Thursday April 25 2019, Weekly News Digest

fintechs

News Comments Today’s main news: LendingClub restructures SME lending. Funding Circle lowers return projections. RateSetter receives Queen’s Award for Enterprise. SoFi could get $500M funding from Qatar. Today’s main analysis: How personal loans impact credit scores a year into repayment. Today’s thought-provoking articles: Employer payday loans and continuous billing using today’s technology. Interview with Deserve’s […]

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United Kingdom

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United States

LendingClub shuts down SME lending arm (Banking Tech), Rated: AAA

US peer-to-peer lending pioneer Lending Club has closed the doors on its in-house small business lending operation, reports Julie Muhn at Finovate.

Opportunity Fund, a non-profit small business lender; Funding Circle, one of the largest alternative small business lending platforms in the US; and Lending Club have teamed up to offer Lending Club’s small business clients’ access to credit. Businesses can now borrow up to $300,000 for rates as low as 5%.

How Personal Loans Impact Debt and Credit Scores a Year Into Repayment (LendingTree), Rated: AAA

Key findings

  • One year after taking on a personal loan, 52% of borrowers owed less overall on credit cards and personal loans. These borrowers’ balances — the sum credit card and personal loan balances — fell $811 on average.
  • Among baby boomers who took out personal loans, 56% lowered their overall balances after their first year of repayment, compared with 52% of Generation X and 48% of millennials.
  • Boomers also lowered their balances by much larger amounts, owing an average $2,048 less after a year. Balance reductions of younger borrowers were more modest: Generation X lowered their overall balance by $338, and millennials reduced their overall balance $250.
  • A year into repaying a personal loan, credit scores declined slightly for all age groups. Boomers’ credit scores declined the least, with the median falling just 1 point from 669 to 668. The median score of Generation X personal loan borrowers fell 7 points, from 659 to 652. Millennial credit scores fell 10 points, dropping from 661 to 651.
  • Credit utilization rates — the ratio of the sum of credit card balances to the sum of credit card limits — show a similar trajectory. One month after taking a personal loan, the median utilization rate fell from 35% to 26%. But after the first month, utilization increased. The median utilization rate one year after taking a loan increases to 44%.

How To Get Your Paycheck Early (Forbes), Rated: AAA

Speaking of Walmart, the retailer has partnerships with two fintech startups–Even Responsible Finance and PayActiv–that enable its US workers get part of their salary paid before payday.

Employees can get up to eight drawdowns (called Instapays) on their salary ahead of scheduled payouts. The first eight drawdowns are free to the employees, and then in subsequent use, fees are levied across a personal finance app available through Even.

Continuous Billing

There’s no reason why billers can’t provide continuous information about what a customer owes, in real time, online or through mobile apps.

Deserve’s Kalpesh Kapadia: ‘We promise the best credit card for our customer’s profile and life stage’ (Tearsheet), Rated: AAA

The financial system has always struggled with young people. Because the system uses credit history, young people were frequently excluded from credit products because they’re new to the system. If you’re an immigrant or foreign student studying in the US, it’s way worse. Kalpesh Kapadia set out to change a system that was skewed against young people. He’s the co- founder and CEO of Deserve, which offers credit cards to college students at 2500 universities in the US.

To do this, he’s created an analytics-based lending platform that’s also branching out into powering credit cards as a service. We talk about how Deserve is able to underwrite credit-thin files and why he thinks his firm is at an advantage when it comes to competing against Marcus’s credit products and Apple’s new credit card.

Resolve Accelerates Shift to B2B eCommerce with Automated Net Payment Terms (GlobeNewswire), Rated: A

According to Forrester Research, business-to-business (B2B) eCommerce is poised to reach over $1.8 trillion by 2023. To help power this explosive growth, Resolve today announced that it has formally spun out of Affirm to launch an automated payments platform offering extended net terms. Early customers using Resolve’s payment automation technology have realized significant increases in B2B sales, growth in order size, and faster sales cycles.

Online Auto Loans: The Pros and Cons (U.S. News), Rated: A

Things are different now. Almost every financial institution has an online presence, and most offer information about car loans on their site. Most also provide an opportunity to apply for financing online, with a growing number able to take car buyers through the entire auto loan process without ever having to visit a bank or credit union branch.

It’s Not Easy Solving For $ 1.5 Trillion In Student Debt (PYMNTS), Rated: A

There is $1.5 trillion worth of student loan debt outstanding in the U.S. and it is creating problems.

Admittedly the plan is quite a bit more complex than that, as detailed by Sen. Warren in a Medium post that went live yesterday (April 22). In broad strokes, for students from families with less than $100,000 a year in annual income, $50,000 in student loan forgiveness would be available. The post also calls for “substantial debt cancellation for every person with household income between $100,000 and $250,000.” The Warren plan also calls for the elimination of tuition at all two-year and four-year public institutions of higher learning, and would create a fund of at least $50 billion specifically for historically black colleges and universities. Federals subsidies for for-profit colleges would be banned.

Would You Take a Job Just for the Fertility Insurance? (Glamour), Rated: AAA

The cost, however, put it out of reach. A single round of IVF rings in at about 

dv01 Launches Credit Risk Transfer Market Surveillance Offering (dv01 Email), Rated: A

dv01 today announces the launch of its Credit Risk Transfer (CRT) Market Surveillance offering, which will be showcased on April 25 at the 4th Annual Credit Risk Transfer Symposium in New York.

dv01’s latest offering adds $1.8 trillion of Freddie Mac (STACR) and Fannie Mae (CAS) CRT securitizations to dv01’s modern web-based data analytics platform, furthering their goal of bringing greater transparency to capital markets. Building on the success of dv01’s Market Surveillance offering for consumer loans (launched in 2017), the CRT offering will allow investors to analyze historical performance of CRT deals both individually or as combined deals, perform whole market analysis, and run cash flow scenarios.

Let’s give post offices another job (The Student Life), Rated: A

As of 2017, approximately 6.5% of households in the U.S., totaling more than eight million, don’t have an account open at an insured bank, according to the Federal Deposit Insurance Corporation. An additional 24.2 million households utilize non-traditional financial services that often make them vulnerable to usurious lending rates.

Americans utilizing alternative forms of credit spend nearly 10% of their salaries on fees alone. For a family making the average salary of $25,500 in 2012, those fees average out to $2,412.

The USPS has 59% of its locations in zip codes that have one or fewer banks, according to a 2011 government report. This could help people to overcome a geographic boundary.

Equifax acquires PayNet to help expand access to capital for small and mid-sized businesses (PR Newswire), Rated: A

Equifax Inc., a global data, analytics and technology company has acquired PayNet, a company that provides commercial credit risk underwriting and management solutions to online and alternative finance lenders, and commercial finance and leasing companies in the U.S. and Canadian markets.

Marketplace Lending Update #5: The Very Long Arm of Colorado Law (The National Law Review), Rated: A

Recently a state court in Colorado ruled that securitization trusts that acquire marketplace lender loans originated to Colorado consumers are subject to Colorado jurisdiction. The court’s ruling derailed the attempt by the securitization trusts to escape the ongoing battle between the State of Colorado and marketplace lenders over rates and fees that can be charged to Colorado residents.

Berman Tabacco Announces Major Win for Victims of Plain Green Online Lending Scheme (BusinessWire), Rated: A

In a long-awaited opinion, the U.S. Court of Appeals for the Second Circuit today ruled that borrowers who took out loans from the Native American-affiliated online lender Plain Green can proceed with their nationwide RICO class action in Vermont federal court. The Second Circuit affirmed a May 2016 ruling by District Judge Geoffrey W. Crawford and comes nearly two years after oral argument on Defendants’ appeals. Berman Tabacco and Gravel & Shea PC are Lead Counsel in the case, Gingras, et al. v. Rosette, et al., No. 5:15-cv-00101-gwc (D. Vt.).

2nd Circ. Says Tribal Officers Not Immune In Payday Loan Suit (Law360), Rated: B

The Second Circuit on Wednesday rejected a bid by officers of tribe-owned lending company Plain Green LLC to escape a suit claiming they charged exorbitant interest rates on so-called payday loans,…

White Oak Global Advisors Completes $ 30M Loan for Danimer Scientific Holdings (AP News), Rated: B

White Oak Global Advisors, LLC (“White Oak”) today announced it acted as sole lender and administrative agent to provide a $30 million senior credit facility to Danimer Scientific Holdings, LLC (“Danimer”), a manufacturer of specialty compostable and biodegradable plastics. This transaction expands on White Oak’s ESG-lending platform, which aims to finance small and medium-sized enterprises (“SMEs”) that are developing solutions to help address environmental and social issues around the world.

Online Lender Upgrade Recognized as Top Place to Work in San Francisco (Crowdfund Insider), Rated: B

Online Lender Upgrade, a Fintech serving the consumer credit market, has been named a “Best Place to Work in the Bay Area’”by the San Francisco Business Times and Silicon Valley Business Journal. Upgrade is the creation of  CEO Renaud Laplanche, the founder of publicly traded marketplace lending platform LendingClub. This is the second time Upgrade has been recognized as a nice place to work in the notoriously work focused bay area.

United Kingdom

Funding Circle lowers return projections (P2P Finance News), Rated: AAA

FUNDING Circle has revised down its annual return projections in the face of a weaker environment for consumer credit.

The peer-to-peer business lender now predicts investors in its Balanced portfolio will achieve a return of 4.5 to 6.5 per cent a year.

Investors in its Conservative portfolio, meanwhile, could achieve 4.3 to 4.7 per cent a year.

Peer to Peer Lender RateSetter Receives Queen’s Award for Enterprise (Crowdfund Insider), Rated: AAA

Peer-to-peer investment platform RateSetter has been recognized with a prestigious Queen’s Award for Enterprise for excellence in innovation.

Challenger bank Tandem to double headcount as CEO warns of Brexit brain drain (Yahoo! Finance), Rated: A

Tandem Bank said on Tuesday it had moved into a new 16,000 square foot office in London as part of plans to double headcount this year to 230 and grow to 300 people by the end of 2020.

“Last year we hit 500,000 customers when we had an expectation for 150,000,” Knox told Yahoo Finance UK.

Consumer P2P loans weigh on P2PGI fund returns (P2P Finance News), Rated: A

P2P Global Investments (P2PGI) has warned that its legacy peer-to-peer lending portfolio continues to be more volatile than expected despite posting an improved net asset value (NAV) return for 2018.

P2PGI – the world’s first P2P-focused investment trust – revealed in its annual report that its NAV for 2018 was 5.2 per cent, up from three per cent in 2017.

China

How Leverage Turns Market Corrections into Crashes (Yale Insights), Rated: AAA

Q: Is shadow borrowing unique to China?

It’s difficult to study the phenomenon very precisely. We do observe shadow lending in various forms growing throughout the world, including in the U.S., and, if left unregulated, this type of lending could mean that household and financial institution leverage keeps rising in a way that is both unregulated and undocumented.

Because the Chinese government believed that the shadow sector was partly responsible for the crash, it seized the data from some shadow lending platforms and allowed us to analyze it.

Q: Who’s providing the financing in these situations?

The exact sources of financing are not well known. Some of it could be other stock investors that have put up their own holdings as collateral and borrowed against it and then lend out the proceeds on the shadow market. It could also be peer-to-peer lending platforms. It’s also believed that some of the financial institutions and brokerage firms within China may have also lent out within the shadow sector.

Trade war with US could lead to economic ‘cold war’ for China, Beijing researchers say (SCMP), Rated: A

The tit-for-tat tariff war with the US and the broad hostility is seen as a major risk endangering China’s “economic security”, along with a property bubble, local debt, unemployment and online financing including peer-to-peer lending, according to the latest edition of China’s Economic Security Outlook.

European Union

French Lender Societe Generale Issues $ 112 Million Bond on Ethereum (CoinDesk), Rated: AAA

French financial services giant Societe Generale Group has issued about $112 million worth of bonds in the form of a security token on the public ethereum blockchain.

Announced today, a subsidiary called Societe Generale SFH used the OFH token (obligations de financement de l’habitat, or home financing obligations) to represent 100 million euros of covered bonds, a type of security that is backed by specific assets but remains on the issuer’s balance sheet.

The bond has a five-year maturity with a 12-month extension period, Moody’s said.

N26 opens tech hub in Vienna with a focus on security (TechCrunch), Rated: A

Fintech startup N26 is opening an office, its fourth, in Vienna. Eventually, the company plans to hire 300 software engineers, product managers and IT specialists.

API card platform Marqeta signs up three customers in Europe (Verdict), Rated: B

The platform has been signed up by French digital bank Morning, Swiss digital bank Yapeal, and Spanish POS lender Aplazame.

CoinLoan Plans IEO and Seeks Partners (Digital Journal), Rated: B

CoinLoan crypto-backed lending platform declares its intention to launch an Initial Exchange Offering and invites discussion with major crypto exchanges interested in the listing.

International

SoFi Is in Talks With Qatar for $ 500 Million Funding Round (Bloomberg), Rated: AAA

Fintech startup Social Finance Inc. is in the final stages of closing a funding round from the Qatar Investment Authority and others, according to four people familiar with the matter.

The new round, which could close as soon as this week, is said to value the startup at an amount similar to the $4.3 billion valuation of its 2017 funding round, led by Silver Lake. Two of the people said that in order to achieve the same valuation, investors were asking for more protections should the company raise money or sell itself for a lower price tag in the future. The terms of the deal have not been finalized and could still change, the people said. All of the people asked not to be identified because the discussions are private.

These are the top 10 hottest fintech startups and companies in the world (Business Insider), Rated: AAA

Fintech industry funding has already reached new highs globally in 2018, with overall funding hitting $32.6 billion at the end of Q3.

Brex

What it does: Brex is a US-based corporate credit card provider, which initially focused on serving startups.

Raisin

Why it’s hot in 2019: Raisin became a fintech unicorn after raising $114 million in January, and has since then formed partnerships with Commerzbank and ClearScore. Additionally, the startup partnered with Starling Bank in 2018 to launch bank accounts in the UK

SoFi

Why it’s hot in 2019: While the company previously focused on loans, including student loans, in 2019 it has made some significant moves into the wealth management space, and launched both free ETFs and an investment product, dubbed SoFi Invest. As it becomes a more rounded financial product, SoFi will be worth watching in the next few years.

Lending Express

What it does: Lending Express is a US-based lending platform, which focuses on SMBs, and helps them gain access to more funding by providing them with advice.

Volt Bank

Why it’s hot in 2019: In January, Volt became Australia’s first fully licensed neobank. The challenger bank will first offer a suite of retail banking products, as well as budgeting and account aggregation tools, and plans to enter the SMB banking sector in 2020.

U.K. fintech now has war chest to push stateside (American Banker), Rated: A

Fresh off a $100 million funding round last year, the British startup OakNorth is preparing to license its business lending technology to U.S. banks and beyond.

The 3-year-old small-business lender is entering the U.S. at a time when fintechs and banks have stepped up their digital business lending efforts. Though OakNorth has not announced any official partnerships in the U.S., CEO Rishi Khosla said there’s appetite for what the firm is offering.

BlockFi Is Now Paying Interest on $ 53 Million of Crypto Deposits (CoinDesk), Rated: A

Crypto lending startup BlockFi has gathered another $18 million of bitcoin and ether deposits since last month, bringing its total interest-earning accounts to $53 million.

The company also lowered its minimum balance to earn interest on bitcoin from 1 BTC to 0.5 BTC and expanded its operations to India, meaning its service is now available globally, except for territories sanctioned by the U.S., U.K. and E.U.

No crypto winter for BlockFi as client base reaches 50% (CoinGeek), Rated: B

Crypto lending startup BlockFi has been growing, and now claimed that it has grown its client base by 50% in just one month.

Funds at your disposal: Digital lending making inroads into traditional lending (Finextra), Rated: A

The penetration of the internet of things and devices such as smartphones has brought in many advancements. This has made economic activities available at the touch of a button. Among the various sectors, the digital world has evolved the way traditional banking processes are being carried out. A growing number of businesses and individuals are filling applications online for taking loans rather than getting into the lengthy lending process.

Microsoft Will Pay You To Develop… Ethereum? (CryptoBriefing), Rated: B

“[ConsenSys Labs] has put up a few bounties in the vein of rethinking the lending market, and thinking about a peer-to-peer lending and a decentralized credit score system,” explains ConsenSys’ Operations Lead Vivek Singh. Instead of relying on centralized credit agencies, such a system—if successful—could allow borrowers to leverage their social connections into a sort of decentralized credit score.

India

Indian lendtech ZestMoney raises $ 20m (Banking Tech), Rated: AAA

ZestMoney, a start-up that helps consumers with no credit history get loans to buy online, has raised a $20 million Series B.

‘Money Loji’ launches App that offers loans to salaried professionals within 5 Minutes (Business Standard), Rated: A

Money Loji, a modern money ending platform, has launched its App, which offers quickest and the most secure loans to salaried professionals for an immediate requirement with flexible repayment options starting from 7 days to a maximum of 90 days. They follow a unique three-step process – application, approval, disbursement which is carried out within 3-4 minutes. The eligibility criterion is a minimum in-hand of Rs 20,000/month and a minimum age of 23 years. The application requires the users to upload an identity proof, an address proof, last 3 alongside the slips.

Blockfi Launches High-Interest Crypto Lending Program in India (Bitcoin.com), Rated: A

New Jersey-based crypto startup Blockfi announced Tuesday that it has expanded service to users in India. Its flagship Blockfi Interest Account (BIA) for BTC and ETH is now available in 65 countries.

Asia

Nuo Network Crypto Lending Platform Becomes Asia’s Biggest with $ 2 Million in Reserves (Bitcoin Exchange Guide), Rated: AAA

ConsenSys ventures backed Nuo.Network, which is a non-custodial lending platform recently made it to the top 5, dollar Defi (Decentralized Finance) projects and it presently the largest lending platform based in Asia. In the past month, the value of loans given has doubled, this is partly due to the growth of DAI reserves, which is now about 500,000 USD and the surge in Maker stability fees.

Why China’s Ping An OneConnect picks Indonesia for expansion (The Asset), Rated: A

The archipelago is viewed as an ideal market to benefit from the services offered by the enterprise. According to the Ping An Group, Indonesia, at around US$27 billion in 2018, is the largest and fastest-growing internet economy in Southeast Asia.

MENA

Banks use fintech to make up for lost time on financial inclusion (Financial Times), Rated: AAA

It fell to a mobile phone company more than a decade ago to financially empower tens of millions of Africans who found themselves passed over by the traditional banking sector. Now, some 12 years after Vodafone co-founded M-Pesa, the mobile payments venture that took east Africa by storm, banks are upping their game to improve financial inclusion rates across Africa and the Middle East, as technology widens their ability to deliver banking services at lower costs.

Source: Financial Times

In east Africa, the Catalyst Fund has backed Sokowatch, a three-year-old Kenya-based fintech that enables small retailers to order goods from suppliers registered on the mobile-focused platform and receive same-day deliveries. It also offers access to credit. The platform has already expanded into Tanzania and Rwanda.

In the Middle East, Citigroup has given $5m to a microloans fund in Jordan that helps give women access to credit. The financial support will help provide loans to around 10,000 additional women.

Iraq’s financial inclusion drive boosted by homegrown fintech (Financial Times), Rated: A

Around 7m Iraqis are now receiving welfare benefits or public sector salaries electronically, as the government replaces cumbersome cash dispersals with biometric debit cards that can be used at ATMs and in shops.

Only 23 per cent of Iraqis aged 15 and over held an account with a financial institution in 2017, according to the World Bank — although that figure has doubled since 2011.

Source: Financial Times

YouHodler Cryptocurrency Lending Platform Adds Dash (Dash News), Rated: A

Users will now be able to borrow in EUR, USD, or Stablecoin against their Dash as well as use the site to covert Dash to any crypto or fiat on the platform and withdraw to their crypto or fiat wallet. If a user enters their credit/debit card on the platform then they can “convert DASH to fiat and instantly withdraw that amount onto their personal cards, adding a unique “real world” utility for crypto”.

Canada

7 ways emerging fintech hubs are taking on the giants (PaymentsSource), Rated: AAA

Toronto is another significant fintech force in North America, and the leading fintech zone in Canada, because of the high concentration of financial organizations and technology development in Ontario. Last year Toronto accounted for CA$221 million (US$165 million) in total fintech investments across 25 deals, according to a recent report from Toronto Financial International (TFI).

Toronto ranks ninth out of the top 15 global fintech hubs, according to TFI. Currently the region has more than 190 fintech companies and 20 incubator/accelerators in operation. Payments represent the single leading category of fintech investment in the Toronto area, and combined with lending and digital currencies/FX firms it accounts for half of all local fintech activity, according to TFI.
Source: PaymentsSource
Latin America

Brazilian Credit Marketplace FinanZero raises USD 11 Million in Series B Round (Yahoo! Finance), Rated: AAA

FinanZero, a Brazilian fintech that operates as a consumer loan broker, received a new round of investment, raising USD 11 millionfrom Atlant Fonder, Dunross & Co and Vostok Emerging Finance, among other investors.

Authors:

George Popescu
Allen Taylor

The post Thursday April 25 2019, Weekly News Digest appeared first on Lending Times.

Thursday April 11 2019, Weekly News Digest

china p2p lending

News Comments Today’s main news: Lending Club loans $159M in the past week. OnDeck offers same-day funding. Kabbage secures $700M in funding. RateSetter ISA passes 200M GBP in subscriptions. Funding Circle CEO pocketed 4M GBP last year. Klarna launches global customer authentication platform. Today’s main analysis: Drivers of global growth in FSB’s shadow banking. (A […]

The post Thursday April 11 2019, Weekly News Digest appeared first on Lending Times.

china p2p lending

News Comments

United States

United Kingdom

European Union

China

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News Summary

United States

Need a loan for Tax Day? According to Lending Club data, you’re not aloan… er, alone (Thinknum), Rated: AAA

As seen in data from Lending Club ($NYSE:LC), there is a cyclical spike in the number of loans, as well as the money needed by those needing loans, right around the end of tax season. While this finding may seem pretty clear without any data, it essentially confirms an adage in the lending industry.

RIght now, there was only $21.5 million loaned out to lendees from April 8 to today. This past week, there was about $159 million worth of all sorts of loans — personal, mortgage, etc. — loaned out by the platform.

Lending Club Total Principal Loaned (Weekly)

ONDECK OFFERS SAME DAY FUNDING TO EMPOWER SMALL BUSINESS (OnDeck), Rated: AAA

OnDeck today announced that it will offer to fund and debit customer bank accounts with Same Day ACH transfers, eliminating a decades long pain point for small business owners accustomed to the traditional ACH transfer process, which can take multiple days and lacks certainty on when the transactions will hit bank accounts.

Same Day ACH transfers from OnDeck provide qualified OnDeck Term Loan and Line of Credit customers with funds up to the National Automated Clearing House Association (NACHA) cap of $25,000 by 5:00 pm local time on the same business day the customer books or makes a draw on their line of credit.* Qualified customers are also debited via the same day ACH service, providing them additional predictability in transaction clearing times and offering better clarity around day-to-day cash flow management.

Highlights from Jamie Dimon’s Annual Letter (PeerIQ), Rated: AAA

US payrolls rose by 196 k in March and the unemployment rate remained at 3.8%.

Source: Bloomberg, PeerIQ

Highlights from Jamie Dimon’s Letter to Shareholders

Jamie Dimon published his annual letter to shareholders. We look at some highlights below:

  • The banking system, and JPM in particular, is over-capitalized – Under the Fed’s most extreme stress-testing scenario, where 35 of the largest American banks bear extreme losses (as if each were the worst bank in the system), the combined losses are about 6% of the total loss absorbing resources of those 35 banks.
Source: JPM, PeerIQ

PM is investing billions in technology to compete – the cloud, AI, ML and digital banking

  • JPM customers can now open a bank account online in under 5 minutes and can reduce their mortgage closing times to 3 weeks.
  • The bank now has 49 Mn active digital customers, including 33 Mn active mobile customers
  • JPM is looking at fintechs in the US and in China as not just opportunities but also looming competition.

Online lender Kabbage rakes in 0m funding (Verdict), Rated: AAA

Kabbage, an online lender for small businesses, has fetched $700m in asset-backed securitisation (ABS) funding.

With the securitisation, the company’s debt funding increases to $940m.

Real-time data was Kabbage’s secret sauce, its first investor says (American Banker), Rated: A

The firm started life as a small, scrappy fintech startup in Atlanta in 2008, but has grown rapidly. It made $2 billion worth of loans in 2018 and more than $600 million in the first quarter of 2019. It also recently agreed to provide financing at the point of sale on Alibaba.com as part of a program called Pay Later.

Upstart Raises $ 50 Million and Announces New Bank Partners (Lend Academy), Rated: A

One of the big announcements on day one of LendIt Fintech USA 2019 is from consumer lender Upstart. They have announced a $50 million equity raise as well as three new partners for their “Powered by Upstart” banking as a service program. Oh, and they are getting into credit cards.

PeerStreet Lowers Minimum Real Estate Investment to $ 100 (Think Reality), Rated: A

The burgeoning peer-to-peer lending platform PeerStreet has unveiled product updates that enable investments of only $100.

The company recently announced it’s lowered the minimum investment to $100 for “small balance reinvestments” when using its automated investing product. The upgrade also expands the investment types available for automated investing to include cash offer loans and 30-day notes, which offer shorter terms than typical bridge loan investment options, the company said.

Sharestates Wins Top Real Estate Platform Award at LendIt Fintech USA 2019 (PR Newswire), Rated: A

Sharestates, a marketplace lending platform that connects real estate developers with investors, was crowned Top Real Estate Platform at LendIt Fintech USA2019 in San Francisco, California on April 9, 2019. The Top Real Estate Platform award is based on performance, volume, growth, product diversity, and responsiveness to stakeholders.

Now operating in 46 states, Sharestates offers diversified asset classes including residential, multi-family, mixed-use, commercial properties, and land acquisitions.

Since launching in 2015, Sharestates has closed on over $1.7 billion in total loan volume and returned over $675 million in principal to investors. Average annualized returns have exceeded 10% every year. As a result of its strong performance and valued relationships, 82% of Sharestates loan volume has come from repeat borrowers and 81% of its investors are repeat investors.

The stREITwise Platform Brings Real Estate Investment to All (Realty Biz News), Rated: B

The company has just announced a new acquisition to its investment portfolio, a $32 million mixed-use building in Carmel, Indiana, one of the most affluent suburbs of Indianapolis. The 140,000-square foot Allied Solutions Building, already around 87 percent leased, stands poised to increase dramatically in value thanks to its location in the heart of downtown Carmel in the heart of a busy mixed-use development surrounded by restaurants, coffee shops, fast-casual dining, service-oriented retail, and the locally renownedSun King distillery and food hall right next door.

13 cities where renting is cheaper than buying a home (AOL), Rated: A

Americans’ homeownership rate is 64.8%, according to the latest U.S. Census data.

Following are the 13 metros where renting is cheaper by more than $150 a month, beginning with cities with a smaller advantage for renters.

BlueVine Adds Term Loan to Suite of Online Working Capital Solutions to Fuel Small Business Growth (GlobeNewswire), Rated: A

BlueVine, which provides small- and medium-sized businesses with access to fast and simple online financing, announced that it is making term loan financing available for business owners through its suite of online financing solutions. The BlueVine Term Loan provides small- and medium-sized business owners with fast and simple access to financing to grow their businesses through BlueVine’s advanced online platform. More than 59 percent of businesses are looking for funds to grow their business, according to the 2017 Federal Reserve Small Business Credit Survey Report on Employer Firms. With a BlueVine Term Loan, business owners can quickly pursue larger projects and investments to bring their businesses to new heights.

Aura Approves 350,000th Affordable Loan (Bakersfield.com), Rated: A

Aura, a mission-driven financial technology company that offers affordable loans to hard-working families, this week approved its 350,000 th loan.

Since its launch in 2014, Aura has provided more than $437 million in credit-building loans to borrowers at approximately 1,200 partner locations using technology that enables local businesses to administer loan applications. Currently, Aura’s average loan size is around $1,600.

In total, Aura has raised over $403 million in social bonds across 21 bond issuances. The most recent issuance was in March for $50 million.

What Kind of Collateral Do I Need for a Business Loan? (Nav), Rated: A

Before you can qualify for a commercial loan, you’ll need to prove that doing business with your company is a good risk. This means you’ll need to pass successfully through a lender’s qualification process.

Next Wave of Personal Loan Growth May be Driven by Prime and Above Consumers (MarketWatch), Rated: A

The prime and above risk tiers have become a greater focus for lenders in recent years. Nearly two-thirds of unsecured personal loan balances originated in the first three quarters of 2018 were lent to prime and above consumers. FinTechs drove this shift as originations for prime and above grew to 62% in 2018, up from 52% in 2013. While still less conservative than banks, FinTechs’ overall risk profile for originations now aligns tightly with credit unions. At the end of 2018, FinTechs held the majority share of personal loan balances with 39%, while banks and credit unions followed with 28% and 21%, respectively.

Student Debt Isn’t Just An Employee Problem — It’s Also An Employer Problem (Killer Startups), Rated: A

The Federal Reserve Bank of New York reported in its Quarterly Report on Household Debt and Credit for the fourth quarter of 2018 that outstanding student loan debt increased to $1.46 trillion, which is $15 billion more than the previous quarter. It also reported that student loan debt rose by $79 billion in 2018.

The student debt load isn’t just impacting the individual students who enter the workforce, hoping they can find a job that enables them to make those monthly payments. I’s also slowing economic growth. A January 2019 Federal Reserve paper noted that young adults report their student loan debt is the reason they’re unable to buy a home. The same report also cited other research concluding that 20 percent of the decline in homeownership among young adults relates to student loan debt that’s been rising since 2005.

Amount Announces Cloud-Based Account Verification Platform (Kake), Rated: A

Amount today announced AmountVerify, a cloud-based platform for risk management across financial products. AmountVerify marks the first time industry leading fintech provider Avant is making a component of its cutting edge online lending platform available to financial service companies as a standalone product through Amount.

Onfido raises $ 50M to create the Identity Verification Standard for Businesses Globally (Markets Insider), Rated: A

Onfido, the global identity verification provider, today announced it has raised $50M in funding, bringing the total investment in the company to over $100M. The round was led by SBI Investment and Salesforce Ventures, with support from M12 (formerly Microsoft Ventures), FinVC and others, including existing investors.

Forward Financing Expands Capital Base with $ 90 Million Credit Facility (Yahoo! Finance), Rated: A

Forward Financing has closed on a $90 million credit facility, consisting of a $60 million senior revolving credit facility and a $30 million junior term loan. AloStar Capital Finance (“AloStar”), a division of Cadence Bank, N.A., served as the Agent on the senior facility.

Credibly Announces Investment Grade Senior Debt Offering (Yahoo! Finance), Rated: A

Today, Credibly announces the next phase in its balance sheet growth strategy with a $10 million Investment Grade-rated senior debt offering. The transaction closed on March 28, 2019.

Mitek Expands Auto-Capture User Experience Across All Digital Channels with the Addition of Desktop (GlobeNewswire), Rated: A

Mitek today announced it has upgraded its desktop browser experience to support auto-capture so customers can rapidly verify the identity of applicants across all digital channels: desktop browsers, mobile web and native applications.

According to Javelin Research, today only one third of users (34 percent) still complete the entire account opening process on their desktop.

MiSnap delivers a superior auto-capture experience for desktop and across mobile devices through:

  • Guided commands:  Real-time commands such as where to place a document in relation to the camera or detection of glare on the ID document are some of the conditions evaluated in order to help the user capture an optimal image, which improves image acceptance rates and reduces capture retries.
  • Advanced image analysis: Once MiSnap has achieved an optimal capture of the ID document, the software then further analyzes the image and makes the necessary adjustments in order to process all images consistently and accurately.
  • Modern architecture: Because MiSnap uses WebAssembly, it can perform at native speeds and is easy to integrate into customers’ web-based apps and requires minimal footprint.

58% of lenders will use AI in next two years (AI Foundry Email), Rated: A

Fannie Mae recently put out a 

  • Nearly two-thirds of lenders are familiar with AI
  • But, only 27% are using it in their businesses now, and…
  • Only half of that group are currently using it with customers (the rest are doing trials)
  • However, looking ahead two years – 58% of lenders expect to use AI/ML in their mortgage business.
  • Of the rest:
      • 22% predict they’ll be investigating AI
      • 19% foresee being in a “wait and see” mode

    These data points show us that “prime time” is coming soon for AI/ML in mortgages. 

    Fintech alone won’t be enough to boost credit union mortgage volumes (Credit Union Journal), Rated: A

    How can credit unions, especially small institutions, compete with Quicken Loans’ Rocket Mortgage “Push button, get mortgage” campaign?

    They can’t – and, sources said, they shouldn’t try.

    GROUNDFLOOR Wins 2 FinTech Awards (Groundfloor Email), Rated: B

    GROUNDFLOOR was named Best Crowdfunding Platform by the 

    Pulte Mortgage and Finicity Partner to Combat the Home Loan Paper Chase (MarketWatch), Rated: B

    Pulte Mortgage announced today it is partnering with Finicity — a leading provider of real-time financial data access and insights, to provide its borrowers with a faster, simpler and more secure way to navigate the home financing process.

    Hudson Data and LendingPoint partner to prevent Synthetic ID fraud (Finanzen), Rated: B

    Hudson Data and LendingPoint announced that they are partnering to create an industry solution to prevent synthetic identity fraud using powerful graph machine learning.

    Dharma crypto lending platform officially goes live (CoinGeek), Rated: B

    Dharma Labs completed a Series A funding round earlier this year to support its cryptocurrency lending platform project. The San Francisco-based company raised $7 million from companies such as Polychain Capital, Coinbase Ventures and others and, if there was any concern about the platform not going live, those concerns are now extinguished. Dharma announced this past Monday in a Medium post that the platform is now live.

    United Kingdom

    RateSetter ISA Milestone: Passes £200 Million in Subscriptions (Crowdfund Insider), Rated: AAA

    UK-based peer-to-peer lender RateSetter recently announced its ISA has now passed the milestone of attracting £200 million in subscriptions.

    “Investors have enjoyed an average annualised return of 4.5%, tax-free of course, since the RateSetter ISA launched in February 2018. The average RateSetter ISA balance stands at £11,000.”

    Funding Circle boss pocketed more than £4m last year (P2P Finance News), Rated: AAA

    FUNDING Circle founder Samir Desai (pictured) earned more than £4m last year, having cashed in some of his shares at the time of the peer-to-peer lender’s stock market flotation.

    Desai took home a salary of £210,000 last year, according to Funding Circle’s annual report, a four per cent increase from his salary of £202,000 in 2017.

    The majority of his total remuneration of £4.081m came from cashing in share options.

    Zopa rewrites outdated money idioms (The London Economic), Rated: AAA

    Each future-looking idiom challenges the status quo. For example, according to Zopa, the ‘signing for the bill’ gesture will be redundant soon. Instead, when people have finished their meal, people will be more likely to signal facial or iris recognition to the waiter. Jonesy gives his take and takes it one step further by illustrating a customer displaying his eyeball to request the bill.

    Source: The London Economic

    Fintech unicorns are leading job creation in London (Business Insider), Rated: AAA

    In 2018, there was a 61% increase in fintech job creation within London from the previous year, per a new report by Robert Walters, making it the fastest growing sector for vacancies in the city.

    The UK houses 25% of all fintech unicorns and their growth plans call for more talent. There are 29 fintech unicorns worldwide, seven of which are based in the UK, making the UK second only to San Francisco, which is home to nine.

    Over 30% of jobs in the UK’s fintech industry are for IT-related roles, compared with 24% in 2017. And fintech unicorns’ hiring for IT professionals increased 74% year-over-year (YoY).

    Source: Business Insider

    London to take San Francisco’s fintech unicorn crown (The Innovation Enterprise), Rated: A

    However, the report has predicted that London could take the lead as early as this year, as the city receives 39% of European fintech venture capital funding, with the runner-up, Berlin, taking just 21% of the total investment.

    With 50% against a global average of 33%, the UK also enjoys the highest rate of consumer fintech adoption of any Western country, only beaten by India and China, the report found.

    LendInvest gains £200m HSBC funding as it seeks home loan market entry (Verdict), Rated: A

    LendInvest, which operates an online marketplace for mortgages, has received an investment of £200m ($261m) from HSBC UK to support its foray into the regulated home loan sector.

    Peer-to-peer scheme for first-time buyers launches (FT Advisor), Rated: A

    Start-up company Stepladder is promoting a new way for first-time buyers to save for a house deposit.

    Arbuthnot Latham launches Arbuthnot Direct for those seeking long-term interest returns (Arbuthnot Email), Rated: B

    Arbuthnot Latham & Co., Limited (“Arbuthnot Latham”) is pleased to announce the launch of its new platform under the trading name of Arbuthnot Direct. Arbuthnot Direct offers fixed term deposits online, targeting retail customers who are seeking interest returns on their money over the longer term. The platform held a successful soft launch in February 2019 and has already met with a positive reception.

    China

    The rise and fall of P2P lending in China (Finextra), Rated: AAA

    It is worth mentioning that the size of China’s P2P industry is larger than that of the rest of the world combined, with outstanding loans of US$217.96BN.

    China’s online P2P lending industry grew rapidly between 2011 to 2015, with the number of P2P lenders growing from 50 to nearly 3,500 respectively.

    Trouble started brewing in China back in 2016, when statistics released by the Chinese Banking Regulatory Commission showed that about 40% of P2P lending platforms were in fact Ponzi schemes.

    This triggered the shutdown of P2P lending platforms; over 900 closed by the end of 2016. For 2018, only 1,021 providers remained in place.

    Source: Bloomberg News

    Shenzhen police arrest Zhang Wei, calling China Create Capital a ‘mafia-like gang’ (SCMP), Rated: A

    China Create Capital Limited, the investment holding company headed by the 46-year-old Heilongjiang native is a “mafia-style gang” involved in illegal fundraising, harassment, blackmail, illegal detention of people and the possession of firearms, the Shenzhen police said in a notice. The whereabouts of Zhang, who was arrested with 43 other executives of China Create, could not be ascertained.

    The arrests are the latest in the Chinese government’s crackdown on crime and corruption in the country’s financial system and capital markets, where 1,129 “mafia-like” syndicates were broken up across 10 provinces last year, with 4.94 billion yuan (US$737 million) of assets seized, according to the police. A number of Chinese oligarchs including Anbang Group’s

    former chairman Wu Xiaohui

    , CEFC Group’s founder Ye Jianming and financier Xiao Jianhua had fallen from grace since 2017.

    $ 60 Million and Rising: China’s Crypto Funds Try Lending to Beat Bear Market (CoinDesk), Rated: A

    These new crypto lenders include such notable names as Bixin Capital, FBG Capital and DGroup, founded by Dong Zhao, who made a name by operating one of the longest-running over-the-counter (OTC) trading desks in China. Along with a startup called Babelbank, these investors have originated a combined $60 million worth of loans over the last five months, denominated in cryptocurrencies or, in one firm’s case, Chinese yuan.

    European Union

    Klarna launches global customer authentication platform (Klarna), Rated: AAA

    Klarna today announced the launch of its global authentication platform — an aggregator with multiple global and local authentication solutions. The platform allows multinational businesses, including merchants and other banks, to provide a simple, secure and personalised customer authentication experience irrespective of market, through a one-time integration.

    Klarna Sees Payments as Evolving From Function to Engagement (WWD), Rated: A

    Klarna’s Hannah Bravo says customers chose brands based on payment options.

    This New Tool Is Helping Retailers Build Consumer Trust During Online Checkouts (Footwear News), Rated: B

    The Klarna platform enables businesses to choose from a range of global and local authentication methods so that they can find one that works best for their customer. Whether using SMS verification or emailed one-time passwords, brands and retailers can verify their customers’ identities with minimal interruption to the consumer’s shopping journey.

    International

    Drivers of Global Growth in FSB’s Shadow Banking (DBRS Email), Rated: AAA

    DBRS sees significant risks stemming from continued growth in shadow banking globally. Assets are now at $52 trillion globally, up from $30 trillion in 2010, according to the FSB. The U.S. has the largest concentration with 29% of global shadow banking assets. But, this is down from 48% in 2010, as other regions are growing faster.

    Summary highlights of the commentary include:

    • Shadow banking is still growing. This narrow, but rapidly growing, subset of nonbanks had assets of $52 trillion in 2017, up 75% from $30 trillion in 2010.
    • Since 2010, assets of nonbanks are also growing, up 61% to $185 trillion. That is 49% of the $378 trillion in total global assets in all financial institutions at the end of 2017, up significantly from 44% in 2010.
    • The key driver of this growth in nonbank assets is the expansion of OFIs. These OFIs are defined as all financial institutions that are NOT central banks, banks, insurance companies, pension funds, public financial institutions, or financial auxiliaries. Assets at these OFIs grew 71% since 2010 to a record $117 trillion in 2017, or just over 30% of assets in financial institutions globally.
    • By far, the largest segment of shadow banking globally is collective investment vehicles, which are subject to runs. These include fixed income funds, mixed funds, MMFs and hedge funds. Since 2010, this segment has grown by 130% to $36.7 trillion in assets. By contrast, growth in other segments has been less than $1 trillion, or even negative.

    Read the full report here.

    Crypto Lending Platform Salt Adds Support for Dash as Collateral (Crypto-Economy), Rated: A

    Cryptocurrency lending platform Salt will now be allowing its users to collateralize their Dash holdings including their Masternode staking coins to access loan facilities.

    India

    RentoMojo in talks to raise $ 40 million from GMO, others (livemint), Rated: A

    For RentoMojo, the latest fundraise comes almost two years after it raised $10 million in July 2017 from Bain Capital, Accel and Chiratae Ventures. Renauld Laplanche, chief executive of US-based Lending Club, also took part in his personal capacity.

    Asia

    Housing sector remains major source of complaints: BPKN (The Jakarta Post), Rated: A

    The BPKN received 154 complaints in the first quarter, most originating from the housing sector. BPKN communications and education coordinator Arief Safari said the agency had received 129 complaints on the housing sector in the first quarter, followed by six complaints on online peer-to-peer (P2P) lending, three on banking and the remainder on various sectors, including travel and e-commerce.

    Batumbu to help finance SMEs (The Jakarta Post), Rated: A

    PT Berdayakan Usaha Indonesia has announced that it aims to help small and medium enterprises (SME) access financial capital through a partnership program with its digital platform Batumbu.

    MENA

    Authors:

    George Popescu
    Allen Taylor

    The post Thursday April 11 2019, Weekly News Digest appeared first on Lending Times.

    Thursday March 28 2019, Weekly News Digest

    structured debt

    News Comments Today’s main news: Klarna launches open banking platform. SoFi re-engineers home loans. Apple’s new credit card. OakNorth secures guarantee of $133M. Qupital raises $15M to bumrush China. Today’s main analysis: Arbuthnot Banking Group audited final results for 2018. Today’s thought-provoking articles: U.S. yield curve, new fintech products. Cities with most overleveraged mortgage debtors. Household debt. Expanding access to credit […]

    The post Thursday March 28 2019, Weekly News Digest appeared first on Lending Times.

    structured debt

    News Comments

    United States

    United Kingdom

    International

    Other

    News Summary

    United States

    SoFi Refreshes Home Loans, Making Home Buying Painless and Paperless (PR Newswire), Rated: AAA

    Today, SoFi announced the refresh of its mortgage offering as SoFi Home Loans, complete with a reengineered process that helps people buy or refinance a home with an online application, no hidden fees, or prepayment penalties.

    SoFi Home Loans offer competitive rates including affordable down payments, with as little as 10% down on loans up to $3MM, with no hidden fees or prepayment penalties. SoFi allows applicants to choose between four different loan terms and fixed or adjustable rates. Those interested in refinancing can choose between traditional mortgage refinancing, cash-out refinancing, and student loan cash-out refinancing. If SoFi Home Loans isn’t able to handle a loan request, SoFi provides an easy option to digitally transfer member information to its affiliate partner who may be able to help.

    Apple’s new credit card keeps advisors guessing (Financial Planning), Rated: AAA

    The Apple credit card is the latest offering by a Silicon Valley tech giant looking for a ready-made avenue into the financial services’ sector. While the new card mostly benefits loyal users of Apple products, it’s also an unwelcome reminder of an ever present question on the minds of wealth managers: Will the FAANG companies like Facebook, Amazon, Apple, Netflix and Alphabet continue their land grab of services historically provided by the financial services industry — and at what cost to traditional RIAs?

    Ominously, a majority of investors considering switching financial services providers said they would consider banking with a tech company like Facebook, Google or Amazon if they could, according to a recent survey by Novantis.

    US Yield Curve Inverts; New Products from FinTechs (PeerIQ), Rated: AAA

    For the first time in 3,000 days, and with much anticipation, the 3-month and 10-year treasury curve inverted. The median time to a recession after this curve inverts is between 1 to 1.5 years. However, unprecedented interventions such as QE (and higher central bank holdings globally) make it difficult to draw hard and fast conclusions. Market participants are pricing in a 41% probability of an interest rate cut in the September meeting.

    Source: PeerIQ; Bianco Research

    New Products from FinTechs

    FinTech innovation continues with new products from PeerStreet and Figure. PeerStreet has launched a 30-year loan to enable private investors to buy rental properties. Residential for Rent loans are targeted towards rental home operators. The rental market in the US has grown exponentially post-crisis people struggle to buy homes. The number of rental homes has grown from 36 Mn in 2006 to 43 Mn in 2017.

    Source: FactTank, PeerIQ

    2019’s Cities with the Most Overleveraged Mortgage Debtors (WalletHub), Rated: AAA

    Buying a home represents an important milestone for most consumers. But for those who dive in to the deep end of real estate without a financial safety net, the decision could lead to buyer’s remorse in the long run. Mortgage rates are slowly falling after reaching their latest peak in November 2018, and are close to the lowest they’ve been in the past 3 decades. This makes 2019 a tempting time to buy a home. Some industry experts believe 2019 is friendlier toward buyers than sellers because of the lower rates.

    Source: WalletHub

    Household Debt – Mixed Signals (DBRS), Rated: AAA

    The most recent Quarterly Report on Household Debt and Credit issued by the Federal Reserve Bank of New York (the Fed) and Equifax Inc. (Equifax) showed that household debt rose for the 18th consecutive period during Q4 2018 to $13.5 trillion, $869 billion higher than the peak reached in 2008. This represented the third-smallest increase (0.24%) over the 18 consecutive periods of growth, partly because of decreasing mortgage loan debt during Q4 2018 to $9.2 trillion from $9.4 trillion at the end of Q3 2018 and flat levels of auto loan debt at $1.3 trillion for both Q3 and Q4 2018.

    Expanding Access to Credit in the Land of New “Halves” (Lend Academy), Rated: AAA

    Credit is one of the largest, most powerful, lucrative and important industries in the world. It also is one of the best tools for wealth creation – home ownership, small business ownership and growth, and, leveraged investing.  This is readily accessible for prime consumers with more options now than ever before. But for the other half of the country that is non-prime, options are still limited and in many cases non-existent.

    Early pioneers of securitizations like SoFi, the scaling of marketplace lending like Lending ClubProsper and Best Egg, and new distribution models like Greensky and Affirm have contributed towards increasing comfort of these “new asset classes” that were mostly locked up in bank’s balance sheets.

    There are a lot of new “halves” in today’s world.

    Amount Delivers Seamless Digital and Mobile Lending Platform to TD Bank (PR Newswire), Rated: A

    Amount, a technology provider for financial institutions, today announced a strategic partnership with TD Bank. TD Bank, a top ten U.S. bank, is leveraging Amount’s platform to power the bank’s TD Fit Loan, which launched in August 2018. This initial offering allows consumers to consolidate higher-interest debt, while helping TD meet growing consumer demand for a seamless digital and mobile lending experience. Through this partnership, TD and Amount will roll out additional offerings, as well as standalone tools addressing fraud, verifications and decisioning.

    5 Freebies With Your Student Loans (NerdWallet), Rated: A

    1. Career coaching

    Who offers it: SoFi.

    SoFi members have received over 15,000 coaching sessions to date.

    4. Referral bonuses

    Who offers it: Multiple refinance lenders.

    • Education Loan Finance offers $400 for each successful referral, as well as $100 for the loan applicant.
    • Laurel Road lets you split its $400 bonus however you and your referral see fit.
    • Splash Financial provides $250 apiece for both parties.

    5. Charitable work

    Who offers it: CommonBond.

    If you prefer freebies that help others, CommonBond has a one-for-one social impact mission. For each loan the lender issues, it donates an amount based on a formula that funds a child’s education in a developing country through the nonprofit Pencils of Promise. Those donations have totaled over $1 million to date.

    CNote Launches Wisdom Fund to Close Lending Gap for Women (PR Newswire), Rated: A

    Women are the fastest-growing group of entrepreneurs in the U.S. Yet less than 5 percent of small business lending—only $1 in $23—goes to women. CNote aims to fix this disparity with the Wisdom Fund, a new impact investment opportunity launching today.

    Investors in the Wisdom Fund will earn an estimated 4 percent annual return, over a 60-month term, on a loan portfolio that’s diversified across established CDFIs. Email wisdomfund@mycnote.com to learn how you can help fund more women-owned businesses today.

    Women seeking loans should contact a participating CDFI. Partners in the Wisdom Fund’s first phase include:

    • Carolina Small Business Development Fund, which provides small business loans and financial training to startups, existing businesses and community organizations in North Carolina.
    • LiftFund, a Texas-based organization that empowers underserved entrepreneurs with capital and support services in 13 states.
    • TruFund, a national nonprofit organization that provides affordable capital to small businesses and nonprofits in AlabamaLouisiana and New York.

    Study Finds 70% of Americans Would Share More Personal Data for Fairer Credit Decisions (PR Newswire), Rated: A

    More than half (54%) of loan applicants don’t even have a clear understanding of why they receive the interest rate they do from a lender, while a majority (70%) say it is difficult finding lenders who will look at them as something other than their credit score.

    • 7 in 10 American adults (71%) wish there was another way to prove themselves to credit lenders outside of the standard credit score.
      • Hispanics (82%) and African Americans (81%) are more likely than Whites (67%) to want lenders to look at additional factors in lending decisions.
    • 77% believe more data is better when evaluating potential borrowers’ credit.
    • 71% would be willing to share more personal data with a lender if it resulted in a fairer credit decision. The motivation is even higher among middle-class earners. 79% of people making $50,000 to $75,000 would share more personal data to prove their creditworthiness, compared to 66% of people making over $100,000.
    • 84% think their bank should use modern technology to assess their creditworthiness.
      • Specifically, about half of loan applicants (53%) would like their ideal lender to use machine learning to make fairer credit decisions.
      • More than 2 in 5 (42%) would like their ideal lender to use machine learning to make the credit for homeownership more accessible to everyone.
      • Surprisingly, older generations want newer technology even more. Baby boomers and seniors (83% and 87%, respectively) wanted their banks to use new technologies to score them, compared to 79% for Millennials and Gen Zers.

    Survey: Alternative Data Sharing (Urjanet), Rated: B

    Urjanet surveyed more than 300 U.S.-based adults to assess consumer sentiment around alternative data sharing in the lending process. Key findings include:

    • A majority of consumers have multiple alternative sources of payment history
    • Alternative data sharing represents a huge opportunity for lenders to drive financial inclusion
    • Most consumers (59%) are willing to share utility and telecom data to boost chances of approval

    SigFig launches platform to help retail banks sell financial products (Investment News), Rated: A

    SigFig, the financial technology firm that developed digital advice platforms for several large financial institutions, wants to help banks automate more than investment management.

    Technology to Play Crucial Role in Preparing ABS Professionals for Next Economic Cycle (ABL Advisor), Rated: A

    An overwhelming majority (90 percent) of asset-backed securities (ABS) professionals feel that adopting new technologies will be important to preparing their businesses for the next economic cycle, according to Capital One’s sixth annual survey at SFIG Vegas 2019.

    The survey also revealed that ABS professionals believe the biggest risks to their businesses are uncertainty around regulatory risk and increased credit risk, both at 29 percent. However, despite regulatory risk being a top concern, the industry’s apprehension has nearly cut in half over the last two years. In 2018, 48 percent noted regulations were the biggest risk to their businesses while 58 percent thought so in 2017. Additional top-of-mind concerns for 2019 include increases in interest rates (18 percent) and increased competition (17 percent).

    TrustToken’s Stablecoin Now Available On Cred’s Crypto Earning Platform (BlockTribune), Rated: A

    Asset tokenization platform TrustToken has announced a strategic partnership with crypto lending platform Cred.

    Founded by former PayPal financial technology veterans, Cred is a decentralized global lending and borrowing platform that allows stablecoin issuers, exchanges and wallets to provide valuable earn and lending services worldwide.

    Fintech in Brief: Update on Legal Challenges to OCC Fintech Charter (JDSupra), Rated: A

    On March 19, 2019, the New York State Department of Financial Services (“NYDFS”) filed a brief in opposition to the Office of the Comptroller of the Currency’s (“OCC”) motion to dismiss the NYDFS’ lawsuit challenging the OCC’s statutory authority to grant special purpose national bank charters to Fintechs (the “Fintech Charter”). The brief in opposition signals that the NYDFS will continue its opposition to the Fintech Charter under the leadership of Acting Superintendent Linda Lacewell, who replaced outgoing Superintendent Mari Vullo in February. In opposing the OCC’s motion to dismiss, the NYDFS argued that it has standing to challenge the Fintech Charter, the matter is ripe for judicial review, and its claims are not time-barred. The NYDFS also argued that the OCC’s interpretation of the “business of banking” is not entitled to Chevron deference and “should be invalidated in its entirety.”

    Mortech Partners with Roostify for Enhanced Online Mortgage Experience (Business Wire), Rated: A

    Today, Mortech, a Zillow Group business providing mortgage technology solutions for mortgage lenders and secondary market teams, announced a new partnership between Mortech’s product and pricing engine (PPE) and Roostify, a digital lending platform that gives customers more control of their home buying process while allowing loan officers to utilize the latest technology to more easily process loans. The strategic partnership will integrate two proven mortgage technology solutions to improve the digital mortgage experience for many industry-leading lenders.

    Finastra brings community banking services outside the branch with the launch of Fusion Digital Front Office (Finastra), Rated: A

    Finastra has launched Fusion Digital Front Office, an innovative tablet-based banking platform that enables community banks and credit unions to take services directly to the consumer, outside of the branch. The solution provides a simple gateway to manage account origination, sales and service, and transaction processing from any remote location.

    Huobi’s US Arm Launches Institutional Group for OTC Crypto Trading (CoinDesk), Rated: A

    “We’re entering the market now with a real institutional offering, we’re definitely going to be offering some new products and services,” such as token lending and over-the-counter (OTC) trading, in the coming months, he added.

    Elevate Named as a Finalist for LendIt Fintech 2019’s Financial Inclusion Award (AP News), Rated: B

    Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, has been named as one of six finalists in the “Excellence in Financial Inclusion” category for the LendIt Fintech Industry Awards 2019. This award is given to the company that has made the biggest impact in expanding access to financial services in new and innovative ways.

    J.D. Power ranks Regions among top alternative lenders for personal loans (Biz Journals), Rated: B

    Birmingham’s largest bank has ranked among the top alternative lenders in the U.S. for providing personal loan satisfaction through digital applications.

    United Kingdom

    ARBUTHNOT BANKING GROUP (“Arbuthnot”, “the Group” or “ABG”) Audited Final Results for the year to 31 December 2018 (Morningstar), Rated: AAA

    FINANCIAL HIGHLIGHTS

    ·      Profit Before Tax £6.8m (2017: £2.5m)

    ·      Underlying profit before tax £7.4m (2017: £3.2m)

    ·      Operating income increased by 24% to £67.9m (2017: £54.6m)

    ·      Negative earnings per share 134.5p (2017: positive 43.9p)*

    ·      Continuing earnings per share 38.0p (2017: 14.0p)

    ·      Underlying earnings per share 40.3p (2017: 17.6p)

    ·      Final dividend per share 20p (2017: 19p), an increase of 5%

    ·      Total full year dividend per share 35p (2017: 33p)

    ·      Bonus share issue to create new class of non-voting shares

    ·      Net assets £196m (2017: £236m)

    ·      Net assets per share 1283p (2017: 1547p)

    ·      Underlying return on deployed equity 5.6% (2017: 4.2%)

    Consolidated statement of financial position

     

    At 31 December

    2018

    2017

    Note

    £000

    £000

    ASSETS

    Cash and balances at central banks

    17

    405,325

    313,101

    Loans and advances to banks

    18

    54,173

    70,679

    Debt securities at amortised cost / held-to-maturity

    19

    342,691

    227,019

    Assets classified as held for sale

    20

    8,002

    2,915

    Derivative financial instruments

    21

    1,846

    2,551

    Loans and advances to customers

    22

    1,224,656

    1,049,269

    Other assets

    24

    12,716

    20,624

    Financial investments

    25

    35,351

    2,347

    Deferred tax asset

    26

    1,490

    1,527

    Interests in associates

    27

    – 

    83,804

    Intangible assets

    28

    16,538

    15,995

    Property, plant and equipment

    30

    5,304

    3,962

    Investment property

    31

    67,081

    59,439

    Total assets

    2,175,173

    1,853,232

    EQUITY AND LIABILITIES

    Equity attributable to owners of the parent

    Share capital

    37

    153

    153

    Retained earnings

    38

    209,083

    237,171

    Other reserves

    38

    (13,280)

    (949)

    Total equity

    195,956

    236,375

    LIABILITIES

    Deposits from banks

    32

    232,675

    195,097

    Derivative financial instruments

    21

    188

    931

    Deposits from customers

    33

    1,714,286

    1,390,781

    Current tax liability

    236

    705

    Other liabilities

    34

    18,549

    16,239

    Debt securities in issue

    35

    13,283

    13,104

    Total liabilities

    1,979,217

    1,616,857

    Total equity and liabilities

    2,175,173

    1,853,232

    Read the full report here.

    Tech Nation Lists 10 Fintech Pioneers In Future Fifty 2019 Cohort (Forbes), Rated: AAA

    Revolut, Monzo, Starling Bank, Currencycloud, Aire, Blockchain, MarketInvoice, Quantexa, Nested and Salary Finance were revealed to be among the 24 most dynamic and fast-growing late-stage technology companies to be chosen to join Future Fifty’s 2019 cohort.

    Tech Nation and Dealroom data has also revealed that the U.K. has attracted a whopping $7.9 billion in funding in 2018 and closed the gap for exits of venture-backed companies with the U.S. As well as this U.K. sales, IPOs and mergers were worth $40 billion – ahead of every other European country – which points to the success of the tech sector as a whole in the country.

    OAKNORTH ANNOUNCES BRITISH BUSINESS BANK ENABLE GUARANTEE OF £133M (Business Leader), Rated: AAA

    OakNorth has today announced its participation in the ENABLE Guarantee programme, securing a guarantee of £133m from the British Business Bank, the UK government’s economic development bank. OakNorth will use the guarantee to strengthen further its lending support to fast-growth businesses and established property developers and investors.

    The ENABLE Guarantee programme is designed to encourage banks to increase their lending to smaller businesses by reducing the amount of capital required to be held against such lending. Under an ENABLE Guarantee, the UK Government takes on a portion of the lender’s risk on a portfolio of loans to smaller businesses, in return for a fee.

    Inside OakNorth’s plan to take its lending technology global (Tearsheet), Rated: A

    As a challenger bank, OakNorth charts a different course. While Revolut, Monzo, and N26 focus on putting their digital current accounts in the hands of millions, OakNorth doesn’t even offer a current account. While other challengers are racing to acquire banking licenses all over the world, OakNorth is happy with just a UK license.

    OakNorth is also posting profits while other challengers aren’t.  The bank announced a £33.9m profit for 2018, up 220 percent from 2017.

    OakNorth provides debt financing to entrepreneurs in growing businesses, lending £0.5M to £40M to profitable, scale-up, British businesses. To fund its underwriting, OakNorth offers digital savings accounts. It currently has 40,000 customers with digital savings accounts and has lend £3 billion in under four years.

    Successful UK Payday Lender Western Circle Limited Begins Offering Personal Loans Online (Finger Lakes Times), Rated: A

    Western Circle Limited has made a name for itself by offering responsible payday loans online. Their decision to branch out into the personal loans market through the new brand PersonalLoansNow.co.uk was well received by their customers.

    Five last-minute IFISA ideas (P2P Finance News), Rated: A

    THE END of the tax year is fast approaching, so if you haven’t yet taken full advantage of your £20,000 ISA allowance to make tax-free returns, now is the time. The peer-to-peer lending industry is expecting to see an uptick in inflows into Innovative Finance ISAs (IFISA) this year now that there is a much wider choice of products available and the potential for higher returns than cash with lower volatility than the stock market.

    FINTECH LAUNCHES AI LOAN COMPARISON SERVICE (Business Cloud), Rated: A

    Loan marketplace Monevo has launched a new platform to give consumers comparisons of pre-approved loans.

    Based in Macclesfield, the business is a licensed credit broker for personal and business loans and is Europe’s largest personal loan marketplace.

    An Alternative Approach (IFA Magazine), Rated: A

    When it comes to asset allocation, advisers constantly face the challenge of finding real diversification in client portfolios. Sue Whitbread met with Matthew Ardron and Benedict Yung of Basset & Gold Group, to talk about their approach of offering fixed rate bonds that invest in alternative lending.

    Half of Brits running out of cash before payday – pushing them to rogue lenders (Mirror), Rated: A

    Exclusive research for Mirror Money shows by the end of this month, those turning to payday loans will have shelled out more than £214million – that works out at £28 per second

    P2P to have strong presence at Innovate Finance Global Summit (P2P Finance News), Rated: B

    FOUNDERS of the ‘big three’ peer-to-peer lenders are among the confirmed speakers at Innovate Finance Global Summit (IFGS), which takes place next month at London’s Guildhall.

    Giles Andrews of Zopa, Samir Desai of Funding Circle and Rhydian Lewis of RateSetter are all participating in various sessions at the fintech industry trade body’s flagship conference on 29-30 April 2019, which marks the start of UK Fintech Week.

    Other confirmed speakers from the P2P world include Zopa chief executive Jaidev Janardana, ArchOver’s Angus Dent, Ali Celiker from British Pearl and Roxana Mohammadian-Molina from Blend Network.

    China/Hong Kong

    Hong Kong SME financing platform raises $ 15m for China push (Finextra), Rated: AAA

    Hong Kong-based online SME trade financing platform Qupital is targeting the mainland after closing a $15 million Series A funding round led by CreditEase FinTech Investment Fund.

    Consumers hunger for loans, lenders popping up everywhere (Shine), Rated: AAA

    Qin Shuifeng, 30, who lives in the suburban district of Jiading, went to a branch of the Postal Savings Bank of China in 2016 to seek a loan for home improvements.

    The lender granted her and her husband a credit line of 1 million yuan (US$148,600), of which they drew 600,000 yuan, with an interest rate 10 percent higher than the benchmark rate.

    Competition 

    The central government has issued a series of policies favorable to consumer lending since the second half of 2018.

    Still, risks remain. To realize sustainable development, players need to build strong operational and risk control capabilities, either by themselves or in partnership with financial technologies firms.

    European Union

    Klarna Launches Open Banking Platform (PR Newswire), Rated: AAA

    Today, Klarna, one of Europe’s leading payment providers and the global market leader in payment initiation services, announces the launch of its own Open Banking Platform. This platform will enable access to more than 4,300 European banks through a single Access to Account (XS2A) API in line with Payment Services Directive (PSD2). Klarna’s XS2A API is the most established and proven solution that has been developed at scale across markets for almost 15 years through the Klarna Group company Sofort.

    This platform provides a fully proven and mature infrastructure, superior market coverage and connectivity, with access to 99% of online banking consumers currently across 14 European markets. By opening up its own advanced technology and capabilities, Klarna is simplifying and democratising access to APIs securely. Both established and newer banks and fintechs as well as other licensed businesses, will be able to build smart and personalised offerings that meet the evolving needs of consumers across Europe. Klarna has been one of the leading proponents of the PSD2 legislation and believes high-quality APIs will drive innovation and competition but most importantly will empower consumers across Europe with increased choice, control and clarity on their finances, and ability to access better products.

    International

    Has Alternative Lending Seen Its VC Peak? (PYMNTS), Rated: AAA

    U.S. FinTech funding reached its highest level in five years in 2018, according to CB Insights data published last month, hitting $11.89 billion. Yet at a time when analysts say VCs are focusing more on late-stage investment, alternative lenders are having a tougher time securing funding, particularly market newcomers in a crowded market.

    But there is evidence that investors’ appetite for alternative lending startups is on the wane, even as overall FinTech funding continues to climb — and as the success of the alternative lending market grows, too.

    eToro buys blockchain company Firmo (Fintech Futures), Rated: A

    Just weeks after launching in the US, trading and investment platform eToro announced plans to purchase Copenhagen-based blockchain firm Firmo, reports Julie Muhn  at Finovate

    Founded in 2017, Firmo offers a programming language called FirmoLang that runs on a sidechain. Exchanges can leverage FirmoLang to create financial instruments such as P2P lending platforms or cryptocurrency derivatives with tokens. And Firmo is versatile, allowing the tokens to be run on any blockchain.

    Battlestar Capital Earns 30% Returns For Holding Crypto (ChainBits), Rated: B

    Battlestar Capital, which is a blockchain staking-as-a-service company, revealed that customers could potentially earn up to 30 percent on a yearly basis when it comes to their idle crypto holdings. Here is everything about the startup’s claims in a nutshell.

    In an interview, the company said that it has teamed up with crypto lending startup called Celsius Network in an attempt to launch a large-scale service capable of offering potentially high returns.

    Australia

    APRA Proposes Stricter Credit Risk Management Standards (Regulation Asia), Rated: AAA

    The revised prudential standard enhances board oversight of credit risk and requires more intensive credit checks on borrowers. APRA also highlights the risks of P2P originated loans.

    India

    New modes of lending, fund raising on cards (The Asian), Rated: AAA

    In a bid to change the market dynamics of the banking and financial sectors, the Reserve Bank of India (RBI) will soon come up with alternative models of lending and capital raising for the sectors.

    Asia

    Bukalapak partners three P2P lenders to provide loans for offline businesses (Tech in Asia), Rated: AAA

    Bukalapak is teaming up with Indonesian P2P lending startups Amartha, Modalku, and PohonDana to provide loan facilities in a program called Modal Mitra. The loans are available to offline vendors who are part of the company’s Mitra Bukalapak program.

    The financing offered through Modal Mitra ranges between US$70 and US$700 and can be paid back in up to six months, with weekly installments starting from US$6. It can only be used for purchases in the Mitra Bukalapak app.

    Eurasia

    Russian fintech launches digital bank 131 (Finextra), Rated: AAA

    Bank 131, a new digital bank focused on Russian companies and entrepreneurs that work for global internet companies and/or buy from global ecommerce companies with a Russia presence, announced today they have received their banking license from authorities – the first and only new bank to do so in four years.

    Canada

    Shadow banking has grown, but risks to financial systems are modest (Advisor’s Edge), Rated: AAA

    Canada’s shadow banking sector has grown substantially in recent years, but the overall financial system has grown even faster, keeping risks in check, suggests a new report from the Bank of Canada.

    In the report, the central bank details the results of its monitoring of so-called “non-bank financial intermediation” (NBFI), also known as shadow banking. Among other things, the report finds the Canadian NBFI sector has grown by 1.7 times since 2006, driven by strong growth in investment funds, securities financing transactions and private lending.

    Authors:

    George Popescu
    Allen Taylor

    The post Thursday March 28 2019, Weekly News Digest appeared first on Lending Times.

    Thursday February 14 2019, Weekly News Digest

    OnDeck revenues

    News Comments Today’s main news: SoFi invests in Apex Clearing. Zopa chairman steps down. Ratesetter ISA tops 17M GBP in first year. Assetz Capital surpasses 700M GBP in lending. Revolut denies getting Lithuanian bank license to influence politics. Today’s main analysis: OnDeck’s Q4 earnings review. Today’s thought-provoking articles: What’s happening with auto loans. How Amazon controls small businesses with lending. Banks […]

    The post Thursday February 14 2019, Weekly News Digest appeared first on Lending Times.

    OnDeck revenues

    News Comments

    United States

    United Kingdom

    European Union

    International

    Other

    News Summary

    United States

    SoFi held talks to acquire a fintech company backing some of the hottest robo advisors as it eyes expansion beyond its lending roots (Business Insider), Rated: AAA

    OnDeck Q4 2018 Earnings Review (Lend Academy), Rated: AAA

    The company achieved much of what they set to do in 2018 and posted another solid quarter as they rounded out the year. Q4 2018 net income came in at $14 million on gross revenues of $109.5 million. The company ended the year with a total of $27.7 million in net income. Below is a snapshot of their Q4 and 2018 full year highlights.

    As of Q4 2018 the company still had $246 million of excess debt capacity.

    BB&T and SunTrust merger; Tech in Bank Earnings (PeerIQ), Rated: AAA

    The Fed’s January 2019 Senior Loan Officer Survey showed that banks tightened standards for commercial real estate (CRE) loans. Overall, banks tightened standards for credit card borrowers. However, lending standards for most categories of consumer loans and C&I loans remained unchanged. Banks also reported weaker demand for both business and household loans.

    Source: Federal Reserve, PeerIQ

    BB&T agreed to buy SunTrust for $28.2 Bn – the first major mega-bank deal in a decade. This deal will create the sixth-largest US retail bank. The M&A is supported by a constructive regulatory environment fostered by the OCC and CFPB, among others. The previous large acquisition was the JP Morgan acquisition of Bank One in 2004.

    A major motivation for the deal was the ability of both banks to pool resources to build better digital offerings. SunTrust has a FinTech focused fund and has partnered with FinTech lenders to provide home improvement and small business loans. Banks are investing billions in digital tech spend to maintain relevance with customers that are increasingly eschewing bank branches for a seamless, online, full-service banking and wealth management customer experience.

    Auto Loans in High Gear (Liberty Street Economics), Rated: AAA

    Total household debt increased modestly, by $32 billion, in the fourth quarter of 2018, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. Although household debt balances have been rising since mid-2013, their sluggish growth in the fourth quarter was mainly due to a flattening in the growth of mortgage balances. Auto loans, which have been climbing at a steady clip since 2011, increased by $9 billion, boosted by historically strong levels of newly originated loans. In fact, 2018 marked the highest level in the nineteen-year history of the loan origination data, with $584 billion in new auto loans and leases appearing on credit reports, up in nominal terms from 2017’s $569 billion. In this post, we take a closer look at the composition and performance of outstanding auto loan debt using the New York Fed’s Consumer Credit Panel (CCP), which is based on anonymized Equifax credit data and also the source for the Quarterly Report.

    Amazon’s lending perpetuates the tech giant’s control over small businesses (Tearsheet), Rated: AAA

    Amazon runs a marketplace with 2.5 million sellers, 24,000 of which had more than $1 million in sales on the platform in 2018. These sellers represent the potential customer base for the company’s lending model.

    From this base of borrowers, Amazon has been able to reportedly lend over $1 billion in 2017, exceeding  $3 billion in total lending volume from its inception in 2011 to 2017. As for 2018, in its annual report, the company reported receivables outstanding from their lending program of $710 million, up from $692 million a year prior.

    With access to detailed information and data on each seller, Amazon is able to mitigate lending risk substantially. Seller metrics only available to Amazon are utilized to determine a small business’s creditworthiness. Sales history, product offerings, customer service feedback, and shipping metrics enable Amazon’s lending business to have better insight into how to accurately issue loans. This allows Amazon to have an understanding of the health of each small business on its seller marketplace.

    Goldman Sachs, Point72 and others invest $ 44 million in business credit startup Nav (Reuters), Rated: A

    Nav, a startup that gives small businesses free access to their credit reports, said on Monday that it had raised $44 million from investors including Goldman Sachs Group Inc (GS.N), Point72 Ventures and Experian Ventures (EXPN.L).

    Well Fargo Outage Points to Opportunity in Digital Banking (Lend Academy), Rated: A

    Wells Fargo is still digging out from a PR disaster last week when the bank went offline for a large segment of customers due to a fire alarm triggered in a server facility in Minnesota. Customers could not access the mobile app, the website or ATMs. The incident has been used to highlight how big an opportunity there is for fintech firms or more nimble banks.

    What the outage shows is that bank infrastructure is still stuck in the past, analysts rightly askedwhy Wells Fargo did not have the bank running on a cloud based system.

    Digital bank Chime seemed to benefit from the news with more than 10,000 accounts being opened, a record 24 hour period for the startup.

    new survey by Fraedom says 80 percent of banks believe challengers have impacted their business and 30 percent say they are their biggest threat.

    Susan Ehrlich of Earnest (Lend Academy), Rated: A

    Our next guest on the Lend Academy Podcast is Susan Ehrlich, the CEO of Earnest. They are one of the largest student loan refinancers in the country and they also offer personal loans. Back in 2017 Earnest was acquired by the student loan servicer Navient which was itself spun out from Sallie Mae in 2014.

    Government Shutdown Slows SBA Lending Volume, Approval Percentage Dipped Slightly in January (GlobeNewswire), Rated: A

    Business loan approval rates dropped three-tenths of a percent at regional and community banks in December 2018. Small bank approvals dropped a full percentage point from 49.9% in December 2018 to 48.9% in January.

    Small business loan approval rates for big banks remained at a record high 27% in January 2019, according to the Biz2Credit Small Business Lending Index, which examines more than 1,000 small business credit applications made via its online lending platform.

    Goldberg added that since reopening on January 28, her office has guaranteed more than 200 SBA loans worth $59.3 million.

    Institutional lenders climbed up to 65.1 %, a jump of three-tenths of a percent from December’s mark of 64.8%.

    Loan approval rates among alternative lenders rose from 56.6% in December to 57.3% in January, a jump of seven-tenths of a percent.

    Citi rolls out new personal loan, online savings account (American Banker), Rated: A

    Citigroup has launched a new consumer loan product and a new high-yielding savings-account as part of its rollout of its new digital bank.

    The New York bank recently introduced Citi Flex Loan, which allows select existing Citi credit card customers to convert part of their credit lines to a loan with a fixed annual percentage rate, Mark Mason, Citigroup’s incoming chief financial officer, said Tuesday at an investor conference.

    Square’s banking bid avoids backlash that doomed Walmart’s (American Banker), Rated: A

    As Square seeks federal approval for a Utah industrial loan company, the fintech’s bid has so far avoided the kind of loud, public opposition that marred past ILC bids by higher-profile nonbanks.

    Community banks still criticize the ILC charter as a banking loophole for non-financial firms, and the Independent Community Bankers of America opposes Square’s application.

    Almost 60% of small business owners launch with less than $ 25,000 (CNBC), Rated: A

    At least that’s according to entrepreneurs polled recently by Kabbage, a financial services and data platform serving small businesses. More than half of those polled, or 58 percent, started their businesses with less than $25,000. A third started with less than $5,000.

    These numbers track with the latest data from the U.S. Census Bureau, which found that the median cost to start or acquire a company is about $25,000. It did find fewer businesses that begin with less than $25,000, only 46 percent, though that could be due to its inclusion of new owners who purchase existing operations as well owner starting from scratch.

    LoanStreet Adds Commercial Lending Features for Financial Institutions (Crowdfund Insider), Rated: A

    LoanStreet, an online platform that enables traditional finance like banks credit unions and other direct lenders to streamline the process of sharing, managing, and originating loans, has added new features. The SaaS platform now offers commercial loan origination and administration solution for any size financial institution, loan or deal volume.

    LoanStreet’s new lending features include:

    • Built-in collaboration tools offering the flexibility to originate the loan best suited to your borrowers’ needs without sacrificing the ability to invite other financial institutions into the deal.
    • Single access point allowing all parties, including borrowers, lenders, attorneys and auditors, continuous and secure access to the same information.
    • Integrated platform from origination to maturity avoids re-keying, duplication of efforts and eliminates transfer errors and other critical information loss that occurs over time.
    • Efficient process management enabling online, borrower self-service of key administrative tasks — including online payment acceptance — while improving internal controls and information flow.
    • Automated reporting facilitating completion of all applicable regulatory and financial entries for you and every investor.

    Velocity Investments sues woman for breach of contract, seeks ,500 in damages (Louisiana Record), Rated: A

    Velocity Investments LLC, assignee of Lending Club Corporation, filed a complaint against Heather Darling on Feb. 12 in the 24th Judicial District Court. According to the lawsuit, the plaintiff states that the defendant has failed to pay off the balance of $22,495.23 plus interest on a contract between the parties. The defendant is accused of sums due on an open account and breach of contract.

    Online Loan Companies Are No Easy Fix for Desperate Borrowers (Real Daily), Rated: A

    Lending Club is currently the largest online lender in the world. By some estimates, Lending Club, which launched in 2007, facilitated anywhere between $35 billion and $55 billion in online loans in 2018.

    Now as more financial institutions are beginning to extend loans, Americans are falling even deeper into debt again. Americans, as individuals and households, owed over $13 trillion dollars, collectively, in 2018.

    Best News We’ve Heard All Day: More Single Women Own Homes Than Single Men (Pure Wow), Rated: A

    Online loan marketplace LendingTree reports that on average, single women own around 22 percent of homes, while single men own less than 13 percent. The study states that the gender gap in housing across the country is particularly interesting “given the average woman in the U.S. only makes 80 percent of what the average man does.” Interesting, indeed. (We can think of another word for it.)

    Thoma Bravo Is Buying Digital-Focused Mortgage Company (WSJ), Rated: A

    Thoma Bravo LLC has agreed to buy mortgage software firm Ellie Mae Inc. for $3.7 billion, the latest indication that challenges in the home-lending market are spurring consolidation across the industry.

    The transaction will give the private-equity firm control of a company whose technology has been used to help automate the closing of millions of home loans. Based in Pleasanton, Calif., Ellie Mae handles the technology that underpins the entire home-loan origination process, and its services are used in

    INSIKT Changes Name to Aura (Business Wire), Rated: B

    INSIKT, a mission-driven financial technology company that offers affordable loans to hard-working families, today announced that it has changed its name to Aura to expand its focus on creating greater financial health, independence and economic stability for millions in America.

    Roostify Expands Advisory Board with Investment Virtuoso (Roostify), Rated: B

    Roostify, the San Francisco-based digital lending platform provider, announced today the addition of financial services consultant Marshall Lux to its advisory board. Lux, a distinguished consultant, advisor and educator, brings more than 30 years’ experience in private equity to the rapidly expanding business and reflects Roostify’s commitment to perfecting a scalable operational model and further developing an ecosystem of technology partners and strategic alliances.

    LendIt Fintech USA 2019 (LendIt), Rated: B

    April 8-9
    Moscone West
    San Francisco

    HIGHLIGHTED KEYNOTES

    Sallie Krawcheck
    CEO & Co-Founder
    Ellevest

    Rob Frohwein
    CEO & Co-Founder
    Kabbage

    Steven Streit
    CEO
    Green Dot

    Mike Cagney
    Co-Founder
    Figure

    United Kingdom

    Zopa chairman Giles Andrew to step down after 15 years (Independent), Rated: AAA

    Zopa’s co-founder Giles Andrew is to step down as chairman after 15 years at Britain’s oldest peer-to-peer lender.

    Zopa appoints Virgin veteran McCallum as chairman (Finextra), Rated: A

    P2P lender Zopa has appointed former Virgin Management CEO Gordon McCallum as chairman as it gears up for the forthcoming launch of its new banking venture.

    Ratesetter ISA tops £175m in first year (AltFi), Rated: AAA

    The peer-to-peer lending platform said its ISA accounts for one-fifth of its £830m of funds under management.

    Peer-to-peer lending platform Ratesetter said it has been “blown away” by the popularity of its first ISA product, which has hit £175m of subscriptions a year after launch.

    Assetz Capital surpasses £700m lending mark (Bridging and Commercial), Rated: AAA

    Assetz Capital has now lent over £700m to SMEs and property developers since launching in 2013.

    The P2P lending platform has enjoyed significant progression, providing over £200m of funding in the eight months since it surpassed the £500m lending milestone in June 2018.

    Former Assetz Capital founder launches fintech consultancy (AltFi), Rated: A

    The co-founder of one of Europe’s largest peer-to-peer lenders has launched a fintech consultancy to help young firms “avoid some of the mistakes made by the early incumbents of the industry”.

    Former Assetz Capital chief credit officer Andrew Holgate will lead a team of City veterans at consultancy Equitivo, which will help growing fintech firms raise cash, focus on strategy, trim operations and boost performance.

    ‘There is no magic bullet, people will get P2P over time’ (FT Adviser), Rated: A

    The chief operating officer of peer-to-peer platform Relendex, Max Lehrain, has concerns about the Financial Conduct Authority’s crack down on P2P lenders and crowdfunding platforms.

    UK challenger bank Starling secures £75m for European expansion (Fintech Futures), Rated: A

    Life is sweet for UK challenger bank Starling as it has raised £75 million in funding for its expansion plans in Europe.

    It got £60 million in a Series C round led by Merian Global Investors, including the Merian Chrysalis Investment Company.

    Monzo Launches First 100 Business Accounts (Crowdfund Insider), Rated: A

    UK challenger bank Monzo announced on Monday the launch of its first 100 business accounts. This news comes just a few months after Monzo revealed it was considered business banking, with Founder and CEO, Tom Blomfield, stating 2019 plans included business accounts. Speaking about the new accounts, Monzo reported:

    Main Street banks say fintechs like Monzo, N26 and Chime pose the biggest disruptive threat to their businesses (Business Insider), Rated: A

    Main Street banks believe upstarts like Monzo, N26 and Chime, known as challenger banks, pose a significant threat to their business, according to a recent survey.

    Fraedom, a credit card specialist who works with companies like Visa, SunTrust, and Bank of Montreal, surveyed bankers on what some of the biggest impacts to their business will be in 2019. The vast majority (80%) believe challenger banks have an increased impact to their business, and 30% pegged the new competitors as the biggest disruptive threat to their business in 2019.

    Tandem Bank boss calls for rate cut to kick-start UK economy (AltFi), Rated: A

    Ricky Knox, chief executive of app-only lender Tandem Bank called on the central bank to cut rates to kick-start growth, as currently savers are locking away cash in specialist higher interest accounts.

    Peer-to-Peer Lending and Brexit (4th Way email), Rated: A

    Shares plunged and the pound plummeted to a 31-year low when the UK voted to leave the EU. More recently chaotic Brexit negotiations indicate a disorderly exit that could see investors avoid traditional investments in the UK, but what does this mean for peer-for-peer lending and should lenders be worried?

    Bank and P2P lending is far less volatile than equity investing, because:

    • It is short-term orientated.
    • Lenders easily diversify widely across thousands of investments – loans – as opposed to a typical stock investor who diversifies across hundreds of shares through share funds.
    • In P2P lending, buy/sell price swings, often fuelled by uncertainty, are usually irrelevant, since lenders hold loans for the full term.
    • Lenders are usually in a better place in the queue compared to equity investors when recovering losses is involved, which can mean smaller losses on individual investments (loans) that go wrong.
    • With lending being data driven, recession conditions are easier to plan for. A turbulent P2P Brexit would mean a tripling of defaulting loans in some kinds of lending and cut-price sales of borrowers’ assets. Interest rates and reserve funds are prepped for most disasters, leaving a very low chance of a sizeable overall loss on a well-diversified, low-risk lending portfolio.

    Most investors in peer-to-peer lending are using platforms that are run by people with relevant banking experience. The banks, when we look at their bread-and-butter lending, have found it easy to maintain net profits even during multiple downturns over the past 20 years, which includes the Great Recession. This is across the spectrum of lending, from buy-to-let mortgages to personal loans and credit cards. Perhaps surprisingly, retail and small business lending combined was still profitable for the UK’s high street banks during the 2008 and 2009 crash.

    Learn more about 4th Way here.

    Mojo Mortgages secures £7million to revolutionise the UK mortgage experience (Manchester Digital), Rated: A

    Mojo Mortgages, a fintech start up based in the North West has secured £7million in Series A funding to transform the mortgage experience.

    Mortgage Brain boosts user numbers (Mortgage Introducer), Rated: A

    Mortgage Brain welcomed over 2,000 new customers during 2018 with a host of national networks, corporate firms and individual adviser firms choosing to use one or more of its products and services.

    A number of new customers – including Censeo, Intelligence Mortgage Solutions, Your Expert Group, Affinity Mortgages and Your Mortgage Solutions – as well as a number of contract renewals and user license increases, have all contributed to Mortgage Brain’s growth throughout 2018.

    UK inflation below official target for first time in 2 years (Miami Herald), Rated: A

    Lower energy costs as well as a waning impact from the pound’s sharp fall in the aftermath of the country’s Brexit vote have helped consumer price inflation in Britain fall below the Bank of England’s target of 2 percent for the first time in two years.

    The Office for National Statistics said Wednesday that consumer prices rose by 1.8 percent in the year to January, down from the 2.1 percent recorded in the previous month. Inflation has been consistently falling since August as the effects of the pound’s decline drop out of annual comparisons. The latest decline was further accentuated by a fall in the price of electricity, gas and other fuels.

    Inflation is now at its lowest since January 2017, when inflation was also 1.8 percent.

    Arbuthnot Commercial ABL delivers £12m refinancing facility (Bridging Loan Directory), Rated: B

    Arbuthnot Commercial Asset Based Lending Ltd. is delighted to announce it has completed a £12m refinancing for L&C Limited, trading under Red 7 Marine (“R7M”), provider of nearshore access solutions to the UK marine construction and maintenance industry, and an investee company of Perwyn Private Equity (“Perwyn”).

    European Union

    UK fintech unicorn Revolut forced to deny links to Russia (Business Insider), Rated: AAA

    Unicorn challenger bank Revolut has strongly denied claims that its activities in securing a banking license in Lithuania are attempts to interfere in the country’s politics.

    Revolut was granted a European Banking License in Lithuania in December but has since faced claims of interfering in the country’s political processes by Lithuanian Member of Parliament Stasys Jakeliūnas, chair of the Lithuanian parliament’s budget and finance committee.

    German Lending Marketplace auxmoney Overtakes Midsize Banks in Consumer Loan Origination (Crowdfund Insider), Rated: AAA

    Düsseldorf-based Fintech auxmoney has surpassed its targets in 2018. Loan volume increased by 74 percent compared to 2017. Raffael Johnen, Founder and CEO of auxmoney, commented:

    “While the major German banks are in crisis mode, the leading German fintechs are always setting new records. With our continuously strong growth, we managed to be the first credit marketplace to catch up with medium-sized banks in Germany.”

    It issued new loans totaling €551 million last year.

    Auxmoney Now Stands for 0.5% of the Market of German Consumer Loans (P2P-Banking), Rated: A

    German p2p lending marketplace Auxmoney announced that it has facilitated 551M EUR in consumer loans in the year 2018. Up 74% compared to 2017. Approximately 73,000 loans were financed. That would mean Auxmoney now stands for a market share of roughly 0.5% of the market.

    Gymshark teams up with Klarna to announce pay later service (RLI), Rated: B

    Fitness wear brand Gymshark has announced the launch of a pay later service in the UK, Sweden, Norway, Finland and Denmark. The company is now in a partnership with Klarna, a payments provider which will offer Gymshark the new payment option. The payment service will allow online shoppers to try on items at home before paying for the order.

    Instantor releases report on how machine learning is revolutionising credit risk management in Europe (Fintech Finance), Rated: B

    Instantor, the 3rd. fastest growing Swedish FinTech who makes tough calls easy within credit risk management presents “Credit Risk Management 2019 – How Do You Stack Up?”, a report based on a survey conducted by Instantor across Europe among top executives within leading financial organisations. The report reveals that two-thirds of these players are well underway to implementing machine learning (ML) and the majority benefits from its implementation within credit risk management.

    International

    30 Under 30 Europe: The Young Money Merchants Shaping Financial Markets In 2019 (Forbes), Rated: AAA

    Finance is hardly known for its youthfulness, yet this year’s Finance 30 Under 30s are proving that an old industry can learn new tricks. These young venture capitalists, fintech entrepreneurs, crypto enthusiasts and Millennial bankers, with an average age of just 27, are reshaping the sector and transforming our relationship with money.

    The Next Global Financial Meltdown Is Just Around the Corner (Equities.com), Rated: AAA

    As Bloomberg reported last year:

    Shadow banking in China has ballooned into a $10 trillion ecosystem which connects thousands of financial institutions with companies, local governments and hundreds of millions of households. The practice is now at the center of a Chinese government-led regulatory crackdown aimed at defusing financial risks that threaten the wider economy. Unlike in the U.S., traditional commercial banks drive shadow banking, or unregulated lending, in China. That’s because the banks have been able to keep shadow-banking assets off their balance sheets, thereby sidestepping regulatory constraints on lending.

    About 169 million Chinese, or about 12 per cent of the population, have invested in wealth management products online, a rise of 66 per cent from two years ago, according to a Moody’s report published this month. Essentially, they are putting money into the shadow banking system.

    “The picture is different in the European Union. Here, the shadow sector now accounts for perhaps 30–40% of total financial intermediation. But it is growing. Between 2012 and 2016, shadow banking as broadly measured expanded by almost 40% in the eurozone.

    Atlanta-based IDology to Be Acquired by GBG for $ 300m (PR Newswire), Rated: A

    GBG, the UK-headquartered Identity Data Intelligence specialist, today announces that it has conditionally agreed to acquire the entire issued share capital of IDology, a US-based provider of identity verification and fraud prevention services, for $300m (£233m) in an all-cash transaction.

    Nexo lending to offer crypto-backed loans with Blockport exchange (Bankless Times), Rated: B

    Blockport users will be able to use the Nexo platform to get crypto loans, offering them another alternative to selling their cryptocurrencies for fiat currencies. Instead of selling they cryptocurrency assets, Blockport users can now keep their crypto, with all potential upsides, and leverage them to get instant access to cash.

    Australia

    Next Growth Wave: Fintech (Seeking Alpha), Rated: AAA

    In this article we look at some fintech companies, beyond investor’s normal horizon of the United States. In Australia there is a small cluster of listed fintech companies that have started to explode. Some have made gains of 400% in a year and more than 1,000% on the back of strong revenue and turnover growth. Moreover because Australian companies lack access to large scale V.C. investments, technology companies often need to capital raise through a public listing.

    Zip Co. (ASX: Z1P)

    Zip Co. is quite similar to Afterpay and in some ways its closest competitor with an established market position. However in addition to payment splitting, it also offers interest based loans and is different in other ways.

    • Zip Co. is smaller with a market capitalization of $380 M AUD (about $266 M USD), but still has 12,600 retail partners including most of Australia’s largest retailers, however it hasn’t yet entered the U.S. or the U.K.
    • Zip Co. has Zip Pay, which provides a payment splitting application with no interest, but with more flexibility in length of time or repayment amount than Afterpay’s solution.
    • Zip Co. also has Zip Money also provides loans for purchases above $1,000 AUD, with a 3 month interest free period, but with an establishment fee of up to $99.
    • Source: Seeking Alpha

    Labor’s negative gearing policies could hurt first-home buyers (Your Mortgage), Rated: A

    “Despite Australia’s tight regulations on foreign investment, other overseas property markets are tighter – including China, Canada and New Zealand,” Driscoll said. “Unlike in Australia, the Chinese lack many appealing alternative investments at home and, due to government crackdowns on peer-to-peer lending, private equity funds and with the majority of their property being leasehold, many investors are forced to look elsewhere.”

    India

    India’s fintech future looks bright, but it needs to find its raison d’être (India Times), Rated: AAA

    Yet there is more room for growth. The market in India is still small; far more deals are being done in China, and for far higher valuations. Last year alone, venture capital investments into Chinese fintechs were more than 10 times larger than those in India, with 75 percent more deals.

    Although the value of investments in India declined by 21 percent in 2018 over the previous year, the number of deals actually rose 12 percent, making 2018 the most active year on record for fintech financing.

    RBI may change Rs 10 lakh lending cap on P2P platforms, say P2P players (India Times), Rated: A

    Peer to Peer or P2P players are hopeful that the comprehensive financial data sought by the Reserve Bank of India might help the regulator to take some major policy decisions concerning the industry.

    Asia

    Hundreds of unlicensed P2P lenders still operating in Indonesia (The Jakarta Post), Rated: AAA

    The Financial Services Authority (OJK) has found that 231 illegal peer-to-peer lending (P2P) providers, including those from other countries, have been operating in the country since January.

    An Overview on Peer-To-Peer Lending in Indonesia (Legal Business Online), Rated: A

    Two years following the enactment of Financial Service Authority (Otoritas Jasa Keuangan/”OJK) Regulation No. 77/POJK.01/2016 of 2016 (POJK 77/2016), Peer-to-Peer Lending (P2P Lending) has grown popular in Indonesia. Based on data from OJK per Oct. 2018, a total of 15,990,143,141,355 rupiah has been distributed to the borrowers in P2P Lending. It has grown 432.5% from Jan. 2018 until Oct. 2018. Until Dec. 2018, the number of P2P Lending Platform which has been registered and supervised by OJK has reached 88 companies, one of them has been given a license.

    Canada

    Finastra announces Siobhan Byron as new Head of Technology Enabled Managed Services (Finastra), Rated: A

    Finastra has appointed Siobhan Byron as Senior Vice President and Head of Technology Enabled Managed Services (TEMS). In this role, she oversees planning and execution, sales and marketing, research and development and product management across four lines of business including Checks, Enhanced Services, Student Lending and Canadian Mortgage Technology, all in the Canadian market. She oversees more than 1,300 employees that make up Finastra’s TEMS business.

    Authors:

    George Popescu
    Allen Taylor

    The post Thursday February 14 2019, Weekly News Digest appeared first on Lending Times.

    Friday December 1 2017, Daily News Digest

    interest rate sensitivity

    News Comments Today’s main news: Affirm partners with Shopify Plus.The Fed is thinking about starting a cryptocurrency.Payday lending group sues Consumer Financial Protection Bureau (CFPB).Funding Circle gets first IFISA sign-up within 15 minutes of opening.Assetz Capital to launch IFISA with manual lending.KappAhl to offer mobile payments in store with Klarna. Today’s main analysis: How should […]

    interest rate sensitivity

    News Comments

    United States

    United Kingdom

    China

    European Union

    International

    Australia

    India

    Asia

    Canada

    News Summary

    United States

    Affirm Joins Forces With Shopify Plus to Help High Growth Retailers Rapidly Scale Online Store Sales (BusinessWire), Rated: AAA

    Affirm, Inc., the company started by Max Levchin to provide fair and honest consumer financing, today announced it has joined the Shopify Plus Technology Partner Program to help more retailers quickly scale their online store sales by giving their customers a quick and easy alternative to credit cards.

    Affirm App Gives Loans For Designer Jeans, Holiday Flights And More (International Business Times), Rated: A

    Affirm’s chief of staff and head of international expansion, Ryan Metcalf, told International Business Times the startup works with 1,200 retailers nationwide and issued $1 billion worth of loans in 2017.

    “We are able to approve 126 percent more people than industry averages. A large portion of these people have no access to credit or if they do they are being mispriced in the market because their FICO score is outdated,” Metcalf said. “Around one in 10 Americans have ‘unscorable’ credit reports. That’s around 30 million people. So we’re also able to offer credit to those people as well.”

    According to the Fair Isaac Corporation’s data, 20 percent of American credit card owners are ranked as “subprime” because their FICO score is 600 or lower.

    Expert Commentary: how should equity investors position for a secular uptrend in rates? (INTL FCStone Email), Rated: AAA

    In Four Interest Rate Myths, I made a theoretical case for higher rates by debunking the New Gospel of the New Normal. The Slow Agony of and Old Bull highlighted seven signs that the bond bull market was already over. This report discusses the most important question facing market participants for the next five years – how should equity investors position for a secular uptrend in rates?

    The report reviews the performance of U.S. sectors, currencies, and international indices during prior hiking cycles and their recent correlations with yields. Six conclusions emerge:

    • Almost tautologically, bond proxies have consistently underperformed during prior hiking cycles.
    • Currently, only two sectors are positively related to interest rates: financials and energy. Since their valuations remain below average, these sectors are a cheap option against the risk of rising rates.
    • Investors should monitor the correlation between yields and tech stocks: higher rates would kill the bull market if the correlation between tech stocks and bond yields turned negative.
    • U.S. stocks and the dollar index have tended to fall in prior hiking cycles.
    • Korean equities and, to a lesser extent, Japanese stocks have outperformed during prior hiking cycles.
    • The performance of emerging markets and commodity-driven markets is mixed: they have outperformed massively during in the 2003-2006 cycles, but have suffered during the hiking cycles of the 90s.

    Read the full report here.

    Dudley Says Fed Has Started Thinking About Official Digital Currency (WSJ), Rated: AAA

    Federal Reserve Bank of New York President William Dudley said Wednesday the U.S. central bank is beginning to explore whether it could adopt its own digital currency, in an appearance at Rutgers University where he also expressed optimism about the economy.

    Bitcoin is “really more of a speculative activity,” Mr. Dudley said. But he said aspects of the technology are interesting and worthy of attention. “It’s premature to be talking about the Federal Reserve offering digital currencies, but it is something we are starting to think about,” he said.

    Some academics have called for the Fed to offer its own digital currency. They believe it would afford the central bank better control over the economy by tweaking interest rates at the consumer level, bypassing fickle financial markets that often work at cross-purposes with Fed policy aims.

    THE FINTECH EFFECT: AMAZON, GOOGLE, AND THE DISRUPTION OF SMALL BUSINESS LENDING (The Boss Magazine), Rated: AAA

    If banking bigwigs and fintech entrepreneurs have seemed a bit queasy since October’s Lendit Europe conference, they might be blaming Karen Mills for daring to illuminate the elephants in the room: Amazon and Google, and their ability to disrupt the small business lending industry.

    Mills, a former White House administrator for small business and current Harvard Business Review fellow, succinctly pointed out the obvious. With the tremendous amount of financial and personal data these behemoths collect, a broadening of scope into small business lending may be inevitable.

    While Google hasn’t made any notable overtures into the lending business yet, Amazon launched its lending business to support its merchants in 2012. As reported by Bloomberg, the retailer issued $1 billion in loans in the 12 months between May 2016 and June 2017. To date, they have extended $3 billion to over 20,000 small businesses here, as well as in the U.K. and Japan.

    The Magnificence of Micro Loans

    Merchant services provider Square has given its merchants loans of over $1.5 billion since its in inception in 2014, and PayPal’s Working Capital program has loaned over 115,000 global businesses a total of $3 billion.

    Amazon and Square merchants repay the loans automatically based on the amount of sales they make. PayPal’s maximum small business loan amount is 30 percent of a merchant’s annual PayPal sales, not to exceed $97,000 for the first loan.

    Small Business Domination

    Small businesses account for roughly 99.9 percent of all businesses in the U.S., and are responsible for 61.8 percent of the new jobs established from Q1 1993 to Q3 2016. About 80 percent of the nation’s 29.6 million small businesses are nonemployers.

    Payday lending group plans to sue the Consumer Financial Protection Bureau (USA Today), Rated: AAA

    The Community Financial Services Association of America plans to challenge one of the federal watchdog’s signature achievements could signal how the consumer bureau’s previous enforcement policies will shift under new Trump administration leadership.

    The anticipated battle would target a new rule that was indeed published in the Federal Register on Nov. 17, capping a contentious 18-month public comment and lobbying battle between the payday loan industry and consumer advocates.

    Federal budget director Mick Mulvaney, installed by Trump as the bureau’s acting director, has been critical of the payday lending rule and has received campaign backing from the industry. He received $31,700 in 2015-2016 federal campaign cycle contributions from payday lenders, ranking ninth among all congressional recipients, according to data analyzed by the Center for Responsive Politics.

    Federal judge refuses to block Trump’s designation of Mulvaney as interim head of CFPB (Legal NewsLine), Rated: A

    A federal judge on Tuesday rejected arguments by Leandra English, who was named the deputy director of the Consumer Financial Protection Bureau by outgoing director Richard Cordray, in a lawsuit she brought over the agency’s interim leadership.

    Judge Timothy J. Kelly for the U.S. District Court for the District of Columbia, according to a minute order and entry on the case docket, denied English’s emergency motion for temporary restraining order after a motion hearing held Tuesday.

    English filed her lawsuit Sunday night in attempt to block President Donald Trump’s naming of Office of Management and Budget Director Mick Mulvaney as the bureau’s acting director.

    In a minute order filed Wednesday, Kelly said the parties will meet, confer and submit by Dec. 1 a joint proposed schedule for briefing the merits and/or for briefing a preliminary injunction, or separate schedules.

    Payday lender going public as new sheriff takes over at CFPB (Seeking Alpha), Rated: B

    Curo Group is looking to raise about $100M with the sale of 6.7M shares at hoped-for range of $14-$16 each. Prospectus here

    Marlette Funding President Offers Insight on Personal Loan Market (LendEDU), Rated: A

    Q: So we know that Fintech personal loan lenders are starting to attract more consumers and take up more of the market. How do you expect traditional banks to react to this over the next couple of years if the trend continues?

    A: You’re starting to see banks wake up to this new way of lending. They’ve been impacted by a regulation-focused environment in recent years, driving them towards a compliance mindset. However, banks are starting to think of ways to grow their consumer lending businesses, and technology is a big part of this.

    Q: What sort of future do you see for blockchain technology in the Fintech personal loanmarket? What sort of challenge would its implementation pose to Fintech lenders?

    A: One use that I could see for Fintech lending is creating a more secured identity verification process for the customer. From the recent Equifax news, you have a single source of data where all relevant info is in one location, and a breach creates both chaos as well as problems with trust. Distributed ledger tech creates an interesting opportunity to limit this concern, but it’s going to take a long time before it can be implemented fully.

    For Workers In A Pinch, Start-Ups Experiment With No-Interest Loans (Forbes), Rated: A

    Dave is part of a new crop of financial technology companies that are trying to help consumers avoid nasty overdraft fees, as well as payday loans, pawn shops and other expensive forms of debt, via zero-interest loans. They’re going after workers who may struggle to make ends meet, but who could benefit from a minor influx of cash at the right time.

    Dave analyzes a consumer’s bank account history to issue warnings about potential overdrafts up to seven days in advance. Then, for users who still find they’re in a pinch, it may approve a loan of up to $75. Dave doesn’t charge interest, but the app costs $1 a month and users are asked to leave a tip on advances. The Mark Cuban-backed service has amassed 100,000 users since it launched in April.

    In 2016, financial institutions hauled in $33.3 billion on overdraft fees alone, according to Moebs Services, an economic research firm.

    Dave, in addition to companies like Even and Earnin (formerly Activehours), are attempting to do away with the high interest rates and fees that they say put a financial institution’s incentives in contrast with those of the borrower. Their answer: Small, zero-interest advances on a person’s next paycheck with no hidden or punitive fees.

    According to one study of low and moderate income families, household income spiked — or fell — by more than 25% in six months out of every year.

    YieldStreet CEO Milind Mehere: Excited about Growth and YieldStreet’s Future (Crowdfund Insider), Rated: A

    Launched in NYC in 2015, YieldStreet aims to allow people to invest in alternative investments that are backed by real collateral. With a world-class advisory board which recently added three new members Ron Suber (Prosper Group), Mitch Jacobs (On Deck)Alexandra Wilkis Wilson (Gilt Group) and a growing leadership team, including Volfi Mizrahi who just joined as Managing Director of Originations and Ivor Wolk as General Counsel, the platform’s growth is undeniable.

    Erin: On what other elements of your YieldStreet street vision are you currently working?

    Milind: Continuing to expand our product and audience offering – AutoInvest will let users choose their investment preferences such as asset class, yield and duration, then the algorithm our platform uses will match them as offerings become available. In 2018 we hope to open the platform to non-accredited investors, and we are working to provide liquidity on our platform, as well as creating products for the Financial Advisor/RIA market and IRA market.

    Erin: How do you expect YieldStreet to grow? How do you source deals?

    We work with a network of originators and asset managers, as well as many funds (from $50M to $10B) in the private credit space.

    Erin: What lessons from Yodle — from its beginnings to its $342M sale to web.com in 2016 — have you applied to YieldStreet?

    Milind: We have been incredibly efficient at YieldStreet because of that. We have just raised $3.7M in seed capital to reach $200M in originations, where some of our peers have raised anywhere from 6x-25x to achieve the same results. Yodle taught me to be extremely disciplined about where to invest and when.

    Erin: What are YieldStreet’s future plans for growth by 2018? by 2020? by 2025?  How do you predict the sector will change and be disrupted?

    Milind: According to a recent report by PricewaterhouseCoopers (PwC), the asset management industry is set for “transformational change” and booming growth in the next decade. Alternative asset classes, such as real estate and private debt are expected to grow to about $21.1 trillion by 2025.

    Innovative Approaches to Expanding Home Availability and Affordability (Lend Academy), Rated: A

    It seems like almost every day I see a story about increasing real estate prices in the major metropolitan areas of the US. Prices in cities like San Francisco, New York, Seattle, Washington DC have made homeownership unobtainable for many people.

    SoFi comes to mind with their jumbo mortgage which allows borrowers to put just 10% down and offers loans up to $3 million.

    Landed is taking a different approach. I spoke with Alex Lofton who is Head of Growth and Co-founder at the company. They first came on my radar this summer when TechCrunch profiled them. They are similar to companies like Unison (who recently was on the Lend Academy podcast) and Point with a slight twist. Currently, the company focuses on teachers to help purchase a home, providing up to 50% of the down payment. Like other similar products, Landed participates in either the upside or downside when the home is sold.

    PWC CHARGE: ASSET MANAGERS ARE DIGITAL TECH ‘LAGGARDS’ (AllAboutAlpha), Rated: A

    In filling out the particulars of this claim the authors of the new report make four more specific points: one, asset management is a buyers’ market and will become more so, in large part because “institutional investors have the tools to differentiate alpha and beta,” and they want to pay for the former not the latter. They also say that asset managers have been filling gaps in the financial system that emerged in the wake of the global financial crisis – they’ll need to capitalize on and expand these once-niche markets. Thirdly, while they make the common point that traditional active managers feel a squeeze between passive management on the one hand and alternatives on the other, they go further in that direction than other analysts have, saying that the way to react to this squeeze is not to try to beat back the competing forces but to join them, to turn a management firm into a “multi-asset solutions firm.”

    But perhaps the most surprising of the four points is the contention that asset management has been a refuge of digital technology “laggards,” and that this will change in the near future, as “technology giants … enter the sector, flexing their data analytics and distribution muscle. The race is on.”

    Lincoln Financial Network Launches Integrated Technology Platform to Drive Greater Client Engagement and Collaboration in Financial Planning (BusinessWire), Rated: A

    Lincoln Financial Network (LFN), the retail wealth management affiliate of Lincoln Financial Group (NYSE:LNC), today announced that it has successfully launched a meaningful enhancement to its fully integrated wealth management platform for financial advisors and their clients – Automated Account Opening (AAO). AAO encompasses a full suite of new capabilities, integrated tools, and client-servicing solutions that will increase client satisfaction and collaboration with advisors.

    Banks resist pressure to raise rates, but for how long? (American Banker), Rated: A

    Online banks have been aggressively raising the rates they pay on consumer deposits, and that is putting pressure on mainstream banks to consider following suit or risk losing valuable deposits to their more nimble competitors.

    A recent survey of 100 banks conducted by MoneyRates.com found that online banks such as Ally Bank, Goldman Sachs’ GS Bank and Sallie Mae Bank are paying significantly higher rates on savings and money market accounts than their brick-and-mortar counterparts.

    U.S. regional banks delve deeper into advisory services to boost growth (NASDAQ), Rated: A

    Smaller banks, like their bigger Wall Street rivals, have aggressively cut costs since the 2008 financial crisis and trusted ultra-low interest rates to increase loan volumes.

    U.S. Bancorp, BB&T Corp, SunTrust Banks Inc, Fifth Third Bancorp, KeyCorp and Citizens Financial Group Inc together earned $6.97 billion in non-interest income in the third quarter, up 10.6 percent from a year earlier and 15.2 percent from the second quarter.

    That compares with growth in net interest income of 7.7 percent and 2 percent, respectively.

    RICH PICKINGS

    The number of millionaires in the United States is at the highest since Chicago-based research company Spectrem Group started measuring it in 2004, but thresholds of – for example $250,000 to invest – mean many are too small to get personal attention from the big Wall Street firms.

    Born between the early 1960s and 2000, Americans from Generations X and Y who have an average annual income of about $200,000, account for 18 percent of millionaires compared with 8 percent in 2012.

    Yet only 58 percent have financial advisers compared to 72 percent five years ago, according to a study by Fidelity Investment.

    KeyBank Forms Strategic Partnership With Snapsheet To Provide Powerful Insurance Claims Payment Solutions (PR Newswire), Rated: A

    KeyCorp (NYSE: KEY) announced today its strategic investment and partnership with Snapsheet, an innovator of self-service claims solutions for insurance carriers. This investment follows the joint launch and announcement of Snapsheet Transactions, a payment platform on the back end of Snapsheet’s existing claims solution.

    Snapsheet Transactions provides carriers with a payment hub that features a variety of payment options, without adding complexity or risk to insurance carriers’ back-end processes. Key and Snapsheet will continue to partner with each other to support the rollout and execution of enhancements and innovations related to Snapsheet Transactions.

    Concord President & COO Shaun O’Neill to Lead Panel at Marketplace Lending Conference in New York City (PRWeb), Rated: B

    Shaun O’Neill, President and COO of Concord Servicing Corporation, a leading force in the portfolio servicing and financial technology industry, has been invited to serve as moderator of a finance-related panel during the upcoming Information Management Network’s 3rd Annual Investors’ Conference on Marketplace Lending. O’Neill’s panel will focus on the highly topical “Trends and Best Practices for Loan Servicing” during the conference, to be held December 1st at the Marriott New York Downtown, in New York City.

    LendingTree Logo To Appear On Greensboro Swarm Jerseys As Part of Company’s Partnership With Hornets (NBA.com), Rated: B

    The Charlotte Hornets, Greensboro Swarm and LendingTree announced today that the LendingTree logo will appear on the jerseys of the Swarm as part of the Founding Level Partnership announced earlier this month between the Hornets and LendingTree.

    Family loans: How to dodge the drama (Work IT, SOVA), Rated: B

    There are advantages of a family loan for a borrower: no credit check, low or no interest and flexible payback terms.

    Family loans may also come with tax considerations, whether the lender charges interest or not. Charge zero interest, and you may face a gift tax; a borrower who receives a gift may have to report it as taxable income. Tack on an interest charge and you must follow IRS-specified guidelines for the rate you charge and report it as income.

    BORROWERS: EXHAUST OTHER OPTIONS FIRST

    When weighing the pros and cons of a family loan, also consider alternative options, including a personal loan borrowed from a bank, credit union or online lender that can be used for any purpose.

    Personal loans from credit unions and online lenders typically have more flexible qualification requirements than a bank loan.

    LENDERS: ASSESS THE REASON FOR THE REQUEST

    If you are lending the money, try to set your emotions aside and look at the reason for the loan. Has your family member been rejected by banks and other lenders? If so, why? Will your loan help promote good financial decisions?

    United Kingdom

    Funding Circle IFISA motors ahead with instant sign-ups (P2P Finance News), Rated: AAA

    Funding Circle has begun rolling out its Innovative Finance ISA (IFISA) to investors and had a customer sign up within 15 minutes.

    The peer-to-peer business lending giant started emailing users on Thursday morning, in order of when they opened accounts and started investing.

    The IFISA account is a flexi-ISA, meaning you can withdraw any available funds without affecting your annual £20,000 ISA subscription limit, providing you transfer them back in by the end of the tax year.

    Assetz Capital Announcement: Soon to Launch IFISA Set to Include Manual Lending (Crowdfund Insider), Rated: AAA

    The online lender reported that the IFISA will be launched next month, with users able to use their £20,000 annual tax-free allowance on the Assetz Capital platform. Users will be able to transfer in past years’ ISA savings from their cash and shares ISAs. Assetz Capital also noted that new and existing investors will be able to open an IFISA wrapper on the platform and then invest into any automated Assetz investment account. The IFISA is also set to include the popular Manual Loan Investment Account (MLIA) in the New Year.

    Digital banking: a tough way to make money (Financial Times), Rated: A

    It’s been a busy period for the UK’s fledgling digital banks. Since January, eight UK digital banks have collectively raised $600m and two challenger banks were acquired for $2B+. Digital banks have built out the tech, landed banking licenses, and started winning customers – but they have arrived at a ‘now what’ moment. How can they capture a large enough customer base to validate their significant collective investment?

    Monzo reported that its prepaid card scheme loses around £50 per active customer per year, and other digital banks face similar costs. While on the one hand the cost to acquire these current account customers is not very high, given the ‘buzz’ around the sector and banks’ word of mouth-driven growth – these current accounts, with their low average balances, are also inherently unprofitable. So it’s a steep climb for digital banks to recoup their operational costs, much less make a lot of money per customer.

    P2PGI unveils new strategy that speeds up timetable for target returns (P2P Finance News), Rated: A

    P2P GLOBAL Investments (P2PGI) has brought forward its timetable for reaching its target returns of six to eight per cent after unveiling its new portfolio strategy on Thursday morning.

    The investment trust said it now expects to provide a dividend of at least 15p per quarter by the end of the second quarter of 2018, which analysts say reflects an annualised yield of 7.8 per cent.

    LendInvest: How our BTL launch will fill the portfolio landlord lending gap (Mortgage Solutions), Rated: A

    The prospects of the dinner party landlord, who picked up a property or two during the boom years, have been dented by moves like the additional rate of stamp duty on second homes and the changes to mortgage interest tax relief.

    In contrast, it’s the professionals who are best placed to adjust their budgets and ride out such changes. These are the investors who spend their working hours – rather than just their spare time – focused on running their property businesses.

    Countrywide’s letting index in August flagged up the fact that the number of homes on the market to tenants has jumped by 171,000 over the last two years, despite the number of landlords falling by 154,000 over the same period.

    Three reasons why investors must consider alternative lending (Money Observer), Rated: A

    With cash held at the bank slowly being eroded by inflation, many investors have been attracted to the enhanced return prospects offered by alternative – or ‘peer-to-peer’ – lending.

    Alternative lending is very interesting from this perspective, as it is one of the few income options available to retail investors that may be shielded from market volatility. This has grown in importance recently as many markets are currently trading at historically high valuations. Markets follow a supply and demand dynamic and the traditional asset classes are definitely vulnerable to sudden downside pressures in stressed market environments.

    China

    Was 2017 the year that Chinese fintech grew up? (Ecns.cn), Rated: A

    While investments in the Chinese fintech sector tripled to almost 10 billion US dollars in 2016 compared to the year before, 2017 has seen a significant drop in corporate fintech investments across Asia. KPMG reports that corporates have only put 840 million US dollars into the sector in 2017, compared to 6.8 billion US dollars in 2016.

    Decline of P2P, robo-advisors

    One other area that has struggled in 2017 has been robo-advisors. In 2016, China Merchants Securities predicted that by 2020, some 5.22 trillion yuan (758 billion US dollars) worth of assets would be managed by robot financiers.

    China leverage and shadow banking biggest threats to growth (The Asset), Rated: A

    FINANCIAL system leverage and shadow banking pose the biggest threat to China’s economic growth, according to a live poll of attendees at the Fitch on China Forum.

    The forum was organized by The Asset in association with Fitch Ratings and held on November 30 at the Four Seasons Hotel in Hong Kong.

    Source: The Asset

    Ant Financial and QCash scoop FT fintech awards (Financial Times), Rated: B

    A big Chinese group and a US not-for-profit have triumphed in the second annual Financial Times fintech awards, with Ant Financial taking the “impact” prize and QCash winning for “innovation”.

    European Union

    KappAhl first to offer mobile payments in store with Klarna (NB Herard), Rated: AAA

    KappAhl is the first major fashion chain to offer its customers digital payment solutions in stores via their smartphones. Customers will have the option to make their purchases with Klarna In-Store, paying either on the spot or upon invoice.

    This new payment solution will become one of the cornerstones in KappAhl’s digital transformation, with customers in stores benefitting from the same payment options that they have in Shop Online.

    The service has been rolled out gradually and, as of 1 December, will be available in all 173 KappAhl and Newbie stores in Sweden. From 1 December, the service will be available in all 96 Norwegian stores, and, from 4 December, in all 58 stores in Finland.

    Fintech company Deposit Solutions raises $ 20 million from existing investors (Tech.eu), Rated: A

    Deposit Solutions, a German fintech company, has raised $20 million in a round led by e.Ventures and Greycroft, both existing shareholders.

    The new funds will be used to grow the Hamburg-based company’s Open Banking platform for savings deposits for both B2B and B2C services, and to expand internationally. Its APIs allow banks to connect to the platform to build and offer deposit services. It has partnered with more than 50 banks.

    Why Scandinavia’s Biggest Bank Is Setting Up Its Own Fintech Startup Fund (Forbes), Rated: A

    The bank has announced that it’s setting up Nordea Ventures, to make strategic investments in fintech start-ups.

    A case in point is Tink the Swedish-based fintech company, where Nordea provided capital and advice and integrated some of Tink’s own technology into its own digital products while preserving Tink’s name and brand.

    Tink’s app helps consumers to aggregate financial transactions in one place, to compare and switch mortgages to a partner bank or open a savings account, for instance. Another Tink app for banks and payment services like Klarna provides account aggregation and payment capabilities.

    Nordea invests in fintech company Betalo (Nordea), Rated: B

    Nordea is investing in the fintech company Betalo. This takes our partnership with the Swedish company to the next level after a cooperation agreement was signed in March 2017.

    PSD2 BRINGS DELAYED DISRUPTION TO THE FINTECH ECOSYSTEM (TechSavvy), Rated: A

    A new EU-directive is about to force banks to open up their data vaults and allow third parties to access their user data. Nordea has chosen to embrace the change with open eyes, and a fintech startup predicts tough competition embarking on the opportunities it brings along.

    The release of bank data is bound to cause a stir in an otherwise traditional and established sector. One of the incumbents that have already made an imprint is the fintech startup Spiir.

    American tech giants might end up owning the financial space. Rune Mai looks to China to catch a glimpse of what the financial future might hold. The retail giant Alibaba owns half the payment market here with an all-encompassing app that offers everything from dating, financing to shopping.

    Nordea is more inspired than afraid of Amazon. The bank has more than 10 million customers in the Nordic region, and they have decided to face the coming change with open eyes. They are actively pursuing a first mover strategy and has allocated more than 100 people to ready themselves for the coming digital disruption.

    International

    Blockchain P2P Lending, Sending, and Spending: Etherecash Garners Support from Over 40,000 Contributors During Pre-ICO (Digital Journal), Rated: AAA

    A little over three weeks are left in the Etherecash token sale and it’s been a fantastic run so far; the success they have seen comes after a big appearance at the World Blockchain Summit, Dubai, which was closely followed by a heated Pre-ICO.

    The platform is the remedy to the overly-complex and lengthy process of getting a traditional bank account, and will provide access to finances through a cryptocurrency-backed P2P (Peer-to-Peer) fiat currency loan marketplace. P2P loans are backed by the borrower’s own crypto-wealth allowing them to borrow up to 80 percent of their wallet’s value.

    On top of this, once the crypto debit card is available, users will be able to store multiple types of cryptocurrency on it, allowing them to shop anywhere and everywhere as they please, even abroad.

    Based on the Ethereum standard token ERC20, purchasable with Bitcoin or Ethereum, the exciting ICO Launch began 15th November, 2017 – ending December 19th, 2017.

    Australia

    Treasurer of Australia Scott Morrison Visits Online Lender Prospa’s New Office in Darlinghurst (Crowdfund Insider), Rated: AAA

    Prospa, an online lender serving SMEs in Australia, had a visit from the Honorable Scott Morrison yesterday. The Treasurer of Australia help to open up Prospa’s new high tech Darlinghurst office, which apparently is quite large extending over two floors housing a team of 150.

    Prospa expects to add another 50 hires over the next 12 months as it accommodates platform growth.

    India

    KrazyBee looks to expand in Tamil Nadu (The Times of India), Rated: A

    Online lender KrazyBee says it is rapidly expanding its business in Tamil Nadu and its focus in the state will be on solving unique needs of the student community.

    KrazyBee, which earlier operated in five cities (Bengaluru, Hyderabad, Pune, Vellore and Mysore), said that is expanding aggressively in over 11 cities, including Chennai. With more than four lakh registered student borrowers on its platform, KrazyBee says it currently processes over 3,000 loan applications and disburse around 1,700 loans per day.

    Asia

    Asian banks’ operating income could be hit by fintech disruption (Channel News Asia), Rated: A

    Asian banks that do not take any action against the rise of financial technology (fintech) could see their operating income take a hit, said the Monetary Authority of Singapore (MAS) on Thursday (Nov 30) in its latest Financial Stability Review.

    For lenders in Singapore that do nothing to stave off the disruption, that could mean a 5 per cent loss in operating income over the next five years, the central bank warned.

     

    Mobile wallets taking hold in Asia (The Asset), Rated: A

    WHILE the development of digital payments started with the launch of the first universal credit card in the 1950s, the space has rapidly evolved, and now the mantle is being passed to e-wallets, otherwise known as mobile wallets.

    In 2014, credit and debit cards accounted for more than half of e-commerce payments in terms of transaction value. However, that share is predicted to drop to 49% in 2019 as mobile wallet options start to gain ground, according to a report by the United Nations Conference on Trade and Development.

    Canada

    Activists across Canada demand fair banking for low-income people (TheStar), Rated: AAA

    At the Toronto rally held outside Finance Minister Bill Morneau’s constituency office, a 46-year-old man was holding the loan he got in August from a payday loan company and was trying to get pedestrians to look at it.

    He took out a $5,500 loan to pay his rent in August, to be paid back at 60 per cent interest by 2020.

    Don is a member of the grassroots activist group called Association of Community Organizations for Reform Now (ACORN), and one of thousands of people who, on Tuesday, rallied across Canada demanding fair banking.

    Mobetize’ CEO to speak at first BC Tech Association FinTech Day (Globe Newswire), Rated: B

    Mobetize Corp. (OTCQB:MPAY), a leading fintech service provider for payments, remittances and mobile banking solutions, today announced CEO Ajay Hans will be the keynote speaker at BC Tech’s Fintech Day event on December 5.

    Authors:

    George Popescu
    Allen Taylor

    Friday November 24 2017, Daily News Digest

    Lend Academy investment accounts

    News Comments Today’s main news: Revolut sings 1 millionth customer. KBRA assigns preliminary ratings to Lending Club’s Consumer Loan Underlying Bond Credit Trust 2017-P2. Funding Circle to launch Isa. Orca is launching investment platform. Chinese regulators investigating potential Qudian data leak. China cracks down on shadow banking. China tells provincial goverments to halt microlender approvals. Swiss consortium adopts single digital identity for […]

    Lend Academy investment accounts

    News Comments

    United States

    United Kingdom

    China

    European Union

    International

    Australia

    India

    Africa

    Canada

    News Summary

    United States

    Goldman Sachs Faces Doubts About Loss Rates at New Online Lender (Newsmax Finance), Rated: AAA

    As Goldman Sachs Group Inc. lends more money to Main Street, one question won’t go away: How many borrowers will pay them back?

    A recent example it gave suggests the firm expects loan losses to be lower than what some rivals are seeing, and half of what many credit-card lenders experienced the last time the economy went south.

    The bank is counting on its consumer push to deliver $1 billion in revenue growth over the next three years. While the firm looks to attract borrowers with better credit than many rivals, others think it may be underestimating the risks of a business where it’s the upstart.

    My Quarterly Marketplace Lending Results – Q3 2017 (Lend Academy), Rated: AAA

    If you have been reading these posts in the past year or so you will have noticed a steady decline in my returns, primarily caused by underperformance in my LendingClub accounts.

    Earlier this year I adjusted my strategy and started investing across the entire risk spectrum but it is a bit like steering a battleship. Given my many thousands of notes it takes a while for any changes to show up in my portfolio returns.

    My trailing 12 month returns for the year ended September 30, 2017 across all my accounts was 6.64%.

    Source: Lend Academy

    My main LendingClub account has performed poorly over the past 12 months. My TTM return is at a paltry 1.64%, my lowest return ever. All of my LendingClub accounts are below 5% and all have shown reduced returns over the past year.

    Prosper continues to perform quite well. My three accounts are all returning between 7% and 8% which I consider quite respectable. My average interest rate of the loans I have invested in is just under 20% but returns have been quite consistent recently in the 7-8% range.

    Source: Lend Academy

    PeerStreet is a real estate platform focused on fix and flip properties. These are short term loans, typically between 6 and 24 months, and they are backed by the property. I use their automated investment tool to invest in only those loans that are paying 8% or more, up to a 75% LTV and a duration up to 24 months.

    My first new entrant this quarter is AlphaFlow. They are a real estate platform that build diversified portfolios of fix and flip properties for you. What I like about AlphaFlow is that they deploy your money quickly, my entire investment was fully deployed in a matter of days. And they diversify across 75-100 properties, my own portfolio currently has 83 investments in 22 states with an average LTV of 68%.

    Finally, as I do every quarter I want to end by highlighting the net interest number which for the last 12 months stands at $46,631.

    Get the lowdown on the full range of Peter Renton investments here.

    KBRA Assigns Preliminary Ratings to Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2 (BusinessWire), Rated: AAA

    Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2 (“CLUB 2017-P2”). This is a $330.0 million consumer loan ABS transaction that is expected to close December 6, 2017.

    Preliminary Ratings Assigned: Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2

    Class Preliminary Rating Expected Initial Class Principal
    A A- (sf) $239,400,000
    B BBB (sf) $34,600,000
    *C BB (sf) $56,000,000

    This transaction is LendingClub Corporation’s (“LendingClub” or the “Company”) third rated sponsored securitization and the second sponsored securitization consisting of “prime” unsecured consumer loans facilitated by LendingClub’s proprietary technology platform supporting an online marketplace that connects borrowers and investors by offering a variety of loan products originated by issuing banks through the platform, www.lendingclub.com (the “LendingClub Platform” or the “Platform”).

    The transaction has initial credit enhancement levels of 35.45%, 26.05% and 10.83% for the Class A, Class B and Class C notes, respectively.

    China War on Online Loans Makes Waves in New York: QuickTake Q&A (Bloomberg), Rated: A

    Chinese President Xi Jinping’s campaign to reduce risk in the financial system is being felt in New York. The assault on the sector threatens to stymie any new listings of such lenders on New York’s stock exchange — as well as spelling trouble for investors in the handful of companies that have already listed.

    Joseph Otting Has a Lot on His Plate as the New Comptroller (Crowdfund Insider), Rated: A

    Joseph Otting, a former banker and CEO of OneWest Bank, was approved by the Senate in a party line vote last week to take over the helm at the Office of the Comptroller of the Currency (OCC).

    If Otting decides to stand up to the banking hyperbole it won’t be an easy task.

    All of this begs the question: who will gain if Fintech is allowed to compete with banks?

    One-Third of Small Business Owners Work Half of the Major Holidays (Small Business Trends), Rated: A

    One-third of small business owners work at least three of the six major holidays in the US.

    Kabbage’s new survey reveals several work/life balance issues related to the sacrifices small business owners are willing to make. The research involved surveying 400 small business owners, with 67 percent stating they expect to increase revenues by the end of the year. More than half of the small business owners interviewed said they anticipate an increase in revenue of 10 percent or higher.

    The survey found that 60 percent of small business owners only take one full vacation a year, while 23 percent take less than two holidays off annually. Furthermore, when on holiday, 75 percent of small business owners continue working.

    Consumers Say Hedge Fund Financed Illegal Tribal Lending (Law360), Rated: A

    Vermont residents on Tuesday hit a hedge fund with a proposed class action in federal court alleging it helped concoct a sham tribal payday lending scheme meant to skirt laws preventing companies from charging consumers exorbitant interest rates while hiding behind tribal sovereign immunity.

    Plaintiffs Jessica Gingras and Angela Given accused the firm, Victory Park Capital Advisors LLC, of striking a deal with payday lender Plain Green and the Chippewa-Cree Tribe of the Rocky Boy’s Reservation to use the tribe’s name in exchange for a small…

    Payday Lenders Try Legislative Run Around State Laws, CFPB Regulation (Chicago Crusader), Rated: A

    The same deception that hides the real cost of predatory, consumer loans is reflected in the title of pending legislation in both the House of Representatives and in the Senate. The Protecting Consumers’ Access to Credit Act of 2017 (H.R. 3299 and S. 1624) would allow payday lenders, high-cost online lenders, and other predatory lenders to partner with banks to make loans that surpass existing state interest rate limits.

    How the Fed Can Help Families Living Paycheck to Paycheck (Real Clear Markets), Rated: A

    The next Chairman of the Federal Reserve System (Fed) confronts a deep and growing problem: rising inequality. A new Fed Chair could combat this problem in an unexpected way by implementing real-time payments. The few days between checks clearing are a major driver of why it is so expensive to be poor. They are also unnecessary given technology and easily removable with some regulatory will. Real-time payments could save billions of dollars for American families living paycheck to paycheck.

    The check casher costs $20, but two overdrafts cost $70. Check cashing is a $2 billion a year business and represents yet another cost born by those who have less.

    The technology for real-time payments has been around for a long time. The United Kingdom adopted real-time payments in 2008. Japan, Poland, Mexico and South Africa all have the technology in place today. Financial technology (FinTech) firms like PayPal are offering real-time payments for customers who exist on both ends of their system. But unless your employer will migrate to using a FinTech for payroll, you need the banking system to modernize.

    Peer pressure (BreakingViews), Rated: A

    The Federal Reserve’s eggheads are usually a pretty reliable bunch. So when researchers at the central bank’s Cleveland branch recently published a study asserting that peer-to-peer loans were defaulting at rates reminiscent of subprime mortgages a decade ago, it seemed to confirm the worst fears about the budding online-lending market. But industry critics and academics questioned the researchers’ data, forcing the Fed to pull the paper.

    It’s not easy to come by good data for this nascent field of finance, which makes the botched study all the more regrettable.

    SoFi Among Companies To Buy Six-Second Ads During Fox’ Thanksgiving Game (Sports Business Daily), Rated: B

    Duracell and personal finance company SoFi have “snapped up” some of the six-second spots Fox has set aside for its Thanksgiving broadcast of Vikings-Lions, while Disney will “air a mini trailer for ‘Star Wars: Episode VIII The Last Jedi,'” according to Anthony Crupi

    United Kingdom

    Fintech group Revolut signs up its millionth customer (Irish Times), Rated: AAA

    Revolut, an app-based banking alternative which has over 50,000 customers in Ireland, has now signed up 1 million customers globally and claims it has saved users over £120 million (€134 million) in fees.

    London-based Revolut said it is now signing up between 3,000 and 3,500 new users every day, an increase of 50 per cent growth from three months ago.

    Users have now made over 42 million transactions since the company officially launched in July 2015 with a total transaction volume of $6.1 billion.

    In an email to its customers seen by Moneywise and confirmed directly with Funding Circle, the provider says it will allow existing customers to invest in an Isa from Thursday 30 November.

    It has yet to announce a launch date for new customers and says this is because it is anticipating strong demand for the product. For the same reason, customers will not be able to transfer existing Isas to Funding Circle when the product is launched.

    Customers must deposit at least £1,000 to open an Isa.

    Funding Circle borrowers back joining European Free Trade Agreement post-Brexit (P2P Finance News), Rated: A

    MORE THAN half of small business owners want the UK to join the European Free Trade Agreement (EFTA) once Brexit is complete, Funding Circle research has found.

    A survey of 1,254 borrowers on the peer-to-peer lending platform found 57 per cent would support EFTA, also known as the ‘Norway option,’ as it provides a regional free trade area comprising of Iceland, Liechtenstein, Norway, and Switzerland.

    Orca to unveil diversified P2P portfolios for investors (P2P Finance News), Rated: AAA

    PEER-TO-PEER analysis firm Orca is set to launch an investment platform.

    The proposition will automatically build portfolios of P2P investments across more than 50 per cent of the market.

    The portfolios would include major lenders across the consumer, business and property lending space such as Zopa, Funding Circle and Assetz Capital.

    Digital wealth manager start-up Fountain secures seed investment (AltFi), Rated: A

    Fountain, a digital wealth management platform aiming to “empower” investors to achieve their financial goals has secured seed round investment.

    The cash, an undisclosed sum, came from a number of City figures led by Patrick Day, chairman of Day Cooper Day, a specialist pensions provider.

    Peer to Peer Lender ThinCats to Rebrand as Next Phase of SME Funding in UK (Crowdfund Insider), Rated: A

    ThinCats unveiled a new brand last week at an event attended by more than 100 business leaders. The gathering took place at the National Space Centre in Leicester but the new branding will not be officially launched until mid-December.

    Robo-guidance or electric dreams? (FT Adviser), Rated: A

    Effectively, FG17/8 is the new bible for everyone interested in developing a new automated (digital /robo /telephone-based) advice solution. Or it is a checklist for those who have already trodden down this well-worn path.

    Do note though – as if you did not already know – the paper “contains general guidance and is not binding”, is not “exhaustive”, must not be read in isolation of the handbook, and does not address any potential changes that might arise from the implementation of the Insurance Distribution Directive. (Heaven forbid anyone would actually take any accountability for what is between the covers).

    Two years. Two years. To pull together in one document the working practices that professional firms already follow with their eyes closed?

    Three-quarters of advisers unthreatened by robo-advice (Financial Reporter), Rated: A

    New research shows that 78% of financial advisers are confident robo-advice offers no threat to their business, despite nearly half expecting more demand for robo-advice over the next 12 months.

    The research from Aegon found that the degree of concern felt by advisers correlates to the typical size of their client portfolios, with advisers whose client portfolios are at the lower end of the scale more alert to the threat from the lower cost option of robo-advice.

    For advisers with client portfolios of more than £200k, 88% feel it offers no threat to their business, and even for portfolios of up to £100k, the figure remains high at 73%.

    While the majority of advisers believe robo-advice is no threat to their business, a third (31%) do point to robo-advice and similar digital services as one of the top challenges to the wider industry over the coming two years, a little behind Brexit (40%).

    China

    China Regulators, Police Probe Qudian Client Data Leak (Bloomberg), Rated: AAA

    Chinese regulators and police are investigating a potential leak of data from online lender Qudian Inc., according to people with knowledge of the matter.

    Officials are probing allegations that data from more than a million students who are clients of Beijing-based Qudian was leaked and possibly sold online, said the people, who asked not to be named discussing private information.

    The probe’s initial findings show that at least part of the leaked data match information clients had provided to Qudian, the people said. Investigators are checking whether the data came from Qudian, if the company was aware of the breach, and whether it took necessary measures to ensure the safety of personal information it collects.

    China Commences Crackdown on Shadow Banking (The Epoch Times), Rated: AAA

    Chinese regulators introduced major rules on Nov. 17—the scale of which has been compared to the U.S. Dodd-Frank Act—to unify regulations for the asset managementindustry and curtail shadow banking activities.

    The rules are broad-based, covering China’s $15 trillion of asset management products issued by all financial institutions.

    For example, the rules will prohibit asset managers from promising guaranteed rates of return to investors, and require issuers to set aside 10 percent of their fees from managing client assets in escrow, to serve as a buffer against losses.

    For publicly offered funds, total assets cannot exceed 140 percent of the funds’ net asset value. The same ratio is set at 200 percent for privately offered funds.

    China Urges Local Governments To Halt New Internet Microlender Approvals (PYMNTS), Rated: AAA

    China is regulating micro loans on the internet, with a high-level Chinese government agency issuing a notice urging provincial governments to halt approval of new web-based online lenders.

    The firms are lending to consumers in China that have been turned down by Chinese banks. However, interest rates on these tiny loans can be very high — something borrowers don’t realize.

    China’s Micro-Lender Assault Threatens Path to U.S. Listings (Bloomberg), Rated: AAA

    According to the International Financial News, China plans to purge the country’s 157 online micro-lenders, leaving only large state-owned companies and the biggest internet firms intact with licenses. Few of the existing lenders will survive, said the newspaper, which is managed by the official People’s Daily.

    A comprehensive cleansing of the industry, which offers almost immediate unsecured loans over the Internet, often at high interest rates, would escalate earlier moves to crack down on the sector and its estimated $152 billion of loans. News that China has halted further approvals for online micro-lenders has already pummeled the New York shares of firms like Qudian Inc. and PPDAI Group Inc.

    “It would seem to be an enormous, enormous risk to try an IPO with that hanging over your head,” said Christopher Balding, an associate professor at Peking University HSBC School of Business. “It would most likely put a halt to any IPO plans of these companies now.”

    Source: Bloomberg

    China Online Lender Qudian’s Fast Track From NYSE Darling To Dog (Forbes), Rated: AAA

    The listing of online lender Qudian at the New York Stock Exchange on Oct. 18 heralded the birth of a new China billionaire, 34-year-old chairman and CEO Luo Min. The stock rose by as much as 43% that day, giving Luo a fortune worth $2.2 billion amid optimism about industry prospects.

    Five weeks later, more than half of Qudian’s value has been wiped out and he’s on the verge of dropping from the ranks of the world’s billionaires altogether. Qudian fell 16% last night and at yesterday’s closing price, Luo’s fortune (which he shares in a trust with family) was worth $1.02 billion. Investors in other China fintech stocks got socked yesterday, too.  Jingpu Technology plunged 12.9% to $5.75, way below it IPO price of $8 from last week.   China Rapid Finance fell 6% yesterday and PPDai fell a whopping 24%.

    Debt: The secret sauce of Alibaba’s Singles Day success (Technode), Rated: A

    One of most notable online lending players aptly named Huabei (花呗, Just Spend) comes from the company that invented Singles Day—Alibaba.

    To help them give away money to uncle Jack Ma, as hand-choppers have joked, this year Huabei has raised its credit limit to almost 80 percent during the promotion activities before Singles Day, allowing users to spend an extra RMB 2200 on average.

    Huabei is the credit card of millennials, it targets the young and the unbanked. According to a report published recently, 86% of Huabei users belong to the generations born after the 80s and 90s (in Chinese). The fact that the 60% of them never owned a credit card is a good illustrator why online lending has experienced such a meteoric rise in China.

    According to Huabei data, 38% of users choose to repay their debt in 12 monthly installments (in Chinese).

    Credit Suisse-Backed Online Lender to Plan $ 500 Million IPO (Bloomberg), Rated: A

    WeLab Ltd. has picked banks to advise on a Hong Kong initial public offering that could raise about $500 million, according to people with knowledge of the matter. The China-focused lender, whose backers also include billionaire Li Ka-shing, is aiming to list as soon as next year, the people said, asking not to be identified because the information is private.

    An Overdone Payday Mayday (Bloomberg), Rated: A

    Stop panicking about China’s online lenders. The real target of the crackdown is rogue local governments.

    Financial News said government entities can’t issue new licenses for internet micro-lending beyond the 157 institutions that already have them. The consequences were immediate: Zhejiang Busen Garments Co., for one, said in a filing Thursday it’s terminating plans to set up an online lender.

    As of September, there were 8,610 micro-lenders with 970 billion yuan ($147 billion) of loans outstanding. Many of those weren’t licensed by national regulators such as the People’s Bank of China or the China Banking Regulatory Commission, which have strict rules.

    Rather, authorization was handed out by local governments, most of which have no fintech expertise, to companies claiming to be affiliated with state-owned enterprises.

    Source: Bloomberg

    Mobile payment users in China exceed 520m (GB Times), Rated: A

    Ant Financial, Alibaba’s financial affiliate, has announced that China now has more than 520m mobile payment users, reports state-owned news agency Xinhua.

    report released by the People’s Bank of China detailing the country’s payment system in the second quarter of 2017, notes that Chinese banks dealt with 8.6bn payments from mobile services during that period – up 33.84 percent from last year.

    The combined value of mobile payments increased by 33.8 percent to 39.2tn yuan (around US$6tn).

    How fintech companies create an alternative capital market in China (The Asset), Rated: A

    IN China, an alternative capital market is taking shape with the rise of fintech companies, where fintechs are the intermediaries linking borrower and lenders. Moreover, fintechs are edging into the credit rating space, leveraging on their big data capabilities.

    One core competence of fintech companies is their IT stability in the areas of payments and cloud computation. The strength of their IT infrastructure makes the technology players resilient under extreme conditions. During the recent Singles’ Day sale on November 11 – China’s online shopping bonanza equivalent to that of the US’ Black Friday – Alibaba’s Alipay processed a peak of 256,000 transactions per second and Alibaba Cloud processed as many as 42 million instructions per second.

    European Union

    Swiss Consortium Adopts Single Digital Identity For Online Purchases (PYMNTS), Rated: AAA

    A consortium of nine large companies — including UBS, Credit Suisse, Swisscom, Swiss Post, SIX, Raiffeisen, Swiss Railways, Zuercher Kantonalbank and Mobiliar — will enable Swiss consumers to use a single digital identity when making eCommerce purchases.

    According to a report in Reuters, the idea behind the project is to get to a point where consumers can use one login to make purchases at shops, buy train tickets and engage in banking activities online. The group aims to create a joint venture in 2018.

    Exclusive Interview with Lendoit CEO Ori Erez (Chipin), Rated: A

    Lendoit is a Decentralized P2P lending platform, which connects borrowers and lenders from all over the world in a trusted, fast and easy way using the advantages of Smart Contracts and the Blockchain technology.

    What do you think is the biggest problem Lendoit will solve and why is it important?

    The lending industry is not efficient because it’s controlled by centralized financial organizations that set the interest rates according to their own interest. It’s not fair that honest borrower from Brazil is paying 60% interest rate while borrower from Japan pays around 1%.

    Lendoit uses three types of scoring:

    1. Local rating provided by a local supplier from the borrower’s state. Lendoit is working to create cooperation with some entities in various countries to provide this service.
    2. International scoring providers that are using innovative methods such as scanning social networks and scanning the borrower’s e-mail.
      Lendoit is working to create cooperation with these International entities.We have already signed / in the process of signing with several companies in the scoring area, such as FriendlyScore, BLOOM, LENNO, and others, as noted in Lendoit’s WhitePaper.
    3. In the Lendoit eco-system platform, there is a special Smart Contract: a Reputation contract that retroactively checks each borrower who takes a loan, and set reputation score according to his or her historical activities within the platform

    My P2P Lending Investment Portfolio at Bondora is now 5 Years Old (P2P-Banking), Rated: A

    5 years have passed since I first started to invest into p2p lending at Bondora in October 2012. I still have 604 loans in my Bondora portfolio with an outstanding principal of 7,467 Euro at an average interest rate of 23.78%. Of these 2,746 Euro are in current loans, 778 Euro in overdue loans and 3,941 Euro in 60+ days overdue loans.

    Bondora shows a net return of 19.0% for my portfolio. In my own calculations, using XIRR in Excel, assuming that 30% of my 60+days overdue and 15% of my overdue loans will not be recovered, my ROI calculations result in 17.2% return. Even if I assume total loss on all outstanding loans that are 60+days overdue my ROI calculation results in 15.6%.

    Source: P2P-Banking

    Finbee Expands into Czech Market (P2P-Banking), Rated: A

    FinBee, a Lithuania based p2p lending platform, has started to expand internationally by launching in the Czech Republic. By 2020, FinBee plans to begin operations in another two European countries.

    FinBee will provide personal lending services for residents of the Czech Republic as well as for investors from across the entire European Union.

    International

    Investors divide in peer-to-peer lending (Silicon Republic), Rated: AAA

    Banks – local banks, in particular – have traditionally been the main and sometimes the only source of external capital for SMEs. However, increasing regulatory requirements have lowered the probability for SMEs to obtain access to bank financing.

    P2P lending is part of the wider universe of crowdfunding. This is a bigger market than many people expect. For example, a 2016 paper for the European Commission reported that crowdfunding expanded by 167pc in 2014 and reached $16.2bn. North America remains the largest market ($9.5bn), followed by Asia ($3.4bn) and Europe ($3.3bn). While there are no accurate figures on the Irish market, Orca Money reports that the UK P2P market had £9.6bn cumulative lending since 2010, £1bn of which was in Q1 2017. In 2016, Orca Money reported that the UK P2P market comprised 177,000 retail investors with consumer (46pc), business (35pc) and property (19pc) borrowers.

    P2P platforms have been very cautious about the loans they offer to investors, with most of them being classified as low-risk. This has resulted in low default rates and acceptable positive returns for investors. The potential for positive returns has attracted institutional and professional investors (eg investment banks, venture capitalist etc) into the game and created a disproportionate capital supply and demand. Such a trend is particularly visible in the US and UK, the two largest P2P markets, but it has recently emerged in smaller markets like Australia and New Zealand and is likely to occur, to a greater or lesser extent, in all regulated markets, including Ireland.

    The lack of a clear regulation has arguably prevented the growth of the Irish P2P lending market by discouraging both investors and small businesses to participate. A clear regulatory framework is necessary to ensure transparency and to increase investors’ confidence in P2P lending markets.

    Initial coin offerings: regulation and the risks (Lexology), Rated: AAA

    On 12 September 2017, FCA published a consumer warning on initial coin offerings (ICOs), stating that they are ‘very high-risk, speculative investments’, and that ‘there is a good chance of losing your whole stake’ as a purchaser.

    Earlier in September, the People’s Bank of China had denounced ICOs as ‘illegal fundraising’ and issued a ban that caused the value of cryptocurrencies such as Bitcoin to plummet. The following day, Canadian regulators accepted a firm offering ICOs into its regulatory sandbox as part of its broad goal of supporting innovative fintech projects. The European Securities and Markets Authority has been the latest to denounce ICOs, echoing the FCA’s warning to consumers that ICOs are ‘very risky and highly speculative investments.’

    By applying the conditions from SEC vs Howey, the US Supreme Court test for determining whether transactions qualify as investment contracts (and by extension, securities), the investigation found that the tokens emergent from the DAO’s ICO are securities and thus could fall within the US regulatory perimeter.

    The SEC made the classification by fulfilling the following criteria from the Howey test:

    1. Investment of money
    2. Reasonable expectation of profits
    3. Derived from the managerial efforts of others
    4. Investor voting rights were limited

    FintruX Network: Making Unsecured Loans Highly Secure (BTCManager), Rated: A

    The FintruX Network has been established to transform unsecured loans to highly secured loan without any hurdles to borrowers and investors. The platform has unique blockchain approach of global P2P lending highways which proposed to raise $30 million by selling digital tokens.

     

     

    The FintruX Network aims to enhance credit enhancements by introducing cascading levels which involves:

    •         Additional collateral
    •         A local third-party guarantor
    •         Cross-collateralization
    •         Fintrux ultimate protection reserve
    Australia

    Financial services industry to get its Groundhog Day commission of inquiry (Financial Review), Rated: A

    But it was probably not as long as the minimum two years contemplated by O’Sullivan and the Greens for the proposed Banking and Financial Services Commission of Inquiry.

    It should not be a problem if the three judges have no background or experience in fintech, cryptocurrencies, blockchain, peer-to-peer lending, equity crowd funding and payment systems riding off messaging services such as those offered by WeChat, Facebook, Apple and Google.

    After all, this is not about the future. This inquiry is about spending more than $200 million looking in the rear view mirror.

    The age of algorithmic advice (Financial Standard), Rated: A

    Futurist and chief executive of global consultancy firm Tomorrow, Mike Walsh, told the 2017 Financial Planning Association Professionals Congress that sweeping technological change driven by complex algorithms is nothing to fear as it’s simply “not unique.”

    Walsh said financial planners’ fear-based thinking that technology will replace jobs must shift to ask how will jobs need to change.

    India

    YES Bank diversifies funding sources (The Asset), Rated: AAA

    INDIA’s fifth-largest private sector bank, YES Bank, is raising a total of US$400 million in two transactions in the offshore syndicated loan markets as it further diversifies its funding sources.

    The first transaction is a five-year loan amounting to US$250 million raised from a group of Taiwanese banks, led by CTBC Bank, Bank of Taiwan, Mega International Commercial Bank and Land Bank of Taiwan. The deal was upsized from the initial target of US$200 million as YES Bank exercised the green shoe option following an oversubscription of US$355 million from 13 other banks.

    BankBazaar CEO Honored at India FinTech Awards 2017 (Finovate), Rated: B

    Adhil Shetty, CEO of BankBazaar, was recognized by the India FinTech Awards 2017 earlier this month. Shetty was named Fintech Leader of the Year at the event, which featured more than 200 attendees, more than 40 speakers, and 20 shortlisted startups from six countries.

    Africa

    Millennials happy to take financial advice from robots (IOL), Rated: AAA

    Millennials are not only developing a healthy appetite for financial advice, they are also more likely to trust digital advice from automated investment services than older generations.

    • Results from the study showed that in Europe 32% of online adults between the ages of 18 and 37 say they “rely on financial advice from professionals”, compared with 29% of older generations.
    • At least two-thirds of US Millennials were willing to share personal data in order to obtain better service from their financial institution.
    • Only 38% of US Millennials are confident that a bank or credit union will offer them valuable financial advice, compared with 46% of their older counterparts.
    Canada

    Upcoming ICO for Global Migrants and Their Unbanked Families (Digital Journal), Rated: AAA

    The migrant and their unbanked families in emerging and frontier markets have been suppressed for the longest time without any access to basic services, financial or otherwise. Approximately 2.4 billion people in poverty worldwide are often excluded from free movement or basic rights which often leads them to corruption and crime, including slavery, human trafficking and in extreme cases, death. Migrants far too often are denied basic financial tools.

    LALA World (“LALA”) is a wholesome ecosystem for the unbanked, starting with the migrants and their families back home. The base of this ecosystem is the LALA Wallet platform. By creating a whole new peer-to-peer infrastructure, LALA aims to revolutionize the way individuals, small businesses and micro-entrepreneurs transact, make domestic and cross-border payments, borrow money and associated products like insurances, cards, wealth and other general banking products.

    LALA World Products from their Ecosystem

    LALA Transfer – A Peer-to-Peer local and global remittance backed by crypto as well as fiat.
    LALA Bill Pay – Local and International bill payments for you and your family.
    LALA Lends – Domestic and International peer-to-peer lending via crypto and fiat, individual and small businesses.
    LALA Card – Crypto and Fiat card synced to your Wallet and usable at millions of PoS globally.
    LALA Kit – Contains a mobile phone with pre-loaded LALA Wallet, LALA Insurance, LALA Card, partners’ products, etc.

    ICO Pre-sale – Nov. 25-Dec. 15, 2017 (discounts available).
    ICO – Jan. 5-Feb. 5, 2018

    Authors:

    George Popescu
    Allen Taylor

    Tuesday July 25 2017, Daily News Digest

    SEC enforcement results

    News Comments Today’s main news: ICBA letter opposing SoFi as a bank. Moody’s upgrades 7 Prosper ABS MPL tranches. UBS invests in iCapital Network. TenX processes Bitcoin with Visa transactions. BNI Europa reaches profitability. Today’s main analysis: SEC focus on capital formation, enforcement in direct lending. Today’s thought-provoking articles: Will U.S. banks dominate consumer lending again? China needs a bigger […]

    SEC enforcement results

    News Comments

    United States

    United Kingdom

    China

    European Union

    International

    Asia

    News Summary

    United States

    Here is the Letter by the ICBA Slamming SoFi’s Effort to Become a Bank (Crowdfund Insider), Rated: AAA

    Last week, the Independent Community Bankers of America  (ICBA) sent a letter to the attention of Kathy Moe, Regional Director of the FDIC in San Francisco. The subject of the letter was the ICBA’s vehement opposition to Fintech darling SoFi’s effort to become a licensed bank.

    The ICBA asked that Congress close the alleged “ILC loophole” because it not only threatens the financial system but creates an uneven playing field for community banks.

    Read the full letter here.

    SEC Focus on Capital Formation & Enforcement, and What it Means for Direct Lending (PeerIQ), Rated: AAA

    What might a focus on the SEC’s capital formation mandate mean for investors?

    • Retail investors may have greater access to alternative investments typically reserved for accredited investors. For instance, Piwowar questioned the premise of a distinction between accredited vs. non-accredited investors.
    • Small businesses may see a reduction in disclosure obligations to encourage small businesses to tap the public capital markets. SEC Chair Clayton identified the reduction of US IPOs (in the wake of SOX and post-Enron regulations) as a serious issue.
    • ABS investors may have a reduction in the disclosure and liability requirements for publicly registered securitizations. ABS issuance has shifted to Rule 144A private placements – in fact 100% of deals in the marketplace lending market are privately placed – in part, due to the higher disclosure and attestation burdens for public deals.

    SEC Enforcement Actions & Investor Protection

    After the late-2008 Madoff scandal, the SEC dialed up enforcement activities with the goal of improving investor confidence and market integrity.

    Not surprisingly, enforcement actions on direct lending strategies has increased substantially as the sector continues to grow. (We refer reader’s to Harvard Law School’s SEC Enforcement Actions Against Investment Advisors for more information.)

    Direct Lending is Prone to Valuation Negligence

    A pool of unsecured personal loans may contain thousands of loans with differing and constantly shifting loan and borrower attributes. Unlike, say, a CMBS transaction where a valuation agent can visit a property, speak to an owner, and evaluate a tenant – the sheer volume of hundreds of thousands of loans requires advanced analytics to value a portfolio.

    Below we share below our principles for valuation:

    • Transparency: A well-documented valuation methodology, with clear exposition of prepayment, default, credit spread, and other assumptions.
    • Auditable: A repeatable and testable valuation framework.
    • Fair value: Fair value based on a consistent modeling framework that factors in both unobservable and observable valuation inputs from similar assets or adjacent capital markets.
    • Accounts for major risk factors: The pricing framework accounts for risk factors including default risk, prepayment risk, and credit spread risk.
    • Forward looking: Loan valuations must be driven off of expected future cashflows, where cashflows are a function of the borrower’s current credit attributes, macro conditions, payment performance, and seasoning.
    • Loan-level: The pricing framework operates on a loan-level to address granularity in credit risk of loan rather than coarse replines.

    Moody’s upgrades seven tranches from four Prosper marketplace lending ABS securitizations (Moody’s), Rated: AAA

    The complete rating actions are as follows:

    • Issuer: Citi Held For Asset Issuance 2015-PM1
      • Class B Notes, Upgraded to A1 (sf); previously on Aug 6, 2015 Definitive Rating Assigned Baa3 (sf)
      • Class C Notes, Upgraded to Ba2 (sf); previously on Jul 14, 2016 Confirmed at Ba3 (sf)
    • Issuer: Citi Held For Asset Issuance 2015-PM2
      • Class B Notes, Upgraded to A1 (sf); previously on Oct 23, 2015 Definitive Rating Assigned Baa3 (sf)
      • Class C Notes, Upgraded to Ba2 (sf); previously on Jul 14, 2016 Confirmed at Ba3 (sf)
    • Issuer: Citi Held For Asset Issuance 2015-PM3
      • Class B Notes, Upgraded to A1 (sf); previously on Dec 18, 2015 Definitive Rating Assigned Baa3 (sf)
      • Class C Notes, Upgraded to Ba2 (sf); previously on Jul 14, 2016 Confirmed at Ba3 (sf)
    • Issuer: Consumer Credit Origination Loan Trust 2015-1
      • Class B Notes, Upgraded to A1 (sf); previously on Feb 11, 2016 Upgraded to Ba2 (sf)

    Will banks in the US dominate consumer lending once again? (AltFi), Rated: AAA

    SunTrust Bank is an interesting case in point. They are a large 125-year-old bank headquartered in Atlanta. They had total assets on their balance sheet of $204 billion as of December 31, 2016 which makes them a top 25 bank in the US.

    From our perspective, what is most interesting about SunTrust is they have an online consumer lending platform. They actually acquired a small online lending platform called FirstAgain a few years ago and relaunched it as LightStream in 2013. They are starting to get some real traction, having done $1.5 billion in loans in 2015 and over $2.3 billion in 2016. Their average interest rate is lower than the marketplace lenders and their biggest categories are auto lending and home improvement.

    Discover Bank is most well known in the US for their credit cards but they also have a robust personal loan business. In 2016 they originated $4 billion in new personal loans making them the second largest online lender in the category behind Lending Club. Unlike Lightstream, Discover’s personal loans are focused on debt consolidation so they are going directly after Lending Club and Prosper in this space. I find this a curious decision given that they have a $62 billion dollar credit card loan book (as of December 31, 2016).

    The four biggest US banks are still mostly on the sidelines

    JPMorgan Chase is the largest credit card issuer in the US with $142 billion in balances outstanding. Possibly because of their dominance in credit cards, they do not offer a personal loan product beyond student loans and a Home Equity Line of Credit.

    Bank of America is very much like Chase in their offerings towards personal loans – they offer home equity loans and student loans. Nowhere on their website can you find an offering for personal loans.

    Even though Citi is the second largest credit card issuer it does actually offer personal loans. You can apply on Citi’s website for a personal loan up to $30,000 (up to $50,000 if you apply by phone). Rates range from 7.99% to 17.99%.

    Robo giant Betterment raises m in new funding round (AltFi), Rated: A

    Robo-advice giant Betterment continues to grow. The platform raised a $70m (£54m) funding round, an extension of last year’s Series E.

    The firm has raised nearly $300m in total since it was founded in 2008, as some question the business model of robo-advisers. The company was valued at $700m in 2016.

    The funding round was led by Swedish investment company Kinnevik and included investments from Bassemer Venture Partners, Menlo Ventures and Francisco Partners.

    PayPal to partner with JPMorgan (Reuters), Rated: A

    PayPal Inc (PYPL.O) said on Thursday it would partner with JPMorgan Chase & Co (JPM.N), allowing the bank’s customers to link their Chase Pay and PayPal accounts.

    Fintech faithful put payments on a pedestal (Reuters), Rated: A

    Fintech’s faithful are putting payments on a pedestal. Square and PayPal shares are near all-time highs – as are those of venerable outfits like Visa, MasterCard and First Data. They’re each chasing what could be a $2.3 trillion revenue business by 2019, according to McKinsey. But they can’t all be winners.

    Privately held Stripe kicked off the frenzy last November when it raised $150 million in its fourth funding round. That doubled to $9.2 billion the valuation of the seven-year-old company, which builds software to allow companies to quickly set up and track digital payments.

    Quarterly InsurTech Briefing Q2 2017 (CB Insights), Rated: A

    In this report we focus on one of the insurance industry value chain’s most underestimated modules – claims management. It is a $170 billion global industry currently controlled approximately 90% by incumbents. And it is booming with innovation.

    Download the full report here.

    Catching Up with Michael Koenitzer of Global Debt Registry (Crowdfund Insider), Rated: A

    Erin: How is GDR optimising the demand for its loan level diligence solutions?  How does the platform source partnerships?

    Mike: Most online loans underwriting already undergoes some form of validation. Up until recently, however, most of the industry has relied on manual document validation — it’s taken awhile for the industry to wake up to digital data validation. That’s where we come in – we offer a more efficient and a trusted method of validation than what’s been used in the lending space in the past.

    Erin: Leveraging blockchain technology is becoming integral in fintech.  Please describe GDR’s new multi-party blockchain proof of concept (POC) that is designed specifically for the online lending industry. What initial issues did/do you face and how did/do you and your team resolve them?

    Mike: We see blockchain as perfectly suited to the online lending space and more specifically, the set of solutions we offer our clients, because it offers a single source of data that enables clients to access an immutable audit trail. They can see the state of a given loan across its entire lifetime and that builds confidence and trust.  The more certainty investors have, the more likely they are to invest capital in the online lending space.

    Erin: Distributed ledger technology is another key fintech innovation. Why has GDR initiated partnerships with the Wall Street Blockchain Alliance and Structured Finance Industry Group (SFIG) Blockchain Task Force for its strategy development?

    Mike: Both organizations are naturally aligned with our role in shaping the broader conversation around blockchain adoption and what this technology can do for the online lending sector specifically. Through the Wall Street Blockchain Alliance, we’re connecting with many of the banks we’ve been working with through our portfolio of loan validation tools, and with SFIG, we’re sharing and developing best practices around securitizing those loans, working with the underwriters.

    Erin: How do you see marketplace lending evolving overall?

    Mike: The space is going to continue growing, but it is also going to consolidate as any industry does during the process of maturation. I also think that there will also be a reality check on how well the online lending platforms underwrote the loans and what was missed if anything in the underwriting process.  We have seen and I think we will continue to see a shift from rivalry to increased cooperation and joint ventures between traditional banks and online lenders.

    MPOWER Financing Extends Student Loan Program to All 50 States Through Partnership with Bank of Lake Mills (PR Newswire), Rated: A

    MPOWER Financing, an innovative fintech company and provider of educational loans to high-potential international students, has entered a new partnership with Wisconsin-based Bank of Lake Mills, which enables MPOWER Financing to offer its online lending program to students in all 50 U.S. states.

    As a result, MPOWER Financing is now available to thousands more students looking to secure financing across an expanded roster of 223 universities across the nation.

    MPOWER Financing is a public benefit corporation whose mission is to remove the financial barriers to higher education in the U.S. by providing the financial resources necessary for students to attend schools and complete their undergraduate or graduate studies. Founded in 2014, MPOWER Financing provides financial resources to domestic students, DACA students and international students who are often undervalued and do not fit traditional credit criteria.

    Older Women Flunk Financial Literacy Quiz (Forbes), Rated: A

    In a survey released today, the 2017 RICP Retirement Income Literacy Gender Differences Report, from The American College of Financial Services, only 18% of women age 60 to 75 passed. By contrast, 35% of men did (also pretty shabby, if you ask me).

    Most of the women surveyed (55%) said they were extremely confident they would have enough money to live comfortably in retirement. Only a quarter of those women passed the financial literacy quiz, however.

    Also, the women surveyed were less likely than the men to get financial advice and information from friends: only 27% of women consulted friends vs. 39% of men.

    Some 55% of women with advisers said it is extremely important that their money pro educate them about the risks of running out of money in retirement; just 42% of men felt this way. And 60% of women said it’s important to receive education from an adviser about investment management, as opposed to only 47% of men.

    S.F. real estate fintech Opendoor to expand into Florida (Biz Journals), Rated: B

    The move reflects just how fast the so-called iBuyer market is expanding, as some homeowners opt for a quick sale to Opendoor or its rival OfferPad to forego the time and expense involved in a traditional home sale.

    United Kingdom

    How does P2P stack up against other investments? (P2P Finance News), Rated: A

    But as P2P enjoys its moment in the sun, it is worth looking at how the sector stacks up against investment and savings products.

    • P2P vs Exchange Traded Funds (ETFs)

    Over the past year, the FTSE 100 has broken a number of records, ending last month 12.43 per cent higher than 30 June 2016.

    While the majority of P2P platforms have not been able to beat the unusually strong performance of the FTSE 100, a few have come very close. LandlordInvest and Lendy are both offering up to 12 per cent on a variety of property loans, and Ablrate has listed asset-backed loans on its site for 14 per cent.

    • P2P vs cash ISAs

    As a result, the returns offered by cash ISAs have reached historic lows. By December 2016, there was not a single cash ISA offering more than one per cent, and by May 2017, P2P platforms were noticing a surge of ISA transferswhich they credited in part to low-paying cash ISAs.

    Funding Circle is offering a maximum return of 7.2 per cent on its SME loans, while Zopa is offering 6.1 per cent to Zopa Plus account holders, and RateSetter is offering five-year loans at a fixed rate of 4.6 per cent.

    investUP Identifies Opportunities for P2P Lenders (Bob’s Guide), Rated: B

    The peer-to-peer lending industry is maturing, with the market growing at over 30% per annum, and figures suggesting it will be worth over £5 billion by the end of 2017; as such, the sector is now regulated by the FCA.

    investUP is a peer-to-peer lending aggregation platform with the ability to automatically place investments for time-conscious investors. Investors enable a lending robot, driven from criteria provided by the investor, to create a bespoke algorithm which works for them. investUP is authorised and regulated by the FCA.

    China

    China’s shadow banking crackdown needs a bigger stick (Enterprise Innovation), Rated: AAA

    For non-bankers, shadow banking leaves this perception of illicit financial services that harms economies if not the financial services industry. The reality is that shadow banking, and the non-banks that offer the service, is a welcome source of diversification of the credit supply from the banking system, and provides healthy competition for banks. At least that is what is stated in the Global Shadow Banking Monitoring Report 2016 published by the Financial Stability Board, the Swiss-based international body that monitors and recommends on the global financial system.

    Mid-tier banks bear the highest risk as WMPs now account for close to 50% of their deposits, increasing their liquidity vulnerability.

    Cash loans platform-2345, realized $ 14.93million profit during the first half year. (Xing Ping She), Rated: A

    Cash loans platforms-2345 revealed its semi annual report last night. The revenue of the company was $159million during the first half year, increased by 127.1%.
    The company’s original businesses were soft and hard ware developement. The huge increse this time due to the popular of internet finance(cash loans).

    Tencent Internet insurance layout (Wall Street China), Rated: A

    July 18, Taiwan Fubon gold control vice chairman Cai Mingxing said the company is working with Tencent to set up a joint venture in Shenzhen, the future of Fubon products or other company’s policy, will be in Tencent’s WeChat and other platforms. At the same time, Fubon Financial Control has received the approval of the management of robot management services, and hope that as soon as possible in the domestic launch of no one branch. This cooperation with Tencent, headquartered in Xiamen, Fubon Insurance will be through the WeChat sales insurance business.

    CITIC Bank on the line of the first domestic block chain letter of credit information transmission system (01caijing.com), Rated: A

    Recently, CITIC Bank on the block chain based on the domestic credit information transmission system (BCC) (BCLC) (a), which is the first time the domestic banking sector block technology will be applied to the settlement of credit. As of July 21, CITIC Bank has used BCLC to carry out real domestic letter of credit business, trading volume of more than 100 million yuan.

    European Union

    BNI Europa reaches profitability on its 3rd year anniversary (BNI Europa Email), Rated: AAA

    Banco BNI Europa (“BNI Europa”) grew its total assets 36,7% reaching almost 500M€ in June this year. Total revenue grew 146,2% reaching 6,6M€ and the net profit was 2,7M€ allowing the bank to recover losses from 2016.

    One year and half after its opening and with a new management team, the bank decided to completely change its strategy and focus on innovative products. Due to its limited resources, it also decided to create several partnerships with Fintech’s to accelerate its growth and product offering.

    BNI Europa has been known for its customer centric digital platform and its attractive terms deposits and remunerated accounts. This year it launched with great success “Cereja” the reverse mortgage product for the senior consumer segment and the digital consumer credit platform “Puzzle” focused on independent workers.

    The bank has also specialised in the management of alternative lending. So far, BNI Europa established twelve partnerships with European Fintech’s providing funding and credit to Banco BNI Europa across several European countries. Those credit products include consumer loans, student lending, SME medium term lending, SME revolving credit, invoice discounting and bridge lending.

    Managing the fraud risk of frictionless payments (Finextra), Rated: A

    Andrew Davies, VP, Global Market Strategy, Financial Crime Risk Management, Fiserv, talks about how increased speed and convenience in payments increase fraud risk, how financial institutions can address financial crime threats through technology and processes, and how firms can derive further benefits from their investment in fraud prevention – including by leveraging customer transaction information to identify new opportunities.

    Watch the video interview with Davies here.

    International

    UBS Follows Credit Suisse Fintech Move (Finews), Rated: AAA

    Zurich-based UBS has invested in New York-based fintech iCapital Network, «Crowdfund Insider» reported, without disclosing financial details of the deal.

    iCapital is a digital distribution platform which provides access to private equity and hedge funds for wealthy clients and their private bankers.

    UK vs. US: Liberalization of Fintech vs. More Regulation (Coin Telegraph), Rated: A

    Based on the policies involving cryptocurrencies and Blockchain technologies, UK moves to liberalization of cryptocurrencies while the US looks into more regulations.

    Bitcoin Foundation warns that the US is moving backwards in terms of accepting cryptocurrencies and other peer to peer banking models, which could result in the US Banking system being left behind.

    Meanwhile, Britain’s new system will give fintech corporations more freedom allowing them to compete on the world stage.

    FinTech and RegTech – What Next for Financial Crime’s International Standard Setter? (RUSI), Rated: A

    The Financial Action Task Force (FATF), the global standard-setter for anti-money laundering (AML) and counterterrorist finance (CTF), in May brought together more than 150 delegates for its most in-depth discussion to-date on FinTech and RegTech.

    There are, however, potential vulnerabilities inherent in the sector. RUSI’s FinTech FinCrime Exchange (FFE), run in partnership with FINTRAIL, a financial crime risk management consultancy, presented on both the risks and opportunities observed during six months of industry engagement.

    The most significant fintech acquisitions of 2017 so far (Bob’s Guide), Rated: A

    According to KPMG’s Pulse of Fintech report, fintech VC activity in Europe has hit a historically high level for successive quarters. In Q1 2017, global investment in fintech companies hit $3.2bn across 260 deals. Q1 2017’s total capital invested soared to $610m, which was noted as the highest tally in years.

    • Broadridge Financial Solutions acquires Message Automation: Amount undisclosed
    • First Data acquires CardConnect for $750m
    • AntFinancial buys MoneyGram for $1.2bn
    • Paypal acquires TIO Networks for $233m
    • D+H and Misys merge in $4.8bn acquisition and form Finastra
    • Mastercard closes acquisition of Vocalink for $920m
    • Worldpay agrees to $10bn acquisition by Vintav
    • Klarna acquires Billpay for $75m

    Time for fintechs to shine – nominations for 2017 Fintech 100 open (BizEDGE), Rated: B

    Nominations are now open for the 2017 KPMG & H2 Ventures Fintech 100, the annual list designed to recognise leading fintech innovators.

    Companies or any fintech that deserve to be considered for the 2017 Fintech 100 need to be nominated by Thursday, August 31.

    Asia

    Singapore Startup Takes Bitcoin Into Real World With Visa (Bloomberg Technology, Rated: AAA

    TenX is pitching its debit card as an instant converter of multiple digital currencies into fiat money: the dollars, yen and euros that power most everyday commerce. The company said it takes a 2 percent cut from each transaction and has received orders for more than 10,000 cards. While transactions are capped at $2,000 a year, users can apply to increase the limit if they undergo identify verification procedures.

    TenX currently processes about $100,000 of transactions a month. By the end of 2018, it’s targeting $100 million in monthly transactions and a million users.

    Ant Financial invests in Shanghai-based fintech startup VFinance (e27), Rated: A

    Ant Financial, the financial services affiliate of Alibaba, has made a strategic investment in VFinance (维金), a Shanghai-based startup providing digital financial infrastructure solutions to enterprises in China, according to VFinance’s announcement.

    At a press conference on July 18, VFinance also signed strategic cooperation with MyBank (网商银行), an online bank launched by Ant Financial in 2015.

    Authors:

    George Popescu
    Allen Taylor

    Tuesday June 27 2017, Daily News Digest

    shadow banking

    News Comments Today’s main news: Venmo is testing a physical debit card. Zopa shares its banking plans. Ranger Direct Lending enters arbitration with Investee Princeton. Aegon Life explores digital channels for selling policies. Today’s main analysis: What’s driving the growth of shadow banking? Today’s thought-provoking articles: Prosper performance update for May 2017. The fastest consumer lenders to $1B in […]

    shadow banking

    News Comments

    United States

    United Kingdom

    China

    European Union

    International

    Australia

    India

    Canada

    News Summary

    United States

    Venmo is testing its own physical debit card (recode), Rated: AAA

    Venmo has been testing its own version of a physical debit card that would allow people who use its app to make purchases in brick-and-mortar stores using money stored in their Venmo account, according to multiple sources.

    One potential advantage is that it would allow Venmo users to immediately spend money that is sent to them via the app without having to wait a business day for a deposit of those funds to appear in their bank account.

    Prosper Performance Update: May 2017 (Prosper), Rated: AAA

    Today we are sharing performance data for the Prosper portfolio for May 2017.  The weighted average coupon for assets originated through Prosper’s platform in May 2017 was 16.34%i, the highest for a monthly vintage since 2013.

    Additional highlights from the May Update include:

    • Continued credit tightening can be seen via an increase in expected loss rate, coupon, Loss/FICO, and Coupon/FICO compared to prior months.
    • Prepayments for the 2017 origination months continue to trend above prior vintages.
    • 2015 and 2016H1 vintage delinquencies continue to trend below their prior peaks.

    What’s driving the growth in ‘shadow banking’ (Chicago Booth Review), Rated: AAA

    According to Chicago Booth’s Gregor Matvos, Booth PhD candidate Greg Buchak, Columbia’s Tomasz Piskorski, and Stanford’s Amit Seru, much of the growth is due to regulations that have pushed banks out of traditional lending businesses. The researchers also attribute some growth to online technology that has lowered the barrier to entry in markets where lenders once needed networks of physical branches to have any hope of building business.

    The researchers focus on the US residential lending market, the largest consumer loan market in the country—and the market that drew the most attention from regulators after 2008. Between 2007 and 2015, shadow banks nearly tripled their market share, from 14 percent to 38 percent.

    During the study period, lenders that originated loans online (fintech lenders) saw market share rise from 4 percent to 13 percent—but that remains less than half of the shadow-banking sector.

    Source: Review.ChicagoBooth.edu

    Fiserv partners with fintech startup to launch digital adviser (American Banker), Rated: A

    The core banking software provider Fiserv and the fintech startup GoldBean have partnered to provide a digital adviser meant to provide that extra assistance.

    GoldBean has an “investing for beginners” platform that was designed to promote financial literacy. By analyzing people’s spending, it creates customized portfolios featuring companies and brands with which end users are already familiar. GoldBean is a graduate of the INV Fintech Accelerator run by Fiserv and Bank Innovation.

    Fiserv hopes that by integrating GoldBean education and advice into its Unified Wealth Platform, some of these investors will eventually interact with the human wealth managers who use Fiserv’s platform, for instance when they need to talk about a life change.

    Amazon, Klarna, And The ‘Creative Destruction’ Of The Banking System (Seeking Alpha), Rated: A

    As a consequence, Klarna has become “one of the most highly valued technology groups in Europe. A round of fundraising in 2015 valued it at $2.25 billion. And it is solidly profitable.”

    The crucial thing here is that Mr. Siemiatkowski wants Klarna to stay focused. He believes that other innovative FinTech organizations will fill in the rest of the financial landscape. That is, banking will be done by numerous FinTech companies moving at the speed of technology innovation, not at the speed of ordinary banks.

    First, there is so much to be gained from creating a network or a platform that is more inclusive than separate “specialists” joining together to create “full bank offering.”

    Second, there is the issue of regulation. Banks are heavily regulated.

    What Mr. Bezos of Amazon.com and Mr. Siemiatkowski of Klarna seem to be doing is reinventing banking on the basis of a payments platform that can serve many purposes. The “creative destruction” of the banking system as we know it appears to be just beginning.

    The Fastest Consumer Lenders to $ 1 Billion in Originations (Lend Academy), Rated: A

    Anyway, I did a little digging and through publicly available information I was mostly able to figure out how quickly many of the major platforms reached their first billion in total loans issued.

    1. Marcus – 8 months

    2. SoFi – 14 months – Based on data from Kroll Bond Rating Agency, we know that by August 1, 2016 (when the SCLP 2016-2 securitization closed) SoFi had issued at least $1.3 billion in loans based on the loan pool balance of their first three personal loan securitizations. Based on that data I estimate they crossed the $1 billion mark around April of 2016, 14 months after they launched the product.

    3. Marlette – 17 months

    4. Avant – 28 months – Avant launched in January of 2013 and when they crossed $1 billion in May 2015 they were the fastest platform to that milestone at the time.

    5. Lending Club – 65 months – Lending Club was the first platform to cross a billion dollars back in November 2012.

    6. Prosper – 98 months – Prosper was the first marketplace lender to launch in this country all the way back in February 2006. For many years it was just Lending Club and Prosper in the online consumer lending space and for much of that time Prosper was the market leader. Prosper crossed $1 billion in April 2014. They took over seven years to do their first $500 million and just 11 months for them to go from $500 million to $1 billion in total loans issued.

    ezVerify and LendingPoint Launch ezCarePoint for Medical Payments (BusinessWire), Rated: A

    Today at the HFMA ANI 2017 conference, ezVerify and LendingPoint announced an exclusive partnership that will make it easier and more affordable for consumers to pay their medical bills. Working together, the two companies will provide a new service called ezCarePoint, which will allow patients to accurately predict their out-of-pocket expenses and apply for flexible payment plans and loans to cover the costs of medical procedures.

    According to a report by The Commonwealth Fund, more than 30 million people do not get necessary medical attention out of fear that doing so would be financially burdensome. Many Americans do not have a clear understanding of their insurance coverage and out-of-pocket obligations — as a result, consumers face medical costs they weren’t expecting, and practitioners lose money on unpaid bills.

    By integrating the ezVerify and LendingPoint technologies, ezCarePoint will help patients verify their insurance coverage and payment responsibility for health care services before the procedure takes place, preventing incidents where patients unexpectedly find themselves responsible for bills outside of their insurance coverage. If the patient can’t pay the out-of-pocket costs up front, they will have the option to apply for a loan and payment plan quickly and easily from the ezCarePoint platform. Patients will be notified of approvals in a matter of seconds, and upon approval, LendingPoint will pay the loan proceeds to medical practitioners within one business day to pay the patients’ out-of-pocket medical costs up front.

    Euler Hermes Digital Agency Announces CRiskCo Partnership (PR Newswire), Rated: A

    Euler Hermes, the world’s leading trade credit insurer, today announced an innovative partnership with fintech credit risk analysis company, CRiskCo. With a focus on revolutionizing factoring, trade and supply chain finance, CRiskCo uses state-of-the art artificial intelligence (AI) credit analysis and fraud detection processes.

    Christophe Spoerry, Euler Hermes Digital Agency (EHDA) co-founder, said, ” EHDA and CRiskCo are working together to evolve trade credit insurance and risk management, particularly at the transaction and single invoice cover levels. This has the potential to offer small-medium enterprises (SMEs) significantly more protection when doing business, by providing innovative, simple and affordable customer analyses.”

    EHDA recently launched its first breakthrough product – Single Invoice Cover – which protects companies from non-payment by business customers. Cover is provided transaction by transaction while optimizing end-to-end supply chains and extending optimal credit terms to buyers. Based on a proprietary application program interface (API), it creates a seamless process for businesses, while facilitating a comprehensive and granular management of credit exposure.

    RIAs Should Embrace Alternative Investments or Risk Client Attrition (WealthManagement.com), Rated: A

    Before the emergence of crowdfunding-style investment platforms, it was hard for investors to reap the benefits of investing in a diversified portfolio of rental real estate. They can now, and you can show them how.

    Wealth management is a “share of wallet” game. If you diversify your solutions, clients will end up with more diversified risk—and that’s the point.

    Lending Club’s first securitization is a big deal (American Banker), Rated: A

    Lending Club’s first securitization of its own consumer installment loans is an important step in rebuilding its business following a scandal last year over its corporate controls.

    The company has been seeking to broaden its funding sources after concerns about the integrity of its data caused many investors to pause or scaled back their purchases. Lending Club originally acted purely as a matchmaker, connecting borrowers with lenders over its platform. It did not hold on to the loans.

    Money in Cleveland tech-startup community begins to circulate (Cleveland.com), Rated: A

    Splash Financial is a perfect example of this long journey.

    Splash Financial completed a $3.3 million financing round in January of 2017 from several local angels and will become the newest entrant in the booming digital lending marketplace that includes LendingClub, OnDeck, SoFi and Cabbage.

    The company is now working with banks to help build an efficient lending platform where a strong capital source (i.e. – the banks) do not have immediate access to the doctor marketplace.

    1 in 5 Small Business Owners Would Give up a Vacation Day Rather Than Their Smartphone (Small Biz Trends), Rated: A

    According to a recent survey of small business owners on their mobile device use by peer-to-peer lending marketplace Funding Circle, one in five (20.4 percent) small business owners said they would rather give up a vacation day than their smartphones for a week.

    Funding Circle also found more than half (56 percent) of small business owners surveyed find their smartphone gives them the flexibility to work wherever and whenever they want, so they can make time for other passions.

    Nearly half (49 percent) said their smartphone keeps them in closer contact with loved ones while away from home — via tools like text messages throughout the day and video calls while traveling for work.

    Forty-four percent said having their smartphone helps them relax during vacation time because it gives them peace of mind to know if there’s a problem with the business at home, they are accessible.

    Follow the yellow Laurel Road (Transform Magazine), Rated: A

    National online lender Laurel Road, previously known as Darien Rowayton Bank Lending Division, is a division of the Connecticut-chartered Darien Rowayton Bank, which launched over a decade ago in 2006. Wishing to define its bank lending division as the first source of income advice and financial security for the state’s many university students, DRB turned to the New York office of international design agency Brand Union to create an identity and help carve out its unique path.

    Laurel Road’s new strapline, also developed by Brand Union, is ‘Rewarding determination’ and acts with double meaning, being reminiscent of both the student’s educational motives and the lender’s financial role. It also serves to encourage its customers to pursue their college journey to its conclusion,

    loanDepot: “The Momentum is Just Starting” (Crowdfund Insider), Rated: B

    One of the most promising is loanDepot, the creation of CEO Anthony Hsieh, has become one of the top mortgage lenders in the US. Additionally, loanDepot has migrated into the personal loan space too challenging online consumer lenders like LendingClub.

    RealtyShares Sources Debt For Seattle Student Housing Deal (Bisnow), Rated: B

    RealtyShares, an online marketplace for real estate investing, has sourced $11.9M for the acquisition and partial recapitalization of a 10-property portfolio of student housing in Seattle.

    3 Alternative Ways To Hedge Against A Market Downturn (NASDAQ), Rated: B

    When approached correctly, peer-to-peer lending can be among the safest ways to invest right now.

    The key to making it safe is to diversify across many loans. Diversification eliminates the risk of default because any single loan you invest in can default without sinking the entire investment.

    I consider peer-to-peer lending via a reputable platform the safest way to invest right now while still earning respectable returns on your money.

    United Kingdom

    Zopa boss Janardana details plans for customer-centric bank (AltFi), Rated: AAA

    Zopa aims to launch its bank next year with a series of products based on simple, flat pricing – and a direct challenge to the industry’s traditional strategy of milking their large “back books” of existing long-term customers who rarely switch or shop around.

    Jaidev Janardana, Zopa’s chief executive confirmed in an exclusive interview that credit cards and auto-finance would be among the first products, and would charge a single rate for all customers, instead of ultra-low teaser offers that flip to high rates after a fixed term, catching borrowers who do not switch.

    He pointed out that Zopa already follows this approach in its P2P lending with all investors receiving the same rate, and returns changing for everyone simultaneously. The company expects to apply to the Prudential Regulation Authority for its banking licence later this year.

    Ranger Direct Lending Enters Arbitration Against Investee Princeton (London South East), Rated: AAA

    Ranger Direct Lending Fund PLC said Monday it has entered arbitration proceedings against the parent company of investee firm Princeton Alternative Income Fund Ltd, following a provision taken over a loan portfolio.

    Ranger said Monday it is now seeking to enforce redemption and provision of financial information rights against Princeton via the arbitration proceedings.

    Lendy highlights gap between property prices and key influences (Bridging & Commercial), Rated: A

    Lendy stated that residential property prices have risen by 20% since the start of 2014, however, the LPP, the new property market index, has only increased by 17% during the same period with the gap between them continuing to grow.

    Fintech credit firm Quint posts record revenues (Express), Rated: A

    FAST-growing UK fintech group Quint is forecasting a £50 million plus turnover this year after seeing a record 64 per cent rise in growth and revenues rise to £32 million.

    The main drivers are the launch of its consumer credit comparison site MoneyGuru.com as well as strong growth in its lending platform Monevo and Monevo data services business.

    Racefields to buy and sell debt from bridging lending market (Bridging & Commercial), Rated: A

    Racefields is seeking to connect with bridging lenders who are interested in refinancing parts of their loan book after opening a trading room to buy and sell debt from the bridging market.

    Blockchain raises $ 40 million from Lakestar and Google’s venture arm (Business Insider), Rated: A

    Bitcoin and blockchain technology company Blockchain has raised $40 million (£31.5 million) in its second round of institutional funding.

    European venture capital fund Lakestar and GV, Google’s venture capital arm, both led the round. Nokota Management and Digital Currency Group also took part in the investment, as did Blockchain’s existing investors Lightspeed Venture Partners, Mosaic Venture Partners, Prudence Holdings, Virgin, and Sir Richard Branson.

    The Series B funding takes the total raised by Blockchain to $70 million (£55.2 million).

    Why Sipps aren’t yet embracing P2P (MoneyWeek), Rated: A

    Since April 2016, investors have been able to shield gains from peer-to-peer (P2P) lending from the taxman in the innovative finance Isas (IF Isas). And while it has taken a while for most P2P platforms to win the necessary approvals from HM Revenue & Customs and the Financial Conduct Authority (FCA) to offer IF Isas, these products are finally beginning to take off, with several launched since the start of the new tax year. However, the same can’t be said for P2P investments through self-invested personal pensions (Sipps).

    Referral schemes: earn over £1,000 through family and friends (BT), Rated: B

    People using peer-to-peer platform Funding Circle can net £50 if they recommend a friend or relative who goes on to lend at least £2,000. Normally, Zopa investors can earn up to £50 if the person they recommend lends £2,000 with the platform. They’ll receive £50 too. However, at the time of writing Zopa isn’t accepting any more investors due to high demand.

    Elsewhere, Alliance Trust Savings will give existing customers a £50 Marks and Spencer voucher when they get a friend or family member to open an Investment Dealing Account, ISA or Select SIPP. Your friend will get £25 worth of vouchers, too.

    Mutual Scottish Friendly is offering two £25 MyRewards card to their customers – that’s one for the customer and one for the person they recommend.

    China

    Internet majors, banks edge closer to fintech success (China Daily), Rated: AAA

    China’s internet giants that forayed into online finance are now joining hands with banks, their perceived competitors, to succeed together in the booming financial technology or fintech sector.

    The latest such partnership is between Tencent Holdings Ltd and Huaxia Bank Co Ltd, which was announced on Thursday.

    Tencent’s peers, Baidu Inc and Alibaba Group Holding Ltd, which together comprise China’s “Tech Trinity”, are jostling for supremacy in the internet finance segment. The two already have partnerships or collaborations with the nation’s top lenders.

    JD.com Inc, another e-commerce major, has also joined the fintech partnerships fray. It is working with ICBC, China’s largest bank by assets, on fintech, retail banking, loans for small and medium-sized enterprises, and consumer finance.

    European Union

    Ingenico ePayments Partners with French FinTech Company SlimPay on SEPA Direct Debit (EuroInvestor), Rated: A

    Ingenico ePayments, the online and mobile commerce division of Ingenico Group, today announced that it has teamed up with French recurring payments specialist Slimpay to support a SEPA Direct Debit (SDD) solution the company is developing for online merchants to simply and securely create and manage the e-mandates required to process SDD payments. With the partnership, SlimPay joins a rapidly expanding ecosystem of exciting and innovative FinTech companies that work closely with Ingenico to jointly develop new solutions for online merchants.

    International

    Aegon Life insurance company explores e-commerce channels to sell policies (Financial Express), Rated: AAA

    Private sector life insurer Aegon Life Insurance Company is exploring options to sell policies via fintech and e-commerce platforms. The company’s Chief Digital Officer Martijn de Jong said digital channel is to become the primary channel for the insurers to expand customer base.

    The company’s first premium income grew by 30 per cent to Rs 10.40 crore during April-May period of the current fiscal, according to data available with Irdai. Aegon Life Insurance is a joint venture between global insurer Aegon and Bennett Coleman & Company (India).

    Australia

    Digital advice will bypass member apathy, embarrassment (Investment Magazine), Rated: A

    Despite the tremendously importance of retirement planning to the long-term financial security of the working population, the majority of Australians tend to neglect their superannuation funds throughout most of their working lives.

    For example, more than 50 per cent of Australians now retire on a date not of their choosing. In addition, research from global banking and financial services firm HSBC showed that a staggering 41 per cent of Australian pre-retirees do not receive any retirement advice.

    Digital advice allows users to bypass any potential sensitivities they may feel when consulting a human adviser. Those who have limited knowledge about the basics of their own savings goals or liabilities may feel too embarrassed to talk to a professional and therefore switch off from engagement.

    India

    Fintech Startup Stashfin Raises $ 5 Mn Funding From Snow Leopard Ventures, Others (Inc42), Rated: A

    Delhi-based fintech startup Stashfin has raised $5 Mn Pre-Series A funding from Snow Leopard Ventures and Singapore-based Alto Partners. Snow Leopard Ventures is the VC arm of the Kirloskar Group.

    Stashfin is the parent company of digital lending platform, StashEasy. It was founded in February 2016 by Tushar Aggarwal.

    Middle East

    Machine learning is transforming lending (Khalee Times), Rated: AAA

    In June 2015, the World Economic Forum published The Future of Financial Services – How disruptive innovations are reshaping the way financial services are structured, provisioned and consumed. The paper defined a taxonomy for disruption in financial services. It identified six broad areas and within them, 11 clusters of disruptive innovation.

    The six areas are Payments, Market Provisioning, Investment Management, Insurance, Deposits & Lending and Capital Raising. Of the 11 clusters in the report, the combination of Alternative Lending and Shifting Customer Preference clusters are most relevant to today’s article. Within this combination, the Banking-as-Platform movement is playing a remarkable intermediary role in matching lenders and borrowers via a seamless, transparent, user-friendly standard API based model which leverages advances in processing power, artificial intelligence, user interfaces and design-thinking.

    Traditional lenders, i.e. banks, usually find it difficult to match the agility and granular understanding that P2P Lending players have. Banks’ credit evaluation and origination platforms are often industrial-age processes with a large quantum of human intervention.

    Canada

    Billionaire Buffett throws lifeline to cash-starved Home Capital (Daily Mail), Rated: AAA

    Berkshire Hathaway Inc’s commitment of a C$2 billion (US$1.51 billion) credit facility to Home Capital Group Inc, Canada’s largest nonbank lender, marks the billionaire’s latest effort to shore up a company in dire need of cash.

    Home Capital shares soared as much as 18 percent, but was still more than two-thirds below the 2014 peak.

    Berkshire also agreed through its Columbia Insurance unit to buy up to C$400 million (US$302 million) of Home Capital shares for a 38.4 percent stake, pending shareholder and regulatory approvals.

    Home Capital has suffered a deposit exodus resembling a bank run since mid-April, when the Ontario Securities Commission accused it of deceiving investors.

    Authors:

    George Popescu
    Allen Taylor

    Wedneday March 29 2017, Daily News Digest

    ron suber fraud

    News Comments Today’s main news: How to build a $100 billion company. Square launches in UK. Century-old Thai bank plans digital revamp. ClaimVantage raises funds to expand into Asia. Today’s main analysis: Tech will lead to new sub-prime crunch. Today’s thought-provoking articles: An unofficial chat with Ron Suber. How technology is changing online credit checks. Legal considerations of running a […]

    ron suber fraud

    News Comments

    United States

    United Kingdom

    China

    Asia

    MENA

    Africa

    News Summary

    United States

    Tech will lead to new sub-prime crunch (TechCrunch), Rated: AAA

    The tables below demonstrate cumulative changes in interest rates for Lending Club and Prosper. Although the rate for high-grade loans for Lending Club has slightly increased over time, while dropping a little for Prosper, the tendency for both companies is similar: They are widening the gap between low and high-grade borrowers.

    Since 2013, the top 40 percent of earners have accounted for 84 percent of all new income and 34 percent of new debt, which led to a material reduction in aggregate leverage relative to income and provided for consistent growth of retail sales, as this cohort represents 65 percent of total consumption. According to the article, the recession will be a result of a material reduction in consumption from these top earners, who have historically followed the deterioration of lower and middle-income households.

    With the penetration of technology, more and more labor-intensive work is shifted to computers or machines. People employed in manual labor, who mostly get an hourly wage, are in less demand on the market, which leads to the number of such jobs decreasing. Most jobs that were previously done manually are being substituted by machines, which, accordingly, increases competition among workers of respective industries.

    The statement is easily supported by the last data available: A new study by Forrester forecasts that cognitive technologies such as robots, artificial intelligence, machine learning and automation will replace 7 percent of U.S. jobs by 2025 (with 16 percent of jobs replaced and the equivalent of 9 percent jobs created).

    By the end of 2016 there were more than 4.1 million people who drove for a living, with more than 3.5 million doing it full time. The automatization of driving will lead to all of them being forced to change their jobs, and obviously turning to software and tech industries is not an easily affordable option for these people.

    Employment in the tech industry is, on the other hand, quickly growing. According to the results of a Cyberstates 2016 report prepared by nonprofit IT trade association CompTIA, employment in tech hit its highest growth rate in more than a decade in 2015, reaching 6.7 million people for companies with formal payroll in place in the U.S., up about 200,000 from the year prior.

    Summarizing the above, we can expect that for workers employed in labor-intensive industries, the wages are not going to rise as a result of increased competitiveness for jobs in these sectors. Stagnating wages will lead to credit of such workers suffering (which is, in fact, already happening), as their anticipated increase in income is not realized even when the economy is doing well in general.

    How To Build a 0 Billion Company (Newco Shift), Rated: AAA

    Mike Cagney, the CEO of financial services startup SoFi, does not lack for confidence. But then again, confidence is what you need to raise billions of dollars and take on some of the largest and most powerful companies in the world — global financial giants like Chase, Citi, and Bank of America. To get there, Cagney’s got a pretty clever playbook: He’s partnering with those same banks, who buy the loans he originates and profit from SoFi’s unique skill at acquiring new customers.

    An Unofficial Chat with Ron Suber, the Tom Brokaw of Fintech (finTEK News), Rated: AAA

    If you circulate within fintech, pretty much anywhere on the planet, there is a high likelihood you’ve heard of Ron Suber.  And in case you haven’t, he’s the president of Prosper Funding, the marketplace lending platform that has now funded over $8B in loans, and recently closed a deal with a group of institutional investors to purchase up to $5 billion worth of loans over the next 24 months.

    I asked him how he deals with all the travel, plus the highs ($5B deal-yeah!) and lows (Lending Club-OMG!) of the job, and he jokingly responded “Funny – (with) a unique combination of Yin Yoga and Johnny Walker Black”.  He also said he does “intention setting” before he gets out of bed every day, which he has found incredibly helpful.

    The full deck for the Lendit 2017 presentation can be downloaded at this link: LendIt.FINAL

    The last deck he shared with us from the AltFi Australasia Summit in Sydney.  The event was attended primarily by Australians and New Zealanders, with some Asians in attendance as well and also had a slightly different angle.

    The speech compared online lending to online trading, showed a 5 point overview of the industry since inception, and included a picture showing traditional banks already involved in marketplace lending.

    How to Start a Real Estate Crowdfunding Platform (Crowdfund Insider), Rated: A

    Tech development is not cheap. Those hoping to raise angel or VC capital for a real estate crowdfunding platform have, in my humble opinion, missed the boat by a couple of years.

    That said, if venture funding isn’t available, it doesn’t make sense to spend a lot of money on technology. Many of the RECF platforms out there today would like to command a tech multiple, but in reality, function more so as technology-enabled brokering or origination shops. For the vast majority of RECF platforms, their value is is not in their technology, but their ability to fund or originate deals.

    • Will this be a personal platform for your own deals, or will the platform raise funds for deals from other parties? If the latter, you may be brokering or dealing, and may need to obtain a license.
    • Will you be selling equity or debt securities? What type of debt will you be selling? What will it be secured by, if anything? What type of equity will you be selling?
    • What type of real estate will you be raising funds for? Will the properties be residential properties? Commercial? Rehab? New development? Is there a geographic scope involved? You should have a specific business plan in mind.

    It’s great that RECF platforms are hot right now, but remember – you’re still selling a security, and securities laws really aren’t the type of laws one should take lightly.

    RealtyShares Raises Its Largest Joint Venture Capital Investment to Date for Avesta Biscayne Apartment Complex in Miami (Yahoo! Finance), Rated: A

    RealtyShares, a leading online marketplace for real estate investing, today announced that its network of accredited investors has raised $3.5 million in equity capital for the $67.3 million acquisition and renovation of Avesta Biscayne in North Miami, Florida. This is the largest equity investment that RealtyShares has raised to date through its real estate investing marketplace.

    Avesta Biscayne is a 402-unit apartment community near the Biscayne Bay shoreline, consisting of six mid-rise buildings and amenities including a clubhouse, two pools and a tennis court. The deal is sponsored by Avesta Communities, a vertically integrated multi-family owner-operator specializing in apartments serving the middle-income renter. Previously, Avesta raised $2.25 million through RealtyShares to recapitalize and renovate Avesta Bridgewater, a 344-unit apartment complex in Orlando, Fla.

    Shadow banking is getting bigger, not better (Standard.net), Rated: A

    In the U.S. mortgage market as a whole, shadow banks held a 38 percent share in 2015, compared with 14 percent in 2007.

    In other markets, financial organizations that are not subject to bank regulation have flourished, too. According to the Financial Stability Board, the august body that makes recommendations to the global financial system from Basel, Switzerland, “other financial intermediaries” — the category that includes non-bank lenders but not insurance companies and pension funds — increased their assets to $80 trillion, or 23 percent of total financial assets, in 2014. Their average growth reached 5.6 percent in 2011 through 2014, while the global banking system’s assets stopped growing during that time.

    The reason shadow banks have largely escaped public scorn, regulatory scrutiny and high capital requirements is that they often came in the guise of high-tech disruptors. Quicken Loans Inc., the third biggest mortgage lender in the U.S. in 2015, does business online and on the phone, and that somehow makes it less interesting to regulators than a bank that does the same through an old-style branch network. Lending Club and other “peer-to-peer” lending firms quickly became conduits for large investors, not “peers,” yet they avoided regulation as though they were innovative tech platforms.

    By 2015, 85 percent of the mortgages they originated was sold to government-sponsored enterprises such as Fannie Mac, Ginnie Mae, Freddie Mac and Farmer Mac. They benefit from implicit and explicit government guarantees originally supplied to banks — without shouldering the same regulatory burden or facing the same stigma. In other words, they profit from regulatory arbitrage.

    Kroll Bond Rating Agency Releases U.S. Consumer Loan ABS Rating Methodology (Business Wire), Rated: A

    This report describes KBRA’s rating methodology for U.S. consumer loan asset-backed securities (“Consumer Loan ABS”). This includes transactions secured by collateral originated by traditional consumer loan companies, as well as, through online consumer loan marketplace lending platforms (“MPL Platform”).

    Wells Fargo’s Robo is Pricier Than Competitors (Financial Advisor IQ), Rated: A

    Wells Fargo is betting that having access to a live financial advisor will convince clients to put up higher minimums and pay more for its robo-advice platform than for its competitors’ platforms, the Wall Street Journal writes.

    The company’s Intuitive Investor automated advice service requires a $10,000 minimum investment and costs 0.5% of assets annually, according to the paper.

    By contrast, Merrill Lynch’s Edge Guide Investing platform and Schwab Intelligent Portfolios only require a $5,000 minimum, while Wealthfront requires $500 and Betterment has no minimums, the paper writes. All of these platforms charge fees ranging from 0.25% to 0.45% of assets, except Wealthfront, which only starts charging 0.25% on accounts with more than $10,000, according to the Journal. Vanguard Personal Advisor Services, meanwhile, comes with a hefty $50,000 minimum but charges only 0.3%, the paper writes.

    What’s more, Wells Fargo and other full brokerages aren’t necessarily competing with pure robo-advice pioneers such as Betterment and Wealthfront, William Trout, a senior analyst at research firm Celent, tells the Journal. Rather, they’re aiming to tap into their existing client base, he says. Wells Fargo is targeting its retail bank clients who currently don’t receive any form of advice, Lai tells the paper.

    Jed Morey And The Art Of The Publishing Pivot (Innovate LI), Rated: A

    So the New York Financial Press, launched in April 2016 by Syosset-based Morey Publishing as an “alternative financial news journal” that would dive deeper than earnings statements and trading indexes (not to be confused with the Wall Street-based media company founded in 2005 by Pierre Alexandre) – is now feeding Mayava Capital Inc., a Syosset startup created to facilitate small-business lending.

    The other five sites – each focused on lending in a particular vertical market, such as healthcare or transportation or IT – were created by Morey et al specifically to usher visitors directly into Mayava Capital’s arms.

    FUTURE DIGITAL FINANCE AND PERFORMANCE HORIZON RELEASE NEW INDUSTRY BENCHMARKING REPORT (Future Digital Finance Email), Rated: A

    Today, Future Digital Finance and Performance Horizon released their findings from their new report titled “Benchmarking Performance Marketing Adoption within Financial Services Strategies”. As the consumer revolution in retail banking continues, the whole financial services vertical has seen dramatic shifts towards electronic interactions across their consumer and business-to-business operations. This new study takes a look at the wider variety of marketing channels firms have begun to leverage, especially ones with clear measurement methodologies that contribute towards revenues.

    Key statistics from the survey include:
    – Performance marketing, including affiliate marketing, primarily drives customer retention for 21% of financial services companies.
    – Almost a third of companies spend at least 20% of their overall media budget on performance-oriented programs, while 21% of companies spend at least 40% of their overall media budget on performance oriented programs.
    – Finance companies are looking to grow performance-based marketing programs as 77% of companies prefer to pay new partners based on performance.
    – 93% of companies expect mobile website sales will increase, and 92% expect mobile app sales will increase in 2017.
    – 86% of companies agree that data and insights from their existing partner marketing programs enable them to make better business decisions.

    Mortgage Automation Pioneer cloudvirga Raises $ 15 Million in Series B Funding (PR Newswire), Rated: A

    cloudvirga℠, developer of the automated, cloud-based intelligent Mortgage Platform® (iMP), announced today it has raised $15 million in a series B funding round led by Incenter, a Blackstone Group portfolio company. The new funding will support cloudvirga as it scales its technology and expands its product offerings.

    Cloudvirga’s flagship mortgage point-of-sale (POS) system, the iMP empowers consumers to take the helm of a completely re-engineered mortgage workflow that automates the entire initial disclosures process and delivers unmatched transaction speed and efficiency to both borrowers and lenders. Central to cloudvirga’s success is its ability to maintain strict regulatory compliance, reduce time to close and save lenders money by moving many traditional back-office tasks to the front of the loan process.

    Why squeeze fintech into a bank regulatory box? (American Banker), Rated: A

    Within the constraints of its jurisdiction and mission, the OCC is clearly trying to do its part to address the regulatory issues raised by financial service providers in the technology sector. The agency is not simply pursuing a “bank-lite” charter.

    The regulation of financial services in the U.S. is highly fragmented, and fintech is challenging every aspect of that structure. Federal and state agencies can stake claim over the regulation of fintech, yet both are ultimately limited by narrow lanes and tightly defined jurisdictional boxes prescribed to them by their respective charters. As a result, even the most well-intentioned efforts are only able to address the trees, but not the forest.

    The goal of its proposal is to encourage the entry of fintech firms into federally regulated financial services. But if the actual pool of applicants ends up being extremely small, that’s going to be a real problem.

    Random Forest Capital Raises $ 1.75 Million for Strategic Talent Acquisition (Random Forest Email), Rated: B

    Random Forest Capital () completed its seed round in January 2017 with $1.75 million led by a very impressive group of angel investors. The money will be used to build out its full stack software and machine learning algorithms and acquire strategic talent for helping institutional investors find the right opportunities in consumer, residential, and commercial credit.

    “There are 400+ platforms that originate many types of secured & unsecured debt,” said Kevin Farrelly, chief operating officer, general partner, and co-founder of Random Forest Capital. “We can analyze a massive amount of data from those platforms in seconds whereas a human analyst will take days to weeks.”

    Random Forest Capital uses machine learning algorithms and third-party systems with APIs to source investment opportunities from eight platforms (and growing). Their custom algorithms then price the risk and can execute in microseconds.

    “Loan originators make money originating loans – so it’s in their best interest to bucket all the loans together. Our goal is to preserve investor capital. These competing interests create a fundamental divide where alpha in marketplace lending is easily found,” said Austin Trombley, chief technology officer and co-founder of Random Forest Capital.

    Random Forest Capital recently added two new members to its expert leadership team. Julie Choi, Ph.D. has been named the chief risk officer.  Carl Siemon, Ph.D. has been named the principle data scientist for Random Forest Capital. Siemon is a Physics Ph.D. graduate from UT Austin where he was supported by the prestigious National Defense Science and Engineering Fellowship.

    MoneyLion Wins Gold at PYMNTS Innovation Project Awards for Best Credit Innovation (MoneyLion Email), Rated: B

    MoneyLion, the mobile personal finance platform that puts consumers in control of their financial lives with AI-driven tools and smarter credit products, has won the gold medal for Best Credit Innovation at the PYMNTS 2017 Innovation Project Awards. The award coincides with a major growth milestone for MoneyLion, which now has over a million users.

    Real estate crowdfunding platforms raising American real estate prices (STL Real Estate), Rated: B

    But, with the rise of third-party crowdfunding platforms, most notably of Chinese origin, middle class people can get in on a piece of the real estate pie – no matter where they live.

    Today, Brooklyn is where it’s at, with the price of Brooklyn town homes and apartments growing 16 percent between 2015 and 2016, while Manhattan properties decreased by 1 percent.

    United Kingdom

    JACK DORSEY LAUNCHES MOBILE PAYMENTS COMPANY SQUARE IN THE UK (Irish Tech News), Rated: AAA

    Mobile payments company Square launched for UK based businesses today. This launch is the fifth market for Square since launching in the US in 2010 and since expanding to Canada, Japan and Australia.

    Square Point of Sale has actually been available in the UK, among other markets around the world, for a few years already, however the full features of the product that’s available in Square’s four main markets were not available.

    LendInvest Property Development Academy Expands Course Offerings (Crowdfund Insider), Rated: A

    LendInvest, a leading UK online property finance lender, is launching the LendInvest Property Development Academy in four more key cities around the country following overwhelming demand for its London & Southeast courses.

    In addition to three more courses for London & Southeast candidates this year, the Academy has expanded to:

    • Northern England: Manchester, 25 – 26 May
    • Scotland: Edinburgh, 22 – 23 June
    • Midlands: Birmingham, 7 – 8 September
    • Southwest England: Bristol, 9 – 10 November

    All courses are carefully tailored to resonate with common issues facing developers in their respective regions. All modules are taught by industry specialists from the local area who will drawn on locally relevant case studies and anecdotal evidence.

    Lendy Integrates Saving Stream Platform to Continue Growth (Crowdfund Insider), Rated: A

    Lendy, announced on Tuesday it is integrating its popular investor-facing platform, Saving Stream, under its Lendy brand as part of the platform’s continued growth. According to the company, it is merging Saving Stream, with its borrower-facing brand, Lendy Finance, in order to simplify its branding and to make accessing its loan-based crowdfunding platform easier and more accessible to clients.

    Lendy revealed that the total amount loaned to property developers and investors through its peer-to-peer platform has now topped £285 million and its 15,000 registered users have received £20 million of interest from the loans they have written. The company also stated its user base has more than doubled from 5,600 at the start of 2016, with the platform’s popularity among lenders being driven by:

    • The security provided by property-backed loans
    • The additional security provided by Loan To Value (LTV) ratios on all Lendy loans being capped strictly at 70%
    • Returns of up to 12% on loans written through the Lendy service.
    China

    How technology is changing online credit checks (SCMP), Rated: AAA

    It generally takes nothing more than a simple click on the ‘yes’ button to authorise an online peer-to-peer (P2P) lender to go through an applicant’s credit history before approving a loan.

    But the assessment may in fact go far beyond the borrower’s imagination.

    With vast amounts of data at their disposal, the powerful analytical programs behind the screen are often capable of picking up diverse fragments of an applicant’s life story and piecing together a complete picture. And it all happens in a matter of minutes.

    Cloud Atlas, a risk management system developed by Finup, is one such example. After obtaining consumers’ consent to access their mobile contacts book and apps as well as information provided by third-party data agencies, the system is able to carry out a thorough analysis to figure out whether the applicant is eligible for loans on the particular P2P platform.

    The pass rate of applicants for loans under the Cloud Atlas system is well below 10 per cent, as the three-year-old company uses strict criteria.

    High employee turnover sign of transformation in P2P lending industry (Global Times), Rated: A

    With the rollout of new regulations in February, there has been a wave of resignations in China’s peer-to-peer (P2P) lending industry, as employees worry about the prospects of the business.

    “I resigned in February,” said a woman surnamed Liu, a former employee at one of China’s leading P2P platforms, which she refused to be named.

    Liu started her career in Internet finance in October 2016. Half a year later, she worries about the industry’s prospects.

    Recently, P2P industry employee turnover has shot up, with some workers joining larger P2P companies and some moving to other industries.

    The number of Chinese P2P lending platforms fell from 3,516 in November 2015 to 2,393 in February 2017, according to data from the Shanghai-based P2P lending platform wdzj.com.

    Just a few big Chinese P2P lenders seen surviving in sector tarnished by scandal (SCMP), Rated: A

    The seemingly relentless proliferation of China’s peer-to-peer (P2P) lending platforms has finally been contained by stringent measures introduced by the government in a bid to tackle a fraud epidemic that tarnished the industry’s reputation.

    The sector, which ballooned to host thousands of firms of varying sizes and specialities, will eventually become limited to just a handful of mega participants, according to Zhang Shishi, a co-founder of the Chinese P2P platform Renrendai.

    However, the heated competition that emerged as a wave of profit-hungry new players crowded in, all hunting aggressively for investors and money in the markets, led to a rise in illegal activity. Countless cases of P2P lenders promising high returns from non-existent projects and then running off with the proceeds made the headlines.

    Asia

    Century-Old Bank Plans Digital Revamp to Fight Fintech Risk (Bloomberg), Rated: AAA

    Siam Commercial Bank Pcl, Thailand’s oldest homegrown lender, plans to reinvent its mobile digital payment platform as a lifestyle app to help fend off competition from upstart financial technology providers.

    The lender is working with companies including Accenture Plc, Microsoft Corp. and International Business Machines Corp. on the project, Chief Executive Officer Arthid Nanthawithaya said in an interview. The long-term goal is an app that allows customers to search and pay for entertainment options such as restaurants and cinemas, going beyond just day-to-day banking, he said.

    Siam Commercial Bank’s shares gained 0.6 percent at 10:46 a.m. in Bangkok on Wednesday. The stock has climbed about 4 percent in the past three years, less than the 8 percent advance in the Stock Exchange of Thailand’s Banking Index.

    ‘Why would we ignore a billion people?’: An Irish fintech firm has raised €2m to expand into Asia (Fora), Rated: AAA

    IRISH-BASED FINTECH COMPANY ClaimVantage has secured €2 million in funding to bankroll its move into Asia.

    The international firm, which has been headquartered in Dublin since it was founded in 2006, develops and provides cloud-based claim management software for some of the top insurance firms in the US and Canada.

    Singapore Inks FinTech Cooperation Pact with France (Cryptocoins News), Rated: A

    The Monetary Authority of Singapore (MAS), Singapore’s central bank and financial authority has signed FinTech cooperation agreements with a pair of French regulators to boost FinTech ties between the two countries.

    The cooperation agreement sees Singapore’s central bank partner the Autorité de Contrôle Prudentiel et de Résolution (ACPR), the authority monitoring banks & insurance companies in France and the Autorité des Marchés Financiers (AMF), France’s stock market regulator.

    Under the agreement, the three authorities will adhere to a framework that fosters the sharing of information relating to FinTech trends and services. Joint innovation projects and regulatory hurdles will also be discussed between the two countries.

    MENA

    MENA Fintech Startup NOW Money Wants To Help Everyone Get Access To Banking (Entrepreneur), Rated: AAA

    According to the World Bank’s Migration and Remittances Factbook 2016 report, migrants are sending earnings worth more than US$441 billion to families in developing countries, contributing to the 10% of GDP of some 25 developing countries. With KSA, UAE and Kuwait among the top ten high-income countries categorized as main sources of remittances in 2014, six GCC countries accounted for $98 billion in outward remittance flows in 2014. As the region’s expat population transfer money to respective home countries, there’s a prevalent reality that there is a struggle (especially among blue-collar workers) to access bank accounts- and this is what fintech startup NOW Money is trying to solve.

    With a tagline of “empowering the unbanked,” founders Katharine Budd and Ian Dillon launched NOW Money to provide expat workers who don’t have access to banking and remittance services with direct access to a current account, debit card and remittance from their proprietary app and service center.

    Compared to outbound remittances sent as cash (which is often hard to follow), the startup tracks “payments from salary, to remittance, to collection by overseas. This is an important step change in the progress the UAE is making towards combatting money laundering and criminal funding.” With respect to security and privacy, facial recognition tech is used to enable users to log in to the NOW Money app- a photo cannot be used to fake an entry, since movement is accounted for by this feature: the user has to blink to log in. It also records the way you hold your phone and type, so suspicious behavior will cause an alert notification. Although pin codes and passwords are still present as per the current compliance laws requirement, the team believes such a system is still susceptible to hackers, and thus Budd asserts the advantage of biometrics.

    Alternative Financing in Africa, Middle East (Microcapital), Rate: A

    The authors estimate that approximately USD 475 million was made available in Africa and the Middle East via alternative financing methods between 2013 and 2015, with Israel accounting for USD 125 million of this total. The authors conclude that alternative finance as a whole grew more slowly in Africa and the Middle East than in other parts of the world as the development of the market was in its early stages.

    Kabbage: working capital for small businesses unable to obtain credit from traditional sources (MENAFN), Rated: A

    As a large percentage of small businesses, online retail sales as a percentage of total retail sales have doubled in the past five years. Ecommerce sales overall in 2006 were just over 107 billion, representing 2.7 percent of total retail sales . There are over 100 million Ebay users in the US today, with an estimated 200 million new listings in 2Q, 2008 alone. There are an estimated 5 million power sellers transacting over 48 billion on Ebay and more than 8 million high-volume sellers representing over 70 billion across all marketplaces.

    Rob Frohwein founded Kabbage to get small businesses capital quickly, an area in which banks have long struggled.

    Kathryn Petralia has 12 years of experience in the consumer credit and payments space.

    Amy Zimmerman has spent 15 years building tech companies by identifying and cultivating talent. Her focus at Kabbage is to foster the company’s inventive culture.

    Africa

    The legal considerations of running a FinTech startup in Nigeria (Techpoint), Rated: AAA

    However the alternative method is for a startup to operate on its own steam by meeting the requirements to obtain the requisite licences although this method requires significant capital outlay. As such, FinTech startups that are seeking to exploit the significant market opportunities in Nigeria are bound to run into several regulatory compliance obligations.

    The payment and processing segment of the FinTech sector for example — which has shown the most growth and success thus far — is primarily governed by the same general framework as are traditional financial institutions providing offline financial services (e.g. money/payment transfers, clearing, switching, settlement etc), in addition to regulations related specifically to that sub-sector.

    Thus, the legal and regulatory framework that is generally applicable to financial institutions — such as the Central Bank of Nigeria (CBN) Act, 2007, the Banking and Other Financial Institutions Act (BOFIA) and all subsidiary instruments stemming from same — are all relevant to any non-bank led startups providing digital equivalents of offline financial services. This framework brings with it mandatory obligations such as KYC and AML requirements that must be strictly adhered to.

    Commercial lending activities are regulated in Nigeria and as such require licensing by either the CBN (for banks and other financial institutions) or the Ministry of Home Affairs of the various states (non-financial institution lenders).

    As it stands, insurance penetration in Nigeria is only at 0.6% and the growth of the middle class, alongside increased economic activity, indicates a very bright future for this sector.

    The Nigerian Insurance Act provides the overarching framework for operators of all types of insurance business in the country and the National Insurance Commission (NAICOM) is the industry regulator. Under the act, one must be duly registered with NAICOM before engaging in the business of insurance.

    Authors:

    George Popescu
    Allen Taylor

    In search of China’s hidden credit

    What is the true size of China’s debt load, and how fast is it growing? The answer has significant implications for the global economy. Global watchdogs including the International Monetary Fund and the Bank for International Settlements (not to mention this blog) have become increasingly shrill in their warnings that China’s rising debt load poses global risks.

    Estimates of Chinese debt based on official figures are frightening enough — an FT analysis put the figure at 237 per cent of GDP at the end of March — but an increasing number of analysts now believe that the true figure may be higher.

    Continue reading: In search of China’s hidden credit

    What is the true size of China's debt load, and how fast is it growing? The answer has significant implications for the global economy. Global watchdogs including the International Monetary Fund and the Bank for International Settlements (not to mention this blog) have become increasingly shrill in their warnings that China's rising debt load poses global risks.

    Estimates of Chinese debt based on official figures are frightening enough — an FT analysis put the figure at 237 per cent of GDP at the end of March — but an increasing number of analysts now believe that the true figure may be higher.

    Continue reading: In search of China’s hidden credit