biggest shifts for credit reporting and the FICO scoring system, the bedrock of most consumer-lending decisions in the U.S. since the 1990s.

PeerStreet Named to the 2018 CB Insights Fintech 250 List of Fastest-Growing Fintech Startups (Business Wire) Rated: AAA

PeerStreet, a marketplace for investing in real estate backed loans, is honored to announce that it has been named to the second annual CB Insights Fintech 250 list, a prestigious group of emerging private companies working on groundbreaking financial technology. This comes on the eve of PeerStreet’s third anniversary of opening to the public. PeerStreet opened to all accredited investors on October 30th, 2016 at Money 20/20, an annual conference which is happening this week in Las Vegas. Both PeerStreet founders Brew Johnson and Brett Crosby are in attendance.

PeerStreet is being recognized as a leader in real estate investing for the platform’s innovative approach to making real estate debt an accessible asset class for retail investors. The loans offered for investment are vetted by private lenders who know their communities well, and then again by PeerStreet’s own team using big data and market research.

Marcus Slows Lending Growth, Zelle vs Venmo, Freedom & Upgrade Deals (Peer IQ) Rated: AAA

Bank of America – Record Earnings and Results for Zelle

BofA’s earnings were boosted by the highest Net Interest Income since 2011 delivered by its Lending business.

BofA also saw P2P payments rise on its Zelle platform increase 138%. Venmo, over the last year, has been on the defense due to increased consumer fees and leadership changes. SnapChat’s payment service was discontinued. Tech firms such as Google, Facebook, Tencent, and Ant Financial continue to test payments in overseas markets like India (where it is easier for FinTechs to utilize payments rails).

MS remains laser-focused on growing asset management and lending (secured and warehouse lending) and delivered the best stock price performance post earnings. The stock gained 5.7% post-earnings.

Source: Bank Earnings, PeerIQ

Freedom (FREED 2018-2) vs Upgrade (UPGR 2018-1)

Below we compare these deals on their collateral composition, bond characteristics and triggers. We note that each lender has substantially different lending programs, credit risk profiles, and history – and that shows in terms of deal structure and execution.

Collateral Composition

FREED 2018-2’s collateral pool consists of 2 types of loans – 45.5% Freedom Plus (F+) and 54.5% Consolidation Plus (C+).

F+ Loans: F+ loans are unsecured consumer loans to near prime and prime borrowers. F+ collateral has a WA age of 3 months and WA remaining term of 46 months. The WA current FICO score of the pool is 713 and the WA interest rate is 16.2%.

C+ Loans: C+ loans are offered to select qualified debt settlement clients as an option to shorten the duration of their debt settlement program by making funds available immediately to fund settlements reached by Freedom Debt Relief. C+ collateral has a WA age of 8 months and WA remaining term of 45 months. The WA current FICO score of the pool is 562 and the WA interest rate is 22.9%.

UPGR 2018-1’s collateral pool consists of unsecured consumer loans. The collateral has a WA age of 2 months and WA remaining term of 41 months. The WA current FICO score of the pool is 691 and the WA interest rate is 15.9%.

Freedom’s C+ loans have the highest weighted average coupons and original loan terms among all the pools, and Freedom’s F+ borrowers have the highest weighted average credit scores. The higher weighted average coupon on C+ loans helps the deal generate significant excess spread.

Source: Ratings Agencies, PeerIQ
Source: Ratings agencies and Peer IQ

Identity Risk Scoring from Socure Helps Radius Bank Reduce Online Fraud (Finovate) Rated: A

partnership between AI-powered identity risk scoring innovator Socure and workflow management specialist Alloy has enabled Radius Bank to decrease online fraud by 50%, increase new account conversions by 30%, and make manual review nearly a process of the past – reducing it by 95%.

The joint solution marries Socure’s predictive analytics with Alloy’s decisioning engine, and adds a variety of on- and offline data sources, predictive fraud tools, and a flexible rules engine to enable real-time decisioning and onboarding for new account openings.

Plaid is seeking funding at a $ 2 billion valuation (Business Insider) Rated: A

Plaid, a fintech company whose software is used by Silicon Valley heavyweights like Betterment, Coinbase, and Robinhood, is holding talks with potential investors about raising money that could value the firm at more than $2 billion, according to people familiar with the matter.

The fundraise is still in the early stages, the people said, and a formal deal with investors has yet to be finalized.

In April, Forbes reported that the company’s private valuation was $1 billion — meaning that Plaid, which counts 10,000 banks among its customers, could see its valuation double in less than six months.

Klarna Pairs up With Rancourt to let Shoppers pay Over Time (PR Newswire) Rated: A

Today at Money20/20 in Las Vegas, Klarna, a leading global payments provider, introduced their Slice it in 4 payment option, which allows consumers to pay for purchases in installments using their own debit or credit card. In conjunction with the launch, Klarna has signed its first U.S. merchant, Rancourt & Co., premium leather shoe crafters, to use the offering.

In today’s market, 67% of U.S. millenials do not own a credit card. With Klarna’s Slice it in 4, shoppers can increase their purchasing power without the hassle of a credit agreement or long-term commitment. Four equal payments are automatically collected from the consumer’s chosen method of payment – one installment at purchase and three further payments every two weeks. The plan features no upfront costs or interest and is offered online within the merchant’s existing checkout – ensuring the purchase journey is frictionless with no redirects to other sites.

The cost of fraud rises 8.1 percent, year over year, for U.S. lenders, according to LexisNexis Risk Solutions study (PR Newswire) Rated: AAA

Today, LexisNexis Risk Solutions, a part of RELX Group (NYSE: RELX), released its 2018 True Cost of Fraud study on lending. The 2018 study, which surveyed 186 risk and fraud executives at various lending institutions, including mortgage companies, auto lenders, non-bank personal loan issuers, non-bank credit card issuers and finance companies, highlights the continued rise of fraud costs for U.S. lenders. According to the LexisNexis Fraud Multiplier℠, for every dollar of fraud, lenders incur $3.05 in costs, compared to $2.82 in 2017, an 8.1 percent increase. Larger digital lenders, with at least $50 million in annual revenue, are hit hardest by fraud, incurring $3.37 in costs, which is up from $3.07 in 2017.

Other key findings from the study include:

  • 54 percent of risk and fraud executives at large digital lenders state that verification of customer identity is their largest challenge. This is especially true of verification through the online channel.
  • Lending firms that use a multi-layered solution approach experience a lower cost of fraud. Those who layer core + advanced identity authentication + advanced transaction / identity verification solutions have lower fraud costs than others, per fraud event ($2.63 for every $1 of fraud versus up to $3.47) and as a percent of annual revenues. They also tend to have a lower volume of false positives.
  • Large digital lenders with international transactions attribute nearly 40 percent of their fraud losses to their non-domestic business. Fraud that originates in Asia represents 57 percent of the total international fraud expenses for these lenders.
  • Large digital lenders are more likely to represent “best-in-class” thinking about the adoption of fraud mitigation solutions, as they face attacks that are more significant.

Small Businesses Need Their Bankers More Than They Realize (Nasdaq) Rated: A

It’s easy to see why entrepreneurs are bonding with alternative lenders. What’s not so easy to see is why they’re leaving bankers out of the loop. However, with renewed trust in each other, both institutions are finding mutual benefits. What’s more — the B and B called “Business and Bankers” is finding a renewed comeback.

Say you’re a small business owner feeling the squeeze. You could turn to a traditional bank that requires loan applicants to go through a rigorous review process for a 20 percent chance of approval. Or you could apply online with a peer-to-peer firm that approves more than 60 percent of applications and receive a decision in minutes.

MoneyLion Announces America’s Most Powerful and Rewarding Financial Membership (Business Wire) Rated: A

MoneyLion, the innovative financial platform offering consumers a better way to borrow, save, earn and invest, today officially launched America’s most powerful and rewarding financial membership to help people take control of their finances and achieve their dreams.

In support of the most powerful financial membership, MoneyLion will be launching the Financial Heartbeat as well as a comprehensive suite of premium banking products to help everyday Americans better understand and engage with their finances.

Study Shows Student Debt Can Kill 75% of Millennials’ Average Net Worth (Magnify Money) Rated: A

As of 2018, outstanding student loan debt in the U.S. surpassed $1.48 trillion, almost one-and-a-half times what Americans owe on credit cards.

According to a MagnifyMoney analysis of Federal Reserve data, all this debt is hampering millennials’ chances for long-term financial success.

In fact, this study revealed that the average net worth of a millennial with student loans is only 25% of the net worth for a fellow millennial without them. What’s more, the data suggest student loan debt is preventing some millennials from saving for retirement or buying homes.

Key facts

Millennial households with student loan debt have…

  • An average net worth of $29,087, compared with $114,376 for student loan-free households.
  • 46% less in their savings and checking accounts (median balance of $5,500 vs $10,180 for those without student loans).
  • $21,160 in retirement savings versus an average of $39,905 for those with no student loan debt.

HSBC gets back into US consumer lending (Financial Times) Rated: A

HSBC is getting back into US consumer lending almost a decade after it was forced to write off $10.6bn for its last foray into that market.

The UK banking giant said on Monday that it is launching a digital lending platform for US customers in the first half of 2019. The platform will be powered by online lender Avant, which has already processed almost $5bn of loans for more than 600,000 customers.

Transparency, career development and — a puppy button? Here’s how OppLoans shapes its culture (Built in Chicago) Rated: A

OppLoans CEO Jared Kaplan likes to stress that a company can’t responsibly serve its customers without creating an inclusive atmosphere for its employees first.

That’s why OppLoans promotes from within and supports career development with ongoing education initiatives. We spoke with Kaplan and two other leaders at the company to learn more about what they do to ensure their team feels truly valued.

How would you describe your leadership style?

My leadership style follows a few key principles: rule by motivation, not fear; drive a high-performing culture and reward the top performers; and enable ultimate transparency. If employees are excited to come to work, see clear development paths when they perform and understand the good and bad of the business, I’ve created a great place to work.

We also ensure a workplace where everyone is encouraged to speak their minds when they see opportunities to improve the business.

Hundy Launches Mobile App Turning High Cost Payday Loans Into Low Cost Friends & Family Loans (Hundy Email) Rated: A

Hundy, a peer-to-peer micro-lender that empowers the creditworthy to benefit from their good character, announced today at Money 20/20 that it has released the latest update to its lending platform enabling friend-to-friend lending for a low 1% fee. Now, even borrowers who don’t pass a credit check, will be able to request a loan from a friend or family member utilizing all the tools of the platform including signed loan documents, SMS and email reminders, and automated payment scheduling. Hundy was designed to foster community around a marketplace of borrowers and lenders whose participants benefit from transparent terms, wide availability and low prices.

Gary Beasley of Roofstock (Lend Academy) Rated: A

Investing in real estate has been around for centuries but it is only in the past few years that it has become possible to do this remotely and at scale. While institutional investors have had lots of options individual investors have been limited, for the most part, to buying homes in their local area.

Our next guest on the Lend Academy Podcast is Gary Beasley, the CEO and co-founder of Roofstock. Gary and his team have created the first online platform for investing in single family homes across the US. They help investors select the homes, obtain financing as well as find tenants and property managers.

OCC still ready to grant special fintech charters despite state lawsuits (Lexology) Rated: B

The OCC is still moving forward with plans to grant Special Purpose National Bank charters to qualifying non-depository financial technology firms, notwithstanding a lawsuit challenging the move from New York state regulators and the threat of additional litigation. In response to a question following her speech at the October 9 Online Lending Policy Institute conference, Grovetta Gardineer, OCC’s senior deputy comptroller for compliance and community affairs, said the OCC will accept applications from fintech companies seeking the SPNB charter and intends to grant charters to applicants meeting the criteria. As reported in the October 8 edition of Bank Regulatory News and Trends, the New York State Department of Financial Services filed suit against the OCC, challenging the federal agency’s authority to grant the charters. The Conference of State Bank Supervisors also signaled its intention to file suit against OCC over the charters.

Princeton Alternative Income Fund’s Independent Restructuring Officer Rejected by Ranger Direct Lending (PR Newswire) Rated: B

Princeton Alternative Income Fund’s (PAIF) latest attempt to resolve its bankruptcy dispute by appointing an independent restructuring officer was rejected by Ranger Direct Lending (RDL.L)(RDLZ:LN) last week.

The fund proposed hiring respected former United States Bankruptcy Judge Donald H. Steckroth as an independent officer to oversee the fund’s restructuring to protect all its investors. The executives at Ranger had demanded the appointment of an independent officer earlier in the bankruptcy process only to reject it this week.

CrowdOut Capital Continues Expansion With New Hires (Business Wire) Rated: B

CrowdOut Capital LLC, a pioneer in non-bank private lending for growing middle market companies, today announced two new additions to its management team, Christina Gustavson and Darlene Esquivel.

Gustavson will be CrowdOut’s first controller. She brings a strong accounting background having worked as a senior accountant at C3 Entertainment and at RGM Advisors, an Austin-based quantitative trading firm. A licensed CPA, Gustavson earned a Bachelor of Science in Accounting from Texas State University.

United Kingdom

Funding Circle Q3 2018 Update (Proactive Investors) Rated: AAA

Funding Circle Holdings plc (“Funding Circle” or the “Company”), the leading small and medium enterprise (“SME”) loans platform in the UK, US, Germany and the Netherlands, today announces updates to its statistics pages for the three months ending 30 September 2018 (the “Quarter”) and selected highlights from the quarter.

The data by country included in this announcement is also available on the Company’s website at corporate.fundingcircle.com/investors/loan-performance-statistics.

Source: Proactive Investors

UK peer-to-peer lender asks regulator for help (Financial Times) Rated: AAA

A British peer-to-peer property lender has taken the unusual step of appealing to its regulator for help after one of its biggest borrowers threatened to sue the company and many of its investors.

Retail investors in Lendy are already facing tens of millions of pounds in potential losses after almost two-thirds of borrowers failed to repay their loans on time, according to a Financial Times analysis of its loanbook.

The developments threaten to trigger the first big crisis in Europe’s rapidly expanding peer-to-peer industry, at a time when the sector is fighting to convince regulators it does not need stricter regulation.

Peer-to-peer lending growing in popularity (Computer Weekly) Rated: A

P2P lending is becoming a significant alternative source of financing for SMEs in the UK. According to Entrenching Innovation – The 4th UK alternative Finance Industry Report, published in December 2017, P2P business lending grew from £21m in 2011 to £1.23bn in 2016, generating £3.14bn over the six years. The report noted that the annual growth rate in volume from 2015 to 2016 was 40%.

The report cited data from the British Banking Association that revealed P2P business lending equated to 15% of new small businesses loans. More than a fifth of borrowers had a turnover of less than £500,000 and 23% were in the £500,000 to £1m turnover bracket. It also found that lenders were biased towards localised funding. This diversity of lending across the UK suggested that P2P business lending could become “a suitable solution to systemic geographic biases that exist in traditional and bank SME lending”.

The UK extends its lead as Europe’s established tech unicorn capital (City AM) Rated: A

London has cemented its standing as the capital of Europe’s billion-dollar technology startups, as surrounding cities help to push the UK forward while its companies expand internationally.

New figures released today show the UK has now created 60 so-called unicorn startups – companies with a valuation of $1bn (£769.6m) or more – since 1990, according to research prepared for Tech Nation and the government’s Digital Economy Council by Dealroom.

London houses 36 of those UK startups, representing more than a fifth of all unicorns in Europe at a total valuation of $132bn. In comparison, Berlin holds the second biggest city spot with just eight unicorn startups, worth $32bn.

New partnership aims to encourage growth in P2P lending market (Introducer Today) Rated: A

Landbay has chosen Oracle NetSuite to create a more accessible buy-to-let mortgage marketplace for investors, borrowers and brokers.

Through NetSuite, Landbay will be able to process loan applications ten times faster than other lenders and enable its staff to make swifter decisions around mortgage applications and investor sign ups.

Founded in 2014, Landbay offers individual investors direct access to the lucrative mortgage lending market and offers landlords competitively priced buy-to-let mortgages, with plans to lend £1 billion to UK landlords by 2020.

ACORN machine rebrands to OakNorth Analytical Intelligence (Fintech Finance) Rated: B

OakNorth Holdings Ltd today announces the launch of a new corporate brand identity, logo and website. Its fintech platform, ACORN machine, will now be known as OakNorth Analytical Intelligence (ON AI) and we have a new domain (www.oaknorth.ai).

Rishi Khosla, co-founder of OakNorth Holdings said: “Since our founding, our mission has been to enable small and medium-sized businesses obtain the debt finance they need to grow. Our fintech platform, which we developed to address this problem, is being used by a number of leading banks globally, and by us in the UK.”

China

Pintec Technology Aims For $ 41 Million IPO (Seeking Alpha) Rated: AAA

Pintec Technology Holdings (PT) intends to raise $41 million in an IPO from the sale of ADSs representing underlying Class A shares, according to an amended registration statement.

The company provides a range of point-of-sale and related financial services and solutions to retailers and their customers.

PT appears to be transitioning its business to more diversified revenue streams, and it faces significant regulatory uncertainties and potentially harmful trade war effects that may not be transitory.

Peer-to-Peer Lending in China May Be Going Extinct (Barrons) Rated: A

China’s peer-to-peer lending system may effectively vanish in the next year.

European Union

Lithuanian P2P Lender NEO Finance Now Seeking €200,000 Through Seedrs Funding Round (Crowdfund Insider) Rated: AAA

NEO Finance, a Lithuania-based peer-to-peer lending platform, is now seeking €200,000 through UK’s equity crowdfunding platform, Seedrs.

NEO Finance also reported it is the first P2P platform in Lithuania to have reached constant €1 million monthly issues.

The lender also revealed its current stats are:

  • 5400 active lenders
  • 47,000  registered borrowers
  • €21.7 million in loans financed
  • 2017 revenue grew by 395% to €479,000
Australia

MBIE strongly opposed to the introduction of a comprehensive creditor licensing regime as part of government’s loan shark crackdown (Interest) Rated: AAA

A Ministry of Business, Innovation & Employment assessment that introducing a comprehensive creditor licensing regime as part of the Government’s crackdown on loan sharks would be worse than the status quo doesn’t appear to be based on much evidence.

The recent announcement from Commerce and Consumer Affairs Minister Kris Faafoi included plans to introduce a “fit and proper person” test for lenders.

This means the fit and proper person test was chosen over two other options floated in June’s Ministry of Business, Innovation & Employment (MBIE) discussion paper aimed at increasing lender registration requirements. The other two options were expanded powers to deregister lenders and ban directors from future involvement in the credit industry, and introducing a comprehensive creditor licensing system.

India

Fintech non-performing loans under control, financial authority says (The Jakarta Post) Rated: AAA

The Financial Services Authority (OJK) said the non-performing loans (NPL) rate among financial technology (fintech) firms that use peer-to-peer lending (P2P) hovered around 1 percent monthly, safely below the 2 percent maximal set by the OJK.

“The NPL rate can go as low as 0.9, then rise as high as 1.3 then go down again,” said OJK fintech licensing and supervision director Hendrikus Passagi on Sunday as reported by kompas.com.

Serial entrepreneur Satyen Kothari’s Cube Wealth raises $ 2M in Series A funding (Your Story) Rated: A

Wealth management startup Cube Wealth announced on Monday that it has raised Rs 14 crore (about $2 million) in equity funding from Singapore-based venture fund Beenext, Japan-based Asuka Holding and 500 Startups.

The company said that it will use these funds for additional asset partners, and to develop a network of premium sales and marketing partners across different countries including Mumbai, Delhi-NCR, Bengaluru, Hyderabad, Chennai, Kolkata and Pune.

Cube Wealth also plans to expand its presence across Europe and Japan, as it is looking to target non-resident Indians from these markets.

Pay for surgery via a cheaper P2P loan (Times of India) Rated: A

If you need a loan for a medical emergency like a surgery, it might help to turn to your peers rather than institution rather than institutions. Peer-to-peer (P2P) lending platforms say they have seen lenders willing to offer interest rates between 8% and 12% for medical emergencies on their platforms. On the contrary, if you try to raise funds as a personal loan from banks, the interest rate is likely to be between 13% and 17%. P2P technology platforms bring borrowers and lenders together, and most offer a variety of  of loans, including personal loans, vehicle loans, education loans and — in some cases — even home loans. Most lenders tend to be individuals too.

P2P players like Faircent, LenDenClub, i2iFunding and LoanTap say they also process medical loans faster.

Asia

Online alternative lending goes mainstream (Opalesque) Rated: AAA

While alternative lending is currently gaining traction among borrowers, it’s also becoming a formidable asset class in its own right, with the U.S. market now accounting for an estimated $50 billion of annual origination.

Born out of peer-to-peer lending, online alternative lending has gone mainstream, presenting new opportunities for small businesses, consumers and investors.

According to Morgan Stanley Investment Management’s study, what began as “peer-to-peer” marketplaces bringing together borrowers and lenders has evolved considerably in recent years.

Alternative-lending platforms now span many categories, including unsecured consumer, small-business and other forms of specialty financing, it said.

Africa

Local fintech start-ups bag R16m in funding (IT Web) Rated: AAA

Prospa, a mobile savings  for low-income earners, and Nisa Finance, an invoice financing platform, are among the eight local fintech start-ups awarded a total of R16 million in funding by AlphaCode.

AlphaCode is an incubation, acceleration and investment vehicle for early-stage financial  businesses, powered by Rand Merchant Investment (RMI).

The AlphaCode Incubate initiative, in partnership with Merrill Lynch SA and Royal Bafokeng Holdings, identifies South African financial services entrepreneurs with extraordinary ideas and businesses that could impact the financial services industry.

More than 200 start-ups applied to participate; of these, 16 made it to the final pitch evening and eight recipients were selected.

Authors:

George Popescu
Allen Taylor

Friday January 19 2018, Daily News Digest

data breaches

News Comments Today’s main news: SoFi Professional Loan Program hits $720M on first offering. Roofstock reaches $1B in transactions. When Zopa will open to new investors. PPDai to invest in research. Linked Finance sees profitability. Revolut launches geolocation-powered travel insurance. Harmoney partners with DataRobot. Today’s main analysis: The most and least competitive homebuyer markets. Fundrise or Vanguard: Which is the better investment? […]

data breaches

News Comments

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United Kingdom

China

European Union

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Australia/New Zealand

India

Asia

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United States

SoFi’s Professional Loan Program at $ 720 Million for First Offering (LendEDU), Rated: AAA

Social Finance’s Professional Loan Program 2018-A has reached $720.1 million, which is just a bit lower than the final deal it had in 2017.

In this latest program, three portions of senior Class A notes worth $677.3 million will be issued. Of that figure, one $55 million Class A-1 portion is mostly secured by floating-rate loans, and it has a variable-rate interest rate, which will be calculated based on one-month Intercontinental Exchange London Interbank Offered Rate (LIBOR).

Fixed-rate student loans will mostly back the $358.5 million in Class A-2A notes, as well as the $236.8 million in Class A-2 notes.

Why open banking and cybersecurity need each other (Tearsheet), Rated: AAA

The industry’s desire for greater security and protection of customer data seems at odds with its desire for more open banking; by definition, open banking requires banks to share data with third party service providers.

In the U.S. banks are striving to get ahead of their own regulators by creating data exchange standards. API-based data sharing agreements like the deals Fincity signed with Wells Fargo and Chase last year are evidence of those efforts. But banks need to move beyond those one-on-one agreements if they’re going to create a full suite of financial services to offer customers through a true open banking platform.

Source: Tearsheet

PeerIQ CEO Ram Ahluwalia: 2017 Saw a Resurgence of Growth in Online Lending (Crowdfund Insider), Rated: AAA

Ahluwalia told me;

“2017 has seen a resurgence in investor growth and confidence in online lending. ABS issuance is up about 83%.  Execution spreads have tightened substantially. This performance is all on the ABS loan side but has not translated yet into the equity valuations. “

He added that he expects to see continued attention on credit performance in 2018 as they are still seeing normalization of credit performance.

He expects 30% growth in ABS issuance for next year while adding that PeerIQ underestimated the growth for 2017.

LendingTree Ranks Most Competitive Homebuyer Markets (PR Newswire), Rated: AAA

LendingTree, the nation’s leading online loan marketplace, has released the findings of its study on where homebuyers will face the fiercest competition to achieve their dream of homeownership in 2018.

LendingTree looked at 1.5 million purchase mortgage loan requests that came through the LendingTree marketplace in the 100 largest cities in 2017. The study ranks cities using three criteria:

  • The share of buyers shopping for a mortgage before identifying the house they want. Buyers with financing in place are more appealing to sellers and can compete with cash buyers.
  • Average down payment percentage. Having a higher amount of money saved for a down payment can enable you to borrow more money or be offered a lower interest rate, allowing you to make a stronger offer.
  • Percentage of buyers who have prime credit (above 680). Borrowers with higher scores have more financing options to make more competitive offers. The cities/markets below are ranked for 2018 using the criteria noted above, including the relative data used to determine the ranking along with the market’s overall rank from the prior year.

California markets dominate the top 10.

Six of the top 10 most competitive housing markets are in CaliforniaSan Francisco and San Jose lead the rankings in 2018, with a vast number of credit-worthy and well-heeled borrowers making it one of the most challenging markets for prospective home shoppers.

Real Estate Marketplace Roofstock Hits $ 1 Billion in Transactions (Crowdfund Insider), Rated: AAA

On Thursday, real estate marketplace Roofstock announced it has surpassed $1 billion in property transactions since the launching of its marketplace in 2016.

Roofstock Announces $ 7 Million In Additional Funding (Benzinga), Rated: A

Roofstock announced Thursday that the venture capital arm of Silicon Valley Bank had joined its latest funding round, bringing the property investing startup’s funding total to $42 million.

Gary Beasley, CEO: Roofstock is the first online marketplace created exclusively for buyers and sellers of cash-flowing, single-family rental homes that already have tenants.

Who are your investors, if any?

Roofstock has raised $68,250,000 to date, with a recent $35M Series C investment led by Canvas Ventures in October 2017. Other investors since Roofstock’s launch include Lightspeed Ventures, Bain Capital Ventures, Khosla Ventures, Hone Capital, QED Investors, Nyca Partners, and several angel investors.

Vanguard vs. Fundrise: Which is the Better Investment Option? (Fundrise), Rated: AAA

We often get the question, “What makes a Fundrise eREIT worth investing in over the Vanguard REIT ETF?” It’s a fair question that we expected when we created the eREIT. The short answer is that Fundrise eREIT investments are lower in cost for investors than those of the Vanguard REIT ETF and also come with the potential for better returns — how our costs are lower than Vanguard requires a longer answer.

Source: Fundrise

Some of the largest REITs in which the Vanguard REIT ETF owns shares are Simon Property Group(shopping malls, worth approximately $50 billion), Equinix (office buildings, worth approximately $34 billion), and AvalonBay Communities (apartment buildings, worth $25 billion).

Vanguard charges no brokerage commissions and carries only a low investment advisory fee of 0.30%, which it reports to be lower than the industry standard of 1.02%. In addition to the advisory fee, Vanguard charges its REIT ETF investors an asset management fee of 0.11% as well as reimbursement of “expenses.”

The Fundrise Approach

Where public market investments rely on several financial organizations to perform various services from acquisition and development to offering diversified portfolios of REITs, Fundrise uses technology to consolidate these functions and reduce the number of intermediaries in the value chain.

Source: Fundrise

The real estate investment trust designation of the eREIT does not equate the services or value creation offered by the eREIT with that of a public REIT — it simply allows Fundrise to pass at least 90% of the eREIT’s earned income to investors without paying taxes at the corporate level.

Fundrise investors can invest directly into an eREIT and only pay an 0.85% asset management fee at the eREIT level. Investors who want to diversify across multiple Fundrise investments, including eFunds, can do so through one of the investment portfolios. For example, rather than choosing one eREIT or more, investors can invest in the Starter Portfolio with a minimum investment of $500. For this service, investors are charged an investment advisory fee.

Chase joins AutoFi platform (Asset Finance International), Rated: A

Chase, the US consumer and commercial banking business of JPMorgan Chase & Co, has become the first US national bank to partner with fintech company AutoFi to help customers select and finance vehicles through dealers’ websites.

The move comes after the bank’s research showed that nearly half of consumers would purchase and finance vehicles online if they had the opportunity.

ForUsAll Reaches $ 500m in Assets and Raises $ 21m in Venture Capital (Business Insider), Rated: A

ForUsAll, the technology-driven 401(k) advisor to small and mid-sized businesses, today announced it has reached $500m in retirement assets under management and secured $21 million in second round financing led by Ribbit Capital, a leading global investor in financial technology. Existing investor Foundation Capital joined the round, bringing the company’s total funding to $34 million. ForUsAll will use the funds to grow the company’s customer base, accelerate technology development and hire additional staff.

CFPB Signals Shift by Dropping Payday Lender Lawsuit (Bloomberg), Rated: A

The Consumer Financial Protection Bureau is dropping a lawsuit against a group of payday lenders associated with an American Indian tribe in a sign the regulator is changing direction under Mick Mulvaney, the acting director appointed by the Trump administration.

The agency had accused the lenders of deceiving consumers and failing to disclose the true cost of the loans, which carried interest rates as high as 950 percent a year. The agency asked for the case in federal court in Kansas to be dismissed in a court filing on Thursday, giving no details about its reasoning.

The CFPB lawsuit had targeted four companies owned by the Habematolel Pomo of Upper Lake tribe.

Foreign and Domestic Condo Buyers Tap $ 300 Million Fund To Close On New Condo Purchases (PRWeb), Rated: A

Three leading South Florida real estate-related companies with robust real estate experience, deep capital markets relationships, and a proven track record of originating and servicing end-user loans have joined forces to provide senior mortgage loans to non-traditional real estate buyers. The joint venture, named Pebb Yale Truss Lending, (“PYT Lending”) is comprised of Pebb Capital, GPC Truss, and Yale Mortgage. Already the enterprise has commenced loan closings for approximately 20% of the units at Echo Brickell, a luxury condominium development by Property Markets Group (“PMG”) in Miami, FL.

The First Blockchain ETFs Launched on Nasdaq, NYSE Today (coindesk), Rated: A

Reality Shares Advisors and Amplify Trust ETF launched the first blockchain-based exchange-traded funds (ETFs) on Nasdaq and the New York Stock Exchange Arca today.

Both funds went live on their respective exchanges at 9:30 a.m. EST. Reality Shares’ Nasdaq NextGen Economy ETF (BLCN) opened at $24.20, while Amplify’s Transformational Data Sharing ETF (BLOK) started closer to $20.

What are some of the crowdfunding basics you need to know about? (Born2Invest), Rated: A

Crowdfunding is the opposite approach to business finance.

Crowdfunding is defined as a way of raising capital with the collective effort of friends, family, customers, and individual investors.

While crowdfunding is the umbrella term for this new way of investing and doing business, there are several types of crowdfunding.

  • Reward-based crowdfunding
  • Peer-to-peer lending – People who are risking to lend out money to strangers can create loan portfolios.
  • Donation-based crowdfunding
  • Equity crowdfunding – Equity crowdfunding has the most room for change in terms of how people invest their money.
  • Real estate crowdfunding
  • Human capital – If investors want to put in money on top athletes, there are crowdfunding available for this purpose. For instance, Fantex said it would offer an IPO on investments that track the brand value of top sports stars. Another crowdfunding site named Upstart provides money for college without piling on debt.

AI, blockchain, enhanced encryption: The fintech trends Chicago’s top techies are watching (Built in Chicago), Rated: A

Here’s what Chicago’s fintech leaders are watching in 2018.

Morningstar

Which emerging technologies will have the biggest impact on the industry in 2018?

Security technologies around encryption and voice will start to take shape. Investor and consumer trust in the markets, credit and technology suggest people aren’t satisfied with the norm. There aren’t enough heuristics used to encrypt data at rest and in transit, and the emergence of unique voice pattern activation — led by Amazon and Google — will start to drive changes in the industry.

Enova

Which emerging technologies will have the biggest impact on the industry in 2018?

AI and machine learning continue to grab headlines, and for good reason: they have the potential to improve every aspect of business.

PEAK6 Investments

Which emerging technologies will have the biggest impact on the industry in 2018?

Luke Peeler, software engineer: Blockchain technology.

The Future of Financial Services for the Underbanked: Tradition, Innovation, Regulation (LendIt), Rated: B

Traditional services used by the underbanked include check cashing, cash advance loans, and money transfers. Many view these services as overly expensive and behind the times, and an emerging ecosystem is leveraging fintech innovation to provide improved offerings. However, there’s a strong case made by industry researchers that the traditional, non-bank financial providers remain attractive to their customers, especially compared to the costs of a using a bank account.

  • Joe Coleman, CEO of RiteCheck
  • Rishi Kumar, Founder of Kashable
  • Cathy Mahon, President & CEO of the National Federation of Community Development Credit Unions
  • Lisa Servon, Professor of City Planning at the University of Pennsylvania

Guidewire Partners With Plug and Play to Foster Innovation in P&C Insurance (Business Insider), Rated: B

Guidewire Software, Inc. (NYSE: GWRE), a provider of software products to Property and Casualty (P&C) insurers, today announced it has joined Plug and Play’s ecosystem to advance P&C insurance innovation and collaboration. Plug and Play is a global startup ecosystem and venture fund specializing in the development of early-to-growth stage technology startups in 12 verticals. Guidewire joins as a Corporate Partner focused on the Insurance vertical.

VPC recruits Kushman as principal and capital markets head (PE Hub Network), Rated: B

Victory Park Capital (VPC), an investment firm focused on middle-market debt and equity investments, announced today that Todd Kushman joins as a principal and head of capital markets. Kushman is based in New York.

Kushman will lead the firm’s capital markets initiatives, which includes optimizing and identifying new alternative investment product offerings.

BB&T creates $ 50m fintech investment fund (Retail Banker), Rated: B

BB&T, a US-based bank holding company, has decided to set aside $50m to invest in or buy emerging digital technology firms as part of its strategy to boost its competitive profile and trim operational expenses.

United Kingdom

ZOPA LENDING QUEUE: WHEN WILL ZOPA RE-OPEN TO NEW INVESTORS? (Orca), Rated: AAA

There was extensive media coverage in October of last year surrounding Zopa, the largest consumer-focused peer to peer lender in the UK, and when it will re-open its doors to new investors who have been waiting in the Zopa lending queue – some since early 2017. It’s the turn of 2018, and some members in the queue may be seeing signs of promise.

There are 26,000 people in the Zopa “wait list” (as of 9th January). With approximately 60,000 active customers, this influx will represent a 43% increase in lenders at the platform; impressive, given the time it’s taken the platform which was founded in 2005 to acquire its existing customer-base.

U.K. Fintech Nuvo Launches Facebook Chatbot For Financial Advice on Mortgages (Bank Innovation), Rated: A

AI-powered fintech Nuvo today launched a Facebook chatbot that helps people find the best mortgage deal.

Network ROI completes employee buy-out thanks to ThinCats £1m funding (Insider.co.uk), Rated: A

A Midlothian-based IT firm has completed an employee buy-out after receiving £1m in funding from alternative finance specialist ThinCats.

Founded in 2003 by Sean Elliot, Network ROI employs 32 people providing managed IT and connectivity services to organisations throughout the UK.

Fintech to help first-time buyers with Rent Recognition Challenge for startups (City A.M.), Rated: A

A new competition has been launched to get innovative startups using technology to help renters use this payments history as a record of credit worthiness. The idea is that a tool or service can be used by lenders and credit reference agencies as part of an assessment for a mortgage.

First announced in the Autumn Budget, the Rent Recognition Challenge is now open for entries, with a potential prize of £2m for fintechs working on this idea.

Six proposals will get £100,000 each to get started on a prototype between March and October, after which that will be narrowed down to three by a panel of judges with more cash up for grabs.

 

IFA launches investment service for dormant clients (FT Adviser), Rated: A

IFA firm Symphony is offering a white-label version of provider FinchTech’s non-advised robo-service to allow its clients to invest through its website without having to pay for advice.

For a platform fee of 0.25 per cent, investors are given access to four mainstream investment portfolios and four socially responsible investment portfolios via FinchTech, with equity/non-equity weightings ranging from a ‘cautious’ 35/65 split to the ‘adventurous’ 85/15.

BUSINESS SHOWCASE : IGNITION WEALTH IRELAND (Irish Tech News), Rated: B

Ignition Wealth Ireland is the European subsidiary of Australia’s leading digital financial advice provider Ignition Wealth. We assist large financial institutions integrating new technology into their current processes and systems  and we help them to reimagine how their customers navigate the financial advice experience.

China

PPDai to invest in research institute (Shanghai Daily), Rated: AAA

PPDai, China’s first online P2P (peer-to-peer) lending platform listed in the US market, said yesterday that it will invest 1 billion yuan (US$156 million) within three years to set up a new research institute.

The money invested in the new PPDai Smart Finance Institute will be used to fund artificial intelligence, blockchain, finance cloud and Big Data sectors, said Zhang Jun, co-founder and chief executive of Shanghai-based PPDai.

European Union

Linked Finance eyes profitability as revenue and lending levels jump (The Irish Times), Rated: AAA

Linked Finance, the peer-to-peer (P2P) lending platform which has signed over 1,200 loans for Irish businesses, has said it is on track to be profitable this year.

The company, which is seeking to become the biggest non-bank lender to SMEs in Ireland, recorded a €1.1 million net loss in the 12 months to the end of April 2017, compared to a €1.2 million loss in the previous year.

Shareholders’ deficit amounted to €2.7 million at the end of the reporting period, as against €1.7 million a year earlier as accumulated losses increased from €2.2 million to €3.3 million.

FinTech, Robo Advisers, and the Soul of Swiss Banking (Mises Institute), Rated: AAA

As one Swiss economics journal put it, the most contentious conflicts (and partnerships) will be between “startups that are completely reengineering decades-old practices, traditional power players who are furiously trying to adapt with their own innovations and total disruption of established technology & processes”. That is to say:

  • Traditional Retail Banks vs. Online-Only Banks: Traditional retail banks will always retain the cachet of security and stability. Online-only banks, however, are asserting themselves more aggressively in claiming to offer the same services with higher rates and lower fees.
  • Traditional Lenders vs. Peer-to-Peer Marketplaces: P2P lending marketplaces are growing faster than traditional lenders—only time will tell if the banks strategy of creating their own small loan networks will be successful
  • Traditional Asset Managers vs. Robo-Advisors: Companies like Betterment feature robo-advisors offer lower fees and lower minimums; meanwhile, the larger traditional asset managers are creating their own robo-products while providing the kind of personalized attention for which high net worth clients are willing to pay quite generously.
  • Traditional Wealth Management vs. Automated Advice: a plethora of new software platforms and apps feature digital options, including mobile telephone payment services, automated wealth management advice, price comparison apps, tailored social media groups and crowdfunding systems. On the other side, the exclusivity of one-on-one attention is forever and very possibly will take on even more cachet as the somewhat sterile egalitarianism of digital banking erodes the cultural hierarchy of status.
  • Traditional Clearing Systems vs. Blockchain. This latter can store and distribute crypto-currencies (such as Bitcoin) and digital contracts (such as land deeds) without the need for banks or formal clearing systems. Proponents of Blockchain maintain that it promises “to reduce fees, improve security and bypass the volatility of central bank controlled fiat currencies”. Major technology firms such as Google, Amazon and Alibaba are also joining this trend.

CoinLoan ICO Reaches Major Milestones as it Launches MVP and Enables Direct Fiat Investment (Coin Telegraph), Rated: A

Peer to peer fintech startup, CoinLoan, recently rolled out the first version of their peer-to-peer lending platform. Investors were thrilled with the results (try it for yourself here, and are eagerly awaiting the end of the ICO and listing on exchanges soon after.

CoinLoan has also recently enabled direct fiat investment in their ICO. This unique option enables investments of $5,000 or more in USD or EUR in exchange for CLT tokens.

CoinLoan has created a system of secured peer-to-peer lending, where borrowers deposit various crypto assets for a loan in their preferred fiat currency.

International

Revolut launches geolocation-powered travel insurance (TechCrunch), Rated: AAA

Fintech startup Revolut is launching international medical and dental insurance. You can subscribe using the company’s app for £1 per day or more depending on the options.

By default, insurance coverage costs £1 per day for medical and dental insurance. You can add an option for winter sports and you can also cover your friends and family.

Australia/New Zealand

AI helps Harmoney improve ability to assess credit risk (CIO), Rated: AAA

Harmoney is working with DataRobot to improve the performance of its credit risk assessment process.

“With our deployment of DataRobot, we’re now using artificial intelligence to reduce risk for our lenders,” says Brad Hagstrom, joint-CEO of Harmoney.

Nine launches financial advice website 9Saver.com.au (Mumbrella), Rated: A

9Saver.com.au will aggregate the cost of living and shopping segments run across Nine News, Today, Today Extra, A Current Affair and 60 Minutes every week.

India

Startup eco-system looks forward to the budget for addressing tax dilemma (ET Rise), Rated: A

The Indian startup eco-system is looking forward to the union budget eagerly for addressing the tax dilemma. With high-quality entrepreneurs, good ideas and the very important funding ecosystem, startups have become an integral part of the India’s economic growth and job creation.

Asia

Banks, regulators lack skills to cope with pace of fintech innovation (Nikkei Asian Review), Rated: AAA

Both regulators and industry officials lack the right analytical and data skills to cope with the wave of disruption washing over the financial industry, according to the technology officers at leading financial companies at Thursday’s Nikkei Asia300 Summit in Singapore.

Jonathan Larsen, chief innovation officer of Ping An Insurance (Group) Company of China, said there are “definitely no” people with up-to-date skills among the regulators, which is slowing down the pace of change for traditional institutions.

Authors:

George Popescu
Allen Taylor

Friday January 12 2018, Daily News Digest

bitcoin debt

News Comments Today’s main news: More LendingClub-IEG drama.Black Fish raises $145M.Moneygram partners with Ripple.Kreditech expands into India with Mambu. Today’s main analysis: JP Morgan Chase’s investments into digital technology.Is Yirendai undervalued? Today’s thought-provoking articles: Investors go into debt to buy bitcoin.Small business financing trends.How open banking could change how people manage money.Banks, trade finance, and […]

bitcoin debt

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United States

United Kingdom

China

European Union

International

India

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United States

Lending Club has a bitcoin pivoting suitor (Financial Times), Rated: AAA

Lending Club has all kinds of problems: a history of profit warnings, faint traces of scandal after a management upheaval almost two years ago, and a share price still more than 80 per cent adrift from its peak.

Add to that list: a bizarre, crypto-fuelled activist campaign waged by a Las Vegas-based payday lender called Paul Mathieson, who told authorities in his native Australia that he fled to America in 2008 because he feared being killed by a mobster.

Mathieson’s case for change at Lending Club, laid out in a letter to the company’s board on 2 January, is not a terrible one, on the face of it. He argues that the cost structure at the loss-making company, a pioneer in peer-to-peer lending, is “excessive,” noting fancy headquarters in San Francisco and “hundreds” of “excess” developers. He says that the board should consider a pivot to using its own balance sheet to lend, rather than acting as a broker, taking fees for matching borrowers with lenders. Underwriting has been sloppy, he says, resulting in sub-par returns to investors.

Mathieson is offering 13 shares in his own penny-stock company, IEG Holdings, for every share in Lending Club. At the time of the offer on Monday morning, that was a premium of 19 cents, or about 5 per cent.

Source: Financial Times

SeeThruEquity Issues Update on IEG Holdings Corporation (Bay Street), Rated: A

IEG Holdings Corporation (OTCQB: IEGH) provides online unsecured consumer loans under the brand name “Mr. Amazing Loans” via its website, www.mramazingloans.com, in 20 US states. The company offers $5,000 and $10,000 personal loans over a five-year term at rates ranging from 19.9% to 29.9% APR. IEG Holdings plans future expansion to a total of 25 US states, which would cover 240mn people and represent approximately 75% of the US population.

Since 2013, IEGH has obtained additional state lending licenses, and they are licensed and originating direct consumer loans in 20 states including: Alabama, Arizona, California, Florida, Georgia, Illinois, Kentucky, Louisiana, Maryland, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon, Pennsylvania, Texas, Utah, Virginia, and Wisconsin. The Company was founded in 2010 and is headquartered in Las Vegas, Nevada.

IEG Holdings Plans to Create its own IEGH Crypto/Blockchain Currency Backed by Gold Metal and SEC Registration as a Security

IEGH announced that its wholly owned subsidiary, Investment Evolution Crypto, LLC (“Crypto”), is negotiating to purchase a gold project with gold metal in the ground and prospecting licenses. IEG Holdings plans to utilize a gold resource to investigate creating, through Crypto, and a joint venture with Investment Evolution Corporation, also a wholly owned subsidiary of IEG Holdings, its own gold metal-backed crypto/blockchain currency, and potentially offer loans and accept loan repayments in its own crypto/blockchain currency.

IEGH increases loan originations

The company stated that it provided $960,000 in new consumer loans through its online property mramazingloans.com, from the October 2017 to December 2017 period. This represented a 12.3% increase over its July to September 2017 operating period, during which the company’s new loan originations were $855,000.

Desperate to get into bitcoin, investors slip into debt (CNBC), Rated: AAA

Roughly 18 percent of people who buy bitcoin use a credit card to do so, according to a new survey by loan marketplace LendEDU. Of those, 20 percent have not paid off their balance. The phrase “buy bitcoin with credit” has been trending on Google for weeks.

Another problem with going into debt for cryptocurrencies is that people will have to pay back their debt before they see sufficient returns, said Erika Safran, founder of Safran Wealth Advisors. That may require tapping other resources, potentially creating further financial trouble.

Credit card debt from CNBC.

Small Business Financing Trends To Stay Abreast Of (CXO Today), Rated: AAA

  • Traditional bank loan rejections are notoriously high in all markets
  • Small Business Administration (and equivalent agencies) are nefarious for overextending the time-to-credit tolerances of small businesses
  • Volatility of markets, and exposure of almost all markets to disruption by startups could pose urgent cash needs for businesses, which are generally not considered for loan applications by traditional lenders.

Online Lending And Its Deepening Hold Over The Small Business Finance Market

In 2014, a Federal Reserve (US) survey concluded that one in five small business owners opted for loans from online lenders. Since then, the proliferation of online lending platforms has been on the surge, to the extent that traditional brick and mortar lending institutions have also had to move base to the online domain. In the coming years, multiple factors will result in the success and sustainability of online lending platforms. These include:

  • Growing confidence among small business owners to trust online lending platforms
  • Availability of cheaper, quicker, and more convenient loans
  • Options to truly personalize and customize the loan repayment terms to suit the business’ interests

The Call for Transparency in the Online Lending Market

Though the online lending market has been growing year on year, this doesn’t detract from the concerns around lack of transparency in the way some of these platforms operate. Some of the key concerns are around undisclosed APRs and hidden fees. In fact, some online lenders have been castigated for charging significantly high rates of interests from borrowers, often with service quality issues post-approval. Thankfully, there’s already some progress towards bringing a degree of regulation in place for online lending platforms to be at par with traditional lending regulations.

JPMorgan Chase Competitive Strategy Teardown: How The Bank Stacks Up On Fintech & Innovation (CB Insights), Rated: AAA

JPMorgan is making a bigger push into payments technology as digital banking becomes a strategic priority.

In 2016, the bank spent $9.5B on technology and Dimon has committed $300M alone to improve JPMorgan’s technology for its asset management products. Relative to its peer group, JPM claims the highest number of mobile banking customers and its Chase Mobile app currently sports a 4.7 (out of 5) rating in the App Store.

Earnings call analysis – Barclays, Bank of America, Morgan Stanley talking up digitization

  • JPM discussed continued digital consumer banking growth, which grew 6% in Q3’17.
  • Bank of America spent portions of its Q1’17 and Q3’17 talking about digital banking initiatives and technology investment. Specifically, CEO Brian Moynihan mentioned the bank spent $2.25B on technology initiatives in the first three quarters of 2017. The bank also now sees mobile devices account for 1 of every 5 deposit transactions.
  • On Morgan Stanley’s Q3’17 earnings call, Morgan Stanley CFO Jonathan Pruzan mentioned the bank is beta testing new customer-facing digital products it plans to launch, potentially in the robo-advisory space. Specifically, Pruzan noted: “When we think about our wealth business, it’s a business that’s built on scale. And it’s built on the fact that people with wealth want personal advice. So it’s going to be both a mix of technology and digital with the personal element of the advice channel. And we think that’s the winning formula going forward.”

Based on the data, JPMorgan ranks ahead of most bulge bracket banks when it comes to overall fintech investment since 2013, but behind its peers Goldman Sachs and Citi.

Online Marketplace Lender Nav Facilitated More Than 20,000 Small Business credit Approvals in 2017 (Crowdfund Insider), Rated: A

Nav, a small business marketplace lending platform, announced this week it has facilitated more than 20,000 small business credit approvals in 2017.

The company currently has more than 327,000 entrepreneurs now using its platform to manage their data and access capital.

Bono’s Fund Makes Its First Fintech Investment, Backing Acorns (Bloomberg), Rated: A

The Rise Fund, a private investment firm co-founded by the U2 lead singer, is making its first known bet on a fintech business by backing Acorns Grow Inc., said people familiar with the matter, who asked not to be identified because the details are private.

Georgia Company Acquires S.D. Fintech Startup LoanHero (San Diego Business Journal), Rated: A

LoanHero, one of San Diego’s few financial technology startups, has been acquired by Georgia-based company LendingPoint.

Terms of the deal, announced Jan. 11, were not disclosed.

Small-dollar lender Oportun to open 20 offices in Florida (American Banker), Rated: A

Oportun, a community development financial institution that provides small loans to individuals with little or no credit history, is planning to open 20 lending offices in Florida.

The Redwood City, Calif.-based lender said this week that it has already opened four offices in Miami and Hialeah and that it expects to add 16 more in the Sunshine State, primarily in South Florida, by the end of the year.

6 Key Trends in Fintech to Watch in 2018 (Lend Academy), Rated: A

  1. Convergence of Software and Financial Products  One of the important lessons that Square taught the market is that bundles of software solutions (loyalty, POS, analytics, scheduling and many others) and lending are essential drivers in advancing growth of payment processing.
  2. InsureTech
  3. The Power of the Machines  Companies like LendingClub are using machines to discover new relationships and patterns to introduce more tailored financial offers to their customers.
  4. Emerging Economies  Many growing companies in Africa, Asia, and Latin America are developing and adopting financial solutions, often faster and with more innovation than in developed economies.
  5. Wealth Management
  6. Rise of Crypto and Blockchain

Google Pay brings payment tools under a single brand (Tearsheet), Rated: A

The Internet giant is finally putting its many payments capabilities — Google Wallet, Android Pay and Pay with Google — under a single name, Google Pay, after lagging for years behind Apple Pay and Samsung Pay.

Ladder Secures $ 30M Series B Led by RRE Ventures (coverager), Rated: A

CA-based life insurance MGA Ladder announced it has raised $30M in a Series B round led by RRE Ventures, with participation from Thomvest Ventures, as well as Ladder’s existing investors: Canaan Partners, Lightspeed Venture Partners and Nyca Partners . Ladder launched its fully-digital life insurance solution in California on January 10, 2017, and has since expanded to nearly every state across the country.

Fifth Third regains top CRA grade, an entree to M&A (American Banker), Rated: A

Fifth Third Bancorp has received top marks from the Federal Reserve on its most recent Community Reinvestment Act examination as expected.

Fifth Third announced the results on Wednesday, saying in a press release that the Fed gave it an “outstanding” rating on its most recent exam. The Cincinnati company had said in a regulatory filing last month that it expected to ace the test, which covered the period between Jan. 1, 2014, and June 30, 2016.

A Beginner’s Guide to Applying for College Loans (Student Loan Hero), Rated: A

Student loan debt statistics show that more than 70 percent of students graduating from four-year colleges have debt, so you aren’t alone if you need to borrow to cover educational costs.

Step 1: Understand your options

  • Federal loans for students
  • Federal loans for parents
  • Private loans for students
  • Private loans for parents
Source: Federal Student Aid

Step 7: Determine if you’ll need to apply for private loans

  • Family contributions if parents or other family members are willing and able to pay
  • Savings
  • Scholarships or grants from community groups or other sources
  • Parent PLUS Loans
  • Private student loans

Step 8: Learn how to apply for private student loans

Because there are many private student loan lenders, it’s a good idea to shop around. You should consider:

  • Loan eligibility requirements: What do you need to qualify?
  • Loan terms: How long do you have to repay the loan?
  • Repayment terms: When do you need to start repaying, and is there a prepayment penalty?
  • Fees: Is there a cost to apply for the loan or a loan origination fee?
  • Interest rates: Is the rate fixed or variable? How much will you pay to borrow?

You can visit our private student loan marketplace to find private student loan lenders offering loans to parents and students.

Here are the top 6 lenders of 2018!

LENDER RATES (APR) ELIGIBLE DEGREES
CHECK OUT THE TESTIMONIALS AND OUR IN-DEPTH REVIEWS!
2.58% – 7.25% Undergrad
& Graduate
VISIT SOFI
2.57% – 6.39% Undergrad
& Graduate
VISIT EARNEST
2.76% – 7.25% Undergrad
& Graduate
VISIT COMMONBOND
2.99% – 5.15% Undergrad
& Graduate
VISIT LAUREL ROAD
2.74% – 7.26% Undergrad
& Graduate
VISIT LENDKEY
3.11% – 8.46% Undergrad
& Graduate

 

 

Roostify adds tech veteran Adnan Habib as vice president of engineering (Housingwire), Rated: B

Roostify announced Thursday that it hired Adnan Habib as the company’s new vice president of engineering.

In this role, Habib will lead Roostify’s growing product delivery team and will be responsible for making improvements to the Roostify’s digital lending platform.

Roofstock Appoints Suresh Srinivasan as Chief Marketing Officer (BusinessWire), Rated: B

Roofstock (www.roofstock.com), the leading online marketplace for buying and selling leased single-family rental homes, today announced the strategic hire of Suresh Srinivasan as chief marketing officer. Srinivasan has 20 years’ experience leading marketing, product, and e-commerce functions at Fortune 500 and high-growth tech startups. Most recently serving as the SVP of Marketing for Xome, Srinivasan brings a deep understanding of the fast-growing real estate technology sector to Roofstock where he will be responsible for accelerating growth of Roofstock’s marketplace for single-family rental homes and developing the company’s partnership network.

United Kingdom

An invisible banking reform that ‘could fundamentally change how we manage our money’ is days away (Business Insider), Rated: AAA

Regulators in Europe and the UK are ordering banks and credit card companies to share customer data with other companies if their customers agree. The companies will also be able to carry out payments on a customers’ behalf.

Open Banking forces lenders to offer a digital “fire hose” of data that any third party can use to get standardised access — provided the startup is registered with the UK Financial Conduct Authority (FCA) and the customer agrees to share their data. They won’t have to negotiate deals with banks, just plug into their digital systems and go.

The aim of Opening Banking is to give customers greater control over their data and to encourage account switching.

An investigation by the UK Competition and Markets Authority in 2015 found just 3% of customers switched their banks in the last year, meaning many were left with accounts that were not right for them.

 

ThinCats Says 2018 is Poised for Growth in SME Lending (Crowdfund Insider), Rated: A

ThinCats says 2018 is poised for growth. The online lender reports that December was a record month booking £12 million of funding listed on the platform followed the biggest-ever ThinCats-listed loan of £6.7 million to the Chelsea Yacht & Boat Company at the end of September.

Loan Store Reveals to Reduce Interest Rates on Instant Cash Loans for the UK People (MENAFN), Rated: A

Loan Store is the responsible lending hub that reveals to reduce the interest rates on instant cash loans for the UK people.

Hennery Dicosta, a senior adviser of Loan Store, has offered the complete details about this announcement. This is what he said- In a recent scenario, people usually try to borrow a small loan amount. That is why we have decided to provide the loans for bad credit people with no guarantor and no fees on an instant decision to resolve their short term emergencies. We never charge any processing fee and we are now providing these loans on quite low rates of interest. Besides, we do not judge the creditworthiness of the borrowers with their credit rating and give an instant decision on their loan request.

Crowdstacker joins the Peer-to-Peer Finance Association (P2P Finance News), Rated: B

CROWDSTACKER has joined the Peer-to-Peer Finance Association (P2PFA), becoming the self-regulated trade body’s eighth member.

The business lending P2P platform will be represented by chief executive Karteek Patel.

China

3 Growth Stocks at Deep-Value Prices (The Motley Fool), Rated: AAA

With that in mind, we asked three Motley Fool investors to each profile a company that has a low valuation now compared to its earnings-growth potential. They identified Yirendai (NYSE:YRD)Criteo S.A.(NASDAQ:CRTO), and Changyou.com (NASDAQ:CYOU) as strong contenders trading at attractive discounts.

China’s first P2P online lending platform

The Chinese P2P lending market blossomed in the late 2000s, catering to  customers who were underserved by traditional banks, and is worth about $60 billion today.

Analysts expect Yirendai’s revenue and earnings to rise 74% and 14% respectively this year, followed by 43% revenue growth and 41% earnings growth next year. Yet the stock trades at just 14 times earnings, compared to an industry average of 26 for credit service providers. Based on those numbers, Yirendai looks likely an undervalued growth stock.

But there are some obvious reasons why investors are discounting it.

First, Yirendai is a subprime lender. Just 1.7% of its loans were rated as prime “Grade A” last quarter. Another 8.7% were Grade B, and 14.1% were Grade C — but 75.5% were rated Grade D. Yirendai collects higher fees from lower rated borrowers, but its business could collapse if its delinquency rates rise.

The company only discloses delinquency rates for loans past due by 15 to 89 days, and that rate came in at a low 1.8% last quarter. But it doesn’t report any data on loans delinquent for over 90 days.

Chinese finance platform Black Fish raises $ 145m from Gobi, Lightspeed, others (Deal Street Asia), Rated: AAA

Black Fish, a consumer finance platform based in China’s Nanjing region, has received $145 million in a series A round from a cluster of firms  including Lightspeed China Partners and Shanghai and Kuala Lumpur based Gobi Partners.

Others who participated in the round include Morningside Venture Capital, JAFCO Asia, Fullcent Capital and Zhang Tao, founder of Dianping.com.

At this point, the average annual growth rate of consumer finance is 16.4 percent.

China’s Renren Is Poised To Unlock Value From Its Investment Portfolio And Grow With Blockchain (Seeking Alpha), Rated: A

Renren holds a significant investment portfolio that is easily worth $12 per share.  This value will likely be realized in the near term due to multiple catalysts.

The company has started to get involved with blockchain-related businesses, which potentially turns them into a “blockchain play”.

This situation leads to an asymmetrical payoff structure in which there is very little downside and significant upside. My target price is $18.

Renren was an early VC investor in Sofi, taking part in its seed round of financing as well as a later follow-on round. They currently hold a 13% stake in SoFi, having sold 14.1% of their holdings (representing 2% of SoFi) in April 2017 for $92 million.

Source: Seeking Alpha

Dianrong Signs Strategic Agreement with Dalian Finance Development Bureau & Dalian Finance Industry Investment Group (PR Newswire), Rated: A

Dianrong and the Dalian Finance Development Bureau and Dalian Finance Industry Investment Group (DFIIG) recently signed a strategic cooperation agreement to drive financial innovation in Dalian and across China. According to the agreement, Dianrong will develop a series of specific projects in partnership with the Dalian government, including:

  • Assist the Dalian Finance Development Bureau in creating a financial technology (fintech) cloud platform to provide fintech capabilities for small loan and guarantee companies, and other small and medium-sized financial institutions in the region and at large. Tools and services will include sophisticated fraud detection, big-data risk management tools, payment channel integration, and compliance reporting. The fintech cloud platform will also provide regulators with easier monitoring of local lending activities and trends in an ongoing and comprehensive way, helping them provide timely policy guidance and support on risk management.
  • Work with DFIIG to establish a special Internet finance investment fund for Dalian. The fund will focus on investment in fintech projects and startups with the potential to strengthen Dalian’s new economy and financial services industry.
  • Develop a supply-chain trading platform in Dalian utilizing advanced fintech and blockchain capabilities to help more small and medium-sized suppliers secure needed funding. Last year, Dianrong created the first blockchain platform for supply-chain finance with FoxConn Group, a global leader in consumer electronics.

Shanghai tightens financial sector supervision (Ecns), Rated: B

Shanghai is one of China’s largest financial markets by market trading volume. In 2017, its trading volume was 1,438 trillion yuan ($220.9 trillion).

Shanghai has already launched a campaign against fraud and illegal behavior in financial consumer markets, such as internet-based peer-to-peer lending, cash loans to college students, and pay-day loans.

European Union

Rocket Internet CEO says ready to pounce with cash pile (Business Insider), Rated: AAA

Germany’s Rocket Internet needs to hold on to its mountain of cash so it can compete with rivals from the United States and China and pounce when investment opportunities arise, the chief executive said in an interview.

CAUTIOUS MARKET

Rocket is invested in more than 100 start-ups, including in financial and property tech, logistics and travel sites, with its stakes in the five biggest of them potentially worth more than 1 billion euros to Rocket, according to Berenberg bank.

International

MoneyGram Signs Deal to Work With Currency Startup Ripple (WSJ), Rated: AAA

MoneyGram International Inc. MGI +2.63% signed on to run a pilot program testing XRP, a digital currency created by San Francisco startup Ripple, in its payments network, the companies said Thursday.

The Dallas-based company agreed to test XRP as a tool for reducing money-transfer costs and settlement times.

How Banks Can Use Trade Finance Services and Data to Increase Share of Wallet (Traxpay), Rated: AAA

While global trade presents tremendous growth opportunities, businesses of all sizes are none-the-less finding it difficult to access much needed credit, resulting in a global trade finance gap. According to an Asian Development Bank’s (ADB) 2017 Trade Finance Gaps, Growth, And Jobs Survey, that gap was $1.5 trillion in 2016.

Non-financial institution competitors are aggressively targeting this market, using innovations such as blockchain to develop products and tools that not only replace outdated paper and manual-based processes, but also deliver unprecedented levels of cybersecurity that are critical in today’s digital transaction space. The same ADB survey revealed more than $13 billion in venture capital was invested in FinTech trade finance in 2016 alone.

The recent Simmons & Simmons Hyperfinance studyof the world’s leading trade banks found that only 7% believe they are at the forefront of digital innovation in spite of the fact that 80% of innovation leaders report digitally-driven products and services introduced over the past three years have expanded revenue growth. This illustrates the reality that financial institutions recognize the importance of developing a digital strategy, but few are moving aggressively enough to take advantage of these new technologies.

PRINCIPLES, ESG, AND CREDIT RISK (All About Alpha), Rated: AAA

The question before the house right now, though, is: what about the credit rating agencies? The question comes in three parts: there are the global CRAs; the smaller/regional CRAs in most of the world, and regional CRAs in the special case of China.

First, the global CRAs [there are just two of them, Moody’s and S&P] are making “strong efforts” to incorporate an understanding of ESG issues. They are hiring staff with ESG backgrounds, equipping their existing analysts with the relevant expertise, and drawing on third party providers.

Then there is China. Its CRAs include Dagong Global, China Chengxin, and Golden Credit Ratings. The idea of integrating ESG into their analyses is thus far limited to the issue of green bonds, that is, bonds issued for the development of brownfield sites. Government policy in China encourages green bonds and the CRAs have responded. The resulting assessments are focused on the “E,” not so much the “S” or the “G.” And their environmental assessments rely on measuring the impact of the project the bond aims to finance.

  • Research very generally supports the hypothesis that there exists a causal link between ESG factors and the credit worthiness of a borrower;
  • Academic research in limited in that it is too exclusively content to measure credit risk by credit ratings, rather than testing the ratings themselves against alternative measures;
  • But some research does employ the spread of credit default swaps as an independent measure of risk;
  • Anecdotal observation indicates a clear link between G and defaults, although the linkage between E and S and defaults is more difficult to pin down;
  • There is much evidence in the linkage of ESG to macroeconomic factors and potential growth, which in turn are important to sovereign risk in particular.

ABS braces for more auto deals after strong start to year (IFR), Rated: A

The asset-backed bond market is braced for a slew of new issues next week, with deal flow expected to be dominated by auto issuers including BMW and Mercedes.

Just two issuers sold deals this week – GM Financial and Consumer Portfolio Services – and both auto trades were met with strong demand from investors. One banker on the GM deal said the deal was over-subscribed across the capital stack.

The biggest tightening though was seen on the smallest and lower rated tranches. The 3.58-year Class B, rated Aa3/AA by Moody’s and Fitch, priced at 30bp over interpolated swaps versus guidance of 35-40bp and whispers of 45bp area.

The 3.58-year Class C, rated A1/A, priced at 50bp over interpolated swaps versus guidance of 55-60bp and whispers of 65bp area.

FROM BANKING TO BITCOIN, FINTECH IS POISED TO CHANGE THE WORLD (Tech Genix), Rated: A

Currently, it represents only 1 percent of the global financial industry. By comparison, digital media accounts for 40 percent while eCommerce accounts for around 10 percent.

Source: Tech Genix

To give you a perspective, venture capitalists invested more than $13 billion across 840 different fintech holdings in 2016, according to a report by KPMG. This is 7 percent more than they invested in 2015.

According to the McKinsey report, five areas will see high growth over the next decade. They are consumer finance, mortgage, lending, retail payment, and wealth management.

Online payments

PayPal handled $1.73 billion worth of transactions in the first quarter of 2017 alone, representing a 30 percent increase year-on-year.

Borrowing and lending

However, the delinquency rates have been increasingover the last few years. These rates have increased from 0.56 percent in January 2015 to 0.75 percent in December of the same year.

Overstock.com’s 2017 Highlights: Innovation, Expansion, and Recognition (Business Insider), Rated: A

Overstock’s blockchain-focused subsidiary, Medici Ventures, named its board of directors in 2017, and also saw a number of its portfolio companies continue to use blockchain to revolutionize industries including capital markets, money and banking, property registry, voting, identity, and underlying blockchain technology, including:

  • tZERO, the world’s first SEC approved, blockchain-based alternative trading system, launched its initial coin offering (ICO), which attracted over 10,000 subscribers and raised $100M in commitments in the first 12 hours of its pre-sale. A significant portion of the tZERO security tokens issued will be available to accredited investors in the public sale beginning in January, 2018.
  • DeSoto Inc., a joint venture between Overstock.com founder and CEO Patrick Byrne and world-renowned economist Hernando de Soto, was created to develop a global property registry system to surface the property rights of billions of people in the developing world.
  • Bitt, a Barbados-based financial technology company using blockchain to create central banking tools and mobile money applications, named Rawdon Adams, son of former Barbadian Prime Minister Tom Adams, as its CEO. Bitt also fully launched its new mMoney digital payment product, bringing to market a blockchain-based mobile wallet that allows users to participate in digital transactions on their smartphones without the need for a traditional bank account, helping to foster financial inclusion in the region.
  • South-American based Ripio (formally known as BitPagos), participated in an ICO that raised $37M to fund its Ethereum-based peer-to-peer lending platform, Ripio Credit Network.
  • Belgium-based SettleMint launched a token sale for its DataBroker DAO, a peer-to-peer marketplace created to provide Internet of Things (IoT) sensor-owners with a clear path to data monetization, and data consumers with a decentralized marketplace in order to buy IoT sensor data. SettleMint also signed an agreement with The Islamic Research and Training Institute, the research arm of the Islamic Development Bank Group, to work with local partner Ateon on developing blockchain-based financial products that can be used to support development and inclusion in IsDB member countries.

Global lender selects Aussie fintech, Trade Ledger, as worldwide technology partner (PR Newswire), Rated: A

Zürich-based lender, TradePlus24, has selected Australian deep tech startup, Trade Ledger, as its global technology partner to roll out its new trade insurance wrapped lending product across their European lending network, and enter the Australian market.

Bankers fear they will get Amazon-ed in tech disruption (Financial Times), Rated: A

According to IDC, only about a quarter of US bank technology budgets is spent on digital transformation, as opposed to business as usual. They expect this to grow to nearer 40 per cent in 2020.

Secondly, this spending could substantially boost banks’ productivity, and profits.

Banks will drive up the cost of customer acquisition for start-ups who will increasingly struggle unless they build network effects and scale very quickly. Roboadvisers and peer-to-peer lenders will be on heightened alert. Some start-ups will need to rethink their plans to disrupt and look to form partnerships instead.

Changes in financial regulation, such as a lighter touch fintech charter being examined in the US or the second payment services directive in Europe, could potentially make this more likely. The tech giants have the brands, customer reach, digital processes and flair to develop good products, and to take swift advantage of any regulatory changes.

Karma token trading opens after successful million ICO campaign (Crypto Ninjas), Rated: B

India

German Online Lender Kreditech Heads to India (Bank Innovation), Rated: AAA

German online lender Kreditech is making its way to India, Bank Innovation has learned.

For this expedition, the fintech has teamed up with SaaS banking platform Mambu for providing short-term lending products specifically tailored to local consumers.

Kreditech selects Mambu’s SaaS banking engine for its passage to India (Finextra), Rated: A

Kreditech currently operates in Europe and Latin America and will expand into India in early 2018, together with its partner PayU, a global online payments provider and Mambu client in Latin America.

The loan product is expected to go live in the first quarter of 2018, all data will be hosted by AWS India.

NiYO Solutions Raises $ 13.2M in Series A Funding (FINSSMES), Rated: A

NiYO Solutions Inc., a Bangalore, India-based fintech startup for salaried employees, raised $13.2m (85 crore) in Series A funding.

APAC

Myanmar takes small steps towards providing greater liquidity for SMEs (Myanmar Times), Rated: AAA

A rising number of start-ups as well as small and medium enterprises (SMEs) are emerging in Myanmar as business opportunities rise. However, many companies fail to achieve their full potential and contribute substantially to the economy because capital assistance is lacking in the country.

A rising number of start-ups as well as small and medium enterprises (SMEs) are emerging in Myanmar as business opportunities rise. However, many companies fail to achieve their full potential and contribute substantially to the economy because capital assistance is lacking in the country.

Currently, local banks extend loans at interest rates ranging between 8.5 percent and 13pc. The local banks began offering SME loans at8.5pc interest in 2015. Since then, the Japan International Cooperation Agency (JICA) and KfW Development Bank from Germany have also launched SME loans.

P2P lending

To get around the financial constraints, borrowing from family members and peers is common.

In fact, a rising number of businesses have resorted to P2P lending for funds to build up their businesses. Without any guarantees of success though, many entrepreneurs ultimately end up in debt. Others fall prey to fraud. Last year, The Myanmar Times reported at least three cases of fraud involving fake promises of repayments with up to 30pc interest.

Cloud Lending Solutions Recognized as a Top 25 FinTech Company of 2017 (BusinessWire), Rated: B

Cloud Lending Solutions was recognized as a “Top 25 FinTech Company for 2017” by APAC CIO Outlook Magazine. A panel of industrial experts and executives collaborated with the editorial board to curate the list with an aim to provide clarity into the ideal FinTech partners.

Africa

Local digital currency eyes real estate disruption (ITWeb), Rated: AAA

Cape Town-based fintech company, Wealth Migrate, has launched a global   – WEALTHE Coin.

According to Wealth Migrate, while almost half of the world’s wealth is held in real estate, fewer than 13% of people have access or the resources to invest in and  from this lucrative market.

Authors:

George Popescu
Allen Taylor

Friday December 22 2017, Daily News Digest

LendingClub charge offs

News Comments Today’s main news: DV01 finishes year with $7.9B in consumer unsecured bonds. PayPal invests in Raisin. Affirm CEO affirms its product is a personal loan. LexinFintech share price surges. The state of P2P lending in New Zealand. InvestUp considers cryptocurrency investing. Today’s main analysis: Why bitcoin is a threat to LendingClub. Today’s thought-provoking articles: High-tech lenders go after […]

LendingClub charge offs

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Cayman

News Summary

United States

High-tech lenders target the decades-old store credit card (Reuters), Rated: AAA

The once-hot online lending industry has been battered by scandal and losses since last year, but one of the oldest forms of lending – store credit – is increasingly attracting tech companies aiming to supplant a retailer’s credit card.

One such lender, San Francisco startup Affirm, is attracting investment and large customers by using a new approach to underwriting that allows it to approve more borrowers than traditional store credit cards.

Max Levchin, Affirm’s founder who also co-founded one of the earliest digital payments companies, PayPal, boasts that Affirm approves 126 percent more borrowers than Synchrony Financial, the largest issuer of private-label credit cards.

Startup Affirm CEO Clarifies that Product Is a Personal Loan – Not a Credit Card (LendEDU), Rated: AAA

Consumers looking for a personal loan option have another one to consider in Affirm, which is a startup from PayPal co-founder Max Levchin. With Affirm, consumers can access a loan, a form of credit, to buy items at a store, which was originally interpreted to be similar to how a credit card works.

But Levchin has pointed out there are important differences between an Affirm loan and credit cards.

Who Uses Affirm?

Generation X and Millennials are the customers who most frequently use Affirm. Younger consumers have seen how carrying high credit card balances affected their older relatives, and they are less likely to want to have much credit card debt.

The annual percentage rate can be steep, going from as low as 10 percent to as high as 30 percent. But, unlike credit cards, the interest isn’t compounded.

Why Bitcoin Frenzy Is Terrible News For LendingClub (SeekingAlpha), Rated: AAA

LendingClub (LC) has had plenty of troubles over the years. Back in 2015, you could throw a dart at a list of financial stocks and hit a double if you held it through today. LC stock, by contrast, has destroyed shareholder value since its IPO. Even the recent Trump financials rally did next to nothing for LC stock, and now shares are back to near new all-time lows after a downbeat earnings report:

Source: SeekingAlpha

In a booming economy, the G-rated loans did so badly that they jacked up interest rates almost 3% on consumers while also reducing expected returns by more than 3%. This suggests that the G-rated loans were fully 6% short of expectations. This speaks to massive problems with the company’s underwriting, and leaves you to wonder just how badly internet-originated subprime loans will fare when a recession hits and the unemployment rate goes up again.

Source: SeekingAlpha

Bitcoin Losses Ahead?

If you are someone with a low income and a challenging financial position, you have an almost no-lose proposition (if ethics don’t get in the way). You borrow money on a credit card or from LendingClub, “invest” it in Bitcoin or Ethereum, and then hope it keeps going to the moon. If it does, you make many multiples of your interest expense, and have hit the lottery.

Now if the trade goes bad, and Bitcoin plummets, what is your debtor going to do? Since there is little consequence to defaulting on unsecured debt (and LendingClub has a reputation for being a lax debt collector), you simply stop paying on the note. The borrower has a win/win situation – essentially the lender is financing purchase of lottery tickets. I don’t know about you, but I’d need a much higher interest rate than even the 15 or 20% you might get off a low-end LendingClub note to justify that risk.

Source: SeekingAlpha

DV01 to Finish 2017 With $ 7.9 Billion in Consumer Unsecured Bonds (Crowdfund Insider), Rated: AAA

dv01, the data management, reporting, and analytics platform that offers institutional investors transparency and insight into lending markets, announced on Thursday it is set to close 2017 with $7.9 billion of consumer unsecured bonds. This news comes just a few months after the company launched its Cashflows for Securitizations feature.

The company revealed that it has launched a redesigned Securitizations homepage to celebrate the $7.9 billion of consumer unsecured bonds.

SoFi Vs. Earnest Student Loan Product Comparison (StudentLoans.net), Rated: AAA

SoFi offers their clients an option. You can choose variable refinancing rates which currently range 2.75 to 6.84 percent if you enroll in the company’s autopay option. Fixed rates range from 3.25 to 7.24 percent.

Earnest offers their clients both variable and fixed rate options. For the variable option, the rates currently start at 2.57 percent APR while fixed rates start at 3.35 percent APR with their autopay options.

Both SoFi and Earnest do not have a maximum within their loan amounts, but the amount a client owes will affect the interest rates that are offered.

Repayment Options

SoFi offers a number of repayment options for their refinancing product. This includes flexible rates, terms, and an ability to set automatic payments that drop your rate by 0.25 percent. Repayment terms range from 5 to 20 years.

Earnest refinance loans offers the flexibility in the way of terms that range from 5 to 20 years. With their loans, you will be able to increase payments, pay lump sums, provide bi-weekly payments, skip a payment to pay later, and offers an interest break for those who set up automated payments.

American Financial Exchange (AFX) Announces Two-Year Anniversary Highlights (PR Newswire), Rated: A

American Financial Exchange (AFX), an electronic interbank lending market focused on U.S. small and mid-sized banks, announced today the second anniversary of its electronic trading platform. AFX facilitates the determination of Ameribor®, a transaction-based interest rate benchmark for small- to mid-sized banks via its electronic trading platform.

Since opening, more than $100 billion cumulative has been successful transacted. Recently, daily volumes have averaged approximately $350 million with several days of volume highs over $500 million principal traded.

Is Peer to Peer Lending the Best Option for Small Company Financing? (Newswire), Rated: A

If your small company needs a borrowing arrangement but does not have a credit rating that benefits instant endorsement from the banking institutions, you need to sign up for an alternative solution of capital such as peer to peer lending.

Rather than signing up to a recognized traditional bank for a financial loan, you create a proposal to be lent from people who, (if they are interested in your offer), sign up for the loan request in amounts as low as $25.

Unsecured business loans and where to get the best ones if you have bad credit (Las Vegas Informer), Rated: A

Kabbage

Kabbage offers loans that go between $2000 and $150,000, and the APR goes between 24% and 99%. They ask for no minimum credit score but you need to have been in business for at least one year in order to qualify, and have annual revenue of over $50,000.

Fundbox

With Funbox you’re looking at a loan amount of $1000 that can go all the way up to $100,000. The APR goes between 15% and 59%, and they also cater to the needs of people with bad personal credit.

OnDeck

With OnDeck you’re looking at loans that go up to $100,000 and an APR that can go from 14% to 40%. Unlike the other two, here you need good personal credit and also you need to be good at managing your cash flow. You will need a personal credit score of at least 600, not to mention an annual revenue of at least $100,000.

LendingClub

At LendingClub you can get a loan of up to $100,000, from a minimum of $5,000, with an APR that goes between 9.8% and 35.7%.

New Real Estate Investing Resource Platform is Changing the Landscape (Benzinga), Rated: A

Think Realty is a membership-based resource platform developed exclusively for real estate investors. Since launching in 2016, investors across the nation and around the globe have signed up at ThinkRealty.com to become Think Realty Members, with an 81 percent increase in membership in the past six months.

Think Realty’s reach continues to expand with its national talk radio show, Think Realty Radio, which will begin airing January 1, 2018 on Wall Street Radio. Think Realty is presenting four national conferences for investors in 2018, beginning with the Think Realty Conference & Expo in Dallas, Texas, February 24 and 25. The other locations are Baltimore, Maryland, April 14 and 15; Irvine, California, July 14 and 15; and Atlanta, Georgia, September 22 and 23.

The 10 biggest real estate tech deals of 2017 (The Real Deal), Rated: A

WeWork is now worth $20 billion. Compass is valued at $2.2 billion following a December funding round. Have you heard of Placester? Well, investors think it’s worth $202 million. The Jared Kushner-backed real estate crowdfunding startup Cadre now has a $800 million price tag.

  • 1) WeWork, $4.4 billion fundraising round
  • 2 & 3) Compass, $100M and $450M fundraising rounds
  • 4) Cadre, $65 million fundraising round
  • 5) Placester, $50 million fundraising round
  • 6) Common, $40 million fundraising round
  • 7) HomeLight, $40 million fundraising round
  • 8) Roofstock, $35 million fundraising round
  • 9) Knock, $32.5 million fundraising round
  • 10) Opcity, $28.77 million fundraising round

Congress: Hands off new rule protecting families from payday lenders (Herald Sun), Rated: A

Ignoring the voices of families and communities who have worked for many years for relief from the harms of predatory payday lending, a handful of members of Congress have introduced legislation that would nullify the Consumer Financial Protection Bureau’s national rule to rein in payday-lending abuses. Their legislation uses Congressional Review Act authority to repeal the rule and prevent the Consumer Bureau from issuing a similar rule in the future, giving predatory payday and car title lenders a free pass.

Why Amazon won’t buy a bank in 2018 (Tearsheet), Rated: A

Forget the speculation about Amazon buying a bank next year. But don’t count it out from adding banking to its near endless line of offerings.

For Amazon, providing financial services is just a means to an end: making more money by selling more things. Other retailers are still its main competition — not banks.

Why banks want to collaborate now on open banking standards (Tearsheet), Rated: A

Every U.S. banker is watching their European counterparts react to the looming Payment Services Directive, or PSD2, which will come into effect in 2018. When that happens, banks will lose their monopoly on customer data as merchants and retailers like Amazon will be allowed to retrieve customer account data from the banks (with customers’ permission).

Now, U.S. banks want to get ahead of their own regulators when it comes to creating data exchange standards. It can take 18 to 36 months to get a framework in place, Courbe said, but banks know they need to start exchanging data with other companies today.

LendingTree Adopts the RevJet Marketing Creative Platform (Sys-Con Media), Rated: A

RevJet, the first smart marketing creative platform, today announced that LendingTree has adopted RevJet’s system for producing, approving, personalizing, serving and automatically optimizing all formats of digital ad creative. Using RevJet to take a methodical approach to experimentation, LendingTree is able to deliver a higher volume of leads to their business partners while optimizing for revenue.

 

United Kingdom

December’s Lending Impact and Borrower Stories (Funding Circle), Rated: AAA

Whatever the season, small businesses work harder on any given day than Mr Claus on Christmas Eve. To celebrate their hard work and determination, we’ve created our very own Christmas Carol, looking at the past, present and future of small businesses. We begin with the small business past, looking at the history of small businesses, and how they adapted during the industrial revolution. Next up, dive into the small business present and learn about the impact they have on today’s world and the trends that have helped them along the way. Finally, discover what the landscape might look like for businesses in years to come in our small business future.

In our latest case study video, meet David, founder of The Creative Whisky Company.

Peer to Peer Robo-Lending Platform InvestUp Sizes Up Cryptocurrency Investing (Crowdfund Insider), Rated: AAA

FCA authorised crowdfunding aggregation platform InvestUp may be going crypto. The UK based Fintech has so far focused on the peer to peer lending space but management is currently looking at adding algorithm driven cryptocurrency investing.

InvestUp shares that 2017 has been another good year for P2P lending having delivered, on average, 10.74% to investors.

Protecting the future of peer-to-peer lending (Gov.uk), Rated: A

Today the peer-to-peer lending industry was given a boost of confidence as the government began legislating to clarify that no business borrowing through a peer-to-peer platform needs to be regulated as a ‘deposit taker’ (often referred to as a ‘banking licence’) unless that is their core business. The legislation will ensure that the industry can continue to thrive and innovate while still benefiting from the UK’s high quality regulatory standards.

The Committee on Exiting Europe Publishes Sector Reports Including Document on Fintech (Crowdfund Insider), Rated: A

The Exiting the European Union Committee, appointed by the House of Commons to examine the process of the Department for Exiting the European Union , released a grouping of documents from the Department today. As one may expect, the slew of reports addressed certain aspects regarding ramifications of the UK’s departure from Europe.

The Fintech Sector Report highlights the current regulatory regime in the EU and how cross border transactions take place between continental Europe and the UK. The document describes Fintech as covering four different categories:

  • Investment, advice (including Robo-Advisors) and  neo or challenger banks
  • Regtech for compaliance
  • Payments including digital currencies such as Bitcoin
  • Alternative finance including crowdfunding and peer to peer lending

Read the full UK Fintech Report here.

Bank of England approves Tandem’s Harrods Bank takeover (AltFi), Rated: A

Tandem can now end the year on a high note after the Bank of England today gave regulatory approval for the challenger’s purchase of Harrods Bank.

The deal will now give Tandem access to a full banking license and the 10,000 customers attached to Harrods Bank, as well as the bank’s mortgage and savings books. According to Tandem, the purchase will also come with a “significant capital injection”.

UBS and EPAM Win Best Use of IT Private Banking/Wealth Management for SmartWealth App at Banking Technology Awards (NASDAQ), Rated: B

EPAM Systems (NYSE:EPAM), a global provider of digital platform engineering and software development services, and UBS AG, the world’s largest wealth manager, have been awarded for Best Use of IT Private Banking/Wealth Management at the Banking Technology Awards held on December 13, 2017 in London.

China

Chinese online lender LexinFintech surges in U.S. market debut (Reuters), Rated: AAA

Chinese online lender LexinFintech Holdings Ltd’s (LX.O) shares surged in their U.S. market debut on Thursday, brushing aside worries related to Beijing’s recent crackdown on the booming micro-credit industry.

LexinFintech’s shares touched a session high of $14.88, a 53 percent jump from its IPO price that valued the Shenzhen-based company at $4.51 billion.

China online lending IPO meets tepid demand as fintech zeal wanes (Financial Times), Rated: AAA

LexinFintech, the latest Chinese online consumer lender to complete a US initial public offering, has met with muted investor demand amid concerns over Beijing’s regulatory clampdown on dubious lending practices.

Lexin scaled back its planned $500m IPO on Nasdaq to $109m, and final pricing was at the bottom end of the price range initially marketed to investors.

Qudian, which is backed by Alibaba affiliate Ant Financial, raised $900m on the New York Stock Exchange in October — the largest US IPO by a Chinese fintech group. After hitting that high point investor interest quickly slid: last month PPDAI raised $221m in a deal that priced below the initial price range.

Since their IPOs, both Qudian and PPDAI have faced allegations of issuing misleading financial disclosures. Qudian closed at 48 per cent below its IPO price on Thursday, while PPDAI was down 44 per cent.

Source: Financial Times

Is Qudian A Bargain Or A Falling Knife? (SeekingAlpha), Rated: A

QD’s stock price has taken a nosedive, plummeting from its $24 IPO price to $12.9 as of 12/19/2017. Given QD’s strong earnings and fast growth rates in the past, the current price may appear to be a great bargain. Is that true?

QD’s strong past operating performance is mainly driven by its online cash-loan business, which brings in 83.3% of its total revenue.

The regulations can be distilled into three key rules: (1) cap the interest rates at 36% (2) limit the leverage of cash-loan companies at 3 or lower, and (3) forbid commercial banks, insurance companies, P2P, etc from investing in cash loans. These rules will put QD’s extraordinary profits to an end, as discussed below.

  • Rule #1: The interest rate caps may turn QD’s strong profits into negative. While QD may have already compiled to the 36% interest cap by the time of its IPO, QD’s revenue will still take a nearly 1/3 cut, holding all else equal.
  • Rule #2: The leverage limit will bring QD’s entire cash-loan business to a halt. According to QD’s 3Q report (Qudian Inc. Reports Third Quarter 2017 Unaudited Financial Results), as of 09/30/2017, its capital structure consists of Liability: 11.18 billion; Mezzanine equity/convertible preferred shares: 5.94 billion;Total Shareholders’ deficit: 1.78 billion. However, the national regulation limits the maximum leverage at 3, or even at 1 according to some regional regulations (21jingji news). It is clear that with 1.78 billion shareholders’ deficit, QD has to raise literally billions of additional funds to satisfy this rule, which is “mission impossible” given the third rule as discussed below.
  • Rule #3: restricting the financing sources will shut the door for QD to raise additional capital.
QD PPDF
Market Cap 4,243 2,175
Total Transactions 3,938 3,231
Revenue 223 192
Net Income 100 83

Brett Diment: 2018 Will be China Fintech’s Breakout Year (FiNews), Rated: A

Fintech will increasingly be associated with Beijing, Shenzhen and Hangzhou in 2018 instead of Silicon Valley, Aberdeen Standard’s Brett Diment details in a contribution for finews.asia.

The Chinese online-payment industry already accounts for around half of global transactions. Alipay, operated by Alibaba’s financial arm, is the market leader.

But Tencent’s Tenpay has been catching up fast. Tenpay’s stroke of genius was to allow its users to send electronic hongbao – the red envelopes of money traditionally given as a Chinese New Year gift. Some 16 million online hongbao were sent in 2014 – rising to a billion in 2015. This helped Tenpay’s share of the online-payment market to reach around 40 percent in just three years.

The University of Hong Kong Online Fintech Course Now Open for Registration (Crowdfund Insider), Rated: B

The Fintech MOOC is a six-week online course on innovations in finance and is designed to provide a foundational understanding of the global changes impacting all financial services.

European Union

Mayo businesses raise almost €800,000 through Linked Finance (The Connaught Telegraph), Rated: A

LINKED Finance, Ireland’s leading peer-to-peer (P2P) lending company, has raised almost €800,000 for Mayo-based businesses.

Eighteen Mayo businesses, including Doherty for Men, Main Street, Castlebar, and Electric Escapes, based in Westport, have raised funds through Linked Finance’s online lending platform (www.linkedfinance.com) to facilitate business growth.

Electric Escapes has raised €50,000 over two separate funding rounds, facilitated through the platform.

PayPal backs fintech deposit marketplace Raisin (AltFi), Rated: AAA

Raisin has secured an undisclosed sum of investment from digital payments platform PayPal. The money will be used to accelerate the growth of Raisin across its core European geographies.

International

Blockchain is “no longer in proof of concept” phase (Global Trade Review), Rated: AAA

Sin has just helped launch the world’s first cross-border bancassurance distributed ledger technology (DLT) platform, working with China Life Insurance and Guangfa Bank in Macau.

In another sign that the technology may be fit for commercial purpose, SME lending platform ModulTrade has settled its first blockchain-based export transaction out of China.

This transaction was small –  just over US$1,000 – but again shows that the technology is beginning to be used outside of the laboratory.

The company teamed up with Rabobank to complete an inventory financing transaction on the blockchain that resulted in a real-time payment for farmers.

All payments were made in real time, using a Rabobank-backed digital dollar, pegged to the Aussie dollar. The digital dollar was issued and cleared by a central issuing and settlement institution.

BENCHMARKING DISTRIBUTED LEDGER TECHNOLOGY (All About Alpha), Rated: A

Two scholars affiliated with the Cambridge Centre for Alternative Finance, in Great Britain, have prepared a fascinating overview of the present state of blockchain and distributed ledger technology (DLT).

  • The protocol layer of this ecosystem is only slowly maturing, and the limit of this maturation is one of the key challenges for the broader adoption of DLT;
  • Most users experiment with only small-scale, isolated layers, with live applications allowed only as “permissioned” layers;
  • There is an increasing focus on creating common standards of enterprise DLT frameworks that will allow for interoperability, but this effort to overcome fragmentation is itself fragmented into “a variety of consortia”;
  • Ethereum in particular has been tested at 57% of central banks, either via the public network or a permissioned version.

Nearly half of the surveyed DLT start-ups are in North America (47%). The second largest group by continent is that which hails from Europe (28%), then 19% (Asia Pacific).

But employment isn’t precisely aligned with the number of enterprises on each continent. A full 61% of employees working in this field are in North America, and only 13% are in Europe.

RCN ANNOUNCES DECENTRALAND PARTNERSHIP (Bitcoinist), Rated: A

Earlier this week, RCNannounced their new partnership with Decentraland, the blockchain-based virtual reality platform where users can acquire virtual land to create and monetize their content.

Under the new partnership, RCN will be able to integrate its credit protocol with the Decentraland platform. This will enable users who own plots of land, content, or businesses created in the 3D world to issue and receive loans.

The Top FinTech Trends of 2017 … were they? (The Finanser), Rated: B

Rise of InsurTech

True. I’ve seen a lot of InsurTech movement this year with a number of standout start-ups like BackmeupBrollyBuzzmoveCuvvaInmybagLuther and Neos.

Rise of RegTech

Yep, I’ve heard more about RegTech this year than ever before, although that’s unsurprising when most banks have at least two staff checking the work of each employee (Citibank has 40,000 compliance people!). Consultancy picks out 100 of the most innovative firms in this space.

Platforms, APIs and Open Banking are the key

I feel like I’ve been talking platforms all year and, with PSD2 and Open Banking coming into play in January 2018, it is certainly true that platforms, APIs and Open Banking have definitely been the theme of 2017.

China and emerging markets focus

Ah yes, I definitely think this year has been a big year for financial inclusion and discussions of Ant Financial and Tencent.

Australia/New Zealand

Banking without the banks: the state of peer-to-peer lending three years on (The Spinoff), Rated: AAA

In 2014, New Zealand was one of the first countries to legalise peer-to-peer lending.

For the latter, Snowball Effect and PledgeMe led the way with the FMA awarding its first equity crowdfunding licences to the two firms. For the former, the first licence for P2P lending was granted to Auckland-based platform Harmoney, which was founded by Neil Roberts that very same year.

To date, there are eight licensed P2P lending services currently operating in New Zealand with more than 20,000 investors currently registered with P2P lending intermediaries. When it comes to borrowers, there are more than 200,000 individuals currently registered with P2P services.

Source: The Spinoff

Since launching in September 2014, it’s lent more than $655 million via 37,000+ loans and paid more than $87 million interest in total. In the most recent financial year, Harmoney saw over more than 830,000 investments made in loans by almost 5,400 unique investors.

Source: The Spinoff
India

Want Good Financial Advice? Ask a Digital Lending Platform (BW Disrupt), Rated: A

The need for credit can come for a variety of reasons, and can be catered to by a vast plethora of different loan products.

Clearly, if you had to get good financial advice, AI-leveraging algorithms are a better bet than humans. So why not use the same technology to help individuals and SMEs find the right credit options for their needs?

Asia

NewsBTC Interviews the Crowd-genie Team (NewsBTC), Rated: A

NewsBTC: Why is licensing so important? How difficult is it to get in Singapore? 

Crowd-genie: Being registered and licensed are two different stories. As peer to peer lending platform involves enormous monetary transactions, a securities license is crucial for regulated lending activities.

NewsBTC: Can you please explanation of how reputations coin work?

Crowd-genie: For each repayment, from the borrower to lenders, we will incentivise on-time payment by adding CGCOIN “Credits” to the borrowers’ wallets. This will be a spendable asset that will be tracked separately in the Digital Passport. The more CGCOIN Credits earned, the higher their reputation, and that in turn, will increase their chances of getting higher investments from more lenders and/or a lower interest rate.

 

Source: NewsBTC
Cayman Islands

Robot to speak at Cayman Alternative Investment Summit (Cayman Compass), Rated: B

Sophia, the world’s first robot to be granted citizenship of a country, will be one of the speakers at the Cayman Alternative Investment Summit on Feb. 8 to 9, 2018, organizers announced Thursday.

At the Cayman Alternative Investment Summit, Sophia will be interviewed on stage by a representative from event sponsor KPMG.

Organizers say the robot’s appearance complements the theme of the investment conference, “Wired: the rise of alternative investments in a digital age,” which targets opportunities at the intersection of alternative investing and technology.

Authors:

George Popescu
Allen Taylor

Thursday October 5 2017, Daily News Digest

roboadvisors aum

News Comments Today’s main news: Aspire Fintech is closing. Navient buys Earnest for $155M. Schwab creates robo-advisor, hires ex-Betterment GM to run it. Atom Bank nears 1B GPB in deposits. SoFi’s plan to become a bank isn’t going so well. Rubique has issued 50K credit cards. Reserve Bank of India (RBI) issues P2P lending platform directions. Today’s main analysis: Nutmeg sees […]

roboadvisors aum

News Comments

United States

United Kingdom

European Union

International

India

Canada

News Summary

United States

SoFi’s Plan to Become the Bank of the Future Isn’t Going So Well (Bloomberg), Rated: AAA

Now, with Cagney felled by a flurry of sexual harassment allegations, the question is whether SoFi has any chance of building the financial supermarket he envisioned. This was always going to be a tall order given the intense competition from entrenched players and fintech startups alike, but now the SoFi brand has been tarnished as well.

“There are a lot of question marks,” says Alois Pirker, research director at advisory firm Aite Group. “The new CEO will need to find his or her bearings there and that will tell which direction they’ll be going.”

Some members of the board consider the moves into life insurance and wealth management Cagney “pet projects,” according to a person familiar with their thinking. Directors prefer to focus on more mature businesses such as personal loans and mortgages that are more predictable and established, said the person, who requested anonymity to discuss a private matter.

The firm reported revenue of $134 million in the second quarter, according to an email from Cagney to investors in August. It had adjusted earnings before interest, taxes, depreciation and amortization of $61.6 million and extended over $3.1 billion in student loans, personal loans and mortgages during that time frame. Personal loans are the most profitable, the person said, followed by student loans and then mortgages.

The wealth management unit had just $12 million in assets under management as of early September, according to a filing. This is far short of the more than $100 million the firm had set as an internal goal, people familiar with the matter have said.

SoFi readies 1st student loan bond post-management shakeup (Asset Securitization Report), Rated: A

Social Finance is returning to the securitization market with $626.4 million of bonds backed by loans used to refinance the student debt of borrowers with advanced degrees and high incomes.

The transaction, SoFi Professional Loan Program 2017-E (internal link; not in original source article), comes just weeks after the marketplace lender experienced a management shakeup; its chief executive officer and chief financial officer both resigned.

SoFi hosts party at Front & Palmer (Metro), Rated: B

Most people are not fans of student loan debt, but last week, SoFihosted a party at Front & Palmer in Philadelphia to celebrate it as a means of opening doors to education and more opportunities.

Recent college grads were invited to attend for free and to gain admittance, only needed to bring a proof of their student loan debt.

Source: Metro.com

Earnest, An Online Student Lender, Bought By Navient For $ 155 Million (Forbes), Rated: AAA

Financial technology start-up Earnest has agreed to be acquired by student loan servicing giant Navient for $155 million in cash, the companies said on Wednesday.

Earnest, an online lender that has focused on refinancing student loans, will remain a distinct brand and will continue to be led by its current management team, including founder and CEO Louis Beryl.

The acquisition will be a launching pad for Navient to begin originating its own student loans.

Schwab creates robo-exec slot and fills it with ex-Betterment unit chief (RIABiz), Rated: AAA

As its robo-assets soar to seemingly effortless heights, Charles Schwab & Co. is hiring an intriguing ex-Betterment talent to ensure that its good fortune holds.

The San Francisco-based investments giant, with $24 billion* of assets under automated management in Schwab Intelligent Portfolios and Schwab Intelligent Advisor, hired Cynthia Loh, the ex-general manager of Betterment for Business, the division that oversees the New York-based robo‘s 401(k) unit.

The Schwab robo-launch’s differentiators were its “zero” fee, its 24/7 access to service personnel and its national advertising. Yet the look and offering of the Schwab Intelligent offering are considered plain-vanilla in scope.

How tough can Schwab get with digital upstarts? (FinancialPlanning), Rated: AAA

Outlining his firm’s strategy for battling digital disruption, Schwab CEO Walt Bettinger envisioned it would push client asset revenues lower, while relying on its brand and established market share to grow.

Reacting to his statement, industry observers expect an uphill slog for independents as the largest firms gear up for a price war on three fronts: financial advice, online trading and ETFs.

An early study by A.T. Kearney predicted incumbents would slash prices to compete with robo advice upstarts. While that never came to pass, the 2015 study still predicted industry revenues would drop by as much as $12 billion by 2020.

“[Schwab has] $3 trillion in client assets. They have very positive brand recognition and customer satisfaction scores that are the envy of most of the industry. They have demonstrated a willingness to cut price to gain market share, as seen with their recent commission cuts in online trading. So yes, they can throw their weight around.”

The wisdom of possessing a trifurcated digital advice offering — Schwab Intelligent Portfolios, a digital-only service, an institutional platform for RIAs, and the hybrid robo advisor Schwab Intelligent Advisory — also becomes clearer, McDermott notes. (Schwab’s robo now has $20 billion in AUM).

Robo advice is expected to collectively top $1 trillion in assets under management in fewer than five years, according to Boston-based consulting firm Aite Group. But micro-investing will partly feed such growth, it predicts, noting over 60% of millennials already are subscribed to such apps.

FinTech Lenders and Banks Take Note (VedderPrice), Rated: AAA

While Upstart’s No-Action Letter has narrow applicability, it may serve as a tool for other FinTech lenders in implementing innovative products and services and establishing relationships with banks.

According to Upstart, its underwriting technology uses traditional underwriting methodologies in combination with other variables that are correlated with financial capacity and “repayment propensity.” Upstart states that its model understands and quantifies risk associated with all borrowers—both those with credit histories and those without credit histories. As a result, the Upstart loan program is able to offer credit to segments of the population with limited credit or work histories at more favorable rates. In other words, it appears Upstart is underwriting consumer loans without reliance upon traditional criteria, such as credit scores and length of employment history.

  • The No-Action Letter is only applicable to Upstart’s automated model for underwriting applicants for unsecured non-revolving credit, as described in Upstart’s original Request.
  • The No-Action Letter will expire three (3) years after its issuance, at which time Upstart may seek to renew the No-Action Letter.
  • The No-Action Letter is subject to modification or revocation at any time at the discretion of the CFPB staff for any reason, including where the CFPB’s staff determines that such modification or revocation is appropriate to protect consumers or is otherwise in the public interest.

On one hand, a no-action letter may be particularly useful for a FinTech company, utilizing innovative technology and operations, to obtain guidance concerning the permissibility of its business model under specific regulatory constructs. A no-action letter may also be useful for a FinTech company seeking to establish joint ventures with banks.

On the other hand, a CFPB-issued No-Action Letter has narrow applicability as it is only applicable to the requesting applicant, a specific regulatory issue and the facts and circumstances identified by the applicant in its request submitted to the CFPB. Should a fact or circumstance fail to be conveyed accurately, or should a fact or circumstance change, the No-Action Letter may be rendered useless.

Online housing investment platform Roofstock raises $ 35M in Series C (The Real Deal), Rated: A

Housing investment platform Roofstock raised $35 million in a Series C funding round as it looks to cash in on growing interest in single-family rental housing.

Roofstock CEO Gary Beasley said the firm will use the money to hire and to expand into new markets. The company has raised a total of $68 million from investors, according to Beasley.

From Shopping to Close, LendingTree Study Finds Mortgage Process is Getting Faster (Business Insider), Rated: A

LendingTree, an online loan marketplace, has released the findings of its study on shopping timelines for purchase mortgages. The study analyzed data from a sampling of more than 5,000 closed loans from March 2016 through May 2017 and reviews the timeline for the entire mortgage shopping experience – from first submitting a loan request and being matched with a lender to the date of the mortgage loan closing. The study revealed that the median time from early rate shopping to closing on a purchase mortgage declined 7 days from 2016 to 2017.

From 2016 to 2017, LendingTree has seen a 19% increase in the number of loans closed within 30 days and a 27% increase in loans closed in 60 days.

Congress is Trying to Get the IRS to Modernize (Lend Academy), Rated: A

Back in December 2013 Renaud Laplanche testified on Capitol Hill on small business lending. He was CEO of Lending Club back then and when a Congressman asked Laplanche a question as to how the government can best help he said to make IRS data more easily accessible to online lenders.

Fast forward four years and there appears to finally be some movement on this. Last week Congressman Patrick McHenry (R-NC) along with Senator Cory Booker (D-NJ) introduced a billthat would help the IRS move into the modern age and allow the automated retrieval of tax information through an API.

The IRS Data Verification Modernization Act of 2017 as it is called will require the IRS to create an API that will allow lenders to verify income in real time.

RealtyShares – New Small Balance Multifamily Program (RealtyShares), Rated: A

RealtyShares is now financing Small & Large Balance Commercial Multifamily, Apartment, Retail, & Hotel Assets.

Typical dwellings/ deal structure:

  • Class A, B & C+ dwellings
  • Typically like properties within a 30 mile radius of a popular MSA (but not necessarily a deal breaker as long as the project looks good)
  • The minimum loan financed needs to meet 1MM (Acquisition w/ renovation)
  • Asset Based Lender but having an experienced client who has done deals in the particular area is a great compensating factor

Project Summary

Loan Information

  1. Loan Amount
  2. Duration (term)
  3. Closing deadline
  4. Reason for deadline

Lien Information

  1. Amount of existing first lien
  2. Amount of other liens

Collateral Information

  1. Collateral Type
  2. Number of Units
  3. Total Square Footage
  4. Street Address
  5. Purchase Price and Purchase Date (if refi)
  6. “As Is” Real Estate Value
  7. Date of “as is” Appraisal/BPO
  8. Net Operating Income (NOI)
  9. Capital Expenditures since Purchase ($)
  10. Vacancy (%)

Guarantor(s) Information

  1. Net Worth of Guarantor(s)
  2. Estimated liquid assets of Guarantor(s)
  3. FICO Score of Guarantor(s)
  4. Guarantor(s) investment in collateral – current or proposed
  5. Sponsor’s Website

Use of Proceeds:
Please provide a concise description, a few sentences, on the Use of Proceeds (i.e., discuss: acquisition, refinance, site improvement, tenant improvements, planning, design/permitting, carry costs and etc.)

Exit Strategy:
Please provide a concise description, a few sentences on the Exit Strategy (e.g. discuss prospective buyer, prospective permanent financing).

What to Watch for When It Comes to Alternative Investing Opportunities (Madison.com), Rated: A

When you are working in the equity crowdfunding space, particularly as a company that is private, you certainly don’t have the liquidity that you would for a publicly traded stock that’s on the exchange.

On this episode of Industry Focus: Technology, host Dylan Lewis is joined by Motley Fool contributing writer Daniel Kline to talk about the dangers of this type of investing. They break down all the risks associated with purchasing shares in a company that does not have to report as much financial data as a traditional publicly traded company.

Watch the full video discussion here.

Elevate to Release Third Quarter 2017 Earnings on Monday, October 30, 2017 (Financial Times), Rated: B

Elevate Credit, Inc. today announced that it will release its third quarter 2017 financial results after the market closes on Monday, October 30, 2017. Ken Rees, Chief Executive Officer, and Chris Lutes, Chief Financial Officer, will also host a conference call on the day of the release (October 30, 2017) at 5:00 pm ET to discuss Elevate’s financial results.

Interested parties may access the conference call live over the phone by dialing 1-877-407-0792 (domestic) or 1-201-689-8263 (international) and requesting the Elevate Third Quarter 2017 Earnings Conference Call. Participants are asked to dial in a few minutes prior to the call to register for the event. The conference call will also be webcast live through Elevate’s website at 

An audio replay of the conference call will be available approximately three hours after the conference call until 11:59 pm ET on November 13, 2017, and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international), and providing the passcode 13671832, or by accessing Elevate’s website.

Citi FinTech’s Customer-Driven Journey: Our Latest Mobile Enhancements (Citi), Rated: B

These new mobile investment features include a dividend reinvestment plan (DRIP), fund screener, consolidated search functionality and enhanced visualization. Through the Citi Mobile App for iPhone, any Citi client with a brokerage account now enjoys one-touch access to their financial advisors and the ability to manage their investments personally, without switching to another channel.

Dividend Reinvestment Plan: Now clients can enroll eligible securities in a dividend reinvestment plan (DRIP) right within the app. Once a customer has opted in, this feature helps our clients put their cash dividends to work, instead of idling in their accounts.

Investment Search: This consolidated search function makes investing easier for clients interested in managing their portfolios themselves.

Performance Visualization: An enhanced visualization enables clients to track their portfolio’s performance and make adjustments right within the app.

United Kingdom

App-only bank Atom nears £1 billion in deposits (Business Insider), Rated: AAA

Startup, app-only bank Atom has passed £900 million in deposits less than two years after launching its first savings product.

The disclosure comes as Atom’s annual accounts show that the startup had £538 million in deposits from over 17,000 customers at the end of March. It means the app-only bank has attracted around £400 million in four months.

The bank’s accounts, filed with Companies House this week, show Atom has received over £300 million of small business loan applications and lent out close to £100 million in loans and mortgages by March this year.

Atom had a net interest loss of £1 million for the year, due to paying out interest on its 1.95% and 2.5% fixed savings accounts, at the time market-leading interest rates, before the launch of its lending products.

UK’s biggest robo-advisor Nutmeg sees losses widen (Business Insider), Rated: AAA

Nutmeg, the UK’s biggest automated investment fintech in terms of assets under management (AUM), released 

Source: Business Insider

P2P lending on course for 20 per cent jump (FT Adviser), Rated: A

Lending across all of the peer-to-peer platforms in 2017 to date is already higher than in the whole of 2016, according to data from research agency 4thWay.

According to the data, total lending across all peer-to-peer platforms is likely to be at least 20 per cent higher this year than last with the largest platforms, Funding Circle and Zopa, leading the way.

Funding Circle has lent £865m in 2017 to date, compared with £825m in the whole of 2016.

European Union

The 8 Biggest Startups in Europe by Funding (Nanalyze), Rated: AAA

Zee Germans are leading the pack with 4 unicorns and we also see that fintech and ecommerce make up half of all the sector allocations.

Company Name Funding Country Sector
Spotify $8.53 Sweden Internet Software & Services
Otto Bock HealthCare $3.50 Germany Healthcare
Auto1 Group $2.80 Germany eCommerce/Marketplace
Klarna $2.50 Sweden Fintech
VistaJet $2.50 Malta On-demand
Adyen $2.30 Netherlands Fintech
Hellofresh $2.09 Germany eCommerce/Marketplace
CureVac $1.65 Germany Healthcare
BlaBlaCar $1.60 France On-Demand
Saxo Bank $1.45 Denmark Fintech
Global Fashion Group $1.10 Luxembourg eCommerce/Marketplace
OVH $1.10 France Big Data
Avaloq Group $1.01 Switzerland Fintech
AVAST Software $1 Czech Republic Cybersecurity
letgo $1 Netherlands eCommerce/Marketplace
MindMaze $1 Switzerland VR/AR

Big Brand Payments, Part 1

Another big player from Sweden is Klarna, founded in 2005 and now valued at $2.5 billion. With $521.44 million in funding from investors like Sequoia and Visa, Klarna is one of the most popular e-commerce payment solutions in Europe, used by Burberry, Overstock.com, J.Crew, Nike, Lenovo, and hundreds more.

Adlibris, one of Europe’s largest booksellers, used Klarna to improve its mobile checkout solution, resulting in an 80% conversion increase.

Big Brand Payments, Part 2

With a valuation just shy of its Swedish colleague Klarna, Netherlands-based Adyen (valued at $2.3 billion), has established a firm foothold in the world of merchant payments by providing a “friction-less payment experience”. Founded in 2006 and funded with $266 million to date, Adyen has some huge customers in its corner, including Netflix, Uber, Etsy, Spotify, Groupon, and LinkedIn. The secret is in its platform, which features support for a wide variety of payment options (250 worldwide, to be exact) in a single system, including Apple and Android Pay, all major credit cards, direct debit for recurring payments, in-app purchases, and much more. The Cambridge Satchel, a UK handbag company, saw its Black Friday sales rocket by 124% after switching to Adyen’s platform. In addition to one-time purchases, the platform also facilitates subscriptions and recurring payments more seamlessly.

Trelix Approved as a Third-Party Due Diligence Provider by DBRS (Business Insider), Rated: A

Trelix, a provider of due diligence, quality control, licensed fulfillment and non-licensed fulfillment products and services across the origination and securitization lifecycle, today announced that it has been approved as a third-party due diligence provider for DBRS-rated transactions. DBRS is a full-service credit rating agency respected for its independent, third-party evaluations of corporate and government issues. DBRS’s approval process, before adding a company as an accepted provider, includes an on-site review to assess companies’ staffing, infrastructure and capabilities relevant to securitization-related services.

As part of Altisource’s Origination Solutions platform, Trelix offers clients a unique combination of technology and risk management tools that position it to have a meaningful impact on the securitization market.

Dutch fintech company InvoiceFinance raises €6 million in funding (Tech.eu), Rated: A

InvoiceFinance, a fintech startup based in Amsterdam, has raised €6 million from Peak Capital.

The new funds will be invested in marketing purposes and hiring for the sales and development team.

New10 Partners With Mambu To Redefine Dutch SME Lending (Bob’s Guide), Rated: A

Mambu today announced that New10, ABN AMRO’s newly launched FinTech, has selected the SaaS engine to power a range of small and medium enterprise (SME) lending products in the Netherlands. New10, which aims to provide credit decisions within 15 minutes, went from concept to launch within 10 months, in line with ABN AMRO’s vision of digitisation and innovation.

Mambu took a collaborative approach working with the New10 team in order to complete implementation within four months. In a highly regulated environment, Mambu’s partnership with Amazon Web Services (AWS) which has received Dutch regulatory approval, helped smooth the path to market. New10 launched on 21 September 2017 with a fully digital SME lending platform with plans to broaden the portfolio and potentially expand into new markets.

collectAI manages 25m Euro in Receivables (Otto Group), Rated: A

collectAI, the service for digital receivables, has processed receivables at a volume of 25m Euro since its foundation in 2016. collectAI automates and digitises invoices, dunning and debt collection processes and is the first digital end-to-end provider in receivables management.

Examples of successful KPIs on the clients’ side include: Introducing digital communication channels lead to an increase of the collection rate of 33 percent, while processing costs have been reduced by up to 41 percent.

While 23 percent of invoices are overdue Europe-wide (EHI 2016 – online retail only), the invoice remains the most popular payment method in Germany with a market share of 30,5 percent (EOS 2016). Even though returns from receivables and debt collection are essential for revenue and thus liquidity, only 18 percent of companies have digitised their receivables to date (EOS/Kantar 2017).

Papering Over the Cracks (LendIt), Rated: A

In 2016 there were a reported 5.4 million SMEs in operation in the UK alone and our economy depends heavily on the success of these “little guys”.

Fintechs and banks are now lending faster than the speed of light, but when it comes to uncovering fraudulent activity, are they actually left standing in the dark?

Invoice finance lenders have to be particularly vigilant when it comes to a different type of fraud: fresh air invoicing.

One way to avoid being stung by paper fraud is to lend against accurate financial data extracted directly from a company’s accounting package, rather than lending against a PDF or excel file that can be amended. Advances in technology means lenders are now able to access this level of data directly, securely and efficiently, so they can be sure they’re providing fair financial support to loan applicants.

International

BitProperty Announces Upcoming Token Sale, Beta Release of Real Estate Investment Platform (Bitcoinist), Rated: AAA

BitProperty, the blockchain-powered real estate investment platform, has announced that it will launch a closed beta release on October 5, 2017. Ten days later, on October 15, it will kick off a token sale to raise funds for further development of the platform.

The BitProperty platform is built on the Ethereum blockchain and uses two different types of tokens. The first type is an asset token that represents a share of a particular asset. When a real estate owner lists a property on the platform, the number of asset tokens issued against the property represents its value. Investors can purchase these asset tokens and will then receive income based on the performance of the asset (property) and the size of the stake that each investor holds.

The second type of token is the BTP token, which represents the inherent value of the platform backed by the pool of the company’s managed assets.

India

Rubique crosses over 50,000 credit cards customers (India.com), Rated: AAA

Mumbai-based FinTech startup Rubique continues to embark upon its fast-paced growth across sectors, including Retail and SME financing.

Rubique has till date successfully crossed over 50,000 Credit Cards customers.

RBI issues directions for peer-to-peer lending platforms (India Times), Rated: AAA

The Reserve Bank of India (RBI), on October 4, issued directions for non-banking financial companies (NBFC) that operate peer-to-peer (P2P) lending platforms. According to the directions, from now on no NBFC can start or carry on the business of a P2P lending platform without obtaining a Certificate of Registration. Every company seeking registration with the bank as an NBFC-P2P shall have a net owned funds of not less than Rs 20 million or such higher amount as the bank may specify.

They have been asked to apply for registration as NBFC-P2Ps within 3 months.

NOTIFICATIONS (Reserve Bank of India), Rated: AAA

3. Scope

These Directions provide a framework for the registration and operation of NBFC-P2Ps in India.

(2) Process of Registration

(i) Every existing and prospective NBFC-P2P shall make an application for registration to the Department of Non-Banking Regulation, Mumbai of the Bank, in the form which will be specified by the Bank for the purpose. Existing NBFC-P2Ps shall apply within three months from the issuance of these Directions.

(ii) The Bank, for the purpose of considering the application for registration, shall require the following conditions, among others, to be fulfilled:

  1. The company is incorporated in India;
  2. The company has the necessary technological, entrepreneurial and managerial resources to offer such services to the participants;
  3. The company has the adequate capital structure to undertake the business of Peer to Peer Lending Platform;
  4. The promoters and the Directors of the company are fit and proper;
  5. The general character of the management of the company is not prejudicial to the public interest;
  6. The company has submitted a plan for, or implemented, a robust and secure Information Technology system;
  7. The company has submitted a viable business plan for conducting the business of Peer to Peer Lending Platform;
  8. Public interest shall be served by the grant of CoR;

Any other condition as may be specified by the Bank, fulfillment of which, in the opinion of the Bank, is necessary to ensure that the commencement of or carrying on the business in India shall not be prejudicial to the public interest.

6. Scope of Activities

(1) An NBFC-P2P shall-

  1. act as an intermediary providing an online marketplace or platform to the participants involved in Peer to Peer lending;
  2. not raise deposits as defined by or under Section 45I(bb) of the Act or the Companies Act, 2013;
  3. not lend on its own;
  4. not provide or arrange any credit enhancement or credit guarantee;
  5. not facilitate or permit any secured lending linked to its platform; i.e. only clean loans will be permitted;
  6. not hold, on its own balance sheet, funds received from lenders for lending, or funds received from borrowers for servicing loans; or such funds as stipulated in paragraph 9;
  7. not cross sell any product except for loan specific insurance products;
  8. not permit international flow of funds;
  9. ensure adherence to legal requirements applicable to the participants as prescribed under relevant laws.
  10. store and process all data relating to its activities and participants on hardware located within India.

(2) Further, NBFC-P2P shall-

  1. undertake due diligence on the participants;
  2. undertake credit assessment and risk profiling of the borrowers and disclose the same to their prospective lenders;
  3. require prior and explicit consent of the participant to access its credit information;
  4. undertake documentation of loan agreements and other related documents;
  5. provide assistance in disbursement and repayments of loan amount;
  6. render services for recovery of loans originated on the platform.

(3) NBFC-P2P shall not undertake any activity other than those stated in paras 6(1) and 6(2) of these Directions. Deployment of investible funds by an NBFC-P2P in instruments specified by the Bank, not for trading, shall however be permitted.

11. Transparency and Disclosure Requirements

(1) An NBFC-P2P shall be required to disclose the following:

(i) to the lender

  1. details about the borrower/s including personal identity, required amount, interest rate sought and credit score as arrived by the NBFC-P2P.
  2. details about all the terms and conditions of the loan, including likely return, fees and taxes;

(ii) to the borrower – details about the lender/s including proposed amount, interest rate offered but excluding personal identity and contact details;

(iii) publicly disclose on its website:

  1. overview of credit assessment/score methodology and factors considered;
  2. disclosures on usage/protection of data;
  3. grievance redressal mechanism;
  4. portfolio performance including share of non-performing assets on a monthly basis and segregation by age; and
  5. its broad business model.

(2) NBFC-P2P shall ensure that the providing of services to a participant, who has applied for availing of such services, is backed by appropriate agreements between the participants and the NBFC-P2P. The agreements shall categorically specify all the terms and conditions among the borrower, the lender and the NBFC-P2P.

(3) The interest rates displayed on the platform shall be in Annualized Percentage Rate (APR) format.

Finance Ministry Welcomes RBI Move On P2P Lending (Bloomberg Quint), Rated: A

The finance ministry today welcomed the central bank’s move to treat peer-to-peer, also known as P2P, lending platforms as non banking financial companies, saying it would improve financing for smaller firms.

RBI To Observe P2P Lenders As Well As Invest in Security Frameworks (Industry Daily News), Rated: A

The government has declared RBI (Reserve Bank of India) as the watchdog for P2P (peer to peer) lending marketplaces that have been segmented as NBFCs (non-banking finance companies). While this might elevate prices for online lenders via compliance needs, most have greeted the decision claiming that it provides them identification.

RBI To Allow Funds Transfer Among Mobile Wallets (Bloomberg Quint), Rated: A

The Reserve Bank of India will make prepaid payment instruments like e-wallets, gift cards and meal coupons interoperable for customers complying with the central bank’s know your customer guidelines.

Inter-operability among KYC compliant prepaid instruments will be implemented in six months after the RBI issues its revised norms within a week by October 11, the central bank said as part of its developmental and regulatory policies.

What startup entrepreneurs should learn from sports (MoneyControl), Rated: B

The so-called unicorn startups and their founders have become role models for the millennials. Hardly any town or city in India is left untouched by the startup fever and its multi-million funding stories.

1. Sport helps build character: Sanjay Darbha, the founder of Peerlend, a peer-to-peer lending platform and a sports enthusiast who competes in Senior Men’s circuit tournaments of the International Tennis Federation (ITF), explains, that sports inculcates attributes such as discipline, focus, and patience.

2. Sports lets you, be yourself: If entrepreneurs want to know the better or bitter side of their team members – make them play a sport.

3. Sport is a medium to connect beyond business: Ecosystem players should find innovative ways to connect with each other to get a better understanding of other’s needs and challenges.

4. Sport helps in building lasting bonds: A playground in an excellent incubator that helps in the construction of robust and long-lasting relationships.

Startups could use games to let their team members explore possible synergies between them.

Canada

Aspire FinTech is closing down (Aspire Email), Rated: AAA

Hey all,

I wanted to share the news today that Aspire Financial Technologies will be officially shutting down this week.  Sadly, the search for a strategic partner we started in the summer wasn’t successful, and our funding has now run out.  As a result, we no longer have the resources to continue the build of our loan data and analytics infrastructure solutions.

I’ll be running a sale process of Aspire’s IP (Aspire Gateway and ALD Explorer solutions) over the next month or so, looking for a quick outcome.  Feel free to contact me to discuss.

Thanks to all that have supported Aspire over the past two years.  Despite the odds, we made it this far, with your help.  Unfortunately, expensive and complex build requirements, with long institutional sales cycles, combined with a lack of scalable professional seed-stage funding in Canada, have been our undoing.  Any one of these being different would likely have yielded a better outcome, but all three together have proved to be terminal.

Mark and I have had a great team to work with.  We thank them for all the hard work and long hours, and wish them well as they move on to their next challenges (and hopefully a bit more stability!).

For me personally, I’ve made and consumed a great deal of  “FinTech Kool-Aid” over the past two years, which has permanently altered by view of the future, and the role that technology will play in the delivery of financial services to consumers, small businesses and corporations going forward.  I’m excited to see this play out, and the role I can play in making it happen.

Best regards,

David A. Fry, MBA, CFA
Co-Founder and CEO
Aspire Financial Technologies Inc.

Authors:

George Popescu
Allen Taylor

A Unique Passive Income Opportunity With Rental Properties

Roofstock rental properties

The goal of most investment is to create passive income. Rental properties are an excellent way to do this, but it takes a lot of time and effort to find and evaluate homes, find and evaluate tenants, and manage the properties. Investing in already-leased single-family rental properties with good tenants accomplishes the goal immediately. Gary […]

Roofstock rental properties

The goal of most investment is to create passive income. Rental properties are an excellent way to do this, but it takes a lot of time and effort to find and evaluate homes, find and evaluate tenants, and manage the properties. Investing in already-leased single-family rental properties with good tenants accomplishes the goal immediately.

Gary Beasley, CEO of Roofstock, estimates single-family rental properties hold about $3 trillion in assets.

“The housing market is large,” Beasley said. “Overall, it’s around $30 million.”

Single-family rentals make up about 10% of that market. That’s about 16 million rental homes. Maybe 1-2% are owned by institutions. Amounting to a million investment transactions per year, that’s a transaction volume of about $50 million.

The State of the U.S. Single-Family Rental Market

“I ran a single-family rental business owning 15,000 houses,” Beasley said. “If you could buy and share rental homes in an online environment, the cash would already be flowing. Roofstock seeks to bring down transaction costs and increase liquidity.”

Homes normally trade through the Multiple Listing Service (MLS), but it’s designed to sell non-occupied homes. A home with tenants is often viewed as a negative. If a rental property has good tenants, however, it provides immediate cash flow. That could be a positive, but the market for occupied single-family rentals is fragmented and underserved.

Finding a rental property used to mean finding a local rental unit and vetting the tenants and property personally. Beasley and co-founder Gregor Watson envisioned being able to break down geographical barriers by providing a way to buy inspected, reliably income-generating properties online.

“You could sit in Gettysburg and buy homes in Phoenix or Orlando,” Beasley said.

They executed a Series A round led by Khosla Ventures in May 2015 for $6.25 million. In December 2015, another $7 million came in from Bain Capital Ventures. A Series B round in December 2016 brought in $20 million from Lightspeed Venture Partners.

Their product is “a nicely packaged single-family rental home sold in the marketplace,” and Roofstock is currently the only platform focusing on that. Beasley and Watson had previously bought a lot of vacant homes spending millions of dollars on their former platforms. They realized that the time and money required to invest in properties and manage them once tenants were found discouraged potential investors.

“We’re allowing investors to own properties after all the hard work is done,” Beasley said. “On our platform, they can see inspection reports on the homes and background information on the tenants as well as see valuation reports and take virtual tours. It’s not like buying a vacant home where you don’t know how much it will cost to fix it up and find a tenant. It’s already cash flowing.”

A Roofstock Case Study

Beasley recounted an example where Gregor Watson owned about 1,500 homes in Dallas and wanted to sell 500. “The first broker he called said, ‘I don’t have 500 signed. Why don’t you call me when you get those tenants out?’ Nobody knew how to sell them. What you have to do is let the lease run out. You might have to spend money to spiff it up. It could cost 10% or more.”

With Roofstock, there’s a 2.5% standard seller fee. On the buyer side, it costs a half point to use the marketplace. The investor can buy the entire property, handle all the paperwork, hook up with the lender, and put $25K down. Then he gets the house.

“Gregor did it all in about 20 minutes on the plane on his way to LendIt. It’s not quite as easy as buying a book yet, but that’s our goal,” Beasley said.

Roofstock opens up an asset class making it super easy with a digital layer of enhanced reporting. There is good financing for individuals allowing them to borrow up to 80% with a minimum of 20% down. Because the properties are vetted, there’s no need for a long closing period.

We call it TLC: transparency, liquidity, and control for investors,” Beasley said.

What Makes a Good Single-Family Rental Property

To meet Roofstock’s criteria, a property must pass their certification process. It must be in a neighborhood considered a good market with viable liquidity for investors on both buy and sell sides. They will not accept homes with structural issues or other big question marks, such as a tenant not current on their rent or a property with an inflated price.

“The idea is to create liquidity,” Beasley said. “That includes buying and selling at prices low enough to move properties and offer a big selection of homes. Some people are looking for yield, others want great school districts or appreciation.”

Roofstock certifies third-party property managers to provide ongoing maintenance and collect rents. They collect data to monitor performance and give the money directly to investors.

“Other companies sell vacant homes that might make good rental properties,” Beasley said, “but we get properties ready for immediate cash flow.”

The platform has a wide selection of single-family rental homes with filters to narrow selections according to price, location, and more. There’s even a “make an offer” section for bargain hunters.

With several thousand homes in the certification process, Beasley is optimistic that early returns indicate Roofstock will continue to profit quarterly. He said buyers on the site range from institutional funds, retail buyers, experienced investors, and individuals who are new to buying investment properties.

What Kind of Investors Roofstock is Attracting

“What’s been surprising is the number of first-time buyers using the site,” he said. “A fair number of millennials are buying their first property through Roofstock, and it isn’t for their primary residence. This allows them to buy a property a year and build up a portfolio.”

Many investors are buying multiple properties on Roofstock, Beasley said. They’re finding people buying homes in markets where they live, diversifying, then putting money into different markets. Seventy-five percent of buyers are buying homes over 1,000 miles from where they live.

Roofstock also facilitates 1031 exchanges, sell apartment buildings, and roll properties into bundles.

“We’ve done several of those types of transactions,” Beasley said.

The Future of Real Estate Investing

Beasley sees the direction of the real estate investing going up and to the right. As it continues to become more institutionalized, he anticipates more individual investors will feel comfortable getting in.

“From a macro standpoint,” he said, “you’ll see a lot more rental homes on the market. More people will be renters because financing is not readily available. It’s getting difficult to make the numbers work for entry-level housing. Millennials are putting off buying, which creates more demand for rental homes.”

Roofstock plans to grow their marketplace past its current 12 U.S. markets. The goal is to build a community of owners over time who integrate better with lenders and find easier ways to finance purchases. Beasley believes that having an ongoing relationship with people who purchase from them will make it easy to sell and buy additional homes, therefore they are continuing to grow supply channels.

“In time, we’ll look more like an Airbnb,” he said. “Sellers will be able to start the process and upload homes to the site, begin the certification process on their own, perform 3D mapping, schedule evaluations and inspections, and more. It will be a self-serve supply model all the way.”

Authors:

Written with Nicki Jacoby.

Allen Taylor

Monday February 6 2017, Daily News Digest

Germany crowdinvesting

News Comments Today’s main news: Fundrise IPO is over-subscribed. P2P lenders prevented from offering wholesale finance. Today’s main analysis: Online lending student loans favor the rich. Today’s thought-provoking articles: Dodd-Frank Retention Rule. Orchard’s online lending snapshot. Lend Academy interview with SoFi’s Mike Cagney. Seniors’ income boosted by sharing economy. United States Fundrise IPO over-subscribed. GP:” […]

Germany crowdinvesting

News Comments

United States

United Kingdom

European Union

Australia

China

United States

Fundrise IPO Over-Subscribed, Increases Max Share Offer Under Reg A+ (Crowdfund Insider), Rated: A

In a solid indication of confidence of the young real estate crowdfunding platform, Fundrise has received solid investor interest in its self-crowdfunding IPO under Reg A+. Demand was sufficient to compel management to increase the maximum funding round from 2 million shares to 3 million shares of Class B Common Stock. At a price per share of $5.00, this means Fundrise may now raise up to $15 million.

The offer was only made available to individuals that had previously invested via the Fundrise platform. As of today, the platform indicates  the “offering is paused due to high demand.”

Even Good-Guy Student Loan Startups Still Favor the Rich (BuzzFeed), Rated: AAA

Last February, the online lending company SoFi paid $5 million for a 30-second ad during the Super Bowl.

That wasn’t where it always landed. The original version of the ad included three more words: “You’re probably not.” But at the last minute, SoFi cut them. The message, a spokesperson told Adweek, wasn’t “authentic” to the company’s image.

The line may have sounded too crude for national TV, but it was actually a perfect encapsulation of SoFi’s brand. Most people aren’t in great financial shape, and SoFi was built around identifying the best and rejecting the rest.

The problem these startups purport to solve is, inarguably, a huge one. Forty-four million Americans currently owe more than $1.4 trillion in student debt. That’s $1.4 trillion dollars hanging over 44 million heads, and, for those who can’t repay their loans, it’s a lifetime of ruined credit scores and dodging collections agencies.

But although the marketing has changed, the demographics have not. Ratings reports from the past four months show that the average Earnest borrower is a 32-year-old with an annual income of $143,447 and monthly free cash flow after expenses of $4,524. CommonBond’s average borrower is 33 years old with an annual income of $159,028 and $5,996 in monthly free cash flow. SoFi’s average borrower, in the new bond with the AAA rating from S&P, is 34 years old, with an annual income of $170,260 and free cash flow of $7,088. (Most graduates saddled with student loan debt don’t fit that description, which is why applicants for private refinancing often need their creditworthyparents to cosign, a caveat that doesn’t get mentioned in the ads.)

Kevin Reed, chief operating officer at Peer IQ, a risk analysis firm focused on online lending, said the emphasis on new metrics is aimed at venture capital investors, not institutional investors. “When you’re pitching Silicon Valley, you need an angle, some competitive differentiation,” he said.

In fact, one of the strongest signals that these online lenders are focusing on elite borrowers is the fact that banks like Citizens, which jumped in to compete in the refinancing ring, have a similar customer base but don’t use cutting-edge technology to find them.

In marketing documents obtained by the Financial Times, the company told investors that refinancing is “how they find the best and brightest and prevent them from attaching to a bank or broker.” In the same documents, SoFi also stressed it has the regulatory freedom to zero in on niche markets such as “the ‘next five percent.’” (That’s a term for the wealth bracket just a couple of rungs below the “1%.”) The company has already become a “one-stop shop for high earners,” focused on offering HENRYs more products, like mortgages, and personal loans.

High ratings have driven the refinancing boom. But Jon Riber, senior vice president at the ratings agency DBRS, told BuzzFeed News that the new metrics are unproven and haven’t been through a full credit cycle, so DBRS determines ratings looking at traditional data like FICO scores: “When it comes to free cash flow and income, we consider that but it doesn’t go into our model for forecasting defaults,” he said.

When you drill down into the ratings reports, there are some signs that the type of borrower is changing. For example, although 65% of the borrowers in Earnest’s latest securitization are making more than $100,000, the largest category is $50,000 to $99,000, which represents 32% of the securitization.

Dan Macklin, the SoFi co-founder, also said he didn’t think it was fair to describe SoFi clients as rich. Although SoFi borrowers earn salaries above the national average, many of them live in expensive cities, so they are not as well off as they seem.

DeGisi from CommonBond acknowledged that the average new borrower looks similar to the average old one, but claimed that CommonBond has been able to substantially broaden its customer base.

Dodd-Frank Risk Retention (RR) Rule Effective Now (PeerIQ), Rated: AAA

President Trump signed a memorandum to review Dodd-Frank Act on Friday. Loosening bank regulation, as noted by WSJ, would return

  • a 5% interest in each class of the securitization (an “eligible vertical interest,” or “EVI”);
  • a 5% of the fair value of the securitization in a first loss, subordinate tranche (an “eligible horizontal residual interest,” or “EHRI”);
  • any combination of an EVI and an EHRI such that the sum of the fair value of the EHRI and the percentage of the EVI are equal to at least 5 percent of the securitization (a “L-shaped” retention interest).
  • The transfer and hedging restrictions for RMBS are different from those of non-RMBS securitization. For RMBS, they expire on or after the date that is (1) the latest of (a) five years after the date of the closing of the securitization or (b) the date on which the total unpaid principal balance (UPB) of the securitized assets is reduced to 25 percent of the original UPB of the transaction, but (2) in any event no later than seven years after the date of the closing of the securitization.

    For all ABS deals other than RMBS, the transfer and hedging restrictions expire on or after the date that is the latest of (1) the date on which the total UPB of the securitized assets that collateralize the securitization is reduced to 33 percent of the original UPB at deal close, (2) the date on which the total UPB under the ABS interests issued in the securitization is reduced to 33 percent of the original UPB at deal closing, or (3) two years after the date of the closing of the securitization transaction.

    The risk retention rule also contains an exemption for securitizations that consist solely of qualifying high-quality loans that satisfied specific underwriting criteria.

    We highlight two important benefits from issuer’s perspective for QM designation. Issuers are 1) insulated from claims and defenses by borrowers due to safe harbor, and 2) are not required to retain 5% of capital structure per the credit risk retention rule. For example, all loans in Majority owned affiliate (MOA) – CLO managers raise equity capital from 3rd party investors through the creation of MOA to finance the purchase of risk retention securities. MOA holds the retention interest, but the securitizers control the major economic decisions of the MOA in relation to the retention interest and any other assets owned by the MOA. Control is measured by ownership of 50% or more of the equity of an entity or ownership of any other controlling financial interest under GAAP.

    Capitalized Majority owned affiliate (C-MOV) – The C-MOA can function as an originator and comply with both US and European retention requirements. The C-MOA has an option to act as the asset manager. As the asset manager, it can originate a small proportion of the assets owned by the CLO and still earn a management fee. The first CLO of the year, Venture XXVI, employs C-MOA.

    Capitalized Manager Vehicle (CMV) – In this solution, instead of CLO Managers serving as asset managers, the CMV is the primary asset manager. The CMV then hires CLO Managers as sub‐advisors. The CMV receives management fees on retained interest. The key accounting consideration is ensuring the CMV is not consolidated by the CLO Manager. 

     

    Weekly Online Lending Snapshot – February 03, 2017 (Orchard), Rated: AAA

    Interest in the space has been accelerating since the first of the year. Late last week it was reported that the American Banker’s Association is looking for an online lending platform to help its members expand their digital lending offerings, and it was reported that Citigroup Inc., has launched its own online lending offering which will make loans of up to $1 million available to small businesses. Also, in small business lending news, Credibility Capital announced this week that it successfully sold a pool of whole loans using Orchard’s software to share and affirm the data of a seasoned loan portfolio with its regional bank client.

     

    Podcast 89: Mike Cagney of SoFi (Lend Academy), Rated: AAA

    In many ways SoFi has become the leading company in all of fintech at least in this country. They raised $1 billion in Q3 of 2015, the largest equity round ever in our industry by a considerable margin. Since then they have continued to add new products, break records and execute flawlessly.

    • How Mike explains what SoFi does today.
    • The part of the business that Mike is most excited about.
    • Where they are at in their student loan business today.
    • Why their unsecured consumer loan product is very different to others in the market.
    • The killer product they have in the real estate market.
    • How SoFi views their wealth management product.
    • Why they decided to move into life insurance.
    • How Mike feels about the Superbowl ad they did in 2016.
    • How they have been raising money recently.
    • What is it about SoFi that makes their securitizations so successful.
    • How they would handle a shutdown in the securitization market.
    • Where SoFi is focusing their resources when it comes to tech.
    • What SoFi customers have in common.
    • The international plans for SoFi and their expansion to Australia.
    • The future vision for SoFi and their place in financial services.

    OnDeck Capital COO James Hobson to step down (Reuters), Rated: A

    James Hobson, the chief operating officer of marketplace lender OnDeck Capital Inc, will resign from his role on March 15 to become chief executive of online insurance startup Attune, according to an OnDeck statement.

    Jason Altieri, Former GC at Lending Club, Lands at Roofstock (Crowdfund Insider), Rated: A

    Roofstock, an online marketplace that facilitates direct purchases of rental property, has announced the appointment of Jason Altieri as Chief Legal and Compliance Officer. Altieri was previously General Counsel at publicly traded marketplace lending platform Lending Club (NYSE:LC).

    Altieri left Lending Club last October where, according to his LinkedIn profile, he remains an advisor.

    Orchard Platform Predicts Super Bowl Outcome (Crowdfund Insider), Rated: B

    The population of New England, at approximately 14.7 million is 1.45 times the population of Georgia, approximately 10.1 million.  New total loan volume in the New England region has been proportionally somewhat higher since 2010; In 2016 through September, New England had 1.58 times the loan volume that Georgia does.

    Winner: Patriots

    Parteger says that during 2016 borrowers from New England had higher incomes and FICO scores, with lower debt-to-income ratios. Borrowers in Georgia had one percent lower revolving credit utilization.

    A larger percentage of borrowers in New England rent their home, a lower percentage have mortgages.

    Winner: Patriots

    During 2016, both regions experienced similar sized loans. Interest rates were slightly higher in Georgia. Loans in New England were graded slightly higher but loans in Georgia had lower risk grades.

    Winner: Tie

    Using 2014 vintage loans, Pargeter says the Georgia has a slightly higher charge-off rate and a big higher average interest rate so overall returns are a bit better in Georgia.  Falcons get the edge on this one.

    Winner: Falcons

    Orchard says the Falcons will win!

    United Kingdom

    Peer-to-peer lenders prevented from offering wholesale finance (This is Money), Rated: AAA

    Peer-to-peer lenders are to be prevented from offering wholesale finance because it is considered too risky for private individuals.

    But the City watchdog, the Financial Conduct Authority, is thought to fear this would mimic banking – but without the same protection for individuals or regulations for the firms involved.

    LendInvest Responds to the UK Government’s Modern Industrial Strategy (Crowdfund Insider), Rated: A

    Last week, UK Prime Minister Theresa May unveiled a modern Industrial Strategy proposal to help build on the country’s strengths and take on its weaknesses.

    LendInvest’s team noted they plan to get behind four pillars to help kickstart the country’s productivity:

    • Technology and innovation: LendInvest noted that the strategy makes a significant investment in research and development for nascent UK sectors, which includes an Industrial Strategy Challenge Fund.
    • Infrastructure: The online lender shared that there were some commitments, including investments towards road, rail and digital infrastructure to enhance mobility and connectivity for citizens and businesses across the country. 
    • Developing skills: LendInvest stated it encouraged the government to invest in skills initiatives for small and medium enterprises (SMEs) property professionals to ensure that would-be property entrepreneurs are equipped with the tools to get projects off the ground.
    • Supporting businesses to start and grow: The website that while the government has already established the Patient Capital Review, it also welcomes further funding from the British Business Bank and a commitment to helping the BBB in providing finance businesses outside of London and the South East. It also encourages the government to use the review into entrepreneur to better understand how to support property developers to grow their businesses.
    European Union

    Germany: Investment Crowdfunding Grew by 39% in 2016 (Crowdfund Insider), Rated: AAA

    In a publication created by Crowdfunding.de, the report, entitled “Marktreport 2016: Crowdinvesting in Deutschland,” states that investment crowdfunding grew by 39% during 2016 reaching €63.8 million.

    The sector was largely powered by a sharp increase in real estate crowdfunding that captured €40.3 million growing by 92.5% during the year. Platforms like Exporo, Zinsland, Zinsbuastein, Bergfürst and IFunded closed 48 real estate crowdfunding rounds in 2016. Exporo led the group with €21.4 million in funding.

    Funding for SMEs and start-ups hit €18.8 million which is approximately at the same level of 2015.  Companisto led this sector with just over 50% of funding or €9.4 million in total.

    Wonga strikes £60m deal to sell European unit to Swedish suitor (Sky News), Rated: A

    Sky News has learnt that Wonga will confirm that it has decided to offload BillPay, one of its most valuable units, to Klarna, a Swedish provider of e-commerce solutions.

    Talks between Wonga and Klarna have been taking place for several months, although they had appeared to falter several weeks ago owing to a number of domestic issues faced by the Swedish purchaser.

    The sale of BillPay will be the most significant international disposal undertaken by Wonga, which is striving to rebuild its business in the wake of a string of scandals and a regulatory crackdown in the UK.

    Wonga’s losses have totalled nearly £120m in the last two years following a string of scandals and costs associated with cutting hundreds of jobs.

    Australia

    Seniors enjoy significant income boost from the sharing economy (News.com.au), Rated: AAA

    New research by peer-to-peer lender RateSetter has found that 44 per cent of over-55s earn money through sharing economy services such as online marketplaces, ride sharing, renting out rooms to travellers and lending money via online platforms.

    RateSetter’s research found that over-65s are the fastest growing group of spenders in the sharing economy, paying an average $82 a month, but younger generations aged below 44 remain the biggest spenders at more than $110 a month.

    Online marketplaces such as eBay and Gumtree remain the most popular part of the sharing economy, with 54 per cent of people using them.

    China

    Company Slammed by Short Seller Over Deals Says More Coming (Bloomberg Markets), Rated: AAA

    Credit China FinTech Holdings Ltd. is planning more investments as it aggressively expands beyond its original loans and lease-financing businesses into online payments and peer-to-peer lending.

    The company, part of a consortium that offered to buy a stake in Ping An Securities Group Holdings Ltd. last month, is currently in talks with “multiple” financial-services companies based in Asia outside China, Chief Executive Officer Phang Yew Kiat said in an interview in Hong Kong on Wednesday.

    The firm’s acquisition strategy — which is now focused outside China — has been driven by HK$4.3 billion ($554 million) of funds that it raised over the past three years, Phang said.

    The acquisitions put Credit China onto the radar of short seller Anonymous Analytics, which expressed doubts over some of the investments in December, as it rated the company a “strong sell.” In a report, Anonymous alleged Credit China had engaged in “a number of questionable” investments, including the purchase of a stake in payment provider Shanghai Jifu, which the short seller said was linked to a “key individual” within Credit China.

    About 480,000 investors involved with problematic P2P lenders by Jan (Global Times), Rated: A

    Over the last three years, a growing number of investors have got involved with problematic P2P lending platforms, according to the report. The figure reached 478,000 by the end of January, accounting for 4.5 percent of P2P investors in China.

    About 64 platforms reported problems or suspended their business in January, including three lenders whose managers disappeared, the report said.

    Authors:

    George Popescu
    Allen Taylor

    Friday December 16 2016, Daily News Digest

    digital-only banks

    News Comments Today’s main news: LendIt partners with 500 startups on PitchIt 2017. Victory Park Capital provides $100M credit facility and $3M preferred equity to Cognical. Today’s main analysis: Report details UK’s consumer credit picture. Today’s thought-provoking articles: The future of banking is digital. China begins execution of P2P fraud case. Where are the women in alternative investing? […]

    digital-only banks

    News Comments

    United States

    United Kingdom

    European Union

    Australia

    China

    Asia

    Ukraine

    Africa

     

    News Summary

    United States

    LendIt and 500 Startups Partner on PitchIt 2017 to Identify Fintech’s Next Stars (PR Newswire), Rated: AAA

    LendIt, the world’s largest show in lending and fintech, today announced its partnership with 500 Startups for PitchIt 2017, a leading global competition for fintech startups who can earn mentorship, endorsement and exposure to leading institutions, investors & press. Online applications also officially opened to qualifying fintech startups.

    This year’s competition is slated to see hundreds of applicants all vying for a prestigious spot in the finals, and a chance to present on the keynote stage in front of thousands of members and high ranking executives from the fintech industry. This year’s Exclusive PitchIt Partner will be global venture capital fund 500 Startups, the world leader in investing in and mentoring early-stage fintech startups. The finalists will present to a panel of expert judges and thousands of conference attendees at LendIt USA on March 6, 2017 in New York City.

    PitchIt @ LendIt attracts hundreds of investors, asset managers, funds and entrepreneurs, bringing together a community of influencers in the lending marketplace. To apply to PitchIt 2017, firms must meet the following criteria:

    • Must be a fintech company
    • Two or more full-time co-founders/employees
    • 2-10 full-time employees
    • Less than 3 years in business (companies founded before 2014 not eligible)
    • Raised less than 4 million USD since launch date
    • Must have a professional business website
    • Everyone registering on behalf of a specific company must have an email with that company’s domain

    Any company that applies for PitchIt and fits the criteria automatically qualifies for our startup ticket pricing of only $295 per ticket.  Also, prior to the event, shortlisted companies will receive coaching from 500 Startups as well as industry leaders and other mentors. Eight selected finalists will receive a free all-access pass to attend the entire LendIt USA conference, up to $1,000 for travel to PitchIt, and a 50% discount Startup Zone booths. The overall PitchIt winner will receive a Bronze level sponsorship to future LendIt events, promotion and media support.

    BlackRock to lead funding round for fintech startup (Reuters), Rated: AAA

    BlackRock Inc plans to lead the next funding round for the startup iCapital Network, which gives individual investors access to private equity funds, hedge funds, and other alternative investments, the two companies said on Thursday.

    Last year BlackRock bought FutureAdvisor, a robo-adviser that manages savings for individual investors.

    Roofstock Expands its Single-Family Rental Real Estate Investment Marketplace to Dallas (BusinessWire), Rated: A

    Roofstock (), the leading online marketplace and transaction platform in the $2 trillion single-family rental sector, today announced that it has expanded into the dynamic Dallas real estate market. In addition to strong home price appreciation forecasts, Dallas is expected to have robust rent and employment growth making it an excellent market for single-family rental investors. Recent measures estimate annual rent growth in Dallas of 5.1%, which is significantly ahead of the national average of 3.7%, and employment growth of 4.3% compared to the national average of 1.8%.

    Roofstock has developed a proprietary marketplace for investors to find, evaluate and invest in single-family rentals online with tools and transparency never before available to either retail or institutional investors. With the addition of Dallas, Roofstock has now expanded to include 11 markets since its public launch in March of this year. The marketplace currently has over 130 exclusive investment properties available, representing a variety of investment characteristics, with new properties being made available daily. Roofstock differentiates its real estate investing marketplace by focusing on single-family rental properties that are fully leased, allowing buyers and sellers to benefit from immediate rental income from the date of purchase.

    Roofstock’s revolutionary model features a proprietary marketplace of certified, cash-flowing homes for sale. Listings include detailed inspection, valuation and title reports, as well as information about the tenants and local property managers who have also been certified by Roofstock. The company stands behind its marketplace with a bold 30-day Money-Back Guarantee which investors can exercise if they are unhappy with the purchase for any reason. The unique technology tools and platform allows investors to purchase U.S. rental properties with confidence online from anywhere in the world.

    Tech start-ups target financial services (Gulf News), Rated: A

    It may not be much longer before bank branches join video-rental stores and record shops as relics of a bygone era.

    At this point, the fintech sector hasn’t proven it can be a viable or trustworthy alternative to traditional banks and stock brokerages. Few of the start-ups have ever posted a profit, and one of the biggest, the Lending Club, is trying to recover from a breakdown that triggered the resignation of CEO Renaud Laplanche earlier this year. The Justice Department is investigating the events that led to Laplanche’s abrupt departure.

    Banks, meanwhile, have demonstrated their resiliency and resourcefulness.

    A recent survey of the financial services industry by the research firm Gartner Inc. found that 70 per cent of respondents considered fintech start-ups to be a bigger threat than their traditional rivals.

    With their guard up, the much bigger banks are more likely to drive many of the fintech start-ups out of business if they don’t acquire them first, says Gartner analyst Rajesh Kandaswamy.

    Although many consumers rarely expect big banks to act in their best interests, they typically consider them to be a safer place to keep money because of their long histories in business, says Forrester’s Berdak. Like the big traditional banks, most digital-only banks also offer government-backed insurance on deposits, but Berdak says that is not enough to overcome lingering doubts about their long-term prospects.

    4 Real Estate Investment Types to Consider for 2017 (Equities.com), Rated: A

    The good news for investors is that you can find projects that fall into each of these categories within the real estate crowdfunding (RECF) sector. RECF usually offers higher returns and lower fees than traditional investment classes, which makes it attractive for investors serious about growing their income.

    Another benefit to RECF is that it allows investors the opportunity to partially fund projects they are interested in.

    The World of Alternative Investing Is Exploding — Where Are the Women? (Observer), Rated: A

    Remarkably, women even outperform men in their investments — when they invest, that is. Traditional equity market investing data indicates virtually no differencebetween men’s and women’s participation rates. If you look only at standard investment products, such as 401(k) accounts, stocks, ETFs, and retirement plans, the participation rates of the sexes appear to be equal. However, alternative investing tells a different story.

    So I was surprised to find, when my team analyzed our user data, that our investor base was 90 percent male. This didn’t make sense to us. Alternative platforms also provide ways to make socially conscious investments, which we know matter deeply to women. In a 2015 survey, 95 percent of women said that helping others through their investing is important to them, and 90 percent prioritized environmental responsibility.

    Alternative investing should also appeal to those who prefer stable investments, and women tend to mix or re-balance their portfolios less frequently than men do. There is no re-balancing or trading involved in alternatives, as they’re often set for a fixed duration, making them a more predictable option.

    Fintech-led alternative platforms should emphasize the character of their investments. Opportunities to create jobs or have a positive social impact are particularly attractive to Millennial women. Not only do such investments make an economic impact on the community, but they also increase the amount of capital available to entrepreneurs who don’t fit into traditional bank underwriting.

    Keeping It Real And Thinking Consumer First Is The NerdWallet Way (TechDay), Rated: A

    Amongst the many challenges of being a fully functioning adult, responsibly managing finances is one of the most confounding. From choosing the right credit card to understanding what the heck a 401(k) truly is, personal finance can be a daunting and complicated struggle.

    The millennial struggle of #adulting is driven a great part through the generation not having a firm understanding of finances. How does NerdWallet play into this discourse and thrive because of it?

    The majority of people, including millennials, make financial decisions in the dark so we want to provide consumers with expert, honest and personalized information to empower them to make the best possible decisions- everything from selecting a credit card, mortgage lender to how to save and invest.

    How did your own experiences influence the inception of NerdWallet and how have these continued to impact the brand as it’s grown into what it is today?

    The inspiration for NerdWallet spurred when my sister, Kim –another Internet entrepreneur- asked for my help in finding a credit card at the same time my parents were put into a mutual fund, which was full of hard-to-understand terms.  It took me (a trained financial professional) over a week to make a recommendation after spending weeks researching available financial products and seeing firsthand how many complicated financial products were out there vying for consumer mindshare with no regards to consumers’ well-being. That’s when I realized how much of a barrier the complexity of information out there is for consumers. I put all of the credit card information into a spreadsheet and from there NerdWallet’s first credit cards tool was built in 2009. We saw the clarity we could provide with credit cards, which got us thinking about all the other financial decisions consumers have to face. Today, NerdWallet spans across 11 personal finance topics (Credit Cards, Banking, Investing, Mortgages, Household Spending, Education, Personal Loans, Life, Health and Auto Insurance, SMB, Taxes and Estate Planning) and has grown from 50 employees to more than 400.

    Within fintech, regtech gets the spotlight (The Asset), Rated: A

    In 2016 the likes of Credit Agricole, HSBC and J.P. Morgan were fined collectively US$521 million for rigging the Euribor rate breaching European Union anti-trust rules. More infamously Deutsche Bank this September was fined US$14 billion for mis-selling mortgage securities in the US.

    Aside from avoiding fines, the cost of banking compliance is on the rise. According to the Federal Financial Analytics, a policy analysis firm, in 2013 the six largest banks in the US spent US$70.2 billion on compliance compared to US$34.7 billion spent in 2007.

    Victory Park Capital provides $ 100 million credit facility and $ 3 million preferred equity to Cognical, Inc. (BusinessWire), Rated: B

    Victory Park Capital (VPC), an investment firm focused on private middle market debt and equity investments, announced today it has provided a $100 million senior secured credit facility to Cognical, Inc. (d/b/a Zibby), to expand its omnichannel lease-to-own payment platform for in-store and online shopping. The credit facility, along with the accompanying equity investment, will help the company grow and scale its lease portfolio, providing underbanked consumers with an affordable alternative for acquiring durable consumer goods such as furniture, appliances and electronics.

    3 Ways to Invest without the Stock Market (Modest Money), Rated: B

    Lending Club is a part of the new wave of investing called peer-to-peeSo I was surprised to find, when my team analyzed our user data, that our investor base was 90 percent male. This didn’t make sense to us. Alternative platforms also provide ways to make socially conscious investments, which we know matter deeply to women. In a 2015 survey, 95 percent of women said that helping others through their investing is important to them, and 90 percent prioritized environmental responsibility.r lending, which is exactly what it sounds like. There is a person that needs money, and there is a person that is willing to lend money. As a borrower, there are several different reasons that you would want to use a site like Lending Club. With these peer-to-peer avenues, you don’t have the complications of going through all of the hoops of working with banks. You can complete the application on your terms. Additionally, borrowers will be able to secure better rates and will also have more flexibility on the requirements to secure the loan. As a borrower, you’ll be allowed to apply for a loan for just about any reason. You can use the money for home repairs, car loans, refinancing, or just to buy a pool for your children.

    On the other side of the coin is the lenders. While there is never a “sure thing” when it comes to investing, Lending Club boasts excellent average return rates. According to their website, they typically see ROIs around 5.06% and over 8%, which is very attractive rates. Additionally, as a new investor, Lending Club is extremely easy to get started and has all of the risks laid out in front of you without the complicated jargon that scares new investors.

    With Lending Club, you can open up a self-directed IRA, which means you will have full control of the investments inside of the account. Don’t worry, it’s not as difficult as it sounds. On the site you’ll be able to look through the variety of loans that are being requested and see the specific details of the loan and what the money is going to be used for. Once you find a loan that you want to participate in, you can decide how much money that you want to invest in that person’s application.

    Exploring the Future of Digital Financial Advice: New Findings from CFP Board, Financial Services and Technology Leaders (PR Newswire), Rated: B

    The CFP Board Center for Financial Planning today announced the findings of its blue-ribbon panel of experts who explored the future impacts of digital advice on the financial planning profession.

    Known as the Digital Advice Working Group, thought leaders and senior executives from the worlds of technology and finance gathered to explore the future of digital advice and the role humans will play in delivering financial advice. The goal was to stretch the professional’s way of thinking about how future environments and events may lead the industry down several conceivable paths.

    United Kingdom

    Growth Capital Ventures gets £1.1m investment from Maven Capital Partners for new P2P platform (altfi), Rated: AAA

    Maven Capital Partners (“Maven”), has completed a £1.1m investment in Growth Capital Ventures (“GCV”), funded through its managed Venture Capital Trusts. GCV is a leading developer and operator of specialist online investment and capital crowdfunding platforms.

    GCV will use the investment to develop a new P2P lending platform. The new platform will focus on providing access to pre-vetted, quality investment opportunities that have the potential to deliver strong investment growth, and support syndication between institutional, professional and retail investors.

    New report shares details about UK’s consumer credit for 2016 (WhaTech), Rated: A

    Key findings:

    • Average credit quality has reached its lowest point in over four years, and default rates have been on an upward trend over the last two years.
    • Lower credit scoring criteria has been priced in by providers, resulting in average interest rates on loans of £5,000 rising 1.9% in a year.
    • P2P remains the fastest-growing sector. The P2P lending market is showing signs it is starting to consolidate, with synergistic partnerships with other sectors being used to increase the scale of operations.

    We estimate that P2P lending will comprise 0.42% of total consumer credit in 2016, rising to 1.2% in 2020.

    European Union

    I Started a Zlty Melon Test Portfolio (P2P Banking), Rated: AAA

    A few weeks ago I decided to start a small test portfolio investing in p2p loans at Zlty Melon. Zlty Melon is a p2p lending marketplace in Bratislava, Slovakia (see earlier articles about the Slovakian market). The marketplace lists loans to borrowers in Slovakia in Euro currency and to Czech borrowers in CZK. On the investor side Zlty Melon is open to residents of the European Economic Area. The website is available in English, Czech and Slovak languages.

    I deposited 400 Euro via SEPA transfer. If you need currency conversion during a deposit, it might be cheaper to use Transferwise or Currencyfair than to do a direct bank transfer.

    I set up an autoinvest (called ‘Investment Manager’) to automatically bid 25 Euro on each new cashfree housing loans, as these seem the most secure loans and so far according to Zlty Melon’s statistics for this loan type there have not been any defaults. I set it up to invest in Slovak loans only as I didn’t want any currency risk.

    THE FUTURE OF BANKING: Growth of innovative banking fintech services (Business Insider), Rated: A

    Banking is a rapidly changing industry, and the biggest paradigm shift that has occurred is the move to digital-only banks.

    Millennials, in particular, are moving more frequently toward digital banking. And as a result, they’re walking into their banks’ traditional brick-and-mortar branches less often than ever before.

    Digital-only bank Ally launched in the U.S. in 2008 and at the time, it was one of the first of its kind. But multiple new players have entered the scene in the last few years. These include Monzo, Tandem, N26, and Fidor in Europe, along with Digibank in India and B1NK in Kazakhstan.

    These banks hold key advantages over traditional institutions, such as freedom from historical tech restrictions and the fees associated with brick-and-mortar branches. And in many nations, financial regulations also help these banks flourish. In Europe, these digital-only banks will soon be able to access customer data from traditional banks.

    There are very few options for digital-only banks in the U.S. but in Europe, the options are plentiful. Digital-only banks across the pond are competing both with legacy banks and with each other for customers. So in order to lure clients away from their existing bank, they have to offer a significantly better product than their competition.

    The payments segment is much more mature than other fintech areas, and a small handful of companies now dominate the business-to-consumer (B2C) space in particular.

    Australia

    $ 126 million year heralds significant market challenge from peer to peer lender SocietyOne (Mozo), Rated: AAA

    Peer to peer lender SocietyOne has finished a record-breaking year on a high thanks to massive investment and borrowing growth, with November registering $15.3 million worth of lending alone.

    With a total of $126 million in lending already in 2016, the company has now recorded $200 million in loans since its inception – a benchmark Managing Director and CEO Jason Yetton attributed to the growing appeal of the peer to peer lending sector.

    The latest figures from SocietyOne highlight an increase in the number of borrowers entering the peer to peer lending market, with a 25% increase since August this year.

    Default rates among borrowers using the company’s marketplace have also shown to be lower than the market average, sitting at 1.1% as of the end of November 2016 compared to a sector average of 2-3%.

    China

    China’s $ 8.6 billion P2P fraud trial starts (Reuters), Rated: AAA

    Criminal prosecution of 26 people involved in China’s biggest alleged online fraud – a nearly 60 billion yuan ($8.64 billion) case involving online peer-to-peer lender Ezubao – has started in Beijing, the official Xinhua news agency reported on Friday.

    Ten individuals, along with Ezubao’s parent companies Yucheng Holdings and Yucheng Global, are charged with fraudulent fund-raising, the news agency said. Sixteen other individuals face charges of illegally taking public deposits.

    Ezubao, once China’s biggest P2P lending platform, allegedly collected 59.8 billion yuan of funds from investors through fake investment projects it advertised on its website and failed to repay 38 billion yuan. It collapsed in February, with executives saying the firm was “a complete Ponzi scheme”, which used investor funds to support lavish lifestyles for its executives.

    An emerging Asia-Pacific fintech hub: Hong Kong (South China Morning Post), Rated: A

    For decades, Hong Kong made its mark as the region’s leading financial centre, vying with New York and London for supremacy as a global nexus of money. Shaken by the Asian financial crisis, SARS, and the rise of Shanghai, gloomy predictions about Hong Kong swirled during the early years of the new millennium.

    Two recent events however, may swing momentum back in favour of Hong Kong: The United Kingdom’s vote to leave the European Union in June 2016, and the election of Donald Trump as the incoming 44th president of the United States.

    Confirming the growing prominence of financial technology (fintech) startups, InvestHK hosted the inaugural Hong Kong Fintech Week last month (November 7 to 11). More than 2,500 participants took part during the week, taking advantage of the high-calibre speakers and the array of events on offer. Notable participants included China’s biggest peer-to-peer lending and wealth management platform Lufax, online insurer Zhong An, JD Finance, WeBank, and Hong Kong-based bitcoin exchange BTCC.

    Asia

    Why banks need to be smarter than fintechs (The Asset), Rated: A

    According to an Accenture, Asia-Pacific based fintechs as of September 2016 have raised US$10.5 billion from investors. A far cry from the US$103 million the region generated 10 years ago.

    The banking opportunity especially in Asia is too significant to miss out on, McKinsey & Company data reveals that out of industry’s US$1.1 trillion 2015 profits close to half was originated from the Asia-Pacific region compared to only 28% in 2005.

    Ukraine

    P2P lending in Ukraine reaches UAH 5 bln (Interfax), Rated: A

    The volume of the P2P lending market since the launch of this service in Ukraine has reached UAH 5 billion, Head of the National Bank of Ukraine (NBU) Valeriya Gontareva has said.

    Africa

    AlliedCrowds Prepares for P2P Platform AlliedExchange Launch (Crowdfund Insider), Rated: A

    London-based AlliedCrowds is preparing to launch its P2P service AlliedExchange soon as it has begun the search for a new Managing Director.

    AlliedCrowds/AlliedExchange is backed and funded by FSD Africa, which in turn is backed by the British government.

    This proposed platform will use P2P lending technology to present a range of sub-Saharan Africa loans to both retail and institutional investors, including diaspora, HNWIs, hedge funds, family offices, banks, development institutions, etc. The platform will have the ability to transact trades and manage accounts. Initially, the platform will be regulated by the FCA, but regional authorization will be sought in due course.”

    Authors:

    George Popescu
    Allen Taylor