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

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United States

United Kingdom

European Union

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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.

    Wednesday June 27 2018 Daily News Digest

    Bank of Amazon unbundling financial services

    News Comments Today’s main news: Consumer debt surpasses mortgage debt. Funding Circle, INTRUST Bank expand partnership. Revolut offers app store for business banking. VPC Specialty Lending hits record monthly returns. Today’s main analysis: Amazon’s big push into lending, and beyond. Today’s thought-provoking articles: The past and future of banking. Should income investors consider P2P lending? Banks can’t partner themselves into […]

    Bank of Amazon unbundling financial services

    News Comments

    United States

    United Kingdom

    International

    Other

    News Summary

    United States

    Consumer Debt Now Surpasses Mortgage Debt (Investopedia) Rated: AAA

    Mortgages may represent the largest debt for households, but as a percentage of disposable income, home loans are comprising less of a liability, LendingTree found.

    In a research report, the online lender, which analyzed data from the Federal Reserve, said that mortgage-related household debt has declined 5.5%, while consumer credit, which includes revolving credit and installment loans, jumped 45%. Of that, 42% was student loan debt. What’s more, LendingTree found that American household debt is on track to hit $1 trillion above the 2008 peak by the end of June. The debt figure has been increasing at a 3.4% annual rate and includes mortgage debt.

    By the end of the second quarter, LendingTree is forecasting total mortgage and consumer debt to reach $15.7 trillion compared with $14.7 trillion 10 years ago.

    INTRUST Bank and Funding Circle expand partnership (PR Newswire) Rated: AAA

    Funding Circle, the small business loans platform, and INTRUST Bank, a leading US regional bank headquartered in Kansas, today announced the next phase of their strategic partnership to support the growth of US small businesses. Following the successful launch of this partnership earlier this year, the second phase increases INTRUST’s funding commitment and kicks off a targeted, co-branded marketing campaign, giving business owners across KansasMissouriOklahoma, and Arkansas greater access to fast and flexible financing.

    To date, over 150 American small businesses have received loans backed by INTRUST through the Funding Circle platform. The upsized commitment is anticipated to increase this number above 500.

    Amazon and Their Push Into Fintech (Lend Academy) Rated: AAA

    Last week CB Insights released this really interesting report titled, Everything You Need To Know About What Amazon Is Doing in Financial Services.

    Source: Lend Academy

    The report provides an in depth look at the moves Amazon has made in payments, lending, the new Amazon Cash program and also takes a look at how the company has been developing fintech programs internationally.

    By the simple addition of a debit card, Amazon could move the unbanked into a quasi bank account that could be used at places beyond Amazon.

    They have had a small business lending operation since 2011 and much fanfare was made about the $3 billion they have loaned through June 2017. But that doesn’t even put them in the top three online small business lenders in that time period. OnDeck, Kabbage and CAN Capital all loaned more.

    To be fair Amazon is not trying to be a general purpose lender. Their SMB lending operation is targeted solely at Amazon marketplace sellers as a way to help them grow their business so they will sell more products on Amazon. It is not clear they have a desire to do more than that.

    Source: CB Insights

    The Banking Industry: Past and Future (The Motley Fool) Rated: AAA

    INDUSTRY FOCUS // Financials // 06-25-2018

    One of the big things that’s happened over the past 25 years is that the big banks have gotten bigger. We now have what are known as the Big Four banks in the U.S. — CitigroupBank of AmericaWells Fargo and JPMorgan Chase. All of those have grown substantially through acquisitions, not just from the financial crisis, which saw a lot of consolidation, but beforehand. Actually, three of the four were actually acquired themselves, and the acquiring companies just decided to keep the names because they were more recognizable.

    Douglass: I believe that peer-to-peer lending will represent at least 25% of total lending spent in 25 years. Now, I only say 25%. For me, it’s very clear that peer-to-peer lending has become a lot more widespread and a lot more feasible than it was previously. I do expect the peer-to-peer lenders — or a bank, perhaps, who hops in — to help solve for one of the current difficulties, which essentially is poor underwriting by some of the peer-to-peer facilitators right now, meaning that the investors who are putting the money in aren’t making the kind of money that they’d hoped to — I believe those will ultimately be solved.

    But, I only say 25% because banks have legitimately trillions of dollars to lend, and they will absolutely be looking for ways to deploy that capital effectively. So, I would expect that they will be helping facilitate a lot of these peer-to-peer loans. I believe they will be, in some cases, investing alongside. I think they will often invest in alone, and perhaps then sell it to peer-to-peer lenders for an arbitrage so that they can do it all again, sort of like you see with agency-backed mortgages.

    Marcus Is Not Adding Credit Cards Products … Yet (Bank Innovation) Rated: A

    Marcus, the consumer lending arm for Goldman Sachs, wants to become the one-stop shop for many of your financial matters, except for one: credit cards — at least for now. Right now, Marcus is heavily focused on launching a savings platform in the U.K. in the coming months, Talwar said. 

    The challenges for a new ‘bank’ with a famous parent (American Banker) Rated: A

    When JPMorgan Chase set out to make its digital-only brand Finn, it quickly rejected the idea of using it to lure millennial customers over to the institutional side of the bank.

    Finn has also found that for the 27 states where JPMorgan Chase is part of a shared ATM network but has no ATMs or branches of its own, customers have difficulty depositing cash. While those same customers can still withdraw cash and often don’t carry money with them, customers that work for tips have a hard time keeping Finn as their main banking account.

    Sharestates Launches New Loan Programs  (PR Newswire) Rated: A

    Sharestates announced the launch of a Long-Term Portfolio Loan Program to facilitate the needs of borrowers throughout the life cycle of their real estate projects.

    Some highlights of the Long-Term Portfolio Loan Program include 30 and 40-year mortgage terms, interest rates ranging from 5.99 to 7.5%, loans with a 10-year interest only period, followed by 20 or 30 years of amortization, as well as the ability to cover three or more properties under a single loan.

    Venmo officially launches its own MasterCard-branded debit card (TechCrunch) Rated: A

    Venmo today is officially introducing its own debit card in partnership with MasterCard, following beta tests of a Visa-branded debit card last year. The new card will allow Venmo users to pay anywhere MasterCard is accepted in the U.S., and will record transactions to the user’s Venmo account for easy splitting with friends. It can also be used at an ATM to withdraw funds from the Venmo’s account’s balance.

    Unlike the beta version of the card, the MasterCard-branded Venmo card can be used to withdraw up to $400 per day at ATMs displaying the MasterCard, Cirrus, PULSE, or MoneyPass acceptance marks. No fees apply for U.S. MoneyPass ATMs, while the others will charge a $2.50 ATM domestic withdrawal fee.

    There are no fees for using the card for purchases, even if you get cash back at the point of sale. However, if a signature is required to get cash back at a bank, you’ll pay a $3.00 Over the Counter Domestic Withdrawal Fee, the company says.

    PayPal gets anti-fraud ability with $ 120m acquisition of Simility (Fintech Futures) Rated: A

    Following on from its $400 million purchase of Hyperwallet on 20 June, it has now acquired fraud prevention and risk management platform Simility for $120 million.

    Following the close of the deal, merchants on the PayPal platform will gain access to fraud tools that can be customised through their existing account management dashboard.

    Crowd lending fintech raises more than $ 17M (American Banker) Rated: A

    The crowd lending startup P2Binvestor has secured more than $17 million in funding from more than 20 participants to expand its bank partnership program, the company announced Thursday.

    CrowdOut Capital Surpasses $ 100 Million in Loans to Middle Market Companies to Fuel Growth (Business Wire) Rated: A

    CrowdOut Capital, the first tech-enabled online marketplace to fund corporate loans for middle market companies, announced it funded more than $112 million in loans in less than two years. Accredited investors choose from the company’s vetted loan offerings on a deal-by-deal basis.

    CrowdOut funds loans as small as $3 million to companies with annual revenues between $10 – $500 million to fuel growth.

    James Gutierrez of Insikt (Lend Academy) Rated: A

    My next guest on the Lend Academy Podcast has spent his career doing just that. James Gutierrez is the CEO and Founder of Insikt. Since I last had James on the show a lot has changed but their mission is still to improve the financial health of the underserved consumer.

    Banks can’t partner themselves into digital relevancy (American Banker) Rated: AAA

    For banks, these partnerships won’t generate the quantum leap they need to move beyond a decades-old, product-centric mentality to deliver next-generation financial services that consumers deserve. At best, financial institutions may gain a workable solution that squats awkwardly in the existing infrastructure and brand. At worst, after a lot of time and effort — and increasing their infrastructure costs — banks will fail to deliver any noticeable difference to customers beyond a flurry of press releases.

    StraightUp Announces Merger With Slice (PR Newswire) Rated: A

    StraightUp, an innovative real estate-focused platform giving investors access to previously unavailable development opportunities, announced today a merger with Slice, the first blockchain-based REIT for investors around the world.

    StraightUp was designed to democratize access to previously unattainable high-potential investment opportunities in New York City. As a result of merging with Slice, the new and improved platform will give international investors access to premium equity opportunities in desirable cities across the country, including New York CityLos Angeles and San Francisco.

    Mobile app for underbanked looks to go national (American Banker) Rated: A

    You could easily mistake Anne Leland Clark, a Twin Cities nonprofit executive, for a banker with with big, national ambitions as she discusses her organization’s digital platform for the underbanked.

    The product, known as Fair Financial, launched in a pilot program this week to serve about 500 local customers over the next 18 months.

    Majority of Americans Won’t Use a Credit Card to Pay for This Summer’s Vacation (Herald Courier) Rated: A

    The survey of over 1,000 U.S. respondents, conducted by Affirm, found that Americans typically take their biggest vacations of the year over the summer, and cost is a major factor when planning travel.

    55 percent of Americans said it’s very important to have the cost of the vacation paid off before going. The cost of a trip can linger even after the vacation is over: 32 percent of people said they regretted taking a vacation altogether.

    House passes bill allowing telecom, utility payments in credit scores (American Banker) Rated: B

    The legislation, authored by Rep. Keith Ellison, D-Minn., is aimed at helping consumers, those in particularly lower-income and minority households, build their credit histories.

    Under the bill, information about a consumer’s utility or telecommunications service may be reported only to the extent that the information relates to payment by the consumer for such service.

    Depositing the Future (NullTX) Rated: A

    What differentiates Depository Network from both of those companies/platforms is the fact that Depository Network is actually not a lending platform. Rather, it is a depository infrastructure that other P2P lending platforms, banks and credit institutions can utilize. Depository Network is the world’s first fully decentralized multi-platform collateral network that connects traditional lending and blockchain technology.

    Invoice Factoring Edges Out Competition Among Short-Term Borrowing Options (PR Newswire) Rated: A

    When a business needs to raise capital, the more short-term the borrowing options, the better. For every option, though, business owners must weigh the increased cash flow against the trade-off. Interstate Capital looked at a breakdown of options – from bank loans to savings – invoice factoring comes out on top.

    AFR Announces Expanded Technology Offering (AFR Wholesale) Rated: B

    American Financial Resources, Inc. (AFR) announces that it has completed a pilot and will now be providing its broker network with notification when a house for which AFR owns the servicing is listed for sale. This will enable AFR’s broker partners an opportunity to reconnect with the homeowner and, ideally, assist with their next mortgage, on both the relisted property as well as the borrower’s next home.

    Wells Fargo revamps premium card to compete on rewards (Payments Source) Rated: B

    Two years after JPMorgan Chase & Co. launched an arms race in credit-card rewards with its Sapphire Reserve card, Wells Fargo will now offer three points per dollar spent on dining, travel and streaming services such as Netflix on its Propel card. Other purchases will earn one point per dollar, and points are redeemable at one cent per point.

    United Kingdom

    Revolut Now Offers an App Store for Business Banking (Crowdfund Insider) Rated: AAA

    Revolut, a digital only bank that says it is signing up over 120 businesses per day, has launched a new services for their business customers – Revolut Connect. This new feature is described as an “App store” for businesses to help provide easier access to digital tools.

    With more than 60,000 businesses uses their bank now,  Revolut Connect is designed to help firms easily connect and build integrations for the most popular business apps, including accounting platforms like FreeAgent, communication tools like Slack, Apps to help with tax, payroll, expense management and more. Revolut adds that many more popular Apps are in the queue. Revolut wants to create a one stop mobile experience where businesses may manage all of their financial needs in a single mobile friendly application.

    VPC Specialty Lending sees record monthly returns (AltFi News) Rated: AAA

    The £289m VPC Specialty Lending investment trust has recorded its highest monthly return to date for May 2018, according to stock market filings.

    Its net asset value [NAV] total return for the month of May, the latest numbers released by VPC, was 1.03 per cent for the month. Returns comprised 0.94 per cent of income gains and 0.09 per cent of capital gains.

    Should Income Investors Consider P2P Lending? (Morningstar) Rated: AAA

    Peer-to-peer investment trusts now have around £1 billion of assets under management between them, but the jury is still out on whether or not they are worth backing.

    P2P trusts launched four years ago as direct peer-to-peer lenders including Zopa and Funding Circle were fast gaining traction. The trusts promised exposure to hundreds, or even thousands, of different peer-to-peer loans, in return for a juicy dividend yield.

    Majority of brokers’ biggest frustration is lenders changing their mind on a deal (Mortgage Introducer) Rated: A

    Over half (56%) of brokers said the lenders changing their mind on a deal frustrates them the most about the specialist finance market, LendInvest found from surveying brokers at the NACFB Commercial Finance Expo in Birmingham.

    A quarter (24%) identified the lack of good service as their main frustration. Rates not being good enough was an issue for 14% of those surveyed, while only 6% of those surveyed cited lack of choice as their biggest frustration.

    Acceptance of robo advice on the rise (Financial Reporter) Rated: A

    According to a recent poll carried out at the Intelliflo Change the Game conferences held in Manchester and London, robo-advice is now regarded as less of a threat to business for advisers than it has been in recent years.

    Last year, both options gained equal top share in the poll (37% each of 315 respondents), while this year,’ robo-advice’ dropped to 25.5% (419 respondents), with ‘large product providers going direct’ down slightly but still the top concern at 32.5%.

    A guide to liquid IFISAs (Peer2Peer Finance) Rated: A

    But the rising popularity of the secondary market and ‘instant access’ accounts have created enhanced liquidity for P2P investors. On an array of platforms, lenders can sign up for long-term loans before selling their stake to others, while some of the bigger platforms allow free or low-fee withdrawals.

    We’ve put together a guide to all the platforms offering IFISAs with extra liquidity…

    • Ablrate
    • Abundance
    • Assetz Capital
    • CapitalRise
    • Crowd2Fund
    • Folk2Folk
    • Funding Circle
    • FundingSecure
    • HNW Lending
    • JustUs
    • Landbay
    • LandlordInvest
    • LendingCrowd
    • Lending Works
    China

    Chinese online lending platform Hui Ying Financial lowers US IPO deal size to $ 32 million (Nasdaq) Rated: AAA

    Hui Ying Financial Holdings, which operates an online peer-to-peer lending platform in China, lowered the proposed deal size for its upcoming IPO on Tuesday.

    The Shanghai, China-based company now plans to raise $32 million by offering 5.6 million shares at a price of $5.85. The company had previously filed to offer 6.8 million shares at the same price. Hui Ying Financial Holdings will raise -19% less in proceeds than previously anticipated and command a market value of $436 million. Shares are currently listed on the OTCQB under the symbol SFHD.

    European Union

    Raisin and Banco BNI Europa Deepen Collaboration (Crowdfund Insider) Rated: AAA

    Fintechs Banco BNI Europa and Raisin have furthered the collaboration between the two firms. Banco BNI Europe says it has entered into a cooperation to allow Portuguese savers to gain access to the best savings rates available from across Europe.

    International

    Global Debt Registry Launches Decentralized Ledger for the Loan Market  (Payment Week), Rated: A

    Global Debt Registry (“GDR”)today announced the launch of its loan registry designed to verify and provide transparency on loan data on the cloud-based IBM Blockchain Platform. All loan level collateral positions and verification activity will now be immutably recorded on the decentralized registry with highly secure permissioning and access controls to provide new levels of efficiency to the $400bn asset backed securities (ABS) market.

    Mobilum Crypto Payment Processor Partners With EthicHub Crowdlending Platform (Bitcoin Exchange) Rated: B

    Mobilum is a cryptocurrency enabled payment processing platform which allows for cryptocurrency payments in real time at points of sale via an already existing debit or credit cards of the customer and the issuer of the Mobilum token. Mobilum recently announced its partnership with EthicHub, an affiliation that is expected to bolster a mutual sharing of investment opportunities for users on both platforms.

    EthicHub’s crowd lending projects have provided financial solutions for small projects especially those involving farmers in less economically disadvantaged parts of the world, an accomplishment for which it was awarded the Best financial inclusion project at LaBitConf in Bogota as well as the award of the “Start-up with the Greatest social impact” at Unconference Fintech Awards in Madrid, Spain.

    Australia

    Mortgage Choice partners with P2P lender (The Adviser) Rated: AAA

    Mortgage Choice has announced that it has partnered with RateSetter in a move that would provide its 600 brokers with access to personal loans and green loans offered by the P2P lender.

    RateSetter CEO Daniel Foggo claimed that the partnership was part of the lender’s plan to develop its broker relationships.

    ING distribution boss joins RateSetter (Independent Financial Adviser) Rated: B

    ING’s former head of third-party distribution, who led relationships with financial advice and mortgage broking networks, has left to join fintech peer-to-peer lender RateSetter.

    India

    All Financial Transactions on Faircent Conducted through Escrow Account (BW CI World) Rated: AAA

    Faircent.com was the first platform in India to meet all guidelines prescribed by RBI and receive the NBFC-P2P certification in May, this year. This is a validation of the business model that we have painstakingly built over the last five years.

    All financial transactions on our platform are undertaken through an escrow account under the trusteeship of ITSL (an IDBI Trusteeship Services Ltd). Borrowers are evaluated by our fully-automated credit evaluation mechanism across more than 400 data points to understand their ability, stability and intent to repay before they are listed on the platform.

    Canada

    Finastra to sell Canadian-based Collateral Management Corporation business to Teranet (Finastra) Rated: AAA

    Finastra today announced that it has entered a definitive agreement to sell its Canadian-based Collateral Management Corporation (CMS) business to Teranet. The transaction is expected to close in July 2018, subject to required regulatory approvals and customary closing conditions.

    CMS will join Teranet as a new complementary line of business. Jointly, they will deliver enhanced, integrated solutions to a broad set of financial services customers, leveraging investments in technology, rich insightful data, and market leading electronic registry and workflow platforms.

    Authors:

    George Popescu
    Allen Taylor

    Tuesday May 15 2018, Daily News Digest

    McKinsey Asia Personal Financial Services Survey Customers and Digital only Banks

    News Comments Today’s main news: Prosper loan originations up 27% year-over-year, over $2B co-sponsored securitizations closed. Funding Circle launches new borrower referral incentive. Renren investors seek to block asset sales. PayMate acquires Z2P Technologies. Today’s main analysis: Singapore’s biggest bank vs. China’s tech giants. Today’s thought-provoking articles: 80% of startup money goes to three states. The Sharestates story: $1B […]

    McKinsey Asia Personal Financial Services Survey Customers and Digital only Banks

    News Comments

    United States

    United Kingdom

    China

    European Union

    International

    Other

    News Summary

    United States

    Prosper Loan Originations up 27% Year-over-Year; Over $ 2 Billion of Co-Sponsored Securitizations Closed (Business Wire) Rated: AAA

    Prosper today reported financial results for the first quarter of 2018. Loan originations increased 27% year-over-year to $744 million, driven by strong demand for the company’s personal loan product and stable funding.

    Financial highlights include:

    • Total Net Revenue, which includes the non-cash impact related to warrants to purchase preferred stock, was flat year-over-year at $30.5 million in Q1 2018 compared to $30.8 million in Q1 2017.
    • Core Revenue(1), which excludes the non-cash impact related to warrants to purchase preferred stock, increased $11.6 million or 34% year-over-year to $45.7 million in Q1 2018 compared to $34.2 million in Q1 2017.
    • Net Loss decreased by $12.6 million to ($11.4) million in Q1 2018 compared to a Net Loss of ($24.0) million in Q1 2017.
    • Adjusted EBITDA(1) increased $13.6 million to $4.5 million in Q1 2018 compared to ($9.0) million in Q1 2017, the fourth consecutive quarter of positive Adjusted EBITDA(1) generated by Prosper.
    Key Operating and Financial Metrics (Unaudited)
    (in thousands)
    Three Months Ended March 31,
    2018 2017
    Loan Originations $ 744,127 $ 585,590
    Transaction Fees, Net 31,354 26,869
    Servicing Fees, Net 7,184 6,154
    Total Net Revenue 30,450 30,845
    Core Revenue (1) 45,729 34,152
    Net Loss (11,401 ) (24,021 )
    Adjusted EBITDA(1) 4,520 (9,039 )

    80% of start-up money goes to three states — here’s what one visionary is doing to help spread the wealth (Business Insider) Rated: AAA

    Baird: And the microfinance industry is — $30 billion a year around the world is lent in $500 chunks to small businesses, near a 100% repayment rate.

    Microfinance is a tool. All investing is a tool. Every microfinance bank, every bank is neither good nor bad, they’re amoral. It’s just what are people trying to do with it. I’ve seen microfinance banks that act in extractive ways and their primary goal is extract as much profit out of poor communities as possible. I’ve seen payday lenders do the same thing. I’ve also seen microfinance banks that are very good and say, “Our core goal is building wealth for the community and we’ve structured our business in a way that works for us.”

    One percent of start-up investment goes to African-Americans. Two percent of start-up investment goes to women. There are a lot of people who are overlooked.  So roughly 80% of start-up investment goes to three states: New York, Massachusetts, California. If you’re in Ohio or Florida or Nairobi or Mumbai, it’s really hard to get your idea into the system.

    The Story of Sharestates: From Startup to $ 1 Billion in 3 Years (Lend Academy) Rated: AAA

    Now, just over a year later, they have announced they recently crossed the $1 billion mark in originations. The company did so in just over 3 years, having officially launched in February 2015, just before LendIt USA that year. They are the second company in the real estate crowdfunding space to do so and are on our list as one of the ten options available for accredited investors in the marketplace lending space.

    Originations in the lending space is only one metric. Any lending company’s survival depends on the quality of the loans they are making. According to the Sharestates’ website, investors have earned an average 10.54 percent annualized return. They also report 0% loss of principal for their investors. As of last year when we checked in the company was profitable which sets them up for continued success going forward. We’ve seen very few companies in the marketplace lending space broadly achieve this goal.

    BuildDirect Partners With Affirm (Globe Newswire) Rated: A

    BuildDirect, the first technology platform for the home improvement industry, today announced its partnership with Affirm Inc., a financial technology company that provides transparent payment alternatives to traditional credit. Now, U.S.-based BuildDirect customers have easy access to flexible and transparent financing options to pay for home improvement and renovation materials over time. At the point of sale, shoppers will see exactly how much they’ll pay in fixed monthly installments over the term they choose.

    Banks struggle to combat the cyber crime bad guys (Financial Times) Rated: A

    Digital banking has been a big positive for the financial services industry, though it has opened companies to greater cyber risk; cyber criminals now have a lot more entry points when it comes to getting access to funds illicitly; banks have increased their spending on defense but it isn’t enough as they also need to construct better, more secure systems; the CEO of Standard Chartered writes in the FT that banks can better utilize the data they collect, design tech better and work more closely with governments to catch bad actors.

    Blockchains Could Be the Answer to Fairer Lending Systems (Nasdaq) Rated: A

    The advancement of blockchain technology, this is poised to change. Through the technology, anyone anywhere in the world can raise financing from peers without having to rely on the traditional credit scores and the often heavily bureaucratic conventional mortgage processes.

    Blockchain solutions such as Homelend  are making it possible for borrowers to directly reach lenders without depending on any intermediary and with no paperwork. The whole process is safeguarded by smart contracts to ensure that all parties in the deal adhere to their part of the bargain. According to Aneeza Haleem , a senior account manager at Cognizant Technology Solutions, blockchain-powered peer-to-peer mortgage financing significantly reduces the costs involved in the mortgage process.

    Will Wells Fargo hurt Zelle by improving on it? (Payments Source) Rated: A

    The irony of the explosive growth of mobile P2P is this: As consumers get more comfortable with paying one another through mobile devices, they’re thinking of P2P less as a service that one should find within a bank’s app.

    This is a problem for Early Warning’s Zelle, the bank-run P2P network whose main selling point is its integration with banks. It’s a sharp contrast to rivals such as Venmo, which styled itself on a social media app; and Facebook and Apple, which took their own messaging platforms and blended P2P payments into the interface.

    Capital One buys digital identity start-up Confyrm (Fintech Futures) Rated: A

    Capital One has acquired San Francisco-based digital identity start-up Confyrm as it seeks to capture the market for consumer identity services.

    Financial details were not disclosed, but as part of the deal Andrew Nash, founder and CEO of Confyrm, has become managing vice-president of Capital One’s consumer identity services. No word on what happens to the rest of the staff.

    Confyrm was founded five years ago and offers help against online fraud.

    Where Bank of America uses AI, and where its worries lie (American Banker) Rated: A

    Bank of America spends $3 billion developing and buying technology every year, and about three times that on keeping its existing IT infrastructure going, says David Reilly, global banking and markets technology chief information officer.

    As you might expect, some of that goes to artificial intelligence technology. The bank does not disclose how much.

    An old-school fraud analytics program might see a customer using a card in a place they have never used a card before and block the transaction.

    AI can do better.

    The one area where banks and fintechs want more regulation (American Banker) Rated: A

    Banks, fintech firms and data aggregators are asking regulators to provide more clarity on how to handle consumer data and who is responsible for leaks when it is shared between firms — a request that’s seemingly a reversal from the deregulatory approach the industry often takes.

    The potential liability stemming from consumer data has become a critical concern for the financial industry as more data aggregators and fintech firms rapidly enter the space, seeking access to customers’ bank account information in order to offer loans and other products.

    Could US Post Offices Become Banks? Here’s How The Plan Would Work (10 News) Rated: A

    Now, there are a couple different ways Congress could build banking into the U.S. Postal Service. The first approach would just cover the basics.

    That means offering low-dollar checking accounts and debit cards to low-income earners. That would at least offer basic financial services to all Americans, regardless of wealth. And it probably wouldn’t be too tough politically because the big banks typically aren’t interested in these customers.

    But Gillibrand’s proposal would go further, allowing the postal service to also make loans of up to $1,000 with a super low interest rate around 2 percent, even to the poorest Americans. Because many of those loans would be at risk of not being paid back, some experts say the interest rate will have to be higher, maybe 25 percent. But that would still be a lot lower than rates from payday lenders, which often have people pay back three or four times what they borrowed.

    Citizens Financial To Launch Online Consumer Bank (PYMNTS) Rated: A

    Citizens Financial Group announced on Monday (May 14) plans to launch Citizens Access, a nationwide direct-to-consumer online bank.

    In a press release, Citizens Financial said the digital platform will offer FDIC-insured deposits products aimed at serving people who want to save and want the flexibility of an online banking service. The company said it will provide digital deposit services at attractive rates and lower costs to help consumers save more for the future. The platform will be launched in the third quarter and will be available throughout the U.S.

     

    Now Is the Time to Refinance Student Loans (Pharmacy Times) Rated: B

    Refinancing your student loans from pharmacy school can potentially save you a significant amount of money while providing the convenience of making one payment a month. Keep in mind refinancing may not be for everyone. Individuals with a poor credit history, low salary from a pharmacy residency or fellowship, or those who want to keep the provisions in federal loans may want to closely consider their options before jumping right into refinancing their loans.

    United Kingdom

    Funding Circle launches new borrower referral incentive (Peer2Peer Finance) Rated: AAA

    FUNDING Circle is offering £1,500 in Amazon vouchers to anyone who refers a business that takes out a loan of £25,000 or more with the peer-to-peer lending platform.

    The UK’s third-largest lender to small businesses said the borrowers may need the cash to grow, refurbish, buy stock or equipment, hire more staff or simply boost their cash flow.

    HMRC updates crypto investors on tax confusion (Peer2Peer Finance) Rated: A

    However, a HMRC representative has told Peer2Peer Finance News that the tax office will deal with cryptocurrency related tax bills “on a case-by-case basis”.

    The 2017-18 tax year saw huge volatility across the cryptocurrency sector, with Bitcoin reaching a high of £13,840 in mid-December before ending the tax year at approximately £4,750 per coin. This has led to confusion among retail investors regarding their tax liability, particularly if they sold out of the market at a high, then reinvested the profits only to see any gains wiped out.

    Frederic Nze of Oakam (Lend Academy) Rated: A

    In this podcast you will learn:

    • What was the catalyst that led to the founding of Oakam.
    • The loan products that Oakam offers.
    • The difference between small dollar loans in the US and the UK.
    • How Oakam is able to find their customers.
    • What percentage of their customers apply for a loan on a smartphone.
    • Why they still have physical stores where people can apply for loans in person.
    • How they have refined their underwriting models over the years.
    • How they are dealing with increased fraud via their online channels.
    • The interest rates they charge.
    • How their customers are able to reduce these rates for future loans.

    Technology not size is key to banking success (Financial Times) Rated: A

    Antony Jenkins, former CEO of Barclays and now head of 10x Future Technologies, writes in the FT that technology is key to the battle with banks; having technology that is more nimble and focused on the customer will help to better position challengers; UK challengers banks have found it hard to compete against the big names, even with recent consolidation; understanding what the customer needs most and allowing them to access services anytime and anywhere is what firms should focus on.

    Fintech most popular sector for HNW investors (Investment International) Rated: B

    Capitama’s current registered investors have a total annual investment capacity of £7.6bn. Of this total capacity, investors have expressed an annual investment capacity of £5bn into private equity opportunities, with £2.3bn total annual investment in Debt and Income opportunities. The interest of the registered investors in Philanthropic and Social Impact opportunities currently stands at £300m per year. This is an additional theme on Capitama given the rise in interest in these organisations from wealthy individuals and organisations.

    69% of Capitama investors are interested in fintech investment opportunities and 67% want to see software and technology deals. Of the nine different investment types available on Capitama, Growth funding is the most popular, with 83% of Capitama registered Investors interested in this area, followed by Early stage investments (72%), Buy-outs (63%), and Real Estate (47%).

     

     

    China

    Renren Investors Seek to Block Asset Sales to Chief, SoftBank (Bloomberg) Rated: AAA

    A group of Renren Inc. investors are trying to block the private sale of company-owned assets to a consortium that includes its own top executive and major shareholder SoftBank Group Corp.

    Renren announced the complex deal in April, which it said was necessary to address concerns that the SEC might deem it an investment company — forcing its delisting if it failed to obtain relevant licenses.

    The letter accused management of trying to transfer the assets at values equal to or lower than their book value, neglecting their duty to smaller shareholders and misrepresenting certain financial statements. For example, it says the shares in SoFi — one of America’s biggest student loan refinancers — are being sold at a valuation of $269 million when they could be worth double that amount.

    US online lending model is unproven, Eisman of The Big Short fame says in Hong Kong (South China Morning Post) Rated: AAA

    Steven Eisman, famous for successfully shorting the US subprime market before the onset of the 2008 financial crisis, has said the online lending business model used in the United States is unsustainable, and that losses from Canadian mortgages could widen.

    The one pocket of financial market anomaly in the US was online lending, where, he said, the underwriting of peer-to-peer credit was unproven, as selling a loan to investors such as hedge funds and other financial institutions was an unsustainable business model.

    “The problem [with P2P lending] is that selling a loan [online] is not the same as selling a book. You buy a book on Amazon and that’s the end of the transaction. When you make a loan, that’s the beginning of a relationship. The question is how you manage that relationship,” said Eisman.

    Soft Chinese Tech IPOs Test Next Wave of Listings (Wall Street Journal) Rated: A

    More than a dozen technology companies from China are rushing to go public abroad, in an enticing opportunity for investors but one that has generated poor returns recently.

    Shares of most Asian tech companies that have listed in New York and Hong Kong since the start of 2017 have notched lackluster performances, with the bulk trading below their initial public offering prices after strong early gains.

    European Union

    Bondora Go & Grow – Bondora Rolling Out New Product (P2P Banking) Rated: AAA

    Go & Grow is designed for the passive investors as hands off p2p lending. One of the main advantages is that Bondora says it is tax optimised.

    The Bondora Go & Grow product features a target interest rate of 6.75% which will accrue daily. It runs completly on autoinvest. The investor just needs to join it and pay money into the Go & Grow account (or transfer it from the normal Bondora account). The Go & Grow account promises daily liquidity. There is a 1 EUR withdrawal fee making small withdrawals expensive but for portfolios of 1000 EUR or more and usual investment horizons this fee is negligible.

    Three Year Old Fintech Mintos is Profitable (Crowdfund Insider) Rated: A

    Latvian Fintech Mintos is reporting a profit in its brief three year old history. According to the company, the global online marketplace for loans has seen their revenue increase more than four-fold in 2017 to € 2.1 million generating a net profit for the year of € 197,000. Mintos says it has experienced significant growth, making it the “peer-to-peer lending market leader for continental Europe” with a 38% market share.

    In aggregate, Mintos has topped € 660 million in investments by investors and the company expects the amount of loans funded to reach EUR 1 billion before the end of this year. As of May 2018, Mintos claims more than 58,000 investors using the platform and this number is expected to surpass 100,000 at some point in 2017. Currently, investors may expect an average 12.1% rate of return.

    International

    The 30 most valuable VC-backed companies in the world (Pitch Book) Rated: AAA

    Ridehailing giants Uber and Didi Chuxing, based in San Francisco and Beijing, respectively, lead the list of most valuable private companies around the globe. And moving down the rankings, the pattern set at the top continues. A total of five of the companies are in the ridehailing industry, and 26 of the 30 are based in either the US or China.

     

    Source: Pitch Book

    What is Libra Credit: Digital Assets as the Future for International Credit (Coin Central) Rated: AAA

    Libra Credit is offering a decentralized lending Ethereum-based ecosystem that helps users get open access to credit anywhere and anytime.

    As long as a user has digital assets, they will be able to borrow money from Libra Credit by using those digital assets as collateral. Additionally, these users will be able to build an international credit history – a concept that Libra Credit and its partners plan to push to be recognized globally.

    Source: Coin Central

    Libra Credit plans to charge a fixed 8% annual interest rate charged by Libra Credit, which is party enabled by its partnerships with traditional finance institutions. The rate is competitive with that of other peer-to-peer lending platforms such as Lending Club and Salt, but isn’t tied to the availability of a peer match.

    Source: Coin Central

    How Misbehaving Australian Banks Are Causing Global Pain (Bloomberg) Rated: AAA

    Australia’s four biggest banks — Commonwealth Bank of Australia, Westpac Banking Corp.National Australia Bank Ltd. and Australia & New Zealand Banking Group Ltd. — have been plagued by a string of scandals. The accusations run the gamut from giving misleading financial advice to trying to manipulate a benchmark interest rate. Simmering public resentment — stoked by a sense banks were gouging fees to fuel record profits and executive pay — boiled over last year when Commonwealth Bank was sued for systemically breaching anti-money laundering rules.

    The government has announced tough new penalties for corporate wrongdoing and beefed up the regulator’s powers; analysts have trimmed earnings forecasts and speculate future legislation could force the biggest banks to sell off advice businesses.  All this comes at a time when bank profits are under pressure from a slowing housing market, rising costs and increased competition. Most of the banks are trying to simplify their operations and sell non-core operations.

    Citi Inks $ 100 Million Trade Finance Deal With Asian Development Bank (PYMNTS) Rated: A

    Global financial institution Citi is expanding its existing partnership with the Asian Development Bank (ADB) to share risk in trade finance transactions, reports in The Financial said Friday (May 11).

    The ADB’s Trade Finance Program reached a deal worth $100 million with Citi that sees the financial institutions (FIs) sharing risk on trade finance transactions in an effort to bolster support for trade and access to finance across Asia.

     

    Australia/New Zealand

    FINNIES 2018: Here are all the finalists for Australia’s fintech industry awards (Business Insider) Rated: A

    89 companies and individuals were chosen for Australia’s only industry-backed fintech awards, from a record field of more than 200 entries.

    Excellence in Business Lending
    ● Finstro
    ● Prospa
    ● Spotcap Australia
    ● The Invoice Market – tim
    ● Trade Ledger

    Excellence in Consumer Lending
    ● HashChing
    ● MoneyMe
    ● MoneyPlace
    ● RateSetter Australia
    ● SocietyOne

    Robot financial adviser granted FMA exemption (Radio New Zealand News) Rated: A

    The country has its first robot financial adviser after KiwiWealth was given an exemption by the Financial Markets Authority from the current law which requires humans to give financial and investment advice.

    But Mr Bishop said it would still have human advisors offer detailed advice and have control of the robot.

    India

    PayMate Acquires Digital Lending Platform Z2P Technologies to Benefit SMEs (BW Disrupt) Rated: AAA

    PayMate, an early pioneer in India’s payments industry and a leading player in electronic Business-to-Business (B2B) payments space, announced today the acquisition of Z2P (Zaitech Technology Pvt. Ltd.), a digital lending platform which provides hassle-free and real-time credit using social and banking data along with proprietary analytics and AI.

    The acquisition is expected to be completed by May 2018 and it follows the announcement in February of this year by PayMate of its B2B partnership agreement with Visa.

    As a result of the acquisition, PayMate acquires an innovative and proven lending solution in Z2P, which when combined with PayMate’s proprietary B2B payments platform will revolutionize the way businesses manage their payment operations, cashflow, and access to growth capital. PayMate plans to partner with banks and NBFCs to improve the flow of credit to SMEs.

    Canada

    Last week, Power Financial CEO Jeff Orr told reporters he plans to invest more money in fintech startups as the company looks to find technologies that can be incorporated into its business model and avoid disruptions that have hurt other sectors.

    Widely known on the Street for its empire of financial advisers and investment products, Power Financial has spent $320-million in the fintech sector – with more than half the funds being allocated toward online robo-adviser Wealthsimple.

    Asia

    Singapore’s Biggest Bank Takes on China Giants in Fintech Battle (Bloomberg) Rated: AAA

     

    Almost 55% of customers say they would consider branchless digital-only bank

    Source Bloomberg

    Gupta credits his early recognition of the threat to his early days in Citigroup’s transaction banking division, unusual for a bank CEO, who tend to hail from the retail or investment banking arms of their institutions. That background taught him both the nuts and bolts of banking and the importance of technology, Gupta said. He also dabbled briefly but unsuccessfully in the startup world, when he quit Citigroup in 2001 to found an Internet portal in India, around the time the dotcom bubble was bursting.

    Latin America

    Morgan Stanley Goes After Brazilian FinTech Market (PYMNTS) Rated: AAA

    Bloomberg, citing four people with direct knowledge of the matter, reported that Morgan Stanley purchased $14 million in local subordinated bonds from online consumer lender Geru Tecnologia e Servicos. The Geru bonds, which the company issued in December of 2017, have a four-year maturity and pay about 11.2 percent each year, noted the report.

    The company is also reportedly in talks with international investors about raising $50 million via an equity round that QMS Capital is handling. QMS has a 10 percent stake in Geru. General Atlantic could also be an investor in the round of fundraising, noted the report.

    Authors:

    George Popescu
    Allen Taylor

    Thursday May 10 2018, Daily News Digest

    Quarterly Originations

    News Comments Today’s main news: Quarz Capital Management outlines proposals to unlock >70% returns in LendingClub share price. Sharestates surpasses $1B in loan originations. Funding Circle hires first female NED. Today’s main analysis: Review of LendingClub’s Q1 2018 earnings results. Today’s thought-provoking articles: LendingTree’s monthly mortgage offer report for April 2018. Crowdfunding in the absence of liquidity constraints. Digitization […]

    Quarterly Originations

    News Comments

    United States

    United Kingdom

    China

    European Union

    International

    News Summary

    United States

    Quarz Capital Management Outlines Proposals to Unlock Return of >70% in the LendingClub’s Share Price (PR Newswire) Rated: AAA

    Quarz Capital Management, Ltd. (QCM), an investment manager, today issued a letter urging LendingClub to take immediate and decisive steps to address the severe undervaluation of its share price and unlock a potential attractive total return of >70% for shareholders.

    US ONLINE MARKETPLACE LENDING BEHEMOTH TRADING AT ‘STARTUP’ VALUATION
    – POTENTIAL TOTAL RETURN IN EXCESS OF 70% OVER THE NEXT 3 YEARS –

    LendingClub is the largest online lending marketplace platform in the US with an estimated ~50% market share1. The firm is projected to generate more than $700million of revenue on ~$11billion of loan originations in 2018E. LC’s substantial loan origination volume of more than $35billion since 2006 and its proprietary credit data increase the effectiveness of credit and risk models and enable the largest institutional investors to undertake the rigorous due diligence required to allocate capital on its platform.

    Recommendation 1. Emphasize on cost control to increase profitability

    Recommendation 2. Improve alignment of compensation system for top management

    Recommendation 3. Increase shareholder return on sizeable cash holdings

    LendingClub Q1 2018 Earnings Results Review (Lend Academy) Rated: AAA

    During the first quarter, LendingClub is typically affected by the seasonality of the lending business so it’s beneficial to look both at the last quarter as well as the prior year period. In the first quarter of 2018, LendingClub posted originations of $2.3 billion. This represents a 5% decrease from the previous quarter, but an increase of 18% from the prior year period.

    Source: Lend Academy

    Revenue came in at $151.7 million, down 3% from the previous quarter but up 22% from the prior year period. They incurred a GAAP net loss of $31.2 million which included legal expenses related to legacy issues of $17 million.

    Source: Lend Academy

     

    Here’s Why Lending Club Is Soaring Today (The Motley Fool) Rated: A

    The company called for 20% growth in its 2018 outlook, so 22% revenue growth is even better than expected. And, the company’s full-year outlook calls for total revenue in the range of $680-$705 million. At the midpoint, this implies average revenue of more than $180 million per quarter for the rest of the year. Considering that the first quarter’s revenue was “just” $151.7 million, this represents some impressive growth ahead.

    Q1 2018: LendingClub Platform Update (Lending Club) Rated: A

    During the first quarter of 2018, we continued to observe that credit performance across the industry is returning to long-term averages and interest rates are rising across fixed income assets.1 On the platform, we continue to see both of these trends in action: investors show higher demand for higher quality assets and are looking for higher interest rates overall.

    Sharestates Surpasses $ 1 Billion in Loan Originations; Celebrates With $ 100,000 Giveaway to Investors (PR Newswire) Rated: AAA

    Online real estate investment platform, Sharestates, today announced they have surpassed $1 Billion in loan volume – an incredible milestone that showcases their continued growth in the real estate investment space. To celebrate the achievement, Sharestates is giving away $100,000 to mark the occasion.

    LendingTree Releases Monthly Mortgage Offer Report for April (PR Newswire) Rated: AAA

    LendingTree today released its monthly Mortgage Offers Report which analyzes data from actual loan terms offered to borrowers on LendingTree.com by lenders on LendingTree’s network. The purpose of the report is to empower consumers by providing additional information on how their credit profile affects their loan prospects.

    See the full report here.

    CRE Crowdfunding Firms Continue to Scale Up Platforms (National Real Estate Investor) Rated: A

    Crowdfunding firms have put a lot of effort into educating accredited investors on real estate crowdfunding and real estate investing in general. Those efforts are starting to pay for firms such as CrowdStreet. The firm hit a major milestone in March with more than 99,000 registered investors on its platform. CrowdStreet also is generating a high volume of repeat investors that are using crowdfunding to create diversified real estate portfolios with different sponsors, property types, geographic markets and risk profiles, notes Tore Steen, CEO, CrowdStreet.

    The average investor on CrowdStreet has five investments in their portfolio, and over 20 percent of investors on CrowdStreet have invested more than $1 million across 12 unique investments.

    Some crowdfunding platforms, such as Fundrise, Realty Mogul and Rich Uncles, have introduced e-REITs as a way to reach non-accredited investors and expand their potential customer base. But for the most part, crowdfunding firms are firmly focused on raising capital from accredited investors.

    Groundfloor is one of the few crowdfunding platforms that is providing direct investment opportunities to non-accredited investors.

    Banks in constant game of catch-up in combating mobile fraud (American Banker) Rated: A

    Even as banks and other financial firms have invested heavily in technology designed to protect customers’ data, fraudsters have become more and more aggressive in trying to steal consumers’ identities to open accounts, take out loans or intercept payments.

    According to ThreatMetrix, a global cybersecurity network used by banks and e-commerce firms to help determine the authenticity of digital transactions, 210 million attempted attacks were made on its network during the first quarter of 2018, a 62% increase over the same period last year.

    Cohn says starting ‘digitized’ bank one option for next job (American Banker) Rated: A

    Gary Cohn, the former director of the White House Economic Council, said he’s still weighing options for his next role but one possibility is a digital bank.

    “I do have an idea for a company,” Cohn, who was president of Goldman Sachs before joining the Trump administration, said Tuesday in an interview on CNBC. “It would be an interesting concept playing on the knowledge I know from the banking world, in running a regulated bank, but in a digitized world.”

    Where big banks fear to tread (Financial Times) Rated: A

    Bank accounts for small businesses is an area of fintech not yet solved; Azlo is looking to fill that void as they believe banks have built their small business offering for the traditional small business owner; the new age business owner doesn’t have years of tax returns to share, providing accounts for them is not a risk banks want to take; Azlo also plans to move into loans later as an alternative to overdraft fees; they believe a straightforward, transparent offering will allow them to serve the type of small business banks have overlooked for years.

    How Northwestern Mutual is using LearnVest to build advisory services (Tearsheet) Rated: A

    Northwestern Mutual is growing its advisory services, building on the technology and expertise of LearnVest, which is currently shutting down and preparing for a rebrand as a content site this year.

    In a statement, Northwestern Mutual said it wants to serve customers wanting an “end-to-end experience” with a human adviser using LearnVest’s digital planning platform, alongside a new content site. The integration also allows the parent company to concentrate on full-scale financial planning — a message consistent with a recent job posting that noted the company is scaling its technology and personal finance approach to reach millions of people across both LearnVest and Northwestern Mutual brands.

    Bitcoin Sees Wall Street Warm to Trading Virtual Currency (The New York Times) Rated: A

    The parent company of the New York Stock Exchange has been working on an online trading platform that would allow large investors to buy and hold Bitcoin, according to emails and documents viewed by The New York Times and four people briefed on the effort who asked to remain anonymous because the plans were still confidential.

    Rebundling the bank: an interview with Renaud Laplanche (AltFi News) Rated: A

    It’s clear that Laplanche has designed Upgrade from the start with scale in mind. Little more than a year after launching its first product, the company has 250 staff across three centres, San Francisco, Phoenix, and Montreal, and its series A funding round was no minnow at $60m. Originations are running at $100m a month, having reached a level after a year that it took Lending Club more than six years to reach. Laplanche said in April he expects to originate $2bn of loans this year.

    Laplanche is scathing about credit cards, labelling them “fundamentally bad products”. They are expensive – the average interest rate on the US’s $1.03 trillion of balances is 17 per cent, he says, which rises to perhaps 25 per cent once fees are accounted for – and borrowers can run up debts without having to pay down the principal every month as they would with a loan. Many don’t even realise they are taking out a loan, and card issuers never use the word.

    California bank goes online competitors one better (Banking Exchange) Rated: A

    First Foundation Bank, an 11-year old $4.5 billion-assets bank headquartered in Irvine, Calif., gets that message. Lorrie Asker, senior vice-president, commercial banking, says she’s heard from many clients that they handle their finances and their banking between 10 P.M. and 2 A.M. In the Age of Amazon, everyone, she says, craves immediate online availability of services, including banking.

    Marketplace business lenders frequently point out that busy small business owners’ lives often don’t synch with “bankers hours.” Being able to apply for credit with online players like Kabbage or OnDeck any hour of the day is a much touted advantage. It plays to the credit hungry who find their credit by Googling for it.

    10 tips to beef up your crowdfunding campaign (Born2Invest) Rated: A

    Researchers from Georgia Tech checked out nine million phrases culled from 45,000 Kickstarter campaigns, and they discovered the most-used phrases from fully funded campaigns versus those that failed.

    Some platforms to consider include:

    IndiegogoA popular crowdfunding platform that is home to mostly technological innovations. Aside from this, the platform also offers initial coin offerings (ICO) of new cryptocurrencies.

    SeedInvestThis crowdfunding platform has a selection process for startups it wants to help out. While the company only accepts one percent of startups that apply, it presents a selection of highly vetted businesses.

    StraightUpMade for real estate crowdfunding, the company invests along with its clients. If a client finds a project interesting, StraightUp also supports it by participating in the crowdfunding.

    LendUp Bolsters Leadership Team Across Finance, Engineering, Credit Card Product, InfoSec, And Legal, (PR Newswire) Rated: B

    LendUp, a fast-growing fintech firm for the emerging middle class, today announced a number of executive hires, including a General Counsel and VP of Engineering, as well as new heads of Capital Markets, Credit Card Product, and Information Security. These appointments will help LendUp expand the scope of its affordable, consumer-friendly products, as it becomes a first-of-its-kind destination for responsible spenders, savers, and strivers.

    Beyond Spare Change: Debt Payment Startup Qoins Wins Country’s Largest Fintech Prize (Hypepotamus) Rated: B

    Qoins, an Atlanta-based startup that rounds up users’ spare change to help them pay off their debt, took home the largest equity-free cash prize for startups in the country as the winner of the Fintech Innovation Award Challenge at this week’s FinTech South conference. The audience was able to vote on which of four finalists would receive the $50,000 check during a live pitch event.

    4 Tips for Finding the Best Online Mortgage Lenders (Nerd Wallet) Rated: B

    Since not every lender offers a fully digital mortgage and your experience can differ from one lender to the next, it’s a good idea to find a company that offers an online experience that meets your expectations. These four tips will guide you to the right fit.

    1. Know who offers the loan you need with qualifications you can meet
    2. Evaluate the customer service
    3. Find out if an online application is right for your situation
    4. Test-drive online lender platforms by getting preapproved

    Laurel Road Named Winner Of Best Consumer Lending Product Category In 2018 Fintech Breakthrough Awards (PR Newswire) Rated: B

    Laurel Road, an online lender and FDIC-insured bank, today announced that its online student loan solution has been selected as winner of the “Best Consumer Lending Product” award by FinTech Breakthrough, an independent organization that recognizes the top companies, technologies and products in the global fintech market today.

    United Kingdom

    Funding Circle, the UK’s biggest peer-to-peer lender, will this week take another step towards a £2bn London flotation by naming its first female non-executive director.

    Sky News understands that the company, which is targeting a listing soon after the summer, will announce that former O2 executive Cath Keers is joining its board.

    Ms Keers, who is an experienced non-executive director in the retail, technology and logistics industries, will bolster Funding Circle’s public market credentials as well as improving the gender balance in its boardroom.

    NatWest fintech investments bear fruit as SME loans platform goes live (Computer Weekly) Rated: A

    NatWest has launched a fintech (financial technology) lending platform aimed at small to medium-sized enterprises (SMEs) that cuts the time it takes to apply for a loan to 10 minutes. The project will help the bank fight off competition from peer-to-peer lenders.

    The platform, known as Esme Loans, offers SMEs loans of up to £150,000 and makes it easier to apply for them by using the latest technology, including application programming interfaces (APIs).  The entire process is online and paperless, with customers able to apply in less than 10 minutes.

    China

    Six and the Citi unveil API partnerships in Hong Kong (Fintech Futures) Rated: AAA

    Citi has made six API partnerships with corporations in Hong Kong as it looks to improve its digital banking services.

    The six partnerships are:

    • HKTVmall integrated with Citi Pay with points API
    • EGL Tours integrated with Citi Pay with points API
    • AIA Hong Kong integrated with Citi Customers API
    • Octopus App integrated with Citi onboarding, cards and money movement APIs
    • Citi Visa Fetch App
    • Zurich Hong Kong integrated with Citi Customers API

    China’s peer-to-peer lending hits the skids (Nikkei Asian Review) Rated: A

    Peer-to-peer lending is slowing dramatically in China as a looming clampdown on the industry spurs platform providers to throw in the towel — sometimes after just a few months in business.

    The balance of peer-to-peer loans, or financing between individuals, came to 1.29 trillion yuan ($202 billion) on April 30, up a mere 6% from the end of 2017. That increase represents a sharp slowdown from the 50% surge last year and the 100% jump in 2016, according to industry information provider WDZJ.com. Less than 200 billion yuan worth of contracts were signed for April, down around 20% year on year.

    European Union

    CROWDFUNDING IN THE ABSENCE OF LIQUIDITY CONSTRAINTS (All About Alpha) Rated: AAA

    A forthcoming issue of the Journal of the European Economic Association will carry a study arguing that crowdfunding in the absence of liquidity constraints is a superior method of equity financing–superior to “traditional financing forms,” that is, unless those traditional financiers are fully competitive and perfectly informed.

    By one estimate, global crowdfunding reached $195 billion in 2017. Of that, $13 billion was equity- or reward-based.

    The 60 second interview: Lara Oyesanya (The Lawyer) Rated: A

    Ahead of her session at the In-house Financial Services Conference, Lara talks to The Lawyer about the legal challenges of digital innovation and the way in which technology is transforming the in-house lawyer’s relationship with external counsel.

    What legal challenges are brought forward by digitalisation?

    Will AI function within current legal frameworks, do we actually know how it will function to properly assess legal risks, is monitoring required to ensure due legal process? There are then ongoing discussions around data, information and cyber security.Algorithms and Applied Programming Interfaces (APIs) are at the heart of digitalisation. With the continued development of artificial intelligence (i.e. algorithms with learning capabilities), there will be more legal challenges to address.

    UniCredit Pushes on Cost, Asset Quality to Affirm Leadership (Bloomberg) Rated: A

    UniCredit SpA Chief Executive Officer Jean Pierre Mustier is ramping up cost cuts and improving asset quality to keep his promise of building a leading pan-European bank.

    A 5.2 percent decline in operating expense in the first quarter helped the bank increase net income to 1.11 billion euros ($1.3 billion) from 907 million euros a year earlier. That beat the 796 million-euro profit expected by the average of 8 analysts surveyed by Bloomberg.

    UniCredit climbed as much as 2.6 percent in Milan trading and was up 2.4 percent at 17.96 euros as of 9:23 a.m. That boosts the bank’s gain this year to 15 percent.

    Taaleri records a loss of about EUR 2.5 million from a German geothermal project (Globe Newswire) Rated: B

    Taaleri Investments Ltd, part of the Taaleri Group, acquired the majority shareholding in Erdwärme Oberland GmbH (86.42% of shares and votes) from the Italian energy-company Enel on March 12, 2018.

    Unfortunately, the tests on the first geothermic production site have proven that the project on the site in question is not commercially doable and, Taaleri Investments Ltd records hence a loss of approximately EUR 2.5 million, visible in Taaleri Groups half year results 2018.

    International

    Digitization of Money and Finance: Challenges and Opportunities (International Monetary Fund) Rated: AAA

    The global economy is experiencing a non-stop digital revolution. Consider this one number: a recent study estimates that by 2025, what is called the “global data-sphere” will grow to 163 trillion gigabytes from 16.1 trillion gigabytes in 2016. That ten-fold increase will encompass data held everywhere from the cloud to our handheld devices.

    It raises the prospect of expanding financial inclusion, especially in developing countries. The possibilities are exciting.

    Companies working with artificial intelligence are exploring credit scoring based on payment data. Fintech startups in Latin America, Africa, and Asia are moving toward the use of peer-to-peer lending data, and information from mobile phone payments to build reliable credit databases.

    Firmo protocol for financial derivatives on the blockchain (Next Big Future) Rated: A

    The Firmo protocol executes financial contracts on blockchain technology. Contracts are written using the domain specific language; FirmoLang. FirmoLang provides a secure execution environment for financial contracts on decentralized asset-classes. Similar to software built for airplane coordination, FirmoLang is formally verified, yielding needed security benefits for smart contracts in finance. FirmoLang compiles directly to Ethereum Virtual Machine bytecode. The Firmo Protocol is designed to integrate with and support the advancing decentralized economy, including: Decentralized exchanges, p2p lending platforms, prediction market platforms and more.

    Firmo is building the future of financial infrastructure. 1/7 of the world’s economy is derivatives, but these financial contracts are not securely available in the crypto economy yet.

    Valorem : Blockchain, Loans, P2P Networks, Investing, Marketplace, Insurance and Charity. ICO is still live! (TechBullion) Rated: A

    The Valorem foundation provides a decentralized platform enabled by smart contracts of the blockchain to allow users engage in cryptocurrency-based transactions and exchanges. The transactions between users are facilitated by an ERC20 standard token called VLR token.

    Valorem Foundation’s VLR token is the utility token for this ever changing platform. Valorem Foundation is developing a unique platform with the following features: Microloans, Student Loans, Car Loans, P2P Networks, Business Investing, Crowdfunding, Buying/Selling of goods, Insurance and Charity.

    Authors:

    George Popescu
    Allen Taylor

     

    Tuesday May 8 2018, Daily News Digest

    Ant Financial

    News Comments Today’s main news: Sharestates forms sister company, launches $300M fund with bank partners. UK mortgage industry in need of innovation, says FCA. PaisaDukan raises $225K in seed money. ShopBack buys Seedly. Today’s main analysis: Credit card usage at all-time high, delinquency rates in check. Today’s thought-provoking articles: Ant Financial is getting policy attention in China. Investor experience […]

    Ant Financial

    News Comments

    United States

    United Kingdom

    China

    International

    Other

    News Summary

    United States

    Sharestates Partners with Prominent Banks, Equity Investors to Launch $ 300 Million Fund (ADVFN) Rated: AAA

    Sharestates, an online real estate investment platform, today announced their partnership with prominent bank partners and equity investors, launching a new $300 Million fund that will provide individual and institutional investors with increased funding power for real estate deals.

    Coinciding with the launch of the $300 Million fund will be Syndicate Profile, a sister company offering 12-40% annual returns to investors with the potential for quarterly cash flow. With individual investments starting at $25,000, individual and institutional investors, as well as family offices, will be able to deploy capital across a spectrum of real estate opportunities not available outside of Syndicate Profile.

    Credit Card Usage at All-Time Highs, But Delinquency Rates Still Remain in Check (Global Newswire) Rated: AAA

    TransUnion’s report found that serious credit card delinquency rates per borrower (90+ DPD) increased in Q1 2018 to 1.78%, up from 1.69% in Q1 2017. The delinquency rate is now level with the 1.77% mark observed six years prior in Q1 2012, though it remains below the 10-year first quarter average of 1.91%. The average card debt per borrower also followed a similar path as delinquencies during the last year, rising 2.63% to $5,472 in Q1 2018 from $5,332 in Q1 2017.

    The number of credit card accounts rose 2.6% in the last year to 416.5 million in Q1 2018, up from 405.8 million in Q1 2017. In that same timeframe, the number of consumers with access to a credit card also increased by 2.1% to 174.9 million from 171.4 million one year ago.

    The latest origination data point to a modest 1% growth rate between Q4 2017 and Q4 2016.

    Changes between Q1 2018 and Q1 2017 for Key Consumer Credit Metrics

    New York State Bill Would Add Another Compliance Hurdle with “Limited Charter” for Online Lenders (Crowdfund Insider) Rated: A

    A bill (Senate Bill S8340) sitting in the New York State Senate now, will create a limited state charter for internet lending.

    Sponsored by New York State Senator Elaine Phillips, the bill would authorize the Department of Financial Services (DFS) to issue a new, limited state charter to “Internet Lending Services Corporations.” These entities are defined as businesses making loans over an internet or electronic platform.

    Frank Rotman of QED Investors (Lend Academy) Rated: A

    Frank Rotman is a founding partner of QED Investors, the most prolific VC investor in fintech over the past decade. He also authors an excellent blog, Confessions of a Fintech Junkie, which is where he published his seminal white paper, The Copernican Revolution in Banking.

     

    Jitters mount as loans from private equity continue to rise (Financial Times) Rated: A

    An article in the FT shares examples of businesses that have not benefited from the recent economic expansion and at the same time took out loans; companies with poor credit ratings took out $564 billion in commercial loans in 2017 which beat out a record set before the financial crisis; these loans are funded by private equity firms and other types of asset managers; the article notes that loan quality may be deteriorating as more capital enters the space and lenders look to make riskier loans.

    All that tech, yet customers keep opening accounts at branches (American Banker) Rated: A

    Heeding predictions that the future of banking is digital, banks of every size now offer customers mobile and online ways of opening accounts. Yet according to J.D. Power, the majority of customers — even millennials who prefer digital banking — say they open bank accounts in branches because it is too confusing to do so online.

    Potential LendingTree HQ move would have significant impact to downtown Pineville, town manager says (Charlotte Business Journal) Rated: B

    The online lender is considering a roughly 30-acre site in downtown Pineville for its headquarters after determining that its plans for SouthPark would not be adequate to accommodate its growth. LendingTree will go before Pineville Town Council on Tuesday to discuss its proposal for what’s known as the Cone Mill site, at 436 Cone Ave.

    StratiFi Technologies Raises $ 7M in Series A Funding (Finsmes) Rated: A

    StratiFi Technologies Inc., a New York- and San Francisco, CA-based provider of fintech technology solutions, raised $7m in Series A funding.

    The round was led by Anthemis Group, with participation from Wolverine Holdings, Cboe Global Markets, HOF Capital, AngelList, Mike Curcio, Matt Hougan, Matt Wyndowe, and Luke Powell.

     

    CyberMiles gains praise at global blockchain technology expo! (Crypto Recorder) Rated: A

    CyberMiles (CMT) is one project that has been flying under the radar for some time now, but one that has the potential to transform ecommerce as we know it for good. Think of it like a next generation eBay. Therefore, it is not surprising that it was selected as the most promising blockchains during the recent global blockchain technology expo.

    Last, but not least, CyberMiles (CMT) has the potential to change how loans are made and disbursed in the finance sector. That’s because it allows for the use of a person’s blockchain identity to be used in peer-to-peer lending.

    FinTech Breakthrough Names CIT Point-Of-Sale Platform As “Best Small Business Lending Solution” In 2018 (PR Newswire) Rated: B

    FinTech Breakthrough, an independent organization that recognizes the top companies, technologies and products in the global FinTech market, today announced that it has selected CIT‘s point-of-sale digital platform as the winner of its “Best Small Business Lending Solution” award. The platform allows business customers to finance their purchases at the point-of-sale in as little as five minutes.

    CIT’s point-of-sale platform finances B2B purchases of more than $2,500. An automated credit process and mobile document signing, simplifies the financing experience enabling customers to shop, apply and complete purchases either in store or online.

    United Kingdom

    FCA Says Mortgage Industry in Need of Innovation (Crowdfund Insider) Rated: AAA

    The Financial Conduct Authority (FCA) has published an interim report on UK mortgage market. According to the FCA, Mortgage debt accounts for over 80% of total UK household liabilities – so this is a significant sector of finance that has a profound impact on individuals.

    While the FCA found that competition was effective for providing home financing, the sector of finance could do with a bit more innovation.

    Source: FCA

    Read the full report here.

     

    China

    China’s Got Jack Ma’s Finance Giant in Its Crosshairs (Bloomberg) Rated: AAA

    Spanning online payments, insurance, lending, credit scores, asset management and more, Jack Ma’s Chinese behemoth resembles a mashup of PayPal, Geico, Wells Fargo and Equifax — with a bit of BlackRock thrown in for good measure. Thanks to clever mobile apps and a burgeoning Chinese middle class, Ant oversees the world’s biggest money-market fundand handles more than $2.4 trillion of mobile payments every three months. Many of the company’s 870 million customers rely on it for nearly every aspect of their financial lives.

    But Ant’s extraordinary reach may soon expose the company to a major challenge: Chinese policy makers, worried that Ant and other financial holding companies pose systemic risks to the nation’s $12.7 trillion economy, are drafting new regulations that could make it much harder for the companies to grow.

    12 Banks in China Implemented Blockchain Technology in 2017 (The Oofy) Rated: A

    CEBNet, which is the news source for China’s banking sector, reported on Friday that twelve of the 26 Chinese banks had included in their annual filings a case in which blockchain applications were accepted to be used in different cases over the past year. Among these institutions, there are commercial banks, including China Construction Bank, Bank of China, and the Agriculture Bank of China, as well as private ones such as the Chinese Merchants Bank and some other banks at the city level.

    European Union

    Experience of investors determines the future p2p lending (TechBullion) Rated: AAA

    Peer-to-peer lending is turning to a priority type of additional income for a growing number of the European investors and going to increase its importance in the next few years. According to the studies conducted by the own analytical center of the Latvian P2P platform Robo.cash, the younger generation of investors who consider P2P lending as an advantageous and comfortable financial tool will contribute to the dynamics greatly.

    The younger generation is speeding up

    With an account of stagnating interest rates on deposits in developed countries, as well as the cautious lending policies held by banks after the global economic crisis, alternative lending is attracting more and more investors and borrowers. Its volumes have grown drastically and the global scale is predictedto come close to $1 trillion by 2025. The increased volume of investments made by investors, who are already experienced in P2P lending, and a grown number of new investors help to maintain such a high momentum on the market.

    The own statistics of the P2P platform Robo.cash working in the European market since February 2017 shows that 22-37-year-old Millennials are steadily catching up with an elder generation of investors. This promises to create a favorable environment for the further growth of alternative lending globally. Six months ago, an average age of investors of the platform was equal to 38 years and age groups were distributed as follows: Silent Generation (73-90) — 0.8%; Baby Boomers (54-72) — 9.5%; Gen X (38-53) — 38.6%; Millennials (22-37) — 50.3% and Post-Millennials (18-21) — 0.8%. Today, the typical investor has grown younger to 37 years due to the increased share of investors under 37 years old: Millennials — 53.9% and Post-Millennials — 1.8%.

    Source: TechBullion

    How banking is open to innovation (Global Banking and Finance Review) Rated: A

    Open Banking, which is the sister regulation of the EU’s PSD2 legislation, is off to a slow start – but that is to be expected. We’re only at the start of a revolution which will unleash an incredible range of innovative financial services and products, and profoundly change the financial and tech industry. Ultimately, it may radically alter how we think about money and do business.

    Data sources have been restricted or denied, integration was complex and slow, and there was no universal regime for security and compliance. In short, all the cards were stacked in favour of financial institutions – they could push exclusive arrangements or buy any solution perceived as a threat at a very early stage. As a result, innovation has been largely restricted to international payment processing, automation, peer-to-peer lending and accounting software. Scaling a consumer focused fintech solution that seeks to do a core banking service better or cheaper has been incredibly difficult to pull off. Open Banking turns this situation on its head.

    International

    Amazon. Stop Being Everything to Everybody! (Crowdfund Insider) Rated: AAA

    While Amazon may have missed out in the purchase of Flipkart, Amazon just extended it’s investment into India’s Capital Float – India’s largest online lender.

    May, 2018 – Amazon Pay – Who moved PayPal and Square’s cheese? Amazon did.

    March, 2018 – Amazon Checking Account

    March, 2018 – Amazon Mortgage – Amazon is making it’s first inroad into personal finance with Amazon Mortgage.

    Feb, 2018 – Amazon Lending – We have known this for sometime now, Amazon Lending started back in 2011 has made over 3 billion worth of loans to small businesses that sells goods on their platform. An invitation only program, Amazon lends anywhere from $1,000 to $750,000. Terms are favorable to credit cards and the fees a deducted from the merchant’s seller accounts at Amazon. Of course amazon uses sellers inventory, product mix and revenue data to underwrite but now with the help of Bank of America, Amazon is ready to restart their SME (Small and Medium-sized Enterprises) lending in a big way again. This is a direct threat to OnDeck, recently teamed up with JPMorgan Chase and Kabbage, which might need to re-stack their chips and integrate more with Ebay and Paypal. –  “Amazon has partnered with Bank of America for its lending program: Sources” –

    Ten years before Jeff Bezos founded Amazon.com, a movie entitled “1984” was released. If you haven’t watched this film, stop reading and do yourself a favor and get it today…. on Amazon. DOH!

    How to Use AI in Fintech and Improve Your Financial Services (Payments Journal) Rated: AAA

    There are a few main ways how AI is used today in the financial world.

    1. Advanced customer service
    2. Fraud detection
    3. Lowering the risk in P2P lending
    4.  Improved insurance support
    5. Enhanced investment analysis

    Kabbage
    This company is a P2P lender that actively uses AI in their service. Their company is situated in the USA. They created AI algorithms that can assess all risks of lending money to a certain customer, and it allows managers of the company to give loans very fast.

    India

    P2P Lending Marketplace PaisaDukan Raises Additional Seed Funding of $ 225K (BW Disrupt) Rated: AAA

    PaisaDukan.com, a P2P Lending marketplace owned by Mumbai based FinTech start-up BigWin Infotech today announced second round of seed funding and secured USD 225K through angel investment. The company has raised $650K of seed funding last month that takes company to the total Seed investment of $875K till date. The investors’ names are still undisclosed by the company.

    Fintech Valley Vizag and Knowledge Partner KPMG Announce Startup Market Connect 2018 (The New Indian Express) Rated: B

    Fintech Valley Vizag, an initiative of Government of Andhra Pradesh, conducted a demo day to enable startups to showcase their solutions to leading corporates in banking and financial industry. As a part of this Connect, eight corporate partners who were looking for innovative solutions shared their 19 high priority use cases. These corporate partners included ICICI Lombard, DCB, Kotak Mahindra, RBL Bank, Fullerton India, IDFC, Tata Capital and Bajaj Allianz.

    MENA

    Vault Investment and MIG jointly form “Relam Investment” (Zawya) Rated: A

    UAE-based company Vault Investment  and Vietnamese MIG Holding, announced that they have aligned to form Relam Investment Company LLC.

    Lootah also announced three new technological investment projects. The first would serve the real estate sector through the crowdfunding platform.

    During the launch ceremony today, Relam Investment Company signed three partnership agreements. The second agreement was with Cygnus Technology Services represented by Mr. Swapnil Patil which is a technological company to launch the services system (OYA) in UAE and Vietnam followed by the agreement for BRICX – a Real Estate Crowdfunding  project with MMD Technologies represented by Mr. Samy Moselhy.

    Investing in My Future by Investing in Israel (The Times of Isreal) Rated: A

    A thriving economy starts with local investments, and for my future and the future of my kids, I know that investing in Israel is the right choice moving forward. Low risk investment optionsexist, and this includes your standard bonds, real estate and certain stock options.

    It’s difficult to help fund a startup through venture capital, but through peer to peer lending, a lot of investors can invest in local, small companies. OurCrowd is a go-to choice, based in Israel, that allows you to invest in upcoming startups.

    Asia

    Seedly helps millennials manage their money – and Singapore’s ShopBack just acquired it (Tech in Asia) Rated: AAA

    Singapore-based ShopBack, an online product comparison and rewards platform, has made its first acquisition. The company snapped up Seedly, which focuses on personal finance advice and expense tracking for young people.

    Founded in 2016, Seedly developed an app that allows users to connect their bank accounts and credit cards as well as get detailed reports about their spending habits.

    On its website, community members can ask each other questions and review products like mobile plans, lending startups, and robo-advisors.

    Authors:

    George Popescu
    Allen Taylor

    Thursday April 5 2018, Daily News Digest

    Thursday April 5 2018, Daily News Digest

    News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2018-2. dv01’s Q1 securitization volume hits $2.58B. Revolut releases open API. RainFin acquires stake in 4AX. Today’s main analysis: International P2P lending volumes for March 2018. Today’s thought-provoking articles: Trends on millennials and money. A tale of two fintech sectors. Amazon could become the third largest […]

    Thursday April 5 2018, Daily News Digest

    News Comments

    United States

    United Kingdom

    European Union

    International

    India

    Africa

    News Summary

    United States

    KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2018-2 (Business Wire), Rated: AAA

    Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2018-2 (“SCLP 2018-2”). This is a $544.6 million consumer loan ABS transaction.

    This transaction represents SoFi Lending Corp.’s (“SoFi” or the “Company”) 14th rated securitization collateralized by a portfolio of unsecured consumer loans. SoFi currently originates personal loans through its state licenses or complies with certain requirements where a state lending license is not required.

    Preliminary Ratings Assigned: SoFi Consumer Loan Program 2018-2

    Class Preliminary Rating Initial Class Principal
    A-1 AA (sf) $277,700,000
    A-2 AA (sf) $127,900,000
    B A (sf) $75,000,000
    C BBB (sf) $64,000,000

    DV01’S Q1 SECURITIZATION VOLUME TOPS $ 2.58B, ENCOMPASSING NINE DEALS FROM SIX ORIGINATORS (DV01), Rated: AAA

    dv01 closed out Q1 with nine new securitizations, totaling $2.58 billion in total issuance. This represents a 141% increase from last year’s Q1 volume, which totaled $1.07 billion.

    Deals were originated by six different lenders, including Prosper, Upgrade, LendingClub, CommmonBond, SoFi, and Marlette. Three of the deals (UPT I 2018-1, UPT I 2018-2, and CLUBC 2018-2) were trust certificates. dv01 was loan data agent on eight of the nine deals; loan level data and reporting tools for all the deals are accessible through dv01’s Securitizations portal.

    Millennials and Money: 30+ Trends Financial Marketers Need to Know (The Financial Brand), Rated: AAA

    Here are over 30 facts, statistics and insights about Millennials banks and credit unions need to know to serve this essential market segment more effectively.

    •  Millennials want to learn how to feel financially empowered. Nearly three quarters say they feel confident in their ability to make financial decisions, but they still want to learn more. 92% believe that being educated on personal finances is important. (Source: CSpace)
    • Millennials are so serious about their financial health that more than a third (34%) have a written financial plan, much higher than the 21% of Gen X and 18% of Baby Boomers who have done the same. However, 78% rarely or never make spreadsheets for their finances, and 35% say they’d rather vomit than make a spreadsheet to help them manage their finances. (Sources: Schwab, Varo Money)
    • Maybe Millennials don’t need help from real human beings. With 85% saying artificial intelligence could help them better manage their finances, banks and credit unions should use digital tools and AI to deliver the financial insights they crave. Nearly half of Millennials say they want their bank to be able to anticipate their financial needs and offer them timely advice (Sources: Varo Money, Segmint).
    • Millennials’ top savings priorities are emergency funds (64%), retirement (49%), and buying a house (33%). Nearly half already have $15,000 or more in savings, and 16% have a whopping $100,000 or more in savings. (Source: Bank of America)
    • When it comes to saving, Millennials still have significant headwinds: three in four college graduates today will have a heavy student debt load. (Source: ABA)
    • The average graduate from the university class of 2016 has $37,172 in student loan debt, up 6% from the prior year. (Source: Student Loan Hero)
    • Student loan debt is such a burden that 70% of Millennials say that financial circumstances were a key consideration in deciding whether or not to go to college. (Source: Harvard)

    Publicly Listed Fintech Companies – a Tale of Two Sectors (Lend Academy), Rated: AAA

    (KFTX) is a good place to start.

    Since inception in June 2016, the index has returned 46%, outperforming the broad market S&P 500 by a whopping 24%, and even the tech-heavy NASDAQ by a meaningful 9%.

    Source: Lend Academy

    Amazon could become the third-biggest US bank if it wants to: Bain study (CNBC), Rated: AAA

    Amazon could rival the nation’s big banks in as few as five years, capitalizing off its digital prowess and massive consumer base, according to a Bain & Company report.

    Pushing customers toward a co-branded banking account also allows Amazon to cut down on transaction costs, Bain said.

    Amazon could – according to Bain calculations – avoid more than $250,000,000 in credit card interchange fees every year if finds a bank willing to partner on checking accounts.

    Source: Bain & Company

    Why Amazon won’t enter the advice market (Investment News), Rated: A

    Despite what many see as the inevitability of tech giants entering the financial advice business, the economics of doing so — as well as the intensely regulated nature of the business — make their entry unlikely, according to a new report from Cerulli.

    The Boston-based research firm says that “companies like Facebook, Amazon, Apple, Netflix and Google (FAANGs) have the tools and data to excel, but face significant obstacles that will likely preclude their entry,”

    One major obstacle, Cerulli says, is the relatively small size of the market. The firm estimates that the “digital advice opportunity segment” represents only about 12% of investors, or a segment “that would be difficult to scale to be of strategic interest to the world’s largest technology providers.”

    The Credit Junction Secures $ 150 Million Credit Facility from MidCap Financial (Business Wire), Rated: A

    The Credit Junction, the first data-driven, asset-based lender for small and mid-sized businesses, has secured a $150 million credit facility from MidCap Financial, a leading capital provider to the middle market specialty finance industry. The facility strengthens and expands The Credit Junction’s ability to deliver comprehensive capital solutions to businesses across the United States.

    The Credit Junction combines traditional credit metrics with data intelligence and partners with business owners to deliver asset-based financing alternatives unique to the needs of each borrower. Since its launch in May 2015, The Credit Junction has helped businesses across the country achieve their growth objectives while supporting job creation and development in the communities they serve.

    Real Estate Investment Platform, Sharestates, Changes the Game with User Experience (UX) (PR Newswire), Rated: A

    Sharestates, an online real estate investment platform, announced today the launch of new online user portals that fully optimize the real estate investment process from beginning to end, providing investors with the first ever UX solutions in the real estate investment industry.

    Sharestates’ unique solution was designed by the company’s development team alongside CEO and Co-Founder Allen Shayanfekr with UX and functionality in mind – now offering investors a streamlined “one stop shop” in real estate financing.

    Banking Disruptors: Peer-to-Peer Lending and Payments (The Motley Fool), Rated: A

    Peer-to-peer lending platforms such as Prosper and LendingClub (NYSE:LC) have changed the way people can borrow money, and apps such as Venmo and Zelle have made it easier and cheaper to send money.

    In this segment from Industry Focus: Financials, analyst Michael Douglass and Motley Fool contributor Matt Frankel talk about the ways that technology is disrupting big banks, and what this trend could mean to the banking industry.

    How Affirm Personal Loans Can Help You Finance Smaller Purchases (Student Loan Hero), Rated: A

    The average student loan payment is $351. Between such a high monthly payment and rent, finding the money to furnish your home or buy a new computer can seem daunting.

    If approved, you can now shop. When you’re ready to make a purchase, you can enter the total from your online shopping cart on Affirm’s site. You then choose an amount between $50 and $10,000. You’ll be provided virtual card information to complete the purchase. With some partner retailers, you might select Affirm at checkout instead.

    LendingTree Launches Credit Analyzer, a Free Credit and Debt Analysis Tool (Lending Tree), Rated: A

    LendingTree, the nation’s leading online loan marketplace, today announced the launch of its Credit Analyzer, a free credit and debt analyzer tool, which was created to help consumers avoid common credit mistakes, improve debt management skills and find the right financial products for their needs.

    Credit Analyzer is a free tool that provides a deeper, instant analysis of consumers’ credit and debt situations and offers personalized recommendations based on individuals’ financial goals. The user experience is designed to make it easier for consumers to understand the most important factors that impact credit scores.

     

    What will the financial services industry look like in five years? (Lend Academy), Rated: A

    This article briefly touches on many of the themes being explored at our LendIt Fintech USA 2018 conference, which is now just days away:

    Audits Will Go the Way of the Dodo Bird

    The protocol of trust is here to stay, and it’s going to disrupt everything.

    While the blockchain has not rendered audits unnecessary yet, I believe we’ll see it happen within the next five years.

    Smart Contracts Are In, Long, Paper-Intensive Financial Processes Are Out

    As I write this, Lending Robot is raising a private round of growth capital. The closing process, called “papering” for very obvious reasons, is just as onerous and Microsoft Word-oriented as I remember it back in the early 2000s when I was a young VC.

    Fintech is Everywhere

    Fintechs are enhancing the customer experience along four axes: choice, price, convenience, and predictability. They are meeting the needs of educated, aware, demanding consumers and they are attacking traditional financial institutions at every angle.

     

    Five Things Fintech Startups Must Do In 2018 To Get Noticed, Adopted And Funded (Forbes), Rated: A

    Here are five things the winners nailed that newcomers must do to compete:

    1. Build a seamless digital customer experience (CX) customized to each set of eyeballs, across platforms — plus, make financial services ubiquitous, instead of an unfortunate necessity.
    2. Streamline their lead generation and nurturing through automation, machine learning and AI, plus intelligent CRM throughout the customer journey. This powers faster, more accurate processes like loan origination, mortgage underwriting and credit application decisions, among others.
    3. Instead of being scared of increased regulation, embrace it as a driver of innovation.
    4. Upend an established Wall Street business model both by undercutting fees and over-delivering on performance.
    5. Find novel, values-driven ways to increase millennial participation in financial services.

    Financing Small Businesses- 6 Tips For Finding An Online Loan (Bizztor), Rated: A

    Online business loans are a popular option for financing small businesses. Over the years more small business owners have been turning to online lenders as banks have cut down on loans to smaller businesses.

    With the assistance of technology and algorithm, online lenders are able to assess conventional credit standards like cash flow and personal credit score.

    DriveWealth Raises $ 21M in Series B Funding (Finsmes), Rated: A

    DriveWealth Holdings, Inc., a Chatam, N.J.-based fintech company, closed a $21m Series B funding.

    The round was led by Raptor Group Holdings, SBI Holdings, Inc, and Point72 Ventures, LLC, as weel as existing investors Route 66 Ventures.

    The company intends to use the funds to develop its technologies and scale its business.

    Mosaic Readies New Solar Loan Deal (Global Capital), Rated: A

    The San Diego-based company filed documents with the Securities and Exchange Commission on Monday for Mosaic Solar Loans 2018-1. The ABS-15G forms name Deutsche Bank and BNP Paribas as banks on the deal.

    The transaction, Mosaic Solar Loans 2017-2, was priced at 185bp over interpolated swaps for the senior class, yielding 3.854%. Energy related ABS such as solar and Property Assessed Clean Energy (Pace) deals were heavily subscribed throughout last year, with strong issuance of residential Pace bonds and the first ever issuance of commercial Pace ABS from Greenworks Lending.

    Laurel Road And Darien Rowayton Bank Officially Rebrand Under Integrated Laurel Road Name (PR Newswire), Rated: B

    Laurel Road, an online lender and FDIC-insured bank, officially announced today that Darien Rowayton Bank and its national online lending division will rebrand under the integrated national Laurel Road brand. The new, unified Laurel Road brand represents a deep understanding of its customer base, best-in-class technology and industry-leading compliance and risk management.

    Bankrupt Payday Lender Can’t Move Pa. AG’s Suit To Texas (Law 360), Rated: B

    Think Finance LLC, a financial technology firm that critics say uses Native American tribes to skirt payday lending laws, failed to convince a Pennsylvania federal judge on Tuesday to move an action brought by the state’s attorney general to Texas, where it has filed for bankruptcy.

    The company has been hit with lawsuits over its alleged role in several “rent-a-tribe” schemes, where a high-interest lender affiliates itself with a Native American tribe to shield itself from legal challenges.

    Sarasota-Manatee ranks last for millennials buying homes (Sarasota Herald-Tribune), Rated: B

    Millennials rank as the key target in the economic development world setting sights on future prosperity. A new study casts a pall over efforts to build the Sarasota and Manatee population of this prized demographic. Out of the largest 100 U.S. metropolitan statistical areas in the country, Sarasota-Manatee ranked dead last among cities favored by millennial homebuyers.

    The study, conducted by LendingTree, focused on the percentages of all loan requests to the online loan marketplace that came from millennials. That figure for Sarasota fell far from top-ranked Des Moines, Iowa — 17.9 percent versus 42.4 percent. Fort Myers ranked just above Sarasota, with 19.8 percent.

    The Online Lending Policy Institute (OLPI) Appoints Deputy Director (Lendit), Rated: B

    Robert J. (Bob) Mullenbach, CRCM, Managing Director – Compliance Division Deputy at ProBank Austin – has been appointed as the Online Lending Policy Institute’s (OLPI) new Deputy Director. Mr. Mullenbach brings 25 years of regulatory compliance experience in billion-dollar financial institutions, regional and community banks, fintech’s, and leading consulting firms. In his current position, Bob audits clients on the myriad of regulatory requirements associated with consumer/commercial lending, bank secrecy act/anti-money laundering, privacy, and non-deposit investment products.

    Microloans offer needy a better alternative (The Columbus Dispatch), Rated: B

    Central Ohio chapters of the St. Vincent dePaul Society, an international charity run by Roman Catholic volunteers, give needy folks a better option through the society’s microloan program. Information is available through the organization’s website at svdpcolumbus.org.

    Anyone of any faith who needs up to $500 for car repairs, school, home repairs or medical bills, can apply for a quick loan with a low interest rate and 12 to 15 months to pay it off.

    Contrast that with the typical payday-loan operation, which loans a couple-hundred dollars and demands payment in two weeks. Many borrowers who are strapped enough to go to such a lender in the first place can’t pay it back that quickly. This leads to loans on top of loans, with tacked-on fees that can lead to an effective interest rate of nearly 600 percent.

    SunTrust teams with fintech to offer loans for HVAC upgrades (American Banker), Rated: B

    SunTrust Banks in Atlanta is teaming up with another fintech upstart to expand its reach in consumer lending.

    The $202 billion-asset company said Wednesday that it has struck a partnership with the online lender Microf to offer point-of-sale loans to homeowners looking to replace aging residential heating, ventilation and air conditioning systems.

    SunTrust will hold the loans on its books and a pay a fee to Microf for the referrals. Microf, based in Albany, Ga., offers the loans through its nationwide network of HVAC contractors.

    United Kingdom

    Revolut unleashes open API to all customers (Fintech Futures), Rated: AAA

    APIs and open banking are hotter than a freshly tarmacked road in summer, and Revolut joins the mad-for-it crowd.

    On its blog, the bank, which was launched in mid-2015 and offers a money transfer app, says account owners can generate sandbox and production keys, and set whitelisted IPs as an “extra layer of security”.

    Away from these API days, the firm adds that over the last few months it’s been making updates to its business accounts.

    New fintech fund could boost P2P sector (Peer2Peer Finance), Rated: A

    At a time when investment trusts such as Victory Park Capital Specialty Lending have signalled a shift away from P2P opportunities, Augmentum Fintech’s investment adviser has hinted that P2P lenders could be included in the portfolio.

    Augmentum Fintech was launched by Augmentum Capital, a venture capital (VC) firm backed by Lord Rothschild’s RIT Capital Partners, last month. The VC firm already had a 7.4 per cent holding in P2P giant Zopa worth £18.5m that has been transferred into the investment company portfolio and its founder Tim Levene, who is acting as investment adviser to Augmentum Fintech, said that the firm is well geared to the P2P sector.

    FCA reveals it intervened in Collateral administration to protect investors (Peer2Peer Finance News) Rated: A

    THE FINANCIAL Conduct Authority (FCA) has revealed that it intervened in the administration of Collateral because the peer-to-peer lender failed to seek its approval when it appointed an insolvency practitioner.

    Wigan-based Refresh Recovery was selected by Collateral when the company shut down in February but it was revealed on Tuesday that the City watchdog was looking to appoint a different administrator.

    “The Collateral companies were required to obtain the approval of the FCA when appointing an administrator,” the FCA said in a statement on Wednesday.

    ISA countdown: The latest IFISAs on the market (Peer2Peer Finance News), Rated: A

    March saw the introduction of tax wrappers from peer-to-peer property platforms The House Crowd and Safe as Houses, while EasyMoney, part of Sir Stelios Haji-Ioannou’s easy family of brands, launched its second IFISA offering.

    Safe as Houses

    The Safe As Houses ISA, which invests in loans made to Safe as Houses Group to develop, regenerate and sell on distressed properties, offers investors a return of six per cent.

    The IFISA has a five-year term and requires a minimum investment of £5,000.

    The House Crowd

    The House Crowd’s IFISA invests in secured P2P loans and property development investments and offers a target return of seven per cent.

    The House Crowd requires a minimum investment of £1,000, and new investments can be added to the IFISA in £1,000 increments, up to a maximum of £20,000 across an investor’s entire ISA portfolio.

    Investors will get a fixed return paid in twice a year in October and April.

    EasyMoney

    The latest IFISA to hit the market before the deadline came from EasyMoney, offering target returns of 7.28 per cent. This eclipses the 4.03 per cent returns offered by its first product that launched in February.

    The P2P lending platform said its new ‘balanced’ IFISA allows individuals to invest in a broader range of property-backed loans, limited to 75 per cent loan-to-value (LTV).

    MINOR INVESTOR: An Innovative Finance Isa with a 7% rate is a tempting idea but tread carefully in the investing Wild West (This is Money), Rated: A

    Only the peer to peer lending element can be included in an innovative Isa, not the equity version where investors take a stake in a company.

    Obviously, innovative Isas don’t qualify for the savings element of the Financial Services Compensation Scheme that protects up to £85,000 per licensed bank.

    Crucially, however, neither do they get the FSCS investing element that covers up to £50,000 in case your investing platform goes bust and hasn’t done what it is meant to with your money.

    European Union

    Robo advisors and the Data Revolution (GDPR) (AltFiNews), Rated: AAA

    With just a month to go until the General Data Protection Regulation (GDPR) is implemented throughout Europe in May. We look at how the new regulatory regime will affect the nascent Digital Advice industry. Some of the upcoming regulatory changes issued from the EU and its commissioners should be positive for fintech asset managers.

    With a clear focus on transparency, robo-advisors should look forward to the new era of information portability and openness.

    The digital advice sector has from inception attempted to gain a competitive edge with clear transparent product engineering and pricing, but it won’t all be plain sailing and there may be headwinds ahead.

    BANCO BNI EUROPA grows significantly in 2017 and attracts equity investor (Fintech Finance), Rated: A

    2017 was once again characterized by the significant growth of Banco BNI Europa’s activity, increasing 41% in assets (from € 362M in 2016 to € 509M in 2017), 16% in customer deposits (from € 262M in 2016 to € 305M in 2017) and 379% in banking income (€ 2,8M in 2016 to € 13,2M in 2017). 

    Net income reached € 2.3M, increasing regulatory capital to € 23.3M and the solvency ratio comfortably above the statutory limit at 13%.

    International

    International P2P Lending Volumes March 2018 (P2P Banking), Rated: AAA

    Milestones achieved this month (overall volume since launch):

    • Landbay reached 100M GBP
    • Estateguru reached 50M EUR
    • Linked Finance reached 50M EUR
    Source P2P Banking

    Banking at a Tipping Point as Fintech Drives Change (Cash Lady News), Rated: AAA

    According to Citigroup consumer banking currently generates around $870bn in revenues across Europe and North America, with digital innovators accounting for just 5% of that total. But if the report’s predictions are correct, by 2023, disruption by fintech companies will account for 17% of a total earnings pot of $1.200bn

    Follow the Money

    CitiGroup cites figures showing that global investment has risen from around $0.5bn in 2019 to just under $20bn today. And most of that investment – Citigroup puts it at 70% is focused on the key areas of personal and SME banking.

    Read the full report here.

    ROSCAcoin: A Self-Regulating, Autonomous and Decentralized Financial Platform for the Unbanked (BTC Manager), Rated: A

    ROSCAcoin is a new decentralised autonomous and self-regulating platform built on the Ethereum blockchain. The project aims to develop an innovative financial infrastructure that allows creating solutions for people with little or no access to financial services. ROSCAcoin is set upon an ancient model of borrowing very popular in third world countries.

    ROSCA, or Rotating and Saving Credit Association, is defined by a method of borrowing where a group of individuals agree to cooperate for saving and borrowing purposes within a pre-established period; is also a form of peer-to-peer banking and peer-to-peer lending. ROSCAcoin strives to introduce this method using the blockchain technology.

    The platform is powered by its own currency RCA, which will be the engine of the whole ecosystem. By using smart contracts, ROSCAcoin is trying to build the ultimate financial solution for the unbanked.

    “Stars are Aligned” for an Higher US Dollar Against the Swiss Franc (PoundSterling Live), Rated: B

    The Dollar has risen 4.4% versus the Swiss Franc since mid-February and could be about to accelarate the move suggest analysts; this despite the sizeable global stock market sell-off which would normally be expected to support the safe-haven Franc.

    Safe-haven currencies usually strengthen in times of fear, such as the present, however this does not appear to be the case with USD/CHF which has risen due to the USD outperforming CHF – not the other way round.

    White Oak Signs Agreement to Acquire LDF Group (Globe Newswire), Rated: B

    White Oak Global Advisors, LLC on behalf of its institutional clients (collectively “White Oak” or the “Company”), announced today that White Oak has agreed to expand its asset-based lending platform to serve clients in the U.K. and Europe through the acquisition of LDF Group (“LDF”), a U.K.-based finance company providing asset finance, business loans, commercial mortgages and education leases to small and middle-market companies.  Established in 1986, LDF is an industry leader and one of the largest independent finance providers for small businesses in the U.K.

    India

    Faircent brings Shalabh Gupta on-board as national sales head – lending (The Siasat Daily), Rated: A

    Leading Peer-to-peer (P2P) lending company Faircent on Thursday announced that the company has hired Shalabh Gupta as national sales head – lending.

    As an industry veteran with over 17 years of extensive sales experience with brands like the Times Group, Reliance Capital, HDFC Bank, and ITC Limited, Shalabh will play a crucial role in furthering the company’s impressive growth plans and vision as a part of its leadership team.

    Aadhaar-Based EKYC Limitations Cause Trouble For Fintech Startups (Ink 42), Rated: AAA

    Since the Supreme Court extended the deadline for linking of Aadhaar to host of services, the fintech segment has been riddled with burdens of limited Aadhaar-based eKYC. The companies have been unable to access Aadhaar database for verification of their customers.

    Impact Of Aadhaar KYC On Fintech Startups

    According to reports, fintech startups across the insurance, lending and broking sectors are being denied access to authentication agencies for eKYC to verify customer antecedents on the Aadhaar database amidst rising concern over data privacy.

    UIDAI revokes e-KYC services for some e-wallets, online lenders (The Times Of India), Rated: A

    In a move that seems to have left fintech players scrambling, the Unique Identification Authority of India (UIDAI) revoked on Tuesday their access to a dozen agencies that provide e-KYC verification and authentication services. Some of these agencies – KUAs (e-KYC user agencies) and AUAs (authorised user agencies) – will no longer be able to provide e-KYC verification to onboard new customers or authenticate financial transactions affecting e-wallets, online lenders, NFBCs and smaller fintech players.

    Africa

    RainFin acquires stake in 4AX (Business Tech), Rated: AAA

    Fintech company RainFin has announced the conclusion of a transaction with 4 Africa Exchange Proprietary Limited (4AX), which will see the company sell to 4AX its corporate debt marketplace, in exchange for a strategic shareholding in 4AX.

    RainFin’s credit marketplace technology has been utilised by companies to raise debt funding from both tradition and non-traditional sources since its formation in 2002.

    Accra, Ghana to Host 2018 Startupbootcamp Africa (Tech in Africa), Rated: B

    Accra, Ghana’s capital city will host the forthcoming Startupbootcamp (SBC) Africa Accelerator program. The SBC sponsors include the Old Mutual, BNP Paribas, RCS, PwC, and Nedbank. During the event, startups present to the panelists for about two hours.

    Authors:

    George Popescu
    Allen Taylor

    Tuesday February 13 2018, Daily News Digest

    china asset-backed securities

    News Comments Today’s main news: SoFi’s adjusted 2017 profit was $126M. Funding Circle lent over 117M GBP in January. CreditEase Fintech Investment Fund invests in Fair. FT Partners advises Yapstone on $71M Series C round. LendingKart raises Rs1,129 crore. Today’s main analysis: Why China isn’t worried about the slowdown in asset-backed securities. Today’s thought-provoking articles: Goldman’s fintech approach to […]

    china asset-backed securities

    News Comments

    United States

    United Kingdom

    China

    European Union

    International

    Australia

    India

    Canada

    MENA

    News Summary

    United States

    Fintech SoFi blames missed earnings on borrowers skipping payments, increased hiring costs (San Francisco Business Times), Rated: AAA

    SoFi said it made an adjusted profit of $126 million after pulling in revenue of $547 million for all of 2017, but did not break out figures for the fourth quarter.

    (MarketWatch), Rated: A

    SoFi Turns Losers Into Winners (and Investors) with the So Money Sweepstakes (PR Newswire), Rated: A

    From February 12th through 16th, SoFi will award $25 in a SoFi Wealth account to 200 losers of HQ Trivia each day. To enter for a chance to win, all people need to do is Tweet to @SoFi on Twitter with a screenshot of their HQ loss screen and the hashtag #SoMoneyEntry. In addition to the $25, winners will also receive SoFi’s new card game, “So Money,” featuring playful questions that aim to encourage people to talk more openly about their financial lives.

    Goldman Sachs is taking a fintech approach to grow its consumer lending business (Econsultancy), Rated: AAA

    Two of the biggest proofs of Goldman’s transformation were its launch of GS Bank, a internet bank with a $1 deposit requirement, and Marcus, an online consumer lending platform through which well-qualified consumers could obtain personal loans of up to $30,000. GS Bank has since been merged into Marcus, which now serves as Goldman’s consumer brand.

    As QZ pointed out, “Goldman thinks it can make $1 billion in extra revenue from its consumer lending business over the next three years, as much as it expects for its trading operations.”

    As detailed by the Wall Street Journal, Goldman is reportedly in talks with Apple to offer buyers of Apple devices financing at point-of-sale. “Customers purchasing a $1,000 iPhone X could take out a loan from Goldman instead of charging it to credit cards that often carry high interest rates,” the Journal explained.

    This type of financing is big business: by one estimate, $80bn of the $200bn consumers borrowed using retailer-affiliated credit cards or point-of-sale loans went towards big-ticket items including electronic gadgets.

    Source: Econsultancy

    The Future of Banking (Crowdfund Insider), Rated: AAA

    The Use of Artificial Intelligence (AI) Will Increase

    Artificial Intelligence (AI) will have a major role in banking for both the short-term and long-term. First, we will see AI help banks with fraud mitigation. Today, most fraud is detected through computer patterns that alert a fraud team who would then take the necessary steps to try to prevent or mitigate the threat. Now that technology has made access to money fast and easy, the transaction volume has increased exponentially.

    Banks and Non-Banks Will Form Closer Partnerships

    By tapping into a non-bank’s customer base, it will lower the bank’s cost of acquisition while providing more value for the customer. Banks will also realize that non-banks provide them with valuable data from their customer bases that they can leverage to provide a customized banking experience as well as a source for additional revenue streams.

    There Will Be More Competition in the Digital Banking Space

    Whether it’s JPMorgan Chase with Finn, or Greenhouse by Wells Fargo, big banks are entering into the digital banking space full force with the hope of attracting young consumers. Then you have digital banks like Ally, USAA and Capital One 360 who truly made a major effort in 2017 to attract millennials by tweaking their product, tone, messaging and branding to make sure they start penetrating that segment. We will continue to see that this year.

    You still have niche financial products like Sofi that focuses on student loans or Stash Invest that focuses on investing, which are playing in the digital banking space.

    Lastly, you have neobanks like Moven, GoBank, Simple and Varo who will continue to flourish and grow, but will be threatened by giants like Amazon, Google and Apple.

    Cybersecurity will Get an Upgrade

    After the highly publicized and damaging Equifax security breach that affected approximate 145 million Americans, we will surely see a modernization and upgrade of cybersecurity.

    We spoke with the creator of the Chase Sapphire Reserve about millennials and the other challenges she’ll confront at JPMorgan (Business Insider), Rated: A

    JPMorgan Chase, on the other hand, recently announced plans to expand its network. It’ll add 400 new branches in 15 to 20 new markets over the next five years — an investment spurred in part by the savings from the recently enacted tax law.

    JPMorgan has, of course, culled some branches over the years, but far fewer than its peers — just 484, or 8.6%, since 2012, compared with cuts of more than 30% by its competitors Citigroup and Capital One over the same period.

    BI: How does what happened with the Chase Sapphire Reserve phenomenon translate to the rest of the Chase consumer business?

    Codispoti: The fact that we were able to break some myths with millennials. When I first took the job there was kind of this general consensus in the market that millennials wouldn’t pay a fee for a credit card or wouldn’t be interested in premium products — it just isn’t true. So I think we’re kind of breaking those myths when we think about banking and home lending as well.

    We’ve shared in the past that we’ve had some extremely successful initial tests with the Sapphire Reserve customer, offering them a home lending offer of 100,000 points if they completed a home-lending mortgage with us. And 50,000 points for those who upgraded to Chase Private Client and deposited $100,000 into an account. We saw extraordinary results, greater than we ever expected. So clearly this is an engaged customer base, they love the Reserve brand. It transcends card into other areas of their financial life.

    Citi Ventures’ Vanessa Colella: ‘No one runs innovation, it’s all about unleashing it’ (Tearsheet), Rated: A

    As one of the largest financial institutions in the world, Citi takes its innovation efforts seriously. Combining internal and external models of collaboration with a disciplined corporate venture arm, the financial services giant ensures that it has a lot of coals in the innovation fire.

    Real Estate Investment Platform, Sharestates, Continues Impressive Growth Launching New Marketplace in Arizona (AltFi), Rated: A

    Today, Sharestates, an online real estate investment platform, announced today their inception into the Arizona Banking Department roster of lenders as Sharestates Investments LLC, NMLS ID number 1538766. With this launch, Sharestates will be offering their loan products to the real estate speculation and development community in a statewide effort.

    As a part of Sharestates’ launch into the Arizona market, the company will be attending the 45th Pitbull Hard Money Conference located at the We-Ko-Pa Resort and Conference Center in Scottsdale, Arizona. The event will be held March 14-15, 2018 and members of the Sharestates team will occupy booth #417.

    Sharestates has funded more than 895 individual loans, providing an average return on investment of 10.42%.

    Realty Mentors Launches Its New Investment Advisory Business (Realty Biz), Rated: B

    Realty Mentors announced a new investment advisory business. According to the article in Crowd Fund Insider.com, the company which is a commercial real estate diligence and underwriting company and is an affiliate company of CreditVest is claiming to be the first of its kind to launch in the commercial real estate crowdfunding industry.

    When it comes to the real estate crowdfunding industry, their services will encourage new investors to enter the market because they will have the benefit of an objective and independent third party advising them.

    Vishal Garg of Better Mortgage (Lend Academy), Rated: A

    Our latest guest on the Lend Academy Podcast also thought it was crazy and decided to actually do something about it. Vishal Garg is the CEO and Founder of Better Mortgage and a few years back he missed out on buying his dream home because of the clunky and slow mortgage process. So, he started a company to completely turn this process on its head.

    Stock Market Volatility & Your Retirement, Who You Gonna Call? Robo Or Human Advisor (Forbes), Rated: A

    Spooked investors looking for reassurance beyond the panic in the headlines have two options to turn to. They can call up a financial advisor, or they can go on the Internet. Artificial intelligence, or fintech’s application of AI, robo advisors, are viewed by many as the future of affordable and effective retirement and investment advice. These algorithms are seen as thetechnology that will disrupt, if not replace, human advice.

    Most robo advisor websites provide real-time quantitative information about the market’s performance. But information alone is not necessarily what people are looking for when they are faced with uncertainty. Market performance is public, but the impact on retirement investments is profoundly personal.

    That observation touches on the key difference and perhaps the strategic advantage of human advice versus advice by algorithm alone. Clients, which for now are primarily of the human variety, are looking for someone to help them cope and to care as much as they do, as well as someone who has the discipline and expertise to provide perspective to what is otherwise presented in the news as chaos.

    Klarna Announces Progressive Parental Leave and Benefit Policy for U.S. Employees (PR Newswire), Rated: A

    Global payments provider Klarna (www.klarna.com) has implemented a new parental leave and benefits policy that offers all of its U.S. employees who become parents a comprehensive package that includes 20 weeks of leave at full pay, a flexible, part-time work week “ramp-up period” on their return and a two-year child care subsidy.

    As of January 1, 2018, Klarna’s full-time and part-time female and male employees who become parents—either biologically or through adoption—are eligible to receive the new parental leave and benefits. In addition, applicable benefits of the new policy will be extended retroactively to U.S. employees who became parents in 2017.

    The new Klarna parental leave and benefits policy for U.S. employees has three core components:

    • Parental Leave: The new parent may take 20 weeks of leave at full pay, and with full health and welfare benefits, during the child’s first two years.
    • Ramp-Up Period: Upon returning to work, employees will have the option to return to work on a part-time schedule.
    • Child Care Subsidy: Upon their return to work, Klarna will provide new parents with a child care benefit during the child’s first two years that will subsidize parents up to $250 per month to defray costs.

    Trump Administration Plans To Defang Consumer Protection Watchdog (NPR), Rated: A

    Within weeks of coming on board, Mulvaney has worked to make the watchdog agency less aggressive. Under his leadership, the CFPB delayed a new payday lending regulation from going into effect and dropped an investigation into one payday lender that contributed to Mulvaney’s campaign. In another move that particularly upset some staffers, the new boss also dropped a lawsuit against an alleged online loan shark called Golden Valley Lending. The suit says the lender illegally charges people up to 950 percent interest rates. It took CFPB staffers years to build the case.

    Bonenfant sent NPR a screenshot from the Golden Valley website. It says on her $900 loan, her scheduled payments in less than 12 months will total $3,735, or more than four times what she borrowed.

    Bonenfant has so far paid more than $3,000 to Golden Valley and rung up more than $1,000 in overdraft fees at her bank.

    The lawsuit was moving forward until Mulvaney came on board, when it was suddenly dropped.

    Federal Rent-a-Bank Bill May Harm Financially Distressed Consumers (Pagosa Daily Post), Rated: A

    Recently, it was announced that the U.S. House of Representatives is likely to vote, the week of February 12, on H.R. 3299, the so-called “Madden fix” bill which would preempt state interest rate caps and open the flood gates to online predatory lending. The bill is spearheaded by U.S. Reps. Patrick McHenry (R-N.C.) and Greg Meeks (D-New York).

    There are signs that some online lenders are making large numbers of loans that consumers will not have the ability to repay:

    • News reports show that delinquencies and charge-offs at marketplace lenders are rising.
    • One lender has had so many of its loans fail, that it had to repay investors for their losses in consecutive securitizations of the loans it bundled up and sold to Wall Street.
    • One online lender reportedly failed to verify a borrower’s income for a full two-thirds of its loans in 2016.
    • Moody’s credit-rating firm likens this industry to mortgage lending in the years leading up to the 2008 financial crisis in that “the companies that market the loans and approve them quickly sell them off to investors,” relieving themselves of the risk of the loan later going bad.
    • Many marketplace lenders make very large loans of $30,000-$50,000 or higher, and even 36% is a very high rate for such loans. Many states have tiered rate caps in recognition that interest becomes more unaffordable the larger the loan. Iowa, for example, caps interest at 21% for loans over $10,000.
    United Kingdom

    Funding Circle lends over £117m in January (Bridging&Commercial), Rated: AAA

    Funding Circle has announced that it lent more than £117m last month to UK businesses.
    The largest portion of funding went to businesses in the South East (22.1%), followed by companies based in London (16.2%), the Midlands (14.4%) and the South West (11.7%).
    The property and construction sector received the largest part of the funding (17.6%), followed by professional and business support (13.5%) and retail (11.9%).

    Referral schemes: make money from your friends and family (Love Money), 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.

    FSB launches new FinTech funding platform for SMEs (Tamebay), Rated: A

    The Federation of Small Businesses (FSB) has launched a new fintech platform to provide small businesses and self-employed people with greater access to funding to help them grow and develop their enterprise..

    The average amount a small business applies for from an alternative finance provider was found to be £39,000 in the survey, with equipment purchases and working capital for short-term operations or late payments being among the top reasons for businesses seeking finance.

    LendInvest Announces Launch of Product Transition Process to Support Developers Throughout Their Projects (Crowdfund Insider), Rated: A

    On Monday, LendInvest announced the launch of its new process for development finance borrowers to transition seamlessly between products. According to the online lender, the Product Transition process allows existing borrowers to transfer easily between specialized loans that are tailored to support them at each stage in their development project.

    Mobile banking start up Fiinu launches Seedrs crowdfunding campaign (AltFi), Rated: B

    Banking start up Fiinu has today launched a crowdfunding campaign on Seedrs,as it seeks £500k in seed funding to support its development and an application for regulatory approval from the Financial Conduct Authority (FCA).

    China

    CreditEase FinTech Investment Fund to Invest in Automotive Financial Technology Company Fair (Business Insider), Rated: AAA

    CreditEase, a Beijing-based leading FinTech conglomerate in China, announced today that its venture fund, CreditEase FinTech Investment Fund (“CEFIF”), recently joined a group of prestigious investors to support California based Fair’s strategic expansion. Other investors in this round of financing include Siemens-backed next47 global venture fund, BMW i Ventures, Millennium Technology Value Partners, 137 Ventures, G Squared and Upfront Ventures.

    Fair is a mobile technology platform that allows customers to lease and return a car with flexible terms entirely by using a smartphone.

    Why China Isn’t Worried About a Slowdown in This Lending Market (WSJ), Rated: AAA

    China’s market for asset-backed securities—which bundle up car loans, mortgages, consumer loans and other receivables into bondlike products—surged in 2017, led by issuers including the financial affiliate of Alibaba Group Holding Ltd. and other nonbank lenders. Total issuance of such instruments, which are mostly denominated in yuan, jumped 90% to over $220 billion last year from 2016, according to S&P Global.

    The country is now the world’s second-largest market for securitized assets after the U.S., where issuance reached $510 billion in 2017, it said.

    In the past couple of months, however, issuance in China of securities backed by unsecured small consumer loans has slowed sharply. This came after Chinese financial regulators took steps to curb a proliferation of internet lenders making microloans, small, short-term loans that typically carry high interest rates. These small loans represent roughly 40% of all consumer loans backing asset-backed securities in the country, according to S&P.

    Around $1.3 billion worth of securities backed by unsecured microloans were issued in January 2018, down from $3 billion in the same month a year ago and versus a peak monthly issuance volume of nearly $7 billion last autumn, according to data provider Wind Info.

    Source: The Wall Street Journal

    China: WeiyangX Fintech Review (Crowdfund Insider), Rated: A

    WeChat has permanently banned over 1000 “cash loans” mini programs which violated its verification and operation rules. Xinhuanet has reported that there were multiple mini programs about “loans” on WeChat (e.g. unsecured loans and quick loans), ranging from 200 to 100,000. Complaints about the illegal credit products reached over 1,000 on one of China’s leading complain platform Ts.21.com

    Hong Kong Monetary Authority (HKMA) announced that it would amend the relevant regulations on virtual banks.

    Official documents show that the original guidelines require that a virtual bank incorporated in Hong Kong must hold at least 50% of its shares by an officially recognized and reputable bank or financial institution. The new ordinance recommends that non-financial institutions could register an “intermediary holding company” first when setting up a virtual bank, and then use the company to controls the virtual bank. This means that the authorities in Hong Kong have lowered the entry threshold on the financial qualification of virtual bank applicants. Non-financial institutions, including technology companies, can also apply to own and operate virtual banks in Hong Kong.

    This week, LähiTaksi, a Finnish taxi company from Helsinki, announced that it would soon accept Alipay payments.

    European Union

    Robo firms signal their advice intentions (Money Marketing), Rated: A

    Robo-advisers will increasingly move towards hybrid models over the next year, combining the human touch with machine learning, experts predict.

    Scalable Capital, the Europe-wide robo firm, which has received financial backing from investment giant BlackRock, has just started offering telephone and face-to-face advice for clients who want to progress beyond an initial free session.

    Nutmeg and Moneyfarm have both signalled plans to move in a similar direction, while Wealthify, which saw Aviva take a majority stake last year, won’t rule out taking this step in the future.

    International

    The Most Important FinTech Innovations that Will Change Our Lives in the Near Future (Interesting Engineering), Rated: AAA

    It is largely evident that we are looking at inevitable digital disruption in financial services. The traditional banking system is yet to see any major technological innovation in lending whereas the FinTech firms have made huge investments in the same area. China moved96% of its e-commerce sales without the services of a bank. A report by Cisco pegs the peer to peer lending volume in China at approximately $66 billion, for the US that number stands at $16.6 billion, and for the UK it is $5.4 billion. Clearly, the opportunities aren’t fictional, and technology will guide this paradigm change.

    American FinTech giants include Stripe, a San Francisco based firm valued at $5 billion, Credit Karma, another Silicon Valley-based FinTech firm valued at $3 billion.

    The UK lags behind the US by quite a distance, but is second overall with $5.4 billion investment in the same time frame, thus confirming its position as one of the world’s leading FinTech hubs. Its FinTech bigwigs include TransferWise, DueDil, AstroPay, GoCardless and Digital Shadows.

    FT Partners Advises YapStone on its million Series C Financing Round (FT Partners), Rated: AAA

    FT Partners is pleased to announce our role as exclusive strategic and financial advisor to 

    Source: FT Partners

    Read the full transaction profile here.

    ETHLend alters terms to encourage use of its own digital currency (P2P Finance News), Rated: A

    CRYPTO-BACKED peer-to-peer lending platform ETHLend has reached more than £2m of loans as it announces new incentives to encourage users to transact with its LEND token.

    Borrowers can post any digital currency as collateral and loans can be made in Bitcoin or Ethereum or LEND. But ETHLend now wants more people to use the LEND token as the means of exchange so it has said anyone providing funds in LEND won’t have to pay any transaction fees.

    There is also a 50 per cent discount when the LEND coin is posted by borrowers as collateral.

    Australia

    DirectMoney a leading ASX gainer after revealing Alceon investment (Proactive Investors), Rated: AAA

    DirectMoney Ltd (ASX:DM1) is an ASX leading gainer intra-day on news of a strategic investment by alternative investment manager Alceon.

    The investment comprises an initial placement of $600,000 at $0.042 per share and is equivalent to a 3.1% interest.

    India

    Lendingkart raises total of Rs1,129 crore after latest funding round (livemint), Rated: AAA

    Rs565 crore

    What is it? The amount raised in equity funding by Lendingkart Technologies, a fintech start-up that provides online loans to small businesses. The latest fund raise, announced on Monday, takes the total amount raised by the Lendingkart Group to Rs1,129 crore.

    Tell me more: Lendingkart’s latest funding round was led by Singapore’s Fullerton Financial Holdings, and also saw participation by existinginvestors, namely Sistema Asia Fund, Bertelsmann India Investment, Mayfield India, India Quotient and Saama Capital.

    India fintech seeking to raise at least US$ 87m to grow tech capabilities (Business Times), Rated: A

    AN Indian fintech company is seeking to raise over US$87 million of equity funding to expand its technological and analytics capabilities.

    Lendingkart Technologies will be doing so through series C capital-raising, with the initiative led by Singapore’s Fullerton Financial Holdings, along with participation from existing investors.

    Canada

    Payday Loan Use Among Heavily Indebted Borrowers On The Rise (Payment Week), Rated: AAA

    Payday loan use among heavily indebted Ontarians continues to escalate, as Ontario in 2017 involve payday loans, up from 27% in 2016.

    The average number of payday loans outstanding at the time of insolvency declined to 3.2 in 2017, after peaking at 3.5 loans in 2014. However, the average payday loan size in 2017 is $1,095, an increase of 12.4% from $974 in 2016.  One in ten (9%) loans are $2,500 or more, up from 6% in 2016.

    The average insolvent payday loan borrower owes $3,464 in payday loans, or $1.34 for every dollar of monthly take-home pay, on top of $29,997 in other unsecured debts. They are using payday loans to keep up with existing debt repayment.

    Borrowell Gives Birth To New TV Campaign (Borrowell Email), Rated: A

    Borrowell is making its first major foray into television with a 30-second spot that launches today, called “Home Birth.” Created by Toronto-based agency Conflict, the commercial aims to raise awareness of Borrowell’s free credit score monitoring service.

    MENA

    Saudi startups have wider funding options amid huge fund volumes (Saudi Gazette), Rated: AAA

    In an interview, Nawaf Al Sahhaf, CEO of Badir, said financing options for these startups include without limitation Venture Capital firms, angel investors, accelerators, and incubators in addition to new alternatives such as crowd funding or even P2P lending platforms.

    Venture Capital funding is an essential piece of the startup jigsaw.

    Venture Funding is unique, however in its characteristic. I define a startup as a company that is looking to receive funding from a venture capitalist. This means that they meet several basic criteria for growth 1) a strong founding team 2) a solution to a clear and identifiable problem 3) a clear path to monetization and most important 4) a scalable product that has a regional if not global market.

    All of these criteria are essential to be eligible for Venture Funding. Many of these criteria may not be applicable or sufficient for alternative funding channels including debt, bank funding or grants.

    UAE ranked third for Islamic Fintech start-ups (Gulf Today), Rated: A

    The UAE is ranked third in an analysis of Islamic Fintech start-ups, according to a survey by Bloomberg Intelligence, issued today. Malaysia and the United Kingdom are ranked first and second.

    Crowdfunding and peer-to-peer (P2P) financing could be a game-changer in Islamic finance, it suggests, giving wider reach and potential to close the gap for small and medium enterprises, SMEs, which generated about 60 per cent of UAE GDP in 2014, with Dubai’s regulator introducing the first tailored regulation for crowdfunding in the GCC.

    Authors:

    George Popescu
    Allen Taylor

    Friday November 17 2017, Daily News Digest

    consumer debt

    News Comments Today’s main news: Kabbage secures $200M credit facility from Credit Suisse for AI-based lending expansion. Consumer Financial Protection Bureau (CFPB) files suit against Think Finance. Royal Bank of Scotland to launch robo under NatWest brand. Hexindai names Citi depository bank for American Depository Receipt Program. ICICI Bank, Paytm partner on short-term credit. Today’s main analysis: PeerIQ Lending […]

    consumer debt

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    United States

    Kabbage gets $ 200M from Credit Suisse to expand its AI-based business loans (TechCrunch), Rated: AAA

    After picking up $250 million in equity funding from Softbank earlier this year, the small business loans and finance company Kabbage — which uses only algorithms and machine learning (no humans) to determine an applicant’s eligibility — is announcing another big infusion of money. The company is picking up $200 million from Credit Suisse in a revolving credit facility that it will use for loans.

    Specifically, Kathryn Petralia, who is the COO and co-founded the company with Rob Frohwein, said the funding will help the company increase the number of loans it can make to larger companies in the US. The average size of those loans will grow to “north of $200,000,” she said.

    DBRS Assigns Ratings to Kabbage Asset Funding 2017-A LLC (DBRS), Rated: A

    DBRS, Inc. (DBRS) assigned ratings to the following classes of loans extended by a group of lenders to Kabbage Asset Funding 2017-A, LLC (the Facility):

    — Up to $148,150,000 of Class A Loans rated A (sf)
    — Up to $24,868,000 of Class B Loans rated BBB (sf)

    The Facility is a warehouse financing arranged for the benefit of Kabbage, Inc. (Kabbage) to support originations of small business loan receivables. Kabbage acts as servicer for the Facility.

    Study suggests many borrowers bungle credit card debt consolidation (Credible), Rated: AAA

    Thanks in part to the rise of fintech companies that make loans online, more than 16 million Americans now have personal loans — an increase of 64 percent in the last five years.

    Payoff — a personal lender that specializes in helping consumers tackle credit card debt — says its internal data shows borrowers who paid off at least $5,000 in credit card balances between August 2016 and January 2017 saw a 40-point increase in their FICO score within four months.

    Cleveland Fed study: a cautionary tale

    One year after taking out a P2P loan, borrowers had credit scores that were 16 points lower than those of the non-P2P borrowers they were matched to, on average — an impact that persisted for four years, the authors said in their working paper.

    The study found no evidence that P2P lenders are providing access to credit for “underbanked” consumers — borrowers taking out P2P loans were obtain other credit from traditional banks at rates similar to other consumers.

    But a number of companies on the list, including Lightstream, BestEgg, LendingPoint, Earnest, and RocketLoans weren’t around in 2012, when the most recent loans studied by the Cleveland Fed researchers were made. Several others — including Avant, CommonBond, Pave, and Upstart — were just getting off the ground at the time.

    The growth in fintech lending has been a driver in overall personal loan growth, with 16.1 million consumers owing $106 billion in personal loan debt as of June 30, 2017. That’s up from the 9.8 million borrowers who owed $45 billion in personal loan debt in mid-2012.

    Fed flags online lending as subprime redux, but market hits back (Global Capital), Rated: A

    ABS participants, speaking with GlobalCapital this week, hit back at the report, written by Yuliya Demyanyk, senior research economist, Daniel Kolliner, research analyst, both of the Cleveland Fed; and Elena Loutskina a professor of business administration at the University of Virginia’s Darden School of Business, and contributing author at the Cleveland Fed.

    The authors challenge the belief that peer-to-peer (P2P) loans have expanded credit to borrowers with limited access to debt since the financial crisis.

    A central argument of the Fed’s report was that sector has not done much to expand access to debt for borrowers with low credit scores.

    In securitization, subprime consumer ABS has thinned since the crisis. For the five major credit card issuers, the years 2008-2016 saw revolving credit available to US borrowers with a Fico score of less than 660 reduced by approximately $142bn, according to data published by online lender Elevate earlier this year.

    Even portfolios backing recent marketplace loan ABS have a weighted average Fico score above 680, the level that defines so-called ‘near prime’ credits, despite the notable dip in collateral quality. Marlette, for example, had an average score of 705 for its most recent transaction which was priced in October, while Prosper had a weighted average Fico score of 709, according to data from Kroll Bond Rating Agency.

    PeerIQ Lending Earnings Insights Report (PeerIQ), Rated: AAA

    We are pleased to release our inaugural Lending Earnings Insights report.

    Below are some of the main themes that we explore in this tracker:

    • Large banks continue to retrench.  Wells Fargo’s loan portfolio is down $13 Bn YOY. Loss reserves are down at all major banks except at GS due to the ramp-up in their consumer lending portfolio. Goldman Sachs expects lending initiatives to add $2 Bn in revenue in the coming years. GS loan loss reserve increased 50% and GS had the highest improvement in ROE across its peer group.
    • Credit re-normalization trend continues remains a recurring theme across all major lending groups. Overall, loss-rates on recent vintages are increasing versus prior recent vintages, although performance remains stronger than pre-crisis levels.  Card issuers are increasing loan loss reserves at a higher rate than loan growth, indicating expectations of higher losses going forward. Discover and American Express increased loan loss provisions ~50% although loan growth is at 9% and 14% respectively.
    • Consumer installment lenders do not anticipate an increase in loss rates, after having recalibrated loss expectations and increased reserves in 2016. OneMain had the smallest increase in loss reserves at 4%.
    • Consumers now have access to greater supply of credit and credit demand continues to grow. Consumer average debt-to-incomes are below pre-crisis levels.
    • Several lenders cited the shifting competitive landscape and the role of technology in driving innovation and risk management. 
    • Where are we in the credit cycle? 
    Source: PeerIQ

    Goldman Sachs’ lending platform is booming (Business Insider), Rated: A

    Other banks may be tempted to emulate Goldman Sachs’ move into lending, but they should proceed with caution. Although consumer credit demand in the US 

    Source: Business Insider

    LendingTree Holiday Shopping Survey Suggests Bigger Budgets, Selfless Spending and Mobile Shopping Among Parents this Holiday Season (Business Insider), Rated: AAA

    LendingTree, the nation’s leading online loan marketplace, recently conducted its Holiday Shopping Survey among 1,050 Americans aged 25 to 55 with at least one child. The results show that people generally expect to give more than they expect to receive, and although only 55 percent of respondents have a set budget this holiday season, 76 percent plan to spend the same amount or more on holiday shopping compared to last year.

    According to the survey, the average holiday shopping budget across all age groups was $943, although 45 percent of respondents say they don’t have a set budget for holiday shopping this year. LendingTree’s 2016 holiday survey found that 56 percent of respondents planned to shop for the holidays without a pre-set budget.

    Additionally, 29 percent say they plan to spend more on holiday shopping in 2017 than they did in the 2016 holiday season.

    Source: LendingTree

    Parents are setting a low bar for their children’s gift giving abilities in 2017, with 68 percent of parents expecting to receive no gifts from or on behalf of their kids.

    Most parents (80 percent) plan to spend at least $100 per child this year while 37 percent of parents plan to spend at least $250 per child.  Although 62 percent of parents say they try to spend the same amount on each child, younger children have a slight advantage with 12 percent of parents admitting to spending more on younger children and only 6 percent of parents use a child’s behavior to dictate how much money is spent on their gifts.

    A debit card is the primary form of payment for holiday shopping for 46 percent of respondents, as well as the primary form of payment for across all groups. Second to debit cards, 29 percent designated cash as their primary form of payment, and only 21 percent are primarily credit card users – although credit cards are considered more secure than cash or debit cards. A recent CompareCards by LendingTree survey found that 66 percent of Americans think debit cards are as safe or safer than credit cards for payments, when in fact debit cards don’t offer the same consumer protections as credit cards.

    Respondents expect to do 50 percent of their shopping online and 34 percent of their shopping on their mobile phone. Millennials (age 35 and under) expect to do 40 percent of their shopping on their phone, the largest of any other age group.

    LendingTree Inc. (TREE) Breaks into New 52-Week High on November 16 Session (Equities.com), Rated: A

    Shares of LendingTree Inc. (TREE) broke into a new 52-week high yesterday, hitting a peak of $281.80. Shares closed at $279.40 after opening at $271.75 for a move of 2.83%. The company now has a market cap of $3.34 billion.

    Sharestates, America’s Private lender, Launches Their One Click Closing Option (PR Newswire), Rated: A

    Sharestates, an online real estate investment marketplace, announced today the launch of its new One Click Closing tool, a feature that will allow return borrowers to visit a page where they can upload all the details and documents required for a new loan, allowing for a seamless transfer of closing date information without further communications. The launch of this new tool coincides with the company’s overarching goal of providing borrowers with a streamlined funding process, while providing them the opportunity to solely focus on identifying viable real estate investment opportunities.

    Bitcoin Tax Laws Are A Nightmare So People Ignore Them (International Business Times), Rated: A

    A survey of 564 American bitcoin users by the online loan marketplaceLendEDU, revealed more than 35 percent didn’t plan to report bitcoin-related gains or losses on their tax returns. On average, respondents said the current fiat value of their bitcoin holdings were $2,930.85, although that will probably continue to rise along with bitcoin’s market price.

    The Best Personal Loans of 2017 (U.S. News), Rated: AAA

    Some of the most common requirements for a personal loan are:

    • Minimum credit score: Most lenders require that you have at least fair or good credit when applying for a personal loan. Each lender sets its own cutoff for what it considers to be excellent, good, fair or bad credit. In general, fair credit is a FICO score between 580 to 669 and good credit is a score between 670 to 739. Most companies require a score of at least 600, but some have greater requirements. A higher score will increase your ability to be approved, and the higher your score, the lower interest rate you’ll qualify for too.
    • Clean credit history: Lenders don’t like to see defaults, collections or bankruptcies. If you have one or more of these on your credit report, you might not be approved for a personal loan. If you’re approved, you may have to pay an exorbitant interest rate.
    • Stable employment: A lender needs to know that if it lends you money, you’ll have the means to repay it over time. Without a stable job, you could miss payments or default on the loan. Proof of employment validates your loan application.
    • Proof of identification: Lenders usually need to see proof of identification, such as a copy of your driver’s license or passport, before approving your loan. Identity theft is common and they want to prevent thieves from taking out loans under another person’s credit.

    Choosing a Personal Loan Company

    There are two types of lenders you can choose from: banks and peer-to-peer lenders. Banks offering personal loans include SoFi and LightStream and peer-to-peer lenders include Upstart, LendingClub, Prosper and Peerform.

    Marketplace-based lenders usually have less strict credit score requirements than their bank-based counterparts. For example, LendingClub and Peerform only require a FICO score of 600 while bank-based companies such as SoFi and Payoff have minimum FICO scores of 660.

    Every lender has a minimum and maximum loan amount. For example, SoFi will lend up to $100,000 while Payoff lends up to $35,000. If you need to borrow $45,000, then only look at lenders who offer that amount or more.

    Best Personal Loan Companies of 2017

    • Best for very good credit, low APR and no origination fees: LightStream
    • Best for very good credit, low APR, no origination fees and a range of offerings: SoFi
    • Best for very good credit and low APR with merit-based qualifications: Earnest
    • Best marketplace for fair to good credit with merit-based qualifications: Upstart
    • Best bank for fair to good credit with merit-based qualifications: LendingPoint
    • Best for fair to good credit with a co-signer option: LendingClub

    The Best Bad Credit Loans of 2017 (U.S. News), Rated: AAA

    Bad credit usually is a FICO score below 640. FICO is the main scoring system for consumer credit, with credit score rangesdefined as:

    • Exceptional (800 to 850)
    • Very Good (740 to 799)
    • Good (670 to 739)
    • Fair (580 to 669)
    • Very Poor (300 to 579)

    Payday Loans Versus Personal Loans

    Payday Loans Personal Loans for Bad Credit
    Lenders Online, brick-and-mortar Online, brick-and-mortar
    Loan Amounts Typically less than $500 $1,000 to $50,000
    Loan Terms Two to four weeks One to five years
    Interest Rates 200 to 400 percent APR 36 percent APR or less

    (Source)

    Some alternative payday loan companies market themselves as more socially responsible than traditional payday lenders because they offer better terms. They also want to help consumers rebuild their shaky credit and make payments on time. For instance, LendUp provides financial education and rewards existing borrowers who repay their loans to be eligible for loans at larger amounts and lower rates. Fig Loans only charges fees to cover the costs of the loan.

    Choosing a Bad Credit Lender

    Consumers should evaluate lenders based on the following criteria:

    • Type of lending company
    • Credit history and general qualifications
    • Co-signer option
    • Additional eligibility qualifications
    • Employment requirements
    • Interest rates and types
    • Loan terms
    • Fees and penalties
    • Repayment options

    The Best Small Business Loans of 2017 (U.S. News), Rated: AAA

    According to the National Small Business Association, 69 percent of small businesses used financing in 2016, including loans, credit cards, venture capital and crowdfunding. The remaining 31 percent were not able to obtain adequate financing.

    According to data from the U.S. Small Business Administration, small business bank loans totaled nearly $600 billion in 2015. At the same time, lending from alternative sources such as finance companies and peer-to-peer, or P2P, marketplace lenders amounted to $593 billion.

    There are two categories of alternative lenders, direct and peer-to-peer lenders:

    1. Direct lenders: Direct lenders are finance companies that fund your loan with capital other than a bank and without a middleman such as a broker, investment bank or private equity firm. Some direct lenders, such as LiftFund, offer SBA loans. Typically, small to midsize businesses borrow from direct lenders.

    2. Peer-to-peer lenders: Online peer-to-peer lending directly connects you with investors who usually have a diversified loan portfolio made up of small portions of loans. A loan is often divided among several investors.

    Choosing a Small Business Loan

    Eligibility Requirements:

    • Minimum credit score
    • Minimum years in business
    • Minimum annual revenue

    Best Small Business Loans of 2017

    • Best for very small businesses: Kabbage
    • Best for borrowers with low credit scores: OnDeck
    • Best for new businesses: Accion
    • Best for low APR: LendingClub
    • Best for invoice financing: Fundbox

    Square Now Letting Some Users Buy & Sell Bitcoin Through Cash Mobile App (Crowdfund Insider), Rated: A

    Financial service company Square is reportedly now testing out bitcoin on some of its Cash mobile app users. The new feature will allow users to buy and sell the cryptocurrency through the app.

    YieldStreet Surpasses $ 200M in Originations, Bolsters Leadership Team and Launches New Website amid Period of High Growth (BusinessWire), Rated: A

    YieldStreet, the alternative investment platform that is working to change the way wealth is created, announced that it has surpassed $200 million in originations and has added two new executives to its leadership team: Volfi Mizrahi as Managing Director of Originations and Ivor Wolk as General Counsel. Their additions come on the heels of the appointment of Hrishi Dixit as CTO earlier this year.

    $ 15 Million Investment Round Fuels Accelerated Growth at Goji (PR Newswire), Rated: A

    Goji announced a $15 million investment round led by Hudson Structured Capital Management Ltd., doing business as HSCM Bermuda.

    CFPB Guns for Think Finance. Files Suit Alleging Consumer Deception in Repaying Loans Not Legally Owned (Crowdfund Insider), Rated: AAA

    The Consumer Financial Protection Bureau (CFPB) has filed suit in federal court against Think Finance, a Fintech that leverages its technology to power online lending platforms. The CFPB says the suit was filed for its “role in deceiving consumers into repaying loans that were not legally owed.”

    The CFPB alleges that Think Finance illegally collects on loans that are void under state laws governing interest rate caps or the licensing of lenders.

    The actual filing states:

    “From 2011 through at least 2015, Defendant has performed critical functions for three separate lending businesses owned by Native American Tribes: (1) Great Plains Lending, LLC (Great Plains); (2) MobiLoans, LLC (MobiLoans); and (3) Plain Green, LLC (Plain Green) (collectively, the Tribal lenders). Defendant is therefore a “service provider” under CFPA. 12 U.S.C. § 5481(226).”

    Read the filing here.

    Richard Cordray’s CFPB Has Done Its Job Well (Bloomberg), Rated: A

    As recently as a decade ago, the U.S. had no single regulator tasked with looking out for the interests of consumers in financial markets. Fragmented oversight allowed all kinds of bad behavior to fall through the cracks. Mortgage brokers hid the true terms of loans in piles of nearly indecipherable documents. Banks changed the order of transactions to extract the maximum overdraft fees from poor customers. Payday lenders offered products designed to trap people in an unending cycle of debt.

    Cordray has accomplished a lot. The CFPB designed new, simpler mortgage-loan disclosures. It shed light on banks’ overdraftpractices. It created the first federal rules to make payday lending less predatory. It gave the public reams of valuable information, such as a database that allows consumers to compare credit-card agreements. Its practice of publishing complaints pushed financial institutions to be more responsive. Its investigation of Wells Fargo brought national attention to the fake-accounts issue.

    Some of its practices (in particular, preferringdiscretionary enforcement over explicit rule-making) are less than ideal and ought to be revisited; in other areas (such as auto lendingand credit reporting) its authority should be expanded.

    We need a watchdog at Consumer Financial Protection Bureau (Washington Post), Rated: A

    Cordray’s departure gives President Trump an opportunity to appoint a new leader, and I’m concerned that this will derail the watchdog agency’s consumer-first mission.

    In Cordray’s parting statement, he wrote that the agency has recovered $12 billion for nearly 30 million consumers.

    Five opportunities and challenges in digital lending (American Banker), Rated: A

    Despite the rapid growth of online and mobile lending in recent years, many banks are still just getting started.

    Traditional banks should help govern fintech (Reuters), Rated: A

    Traditional lenders should demand that online financial companies protect consumer privacy and money interests, Federal Reserve Governor Lael Brainard said on Thursday.

    Banks often pay tech companies for the information they gather on borrowers. For that reason, Brainard said, those lenders can set high standards in consumer protection and privacy.

    Under Trump, Banking Watchdog Trades Its Bite for a Tamer Stance (The New York Times), Rated: A

    The regulator, the Office of the Comptroller of the Currency, which oversees the nation’s biggest banks, has made it easier for Wall Street to offer high-interest, payday-style loans. It has softened a policy for punishing banks suspected of discriminatory lending. And it has clashed with another federal regulator that pushed to give consumers greater power to sue financial institutions.

    Buffett’s ‘Million-Dollar Bet’ shows how much fees matter (Herald Tribune), Rated: A

    One category of alternative investments includes hedge and private equity funds. I am not in favor of such investments, especially for the average investor, and I am not alone.

    Typically, hedge fund fees are 2 percent plus an incentive, or “carry,” of 20 percent of the profits. The result is billions of dollars for the managers and far less for clients.

    In 2015, Buffett lagged his hedge fund rival for the first time since 2008, gaining 1.4 percent versus Protégé’s 1.7 percent. However, 2016 saw Buffett gain 11.9 percent to Protégé’s 0.9 percent. At the end of 2016, Buffett’s index fund gained 7.1 percent per year, or $854,000 in total, compared with 2.2 percent per year, or $220,000, for Protégé.

    United Kingdom

    Royal Bank of Scotland to launch robo-advice under NatWest brand (Financial Times), Rated: AAA

    Royal Bank of Scotland is launching robo-advice for more than 5m customers as banks return to the investment market after a string of fines and as regulators attempt to plug the UK’s wide “advice gap”.

    The state-backed lender is claiming to be the first in the UK to launch automated online investment advice when it opens on Monday under its NatWest brand. The service is designed for the majority of customers and for people with as little as £500 to invest as a lump sum.

    The process, which costs £10 plus fees for the investment, is aimed at customers who lack the confidence to invest alone but do not wish to pay higher charges for full-blown financial advice, such as tax and inheritance planning.

    Beyond the bank (Prospect Magazine), Rated: AAA

    Five high street banks remain responsible for more than 80 percent of business lending, prompting calls for greater market choice both from challenger banks and from emerging FinTech (financial technology) firms. However, the introduction of new platforms and new players raises questions of integration, innovation and regulation.

    Launched seven years ago, Funding Circle has since hosted 70,000 lenders and is responsible for 2 percent of total UK business lending. While going head-to-head with the banks it is worth noting that Funding Circle is also growing the market.

    So what next for financial services? Will the disruptors get disrupted? Possibly. One attendee suggested that FinTech firms would soon be providing ‘white label’ versions of their services to traditional banks that would then offer those services to customers. Others suggested that the likes of Amazon and Google would provide the biggest future threat not just to banks but to today’s FinTech leaders.

    RateSetter, Funding Circle, Zopa feature in Women in Fintech Powerlist (P2P Finance News), Rated: A

    FEMALE employees at RateSetter, Funding Circle, Zopa and Landbay have all made this year’s Women in Fintech Powerlist, which celebrates the achievements and talent of women across the sector.

    RateSetter’s entrants are: Alexa McAlister, head of partnerships; Angela Yotov, head of legal; Joanna Wright, chief risk officer; Katie Brown, corporate counsel; Laurence Perrin, head of compliance; Lucy Bott, head of customer operations; and Maud Holma, finance counsel.

    Women from Funding Circle who made the list are: Alysha Randall, global finance director; Lisa Jacobs, chief strategy officer; Lucy Vernall, global general counsel and global head of compliance; Maria Weaver, chief people officer; Panni Morshedi, managing director of international; Swati Lay, chief information security officer; and Vittoria Reimers, VP loan operations.

    VPC takes majority stake in online lender Borro (P2P Finance News), Rated: A

    VICTORY Park Capital Specialty Lending (VPC) has continued its expansion into balance sheet lending by upping its investment in online secured lender Borro.

    The alternative finance-focused investment trust now has the largest stake in the firm, which provides loans secured on luxury assets, owning around 49 per cent.

    How does LendInvest’s buy-to-let offering stack up to P2P rivals? (P2P Finance News), Rated: A

    LendInvest said it will be offering buy-to-let loans through intermediaries ranging between £50,000 and £5m, with rates starting at 3.69 per cent depending on whether borrowers take a two, three or five-year fixed rate.

    In comparison, Landbay facilitates fixed rate and tracker buy-to-let loans of between £70,000 and £500,000 from 3.55 per cent.

    And fellow P2P lender LandlordInvest offers loans of between £30,000 and £300,000 from five per cent.

    Crowdproperty Pitches to Raise 600K GBP through Equity Crowdfunding (P2P-Banking), Rated: A

    UK p2p lending marketplace Crowdproperty is currently pitching on Seedrs to raise 600K GBP from the crowd at a pre-money valuation of 5.9M GBP.

    Digital bank Monzo sizes up IPO (AltFi), Rated: A

    In an advertisement for a new Chief Financial Officer, Monzo has let on about its plans for an IPO within three to four years time.

    The posting, published today on Monzo’s job site, says:

    Alongside the CEO, you’ll be heavily involved in future capital raising – pitching to investors and negotiating the best terms. In the next 3-4 years, it’s likely you’ll be responsible for taking the company through an IPO.

    UK FinTech Beats Brexit Blues with New Funding Record (Digit), Rated: A

    The UK fintech sector has enjoyed a record year of investment in 2017 with more than £2 billion invested across 182 deals, according to research body FinTech.Global.

    Additionally, the compound annual growth rate (CAGR) of 10.7% experienced by firms valued below £75 million between 2014 and 2016 was supplemented with a further investment of £1.2 billion for this bracket in 2017. As for companies valued above the £75 million figure, a further £877.1 million has been committed across eight deals.

    Investment in the UK’s top-10 fintech firms accounted for nearly 46.7% of the total investment between Q1 and Q3 2017. The largest of these deals went to Gryphon Insurance in June, valued at £179.6 million. Of the top 10 deals, four went to lending firms – Prodigy Finance1stStop GroupNeyber and Funding Circle, valued at £457.5 million. Of the remaining six deals, two went to challenger banks Tandem and Atom, two went to enterprise software companies Options Technology and Darktrace, and the final two went to insurtech companyies Gryphon Insurance and Revolut.

    Millennials say advisers are inaccessible and too expensive (Financial Times), Rated: A

    Millennials view financial advice as an industry of “exclusivity, inaccessibility and high cost,” according to research carried out by the financial advice trade body.

    The poll of 178 millennials found 78 per cent of them believed they could only receive advice if they had investible wealth in excess of £50,000 but a significant number wanted advice when they had £10,000 or less.

    Online-only options appealed to just 12 per cent of those surveyed.

    Cardiff will host one of the first a new network of tech hubs being set up in a £21m investment (Wales Online), Rate: B

    A new tech hub will be set up in Cardiff as part of a UK-wide network of regional hubs under a £21m investment announced by the UK Government.

    China

    P2P Lender Hexindai Names Citi As Depositary Bank for American Depositary Receipt Program (Crowdfund Insider), Rated: AAA

    On Wednesday, Chinese peer-to-peer (P2P) lending platform Hexindai announced it has appointed Citi’s Issuer Services business as the depositary bank for its American Depositary Receipt (ADR) program. According to the online lender, the program was established through an initial public offering of its American Depositary Shares (ADSs), priced at $10 per ADS, which raised approximately $50 million.

    Unified credit rating system expected soon, say experts (China Daily), Rated: A

    A unified platform for collecting personal financial information and assessing people’s credit ratings is being planned, and it is expected to be launched soon as a part of the central bank’s regulatory framework, experts told China Daily.

    It will complement the existing credit center of the People’s Bank of China, the nation’s central bank.

    China Fintech Companies Dominate Top-10 List of Global Innovators (China Money Network), Rated: B

    Compared with the ranking last year, two more Chinese firms were added to the top 50 list. Online marketplace lending company Dianrong and credit card and online financial service firm U51.com, or 51Xinyongka, rose to top 50. Among the 100 fintech companies, lending and payments focused companies lead in terms of sectors.

    European Union

    Online Lender WeShareBonds Raises €12 Million in Mission to Help Finance French SMEs (Crowdfund Insider), Rated: A

    WeShareBonds, an AMF-registered crowd lending platform, has raised €12 million to continue financing French SMEs. The new funding includes both the closing of WeShareBonds’ second credit fund (Prêtons aux PME 2018) to finance French SMEs for €10 million and an equity increase of €2 million to finance platform growth.

    International

    Peer to Peer (P2P) Lending in India: A positive disruption to traditional financing, albeit cautious approach required (CARE Ratings), Rated: AAA

    The overall size of the NBFC sector in India has grown significantly during the last few years with increasing share of NBFC total assets to bank total assets (approximately around 15 per cent of the total banking assets).

    P2P Lending in UK: In UK, the P2P market has seen active retail investor participation. The outstanding loan book in the UK industry is approximately around £2.9 billion (~Rs.25,000 crore) as on Q3-2017 as compared to £0.75 billion (~Rs.6,500 crore) as on Q4-20142 . Based on the outstanding loan book as on Q3-2017, the key players in the segment are Funding Circle, Zopa, FolktoFolk, Ratesetter and ThinCats capturing majority of the market.

    P2P Lending in USA: P2P industry in USA is around $20 billion (~Rs.1.3 trillion) in 2016 up from $18 billion in 20153 . P2P lending in the USA has seen active participation of institutional investors (approximately 70 per cent of the total investor volumes) lending to borrowers through the platforms. In the USA, three dominant players capture majority of the market which include Lending Club, Prosper and Sofi.

    P2P Lending in China: Globally, China has the largest market size of P2P lending which started in 2006. As of January 2017, there were total 2388 P2P platforms in China4with trading volume in 2015 touching $67 billion (~Rs.4.4 trillion) which is ten times that of UK and four times bigger than USA. However unlike USA and UK, the China P2P market is dominated by large number of small and medium size firms.

    P2P Lending in India: Globally P2P lending has been in existence for more than ten years; however, it has been evolving in India in the last couple of years. Given the recent RBI guidelines, companies will now need to obtain NBFC–P2P license and will come under the purview of the regulator. There are more than 50 P2P online platforms operating in India. I-Lend, LenDenClub, Faircent, Lendbox, i2iFunding, Monexo, India Money Mart, Rupaiya Exchange are some of the leading P2P platforms operating in India. Currently, some of the leading P2P platforms claim to disburse loans amounting to ~Rs.1 to 2 crore a month. Outstanding loans under P2P model is estimated to have reached ~Rs.50-60 crore.

    Source: CARE Ratings

    Read the full report here.

    TAURUS COIN OPENS FOR BUSINESS GLOBALLY (EIN News), Rated: A

    United Kingdom’s leading peer to peer cryptocurrency lender Taurus Coin today launched its online lending marketplace with USD 150M lending capital, bringing the world’s fastest growing form of lending to the South-East Asia, Gulf, Africa, Europe, and India investors.

    Australia/New Zealand

    Sharesies to look at robo-advice once regulator rules on exemptions (The National Business Review), Rated: A

    Start-up fund distribution platform Sharesies will develop a plan to provide personalised, automated financial advice, known as robo-advice, once there is more clarity about regulatory exemptions.

    Last month the Financial Markets Authority decided to grant an exemption to enable the provision of robo-advice services under the current financial advice regime and said it aims to finalise the exemption and be open for applications in early 2018.

    India

    ICICI Bank and Paytm partner for short term credit for users (Medianama), Rated: AAA

    ICICI Bank and Paytm have partnered to offer short-term credit to users. The credit given to customers will be interest-free for 45 days and the bank says that it will give loans up to Rs 20,000. Initially, this will be allowed for select ICICI Bank customers who are on Paytm and will be extended to other bank customers as well who use Paytm.

    Once the credit limit is set up for a customer, a consolidated bill is generated on the first day of the next month, which has to be paid by the 15th day of the same month. Customers can use their Paytm Wallet, debit card or internet banking of any bank for an easy repayment of their dues.

    In August, the bank launched product called Instant Credit Card where certain pre-approved customers of the bank will be able to get a virtual credit card much before the physical card is delivered to them. A physical card will be sent to the customer’s address in 5-7 days.

    Meanwhile, the bank’s rival, HDFC Bank said that it would start offering a virtual credit card for customers through its PayZapp wallet, as indicated by this Financial Express report. HDFC Bank has the maximum number of credit cards in circulation with 9.03 million. Meanwhile, ICICI Bank has 4.34 million credit cards.

    • Paytm’s rival in the wallet space, MobiKwik has partnered with Bajaj Finance to to bring in credit facilities to a wallet business.
    • In April this year, PayU India will be investing $50 million in its product LazyPay over the next few years. The credit facility could extend for amounts from Rs 3,000 and even up to Rs 10,000, depending upon customer behaviour.
    • For the recently concluded festival season, e-commerce player Flipkart started to offer EMIs on debit cards on high-value purchases.

    Narrow banking is an idea whose time has come (livemint), Rated: A

    The most heartening takeaway from last week’s public sector bank executive jamboree was the discussion around differentiated lending structures. The ThinkShop (earlier editions were called Gyan Sangams) suggested that large banks focus on corporate lending, while smaller lenders focus on retail loans or specific geographies.

    Taking differentiated lending to its logical end, the time has come to consider converting the worst performers among state-owned lenders to narrow banks, which won’t lend at all.

    Narrow banks are safe banks. By not lending, and using their deposits to buy government bonds, they carry virtually no credit risk. There is no danger of non-performing loans and frequent injections of equity capital that has to be funded by taxpayers. For the Reserve Bank of India (RBI) too, supervision gets easier. There is no need for deposit insurance.

    RBI likely to issue clarifications on P2P lending norms soon (Money Control), Rated: B

    The Reserve Bank of India is soon likely to issue clarifications on the guidelines for peer-to-peer (P2P) lending platforms relating to the lending limits, trusteeship and other operational norms.

    Asia

    Active.Ai raises over million in Series-A round (India Times), Rated: A

    Singapore-based fintech platform Active-.Ai has raised $8.25 million in a series-A round, which was led by Vertex Ventures, Creditease Holdings and Dream Incubator. Existing investors Kalaari Capital and IDG Ventures also participated.

    Canada

    WEALTHSIMPLE, LEAGUE AMONG KPMG’S TOP 50 FINTECH COMPANIES (Betakit), Rated: B

    Toronto-based WealthsimpleLeague, and SecureKey were among the company recognized in the top 50 category. In the emerging stars category, Toronto-based BorrowellWave, and Sensibill were recognized.

    The list was put together by FinTech investment firm H2 Ventures and KPMG FinTech.

    Authors:

    George Popescu
    Allen Taylor

    Monday September 18 2017, Daily News Digest

    LendingClub

    News Comments Today’s main news: 400K UK consumers may have been affected by Equifax breach. Independent Community Bankers of America letter opposing ILCs. RateSetter launches consumer hire-purchase product. Klarna partners with Wacom. Google enters digital payments in India. Payday type loans come to e-tailers in India. Today’s main analysis: Analysis of SoFi deal SCLP 2017-5 and Lending Club deal CLUB 2017-P1. […]

    LendingClub

    News Comments

    United States

    United Kingdom

    China

    European Union

    International

    India

    Asia

    Africa

    News Summary

    United States

    Independent Community Bankers of America Letter (ICBA), Rated: AAA

    As you may be aware, ICBA recently filed a comment letter with the FDIC objecting to the deposit insurance application of SoFi Bank, an industrial loan corporation to be chartered by the state of Utah. In our letter, we urged FDIC, for safety and soundness reasons and to maintain the separation of banking and commerce, to not only deny SoFi Bank’s application but also impose a moratorium on ILC deposit insurance applications. Furthermore, we said that Congress should close the ILC loophole because it not only threatens the financial system but creates an uneven playing field for community banks.

    The news that Square also intends to apply to the FDIC for deposit insurance as an industrial loan corporation has significantly increased our concerns and made it even more urgent that the FDIC immediately impose a moratorium on approving deposit insurance applications for ILCs. As we noted in our SoFi Bank letter, the ILC charter is nothing more than a loophole in the law to circumvent the legal prohibitions and restrictions under the Bank Holding Company Act.

    SoFi Bank and Square are applying as ILCs and not as commercial banks because their parent companies and their affiliates do not want to be subject to the legal restrictions and supervision attendant to the BHCA. Square, for instance, already owns a point-of-sale hardware appliance business and a food delivery service and therefore could not own a commercial bank without divesting its commercial activities. For safety and soundness 2 reasons and to maintain the separation of banking and commerce, the FDIC should deny SoFi Bank’s application and impose a moratorium for at least two years on future ILC deposit insurance applications, including any application by Square. 

    Read the entire letter here.

    Did Lending Just Change for Good? (Crowdfund Insider), Rated: AAA

    Bank lending regulations have rarely been thought of as dynamic or exciting but last night’s ruling by the Consumer Financial Protection Bureau (CFPB) to allow a lender to begin using alternative data in their underwriting could herald the beginning of a new era in lending and how banks work.

    Why is this significant?

    US banks have traditionally been guided by three key pieces of legislation, the Truth in Lending Act of 1968, the Equal Credit Opportunity Act of 1974 and the Community Reinvestment Act of 1977.  These three acts were created before the era of personal computers yet still guide bank lending today.  Since the rise of marketplace lending, which began in 2006, where borrowers go through a platform and investors fund those loans, it is becoming increasingly apparent that many of these regulations are in need of updating.

    In an overly simplistic interpretation (and I am not an attorney), the regulator is giving an online consumer lender the right to underwrite loans using ‘alternative data’ which before was not in line with how the Equal Opportunity Act is interpreted by lenders.  It is not clear what data will be allowed but in a CNBC interview, Upstart co-founder Paul Gu suggested that SAT scores, college grades and even college majors are data points which are helpful in predicting loan defaults. 

    So assuming the change stands, what is next?

    As alternative lenders have more scope to use alternative data, machine learning complex data analysis is opening up an entirely new space for investors.  Gone are the days where banks only competed against each other with marketplace lenders now allowing investors to allocate capital in a similar way to banks, choosing loans to fund based on their own ideas and risk profile.   For now, this is mostly impacting consumer credit, but in the years to come, look for marketplace lending to impact all areas of lending as investors get more comfortable investing in this space regulations start to adapt.

    Scandal costs Sofi chance to become a bank, says ex-SEC head (Financial Times), Rated: AAA

    SoFi’s application to become a bank has almost no chance of approval in the wake of a sex scandal that forced out its chief executive, says a close adviser and former chairman of the Securities and Exchange Commission.

    But last week’s departure of Mike Cagney, the co-founder, chairman and chief executive, has effectively killed the application, said Arthur Levitt, a former chairman of the SEC, who began advising the company two years ago.

    “This departure of Mike makes that a very questionable attainment,” Mr Levitt said, referring to the charter.

    He noted that the FDIC had turned down this type of application “many times” before.

    Equity podcast: SoFi loses its CEO, big rounds for unicorns, and will this VC buy the iPhone X? (TechCrunch), Rated: A

    We turned first to SoFi, a consumer-finance unicorn that has raised more than a billion in equity, and over $2 billion in total. The company is now down a CEO after allegations of misconduct brought censure upon its CEO, Michael Cagney, and the company’s culture.

    Listen to the podcast here.

    Fat cat frat boys ape the worst of banking and tech (Financial Times), Rated: A

    The article also described employee concerns about lending practices and alleged that investors had been misled over a 2012 financing.

    SoFi complained in a public blog about “inaccuracies” in the Times report, but focused on defending its lending practices.

    If the allegations are true, SoFi and LendingClub have many of banking’s worst attributes with Silicon Valley’s warts layered on top.

    Meanwhile, the allegations of doctored loans and conflicts of interest at LendingClub were reminiscent of some of the excesses of the bankers who fed the subprime mortgage market.

    Goldman Sachs thinks fintech has as much potential as trading (Quartz), Rated: AAA

    Goldman Sachs has been pilloried for lackluster results from its trading division (paywall), so this week the bank gave investors a peek into its plans (pdf) for making more money. Surprisingly, the Wall Street powerhouse thinks it can generate as much revenue from online consumer loans—a market targeted by many fintech startups—as from buying and selling securities.

    Specifically, Goldman thinks it can make $1 billion in extra revenue from its consumer lending business over the next three years, as much as it expects for its trading operations. Combined with new lending for the wealthy and companies, the bank expects to bring in $2 billion in additional sales from loans. Goldman co-chief operating officer Harvey Schwartz said it’s one of the fastest-growing lending platforms ever launched, even though he says the bank is taking its time with the nascent business. The bank’s digital consumer-lending arm called Marcus is expected to have lent out $2 billion by the end of the year.

    Meanwhile, big banks have access to cheaper funds than peer-to-peer lenders like Lending Club or Zopa. With consumer deposits and the billions of dollars they routinely borrow in credit markets, banks can undercut the loan rates offered by smaller companies.

    That said, Schwartz acknowledged that consumer lending isn’t immune to economic downturns, and analysts cited by Bloomberg were skeptical about Goldman jumping into a market outside its core expertise.

    Source: Quartz

    The Bank of Google or Amazon? Don’t count on it (American Banker), Rated: AAA

    It might seem like it is only a matter of time before the tech giants knock on banking’s door. In fact, a recent World Economic Forum report posited that big tech companies present a greater challenge to banks than fintech startups. The report notes that regulators will accept a more “oligopolistic distribution of financial services products by tech firms.” Already, the fintech providers Social Finance and Square have applied for FDIC-insured banking charters, just as the Office of the Comptroller of the Currency continues work to develop its limited-purpose fintech charter. Are the largest tech firms next in line?

    Incumbents still hold the upper hand. The risk of an Amazon or Google or Apple dominating the traditional banking sector is nowhere near a slam dunk.

    In every scenario, the tech giants would need to persuade regulators to grant them some kind of charter access in order to effectively compete and level the playing field on funding costs. This would involve easing traditional limits on commercial firms owning banks, and potentially navigating opposition from members of Congress.

    But more fundamentally, tech giants have had mixed experiences in rolling out financial services such as Google Wallet and Apple Pay. And despite the reported consumer skepticism of legacy institutions, banks still continue to maintain a high volume of customer relationships.

    SoFi CEO Resigns; Goldman & Mosaic Ink Deal; SoFi & Lending Club Deal Analysis (PeerIQ), Rated: AAA

    In the fallout of the Equifax breach, the leading credit bureaus are dealing with an overwhelming volume of credit freeze requests from consumers. While it is still too early to tell, it seems that the genie is out of the bottle. The breach is sparking additional focus on FinTech innovation to protect consumers (e.g., digital identity verification, disposable card numbers, etc.).

    Beyond the headlines, SoFi’s growth engine continues. In Q2 2017 alone, SoFi funded $3.1 Bn in loans with $134 Mn in revenue and $61.6 Mn in adjusted EBITDA. Revenue and adjusted EBITDA were up 67% and 60% year over year respectively.  The news of Cagney’s resignation coincided with SoFi marketing its latest personal loan deal which priced this Friday. Interest in SCLP 2017-5 was initially strong, however the bond priced somewhat wider than guidance.

    SoFi’s Latest Consumer Lending Deal: SCLP 2017-5

    After Mike Cagney’s resignation on Friday, the lead underwriter re-launched SCLP 2017-5. Since guidance was released before the critical NY Times article on Tuesday, we have a close (but imperfect) control to study the consequences of management upheaval on deal execution.

    ABS investors reacted negatively to the news; the bonds priced 10 to 15 bps wider than guidance on Monday.

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

    LendingClub’s Self-Sponsored Prime Consumer Deal: CLUB 2017-P1

    This is the second self-sponsored deal from LendingClub, and it follows the success of CLUB 2017-NP1. LendingClub expects to alternate between prime and near-prime securitizations at least once a year going forward. Of the $363 Mn outstanding, approximately $100 Mn came from LendingClub’s balance sheet (a shift from prior management’s business practice); the remaining loans were contributed from investors.

    The CLUB 2017-NP1 and CLUB 2017-P1 deals total to approximately $628 Mn in loans, yet LendingClub has facilitated almost $29 Bn in loans on its platform as of Q2 2017 making it a small part of LendingClub by dollars loaned but a meaningful portion of EBITDA.

    Source: PeerIQ, Company Filings, Kroll Bond Ratings Agency

    The FinTech Investor Podcast Series: Interview With Ron Suber (SoundCloud), Rated: A

    DiversyFund Sells Pre-IPO Shares in Accredited Offer (Crowdfund Insider), Rated: A

    DiversyFund, a real estate crowdfunding marketplace, is selling pre-IPO shares in a Series A crowdfunding round through a Reg D 506(c) offering.

    The Form D filed with the Securities and Exchange Commission (SEC) indicated that Diversyfund had sold $200,000 of a $6 million funding round as of August 31st. Minimum investments of $100,000 are being accepted from accredited investors only.

    Misha Esipov of Nova Credit (Lend Academy), Rated: A

    In this podcast you will learn:

    • How talking with international students at Stanford led to the idea for Nova Credit.
    • The big problem that Nova Credit is trying to solve.
    • How they began their journey in trying to solve this problem.
    • Details of their Credit Passport product, the international credit report.
    • How they were able to convince international credit bureaus to share their data.
    • Why the big three U.S. credit bureaus have not developed an international credit report.
    • How Nova Credit is able to standardize data from very different countries.
    • Nova Credit’s business model and their similarity to a traditional credit bureau.
    • How they can report back credit data to international bureaus.
    • The other vertical they focus on beyond lending.
    • The kinds of lending platforms they are working with today.
    • The progress they have made since LendIt USA 2017.
    • When they first started making revenue.
    • Who has been backing Nova Credit.
    • What is on their road map for the next 6-12 months.
    • How they view expanding into new markets to help immigrants other countries.

    The SoFi Sex Scandal Highlights How Hard It Is For Women In Fintech (Fast Company), Rated: A

    Fintech has become a major force over the decade since the financial crisis, with $12.8 billion in venture capital flowing into the sector in 2016 alone. But of the nearly 500 deals that took place in the U.S. last year, less than a dozen went to companies founded by women.

    “It’s lonely to be a woman in fintech, especially as a CEO,” says Rachel Mayer, cofounder and CEO of Trigger, an automated tool for investing alerts.

    At Anthemis, based in London, 56% of employees are women, a remarkably equitable gender breakdown that is consistent at every level.

    Former banking executive Sallie Krawcheck is following a similar playbook with her female-focused investing service, Ellevest. Since founding the company three years ago she has raised over $50 million in venture funding.

    A survey of U.K.-based fintech firms published last week revealed that women represented just 3 in 10 employees. Of fintech board directors globally, just 8% are women.

    Good news for fintech seen in CFPB’s ‘no-action’ move (American Banker), Rated: A

    In an interview Friday, Upstart co-founder and CEO Dave Girouard explained why the fintech applied for the letter and how it works.

    Is it fair to think of a no-action letter as a stay-out-of-jail-free card?

    DAVE GIROUARD: We’re careful about not trying to interpret it in any way that is different than what the CFPB says it is. The letter makes it clear that they have reviewed what we do and how we do what we do and that they don’t find issue with it.

    How do you feel about the agreement?

    We’re pleased that the CFPB recognized the consumer advantage of alternative data and machine learning, the fact that it could make affordable credit more broadly available to more people.

    So it’s not just about Upstart for sure — it’s the acceptance of these more modern techniques because they can and will benefit consumers broadly over time.

    Sharestates Appoints New Chief Operating Officer, Adds SOC 2 Type 2 Certification (Crowdfund Insider), Rated: A

    Sharestates, an online real estate crowdfunding marketplace, has announced that Nicole Joseph has joined the executive team as the new Chief Operating Officer.

    The new hire is accompanied by the completion of the company’s SOC 2 Type 2 Certification, which affirms that Sharestates now meets the security requirements and parameters for storing information on the cloud as laid out by The American Institute of CPAs (AICPA).

    ReliaMax Announces New Whole Loan Portfolio Placement Service (BusinessWire), Rated: A

    ReliaMax®, the complete private student lending solutions provider for banks, credit unions and alternative lenders, today announced at the 23rd Annual ABS East 2017 Conference a new whole loan trading service, ReliaMax Portfolio Placement, as an extension of its existing capital markets and liquidity programs. The ReliaMax Portfolio Placement service will facilitate qualified existing private student whole loan portfolios for sellers and buyers.

    The ReliaMax Portfolio Placement service provides unique value to the private student lending marketplace in multiple ways including insurance, default prevention, credit analysis, and servicing. Some benefits include:

    • State-of-the-art servicing through ReliaMax helps buyers maximize the value of their portfolio, providing compliance and regulatory support and staffing to manage student loan-specific servicing requirements.
    • Loan insurance through ReliaMax Surety Company covers 100% principal and interest and mitigates risks, reduces defaults, and provides better cash flow.
    • Portfolio review and credit analysis provides guidance around the price at which the portfolio might transact.

    ReliaMax has been involved in many third-party portfolio transactions. For example, in December 2106, MetaBank acquired a $151 million student loan portfolio which ReliaMax Surety Company now insures. The transaction also included the conversion of the portfolio servicing onto the ReliaMax Platform. Over the last three years, ReliaMax has provided insurance and/or servicing on 12 portfolio placement transactions.

    The Top Small Business Funders By Revenue (deBanked), Rated: A

    Square $1,700,000,000 $1,267,000,000 Went public November 2015
    OnDeck $291,300,000 $254,700,000 Went public December 2014
    Kabbage $171,800,000 $97,500,000 Received $1.25B+ valuation in Aug 2017

    Lendio Partners with Ocrolus to Automate Bank Statement Analysis (PR Newswire), Rated: A

    Lendio, the nation’s leading marketplace for small business loans,today announced a partnership with Ocrolus, the emerging leader in bank statement review automation. The PerfectAudit API, powered by Ocrolus, analyzes uploaded bank statements with 99+% accuracy, replacing manual review with automation. Ocrolus technology allows lenders, for the first time, to review every potential borrower’s bank statement data automatically, regardless of whether or not the borrower provides sensitive bank login credentials.

    In April, Lendio became the first lending marketplace to integrate with Ocrolus, whose clients include banks, alternative lenders, accounting firms, law firms, and government entities. The PerfectAudit API gives Lendio the ability to systematically combat bank statement fraud and conduct a hyper-accurate review for every potential borrower.

    Outsiders and Insiders Are Behind the Fintech Revolution (JD Supra), Rated: A

    From peer-to-peer lending to online banking, the fintech industry is a rapidly growing area for technology investment. In the first quarter of 2017 alone, U.S. venture capital-backed fintech start-ups raised $1.1 billion across 90 deals, according to CBInsights Global Fintech Report. The only region to outdo the U.S. during this same period was Asia, which reported for the same group investment of $2.7 billion across 226 deals.

    There exists a wide range of technologies that fall under the definition of fintech, and each is seeing significant growth. One such technology is artificial intelligence, which, according to the PricewaterhouseCoopers 2017 Global Fintech Report, 30 percent of large financial institutions are investing in. For example, another factoid from a separate PricewaterhouseCoopers report, projects that, by 2020, AI will automate a considerable amount of underwriting.

    Mobile payments are another rapidly growing area of fintech, with TechCrunch reporting that there will be an estimated $60 billion worth of payments made on mobile platforms in 2017. The site also predicts that, by 2020, 90 percent of smartphone users will have made a mobile payment, which serves to underscore just how commonplace this fintech will be within a very short time.

    AON: ALTERNATIVE RISK PREMIA VIABLE FOR MANY (AllAboutAlpha), Rated: A

    A new report from Aon discusses the contemporary market for alternative risk premia: where it is, how it got here; where it may be headed.

    The authors, Matthew Towsey and Chris Walvoord, begin with some very basic considerations of what ‘risk premia’ are. They are, on the one hand, the payments one receives for taking on a risk that others do not wish to hold (providing insurance), or they are on the other the winnings one pockets on strategies that take advantage of market anomalies.

    A Q&A With NerdWallet CEO Tim Chen: ‘We’re Making An Impact’ (Benzinga), Rated: B

    How does NerdWallet create its content and recommendations? Do data and algorithms play a role in your platform? I’m curious about the company from a fintech perspective.

    It’s actually a mixture of both — algorithms and incredibly smart, financially savvy humans power our recommendations, reviews and expert advice.

    The company seems to simplify financial information for everyday consumers. Do you think NerdWallet has helped to democratize the space?

    That’s the goal! I truly believe that a person that has spent no time at all thinking about personal finance and can’t afford a financial advisor, should be able to make the same quality of choice as the most financially savvy person in the country

    SDIRA TV Offers New Strategies Amidst Massive Equifax Hack (PR Web), Rated: A

    Experts deliver new alternative investment advice and resources for individuals being impacted by the giant 2017 Equifax data breach. This includes all new episodes of SDIRA TV with national finance experts and investment advisors, as well as a side by side comparison white paper on retirement investing options.

    Deeper concerns have surfaced as it was discovered three Equifax executives sold off substantial amounts of personally held stock before making the breach known.

    20 Places You Can Raise Funding for Your Business (TechBullion), Rated: B

    1. Crowdfunding

    There are several platforms where you can create your crowdfunding campaign. Examples include KickstarterIndiegogoand Go Get Funding.

    1. Peer-to-Peer Lending

    Peer-to-peer lending involves a group of people coming together to lend money to each other. You can look for an entrepreneur peer who is willing to fund ideas similar to yours.

    1. Online Lending

    There are several online lending service providers. Good examples are Kabbageand OnDeck.These online lenders will process your application within hours as opposed to traditional lenders.

     

    My Take On Real Estate Crowdfunding (ValueWalk), Rated: B

    Many of these platforms seem to market to investors, showcasing high dividend yields in the 8% – 10%/year range.

    I read the following two articles in my research:

    In general, those are new untested platforms, which may or may not do well for you over time. These investments have not been time tested during a recession. In addition, I do not understand very well how investment assets are segregated in those platforms, and how things would work out if a project you invested in fails miserably.

    As Financial Processes Go Digital, Detroit Looks To Siphon Talent From New York, Chicago (Benzinga), Rated: B

    He’s talking about fintech, which has leveled the playing field for non-New Yorks to flourish in financial services. Inspired by emerging tech trends, Raznick and Benzinga are taking stakes in Michigan’s future by spearheading the new Detroit Fintech Association.

    The nonprofit trade organization will enhance the community’s exposure, connect startups with national leaders and mentors, support talent recruitment and magnify the Detroit voice in U.S. regulatory discussions. The DFA also aims to improve financial literacy in the city through work with Detroit high schools and higher education institutions.

    FHA Loan Originations Expected to Generate Servicing Portfolio Growth Leading to Servicers Taking on Greater Non-Performing Loans and REO (Marketwired), Rated: A

    Altisource Portfolio Solutions S.A. (“Altisource”) (NASDAQ: ASPS), a provider of real estate, mortgage and technology services, today issued the results of its inaugural Default Servicing Survey, a survey of over 200 mortgage default servicing professionals. According to the study, nearly three-quarters (71 percent) of servicing professionals surveyed predicted FHA/VA loan volumes would increase within their organizations in the next 12 to 24 months; 41 percent believed FHA loans will offer their organizations the most portfolio growth over the same time period.

    According to the U.S. Department for Housing and Urban Development, FHA loans accounted for over 17 percent of newly originated mortgages in 20161 and currently constitute 35 percent of all loans delinquent for 30 or more days2. As the issuance of FHA loans grows, so does the potential increase in volume of default assets. Thus, it is not surprising that 93 percent of servicing professionals surveyed stated that foreclosure/trustee and Claims Without Conveyance of Title (CWCOT) capabilities are important factors to consider when evaluating a vendor to manage growing default portfolios.

    Servicing Professionals Cite Challenges Stemming from Costs of FHA Conveyance and Managing CWCOT Programs

    Servicing professionals (29 percent) cited remitting fees, costs and financial obligations associated with FHA conveyance as the greatest challenge for effective CWCOT programs. For servicing professionals working with third-party vendors to manage CWCOT portfolios, 15 percent said overall vendor management is a challenge associated with managing CWCOT programs while another 15 percent pointed to timeline delays and increased costs due to attorney oversight; 11 percent cited not having enough in-house personnel on staff to effectively manage the program.

    Third-Party Expertise and Central Coordination are Critical to Successful CWCOT Program Administration

    In order to overcome the financial, regulatory and oversight challenges associated with their vendors’ CWCOT programs, servicers must carefully evaluate their third-party vendor strategy to ensure vendors possess the right expertise and resources to execute the program. Most servicing professionals surveyed (97 percent) said they are exploring options including a single-vendor approach to help achieve their objectives; 91 percent identified FHA asset management experience as an important criterion for vendors. When specifically evaluating single vendors, 72 percent of servicing professionals surveyed said consistency and efficiency in managing REO properties is a very important consideration; 69 percent also pointed to compliance management.

    United Kingdom

    Equifax says as many as 400,000 UK consumers may be affected by data breach (Financial Times), Rated: AAA

    Equifax, the US credit-reporting company at the heart of a cyber-security scandal, has admitted that as many as 400,000 UK consumers may have had their personal information stolen.

    The company said that while its UK systems were not affected by the massive cyber raid that targeted information for as many as 143m Americans, UK customer data “may potentially have been accessed”, because it was stored on US systems between 2011 and 2016.

    If Equifax’s forecast is borne out, the data breach will be the biggest in UK cyber history, bypassing that of payday lender Wonga, which affected more than 250,000 customers.

    RateSetter launches consumer hire-purchase product (P2P Finance News), Rated: AAA

    RATESETTER has launched a hire-purchase (HP) product for individuals looking to buy vehicles.

    Consumers will be able to borrow up to £25,000, but the peer-to-peer lender expects the agreements typically to be around £6,000. The terms range between 12 and 60 months, with APRs going from 19.9 per cent to 49.9 per cent depending on the customer’s creditworthiness.

    Assetz Capital Reports “Development Funding Boom” with 175% Increase (Crowdfund Insider), Rated: A

    Peer to peer lender Assetz Capital is reporting it has seen a year-on-year increase of 175% in the number of property development projects funded around the UK. The online lender says this rise comes following sustained growth in the funding pool for property developments, as investors hunt for a piece of the development market.

    There are two new types of Isa – should you switch to them? (The Telegraph), Rated: A

    But as new types of Isa have emerged and new rules have been introduced, the situation has become more complicated.

    And some Isa features – notably “flexibility”, which allows account holders to make withdrawals and then pay the money back in during the same tax year while keeping the tax benefits – have not been introduced by all providers, which has further muddied the waters.

    A Help to Buy Isa, a type of cash Isa, is also an option. First-time buyers can deposit £1,200 in the first month and £200 a month thereafter to put towards a home purchase. The Government then tops up savers’ money by 25pc.

    However, you can’t pay into a normal cash Isa and Help to Buy Isa in the same year, unless you choose a provider that allows you to split the cash. Nationwide and Aldermore both offer this option; they pay 2pc and 1.75pc respectively.

    Lifetime Isas 

    The Lifetime Isa is the newest addition to the Isa family.

    Consumers between the ages of 18 and 40 can use the accounts to save towards their first home or retirement. Up to £4,000 can be put away each year into either a cash Lisa or a stocks and shares version. Eligible savers can continue to contribute until the age of 50.

    Hargreaves Lansdown, Britain’s biggest fund shop, and rivals including AJ Bell, The Share Centre and Nutmeg, an online wealth manager, offer investment Lisas.

    Innovative Finance Isas 

    These Isas shield peer-to-peer investments, which allow consumers to offer unsecured loans to individuals and businesses through online platforms such as Zopa and Ratesetter, and certain “crowdfunding” investments, from tax.

    Lending Works was the first to offer the new Isa, paying the same return as the firm’s existing accounts.

    Zopa allows existing customers to sell their loans and buy them back within the Isa. They can also transfer their Isas with other providers to Zopa.

    Networks are the new corporations (Inside Bitcoins), Rated: A

    There are a lot more people in the world that can collectively lend micro loans on a regular basis than there are corporations that can regularly distribute loans above the value of a thousand dollars.

    “A network of independent lenders committed to distributing micro loans could potentially rival long established financial organisations in terms of the combined value of peer to peer loans serviced to borrowers on a world wide scale” says Richard Ochieze, Managing Director at Ledgermark, LTD.

    The case for Digital Collateral

    The internet makes non repayment of loans a marvellously simple task for borrowers and as such; organisations like the Funding Circle, a peer to peer lending firm, are left wide open to have the profits of their retail investors depleted due to this lingering risk.

    Traditional financial institutions have been able to maintain a fortress of checks and balances such as strict collateral requirements for both business and personal loans in order to provide themselves with a means of recourse should a borrower fail to repay his debt.

    In this digital age in which peer to peer transactions are becoming the norm, this same form of protection must be made available to the average individual who wishes to loan his money out to borrowers in return for profit.

    However, the question must be asked: how can a borrower pledge his house or farm as collateral via an online loans application?

    Prior to the invention of the Blockchain such an asset did not exist and now that it does, the door has been opened to allow individuals based anywhere in the world to distribute and/or become the recipient of a secured micro-loan.

    Can a robot help you invest for retirement? (AOL), Rated: A

    Robo-adviser Wealth Wizards, for example, typically charges £65 for advice on investments of up to £30,000, and 0.30%, or £300, for guidance on what to do with a £100,000 retirement savings pot.

    A typical financial adviser, meanwhile, charges about £580 for telling you how to invest a £200-a-month pension contribution, or between £1,000 and £2,000 for at-retirement advice on your £100,000 pot, according to figures from UK adviser network Unbiased.

    JustGiving targeted by criminals for money laundering (BBC), Rated: B

    Fundraising website JustGiving has said criminals are attempting to use its site to launder money.

    The website told the BBC it had shut down nearly 100 of its appeal pages in the past 18 months because it believed they were fraudulent.

    When discovered, no payments were processed, he said.

    China

    China will step up supervision of overseas investment risks – insurance regulator (Reuters), Rated: A

    China will strengthen its supervision of overseas investment risks and capital flows from insurance funds, the insurance regulator said on Monday, adding that it will urge companies to improve their risk monitoring systems.

    The China Insurance Regulatory Commission (CIRC) will step up supervision over the use of insurance funds, with focus on “chaos” such as irrational stock market fundraising and overseas acquisitions, said Guo Jing, vice head of the finance and accounting department of the CIRC.

    China: WeiyangX Fintech Review (Crowdfund Insider), Rated: B

    Shanghai-based BTCC is the largest and first domestic bitcoin exchange in China. On September 14th, BTCC announced that it would immediately stop new user registration and close operation in China on September 30th.

    The 2nd China Fintech Conference (2017) will be held on September 17th, 2017 in Beijing.
    IDC Financial Insights announced the 2017 Fintech Rankings and Real Results at Finovate Fall New York 2017. This year, 4 Chinese companies won the honor to be named in the 2017 IDC Fintech Rankings. They are Ping An Technology (38), Hundsun Technologies Inc. (54), Pactera Technology International, Ltd. (55) and ECCOM Network System, Ltd. (64).
    Last week, China’s financial and educational regulators announced to ban online lenders from offering loans to college students, and encouraged commercial banks to offer micro-credit products for the campus market. As a response to the call, Industrial and Commercial Bank of China (ICBC) has launched its own student loan product Rong e Loan this week.
    European Union

    Order not going to “Pending” with Klarna (Drupal), Rated: A

    Project:  SOFORT Banking for Ubercart
    Version:  7.x-3.1

    Sofort has been bought by Klarna. Although everything should function as normal according to Klarna, since the switch the order is not going into “pending” after checkout — order status is “in checkout”.

    commented 

    This is a good place trying to get this sorted. My questions are:

    • Is this a new shop or one that runs for a while and worked OK before?
    • From the screenshot it looks like Sofort sends notifications pretty often, is that true?
    • The expectation is that the first of those notifications should switch the status to pending and confirming that to Sofort so that they know you got it and then they wouldn’t notify you again, right?

    commented 

    That’s exactly why this is failing. The Ubercart payment module wants to write into its table the value Aus sofort-Überweisung wird Klarna into the field method.

    You should notify Sofort AG about this problem and I will do the same.

    International

    Klarna partners with global technology company Wacom (Klarna), Rated: AAA

    Today we are proud to announce a new partnership with global technology company Wacom® that further accelerates Klarna’s expansion in the U.S. Wacom is now bringing our simple retail financing solution to the world of creative interface technology and software.

    Financing a purchase over time has historically been optimized for brick and mortar stores. But the online equivalent can often be an ordeal, with redirects, lengthy forms and unclear information. Our process only requires a few fields of information, and lets consumers know instantly if they qualify for the financing solution.

    How Incumbents Can Take on FinTech Challengers (LendIt), Rated: A

    Digital technology has changed financial services. It has facilitated innovation, increased competition and made the mobile customer experience the key differentiator.

    This embodies a strategic threat with McKinsey estimating that legacy financial institutions will see profits decline by up to 60% by 2025 if they fail to evolve, a figure which should be motivating incumbents to look outside of traditional practices for growth and sustainability.

    Millennials and digital natives have turned away from traditional banks in search of mobile alternatives. They are drawn to the best products and experience, and banks with the right level of service can win over this large market. Mobile-only banks like N26 are leading the way.

    SME lending also offers a significant opportunity for growth. The European Commission’s SME Performance Review estimated just under 23 million small and medium enterprises generated €3.9 trillion in value add and employed 90 million people in 2016-2016, and McKinsey has identified a $350 billion untapped lending opportunity within this sector.

    One path is acquisition, which banks like BBVA have followed by acquiring companies like Finland’s Holvi and neobank Simple. This is an expensive option complicated by having to find a company with the right fit for the business.

    Given the technology available, a cleaner option would be to build a digital banking spinoff which can operate like a FinTech.

    Meridian Proposes to Bring Peer to Peer Lending into the Age of the Blockchain (Crypto Insider), Rated: A

    The far reaching nature of the internet has allowed the myriad of local economies that exist in the world to become merged into one, global, interwoven marketplace.

    Despite this, it is still incredibly difficult for people to get a loan from an international organisation – without offering some form of collateral and/or proving credit worthiness.

    The average size of deposit needed to get a mortgage is 62% of annual income, and in London, it’s 131%.

    As a result, only 20% of 25-year-olds own their home today compared with 46% 20 years ago – less than half.

    If you have a bad (or no) credit history, it is virtually impossible to borrow from a mainstream lender.

    Banks and building societies advertise temptingly low rates, but they only need to apply to 51% of successful applicants, so almost half of all borrowers pay a different rate – probably higher.

    Director of Ledgermark LTD, Richard Ochieze, explains:

    An alternative should be offered to people who are being let down by the traditional banking system. We believe that the Meridian system can do a lot to alleviate some of the problems that exist in today’s online lending market.

    The Meridian service offers users the opportunity to procure a loan of up to one Bitcoin at a time.

    To qualify for a loan users must pledge a certain amount of Meridian tokens as collateral.

    Meridian tokens can be purchased during the ICO on 12 October 2017 and will then become tradable on all alternative currency exchanges.

    India

    Google gets into digital payments fray in India (Banking Technology), Rated: AAA

    Google is expected to launch a mobile payments app in India next week, according to several news reports. Google Tez, which means “fast” in Hindi is the anticipated name of the payments service, which Indian news outlet The Ken says is “largely fashioned on the company’s global product – Android Pay“.

    As TechCrunch notes, “this is a big deal because Google hasn’t made a big push into payments outside of the US.”

    ICICI plans payday-type loans in pact with e-tailers (India Times), Rated: AAA

    In a first of its kind for India, ICICI Bank will partner with e-commercefirms to provide automated payday loan-type credit to customers at the bottom of the digital pyramid. Unlike other software-based loans, the digital credit planned by the bank will be available to non-customers and new-to-credit borrowers.

    Speaking to TOI, Anup Bagchi, executive director, ICICI Bank, said that the bank would price these loans similar to credit card advances. In the West, payday loans are advances that fund the low-income individuals to make up for cash shortfalls until their salary. The difference in the ICICI Bank loan is that for the first month, the buyer will get free credit for up to 45 days. It is only if they do not pay on the due date that borrowers will be charged interest at close to credit card rates.

    The bank will lend to new-to-credit customers based on their track record with the e-commerce provider.

    Here’s why RBI wants to regulate online P2P lending (VC Circle), Rated: A

    “The RBI is concerned that this can go big and get out of control,” says Harish.

    Faircent—which is backed by financial institutions like JM Financial, venture fund Aarin Capital and Mohandas Pai-promoted 3one4 Capital—is seen as the largest online P2P lender in India. Other names include Lendbox, Rupaiya Exchange and LenDen Club.

    There are typically three models through which such lenders operate, says Aditya Kumar, founder and chief executive officer at Qbera.com, an online lender that began operations in February this year and claims to have a Rs 10 crore loan book. “While there are at least 30-40 P2P players, who connect lenders to borrowers, 15-20 do marketplace lending (where money is raised from banks and other financial institutions) and then there are loan aggregators who have been around for longer,” says Kumar.

    While Kumar says the total P2P lending market size would be around Rs 25 crore, Rajat Gandhi, founder and CEO at Faircent, puts the figure at Rs 50-70 crore on an annualised basis.

    Figures available with Peer2Peer Finance Association (P2PFA) suggest that the global P2P lending market saw cumulative lending of £8.5 billion during the first quarter of 2017, against £5.8 billion three quarters before. In the same period, the number of lenders grew by a fifth from 1.5 lakh to just over 1.8 lakh.

    How to boost your retirement income with P2P Lending (India Times), Rated: A

    The discourse around P2P lending has always been centered around what it means for borrowers and the advantages they can derive. However, what gets missed is that P2P lending has the potential to be a great source of investment for the lenders contributing to their retirement fund.

    P2P lending is an investment delivering multiple benefits when building a retirement plan:

    1. Add Lending to your Portfolio Mix: The adage that talks of not putting all your eggs in one basket still holds true. An investor should not limit his portfolio to only a few asset class, but focus on investing across investment opportunities so that market fluctuations do not have a huge negative impact on their retirement funds.

    2. Steady and high returns not Linked to Stock Markets: P2P lending adds to building such a diversified investment portfolio while delivering returns that are not merely comparable, but often preferable to returns from other investment instruments such as mutual funds, stocks, and SIPs.

    Lenders on Faircent.com are earning gross returns to the tune of 18% to 24% per annum on an average by building a diversified loans portfolio.

    3. Income Generation & Power of Compounding: Another reason that P2P investment does well is because investors can compound their earnings. Lenders are earning back part of their investment, both principal and return, every month.

    Asia

    Get Me My Wedding Present: How We Run a Micro-Lending Business in Cambodia (Cointelegraph), Rated: AAA

    MicroMoney co-founder and CEO Anton Dzyatkovsky on attracting new customers, recruitment issues and risks in greenfield countries.

    Now that we’ve opened new offices in Myanmar, Thailand and Sri-Lanka, our decision to start with Cambodia can be seen as a definitive step which enabled us to embrace the largest community of unbanked people in the region, bringing the advantages of Blockchain as the key technology for global financial inclusion.

    Cambodia is all about banks

    For us as Europeans, the first surprise was the population’s absolute trust in local banks.

    The US dollar is as used in Cambodia as the local currency is, and the exchange rate has remained stable for over 20 years. State regulators do not exercise particular pressure on the financial industry, and by the time we stepped into the game, 50 organizations had been involved in the consumer loan industry, each with an average capital of $1.5 mln and an ARPU of $5,000.

    30-day overdue loans in Cambodia account for only 0.9 percent of the total, so the PAR ratio (portfolio at risk) is quite profitable (according to the local Central Bank).

    Our Cambodian lessons

    • A growing share of the middle class due to the growth of GDP. For instance, Cambodian GDP grew six percent in 2016.
    • A market capable of generating cheap leads. We discovered all Cambodians belonging to the target audience have at least one active Facebook account, and for them Facebook often equals Internet in general: every national mobile operator provides free access to Facebook.
    • Dormant or non-existent competition. in Cambodia there were no paperless lending services without an escrow of land or real estate property.
    • Eager audience in need of a product. when we were checking out the market, we found only five percent of the population had a credit record. According to McKinsey, the number of ‘unbanked’ people in Asian region overall ranges from 65 to 80 percent of the adult population.
    • Collaboration at the local level. It helped us understand local customers and comply with local regulations (in this case you must be ready to assign 51 percent of your newly established company to a local partner).

    Peer lending for small businesses (The Star), Rated: A

    Funding Societies, which started in Singapore in 2015, is one of the first peer-to-peer (P2P) financing companies to open its doors here in Malaysia in February this year. It is also present in Indonesia.

    Wong, who learned about alternative financing while studying at Harvard Business School, says P2P is well-suited for the Malaysian and South-East Asian markets where there is a big gap in SME financing. He estimates financing needs for small businesses in Malaysia to be at RM80bil.

    According to Research and Markets, the global P2P lending market was valued at US$26bil in 2015 and is projected to reach US$460bil by 2022, growing at a compound annual growth rate of 51.5% from 2016 to 2022.

    Funding Societies has made it to the Fintech 250 list, which is recognised and regulated by Securities Commission Malaysia, to provide financing to SMEs. The company also provides flexible investment opportunities with rigorous risk assessment and returns of up to 14% per year for investors, says Wong.

    So far, the company has done more than 800 deals and disbursed more than RM180mil in financing to SMEs in Malaysia, Singapore and Indonesia.

    Default rate in the region is low at about 2%.

    Bank approves online accounts in foreign currencies (Taipei Times), Rated: A

    Taiwanese could soon be able to open bank accounts denominated in foreign currencies on the Internet after the central bank on Thursday gave its go-ahead to the plan.

    Local banks could seek approval for the new accounts by the end of this year, or 60 days after the introduction of the new regulations, the central bank said in a statement.

    Taishin, the banking arm of Taishin Financial Holding Co (台新金控) and the nation’s largest online lender by the number of accounts, told reporters that it aims to be the first applicant when the notification period begins.

    Africa

    Outsurance buys CoreShares stake as it launches robo-adviser (BusinessDay), Rated: AAA

    Outsurance is to acquire a 25% stake in passive investment manager CoreShares, as the insurance company’s robo-adviser, Outvest, goes live.

    The acquisition complemented Outvest, an online, automated advice business, the companies said in a statement on Monday.

    In SA, financial advisers, to more effectively service their clients, are predominantly using these platforms, although there are platforms available to retail investors.

     

    Authors:

    George Popescu
    Allen Taylor

    Wednesday September 6 2017, Daily News Digest

    fintech bank investment map

    News Comments Today’s main news: Upgrade appoints Western Union exec at general counsel. Assetz Capital now claims to be second largest P2P lender in the UK. Perseus has the solution for EU cyber threats. Amartha partners with Jamkrindo in Indonesia. Today’s main analysis: How banks are investing in fintech. Today’s thought-provoking articles: LendingClub CEO Scott Sanborn interviews with […]

    fintech bank investment map

    News Comments

    United States

    United Kingdom

    China

    European Union

    Australia

    India

    Asia

    News Summary

    United States

    Upgrade, Inc. Appoints Western Union Executive as General Counsel (Upgrade Email), Rated: AAA

    Upgrade, Inc. (), the new consumer credit platform launched by LendingClub founder Renaud Laplanche earlier this year, today announced the appointment of John Dye as General Counsel. Prior to joining Upgrade, John was Executive Vice President, General Counsel and Secretary of The Western Union Company. He was also Chairman of the Board of Directors of the Western Union Foundation.

    Before joining Western Union in November 2011, John was Senior Vice President, Interim General Counsel and Corporate Secretary of Freddie Mac from July 2011. From 2007 to July 2011, John served as Senior Vice President, Principal Deputy General Counsel, Corporate Affairs of Freddie Mac, where he worked on corporate transactions and managed attorneys in the areas of corporate disclosure, securities, intellectual property, contracts and human resources.

    Prior to joining Freddie Mac, John spent 13 years at Citigroup Inc. in New York City, where he held senior leadership positions, and served as Senior Vice President and Senior Counsel at Salomon Smith Barney.

    Upgrade also hired Louis Shansky, a partner on the securitization team at the law firm of Mayer Brown, as Deputy General Counsel.

    Back and Better Positioned than Ever—CEO Scott Sanborn Interviews with Bloomberg (LendingClub), Rated: AAA

    • The macroeconomic backdrop: While macro trends are generally positive—low unemployment, low interest rates, low inflation and low oil prices with an increase in consumer confidence—credit card debt levels are near all-time highs. Today, there is more than $1 trillion in outstanding credit card debt in the U.S.
    • Borrowers are not alone: LendingClub borrowers are not alone in seeking a lower interest rate solution: credit card debt in the U.S. is at an all-time high1 and credit cards tend to carry high interest rates. Sixty to 70% of our customers are currently taking advantage of our personal loans to pay off credit cards which helps them to get on the path to financial success.
    • LendingClub is enabling more new investors access to an old asset: Fifteen percent of our investor base still invests directly through the retail website, with the balance accessing the asset through other means.
    • Institutions want more: In Q2 2017, we had record high subscription from more than 100 institutional investors participating on the platform. Banks were 44% of our overall investor mix last quarter, attributed to LendingClub’s assets offering solid returns with a short duration.
    • Reaching new investors through securitization: More than 20 new investors engaged with LendingClub via the first deal, which demonstrated high demand for the asset.

    The Top Fintech Trends Driving the Next Decade (ABA Banking Journal), Rated: AAA

    Here is a glimpse at the technologies driving bank innovation today—as well as a look ahead to the technologies coming down the pipeline that will change the way banking is done over the next 10 years.

    1. Digital Lending (here and now) – Unsecured consumer lending is the first market where digital lending has made an impact and is by far the most mature. Today, the two leading consumer lending platforms (Lending Club and Prosper) originate roughly $2.5 billion in loans quarterly. Small business lending has quickly followed and is rapidly digitizing. ABA has endorsed the digital commercial lending solutions offered by Akouba, providing banks of all sizes the use of these platforms to enhance customer service and significantly reduce underwriting costs.
    2. Biometrics (1-2 years) – Passwords are only secure to the extent that they are kept private and cannot be guessed by a keen observer. The problem is that these passwords often rely on observable pieces of our life like our birth date, our children’s names, or our pets (my personal favorite), which are all readily available to criminals using social media and public databases. A 2015 study by TeleSign indicated that one in five people use passwords that are over 10 years old, with 73 percent of accounts being secured by the same password. Compounding this problem is the fact that we now have so many accounts that require a password, that it is impossible to keep them straight.
    3. Customer Data (1-3 years) – Today, customer data at banks is often unstructured—housed in systems that are inconsistent and may not talk to each other. A single customer may have multiple accounts with a bank that are all housed in different systems, with inconsistent identifiers. A number of banks, as well as core processors, are working to reconcile these systems. Some are working to build additional data warehouses that aggregate disparate customer data to create a unified view of customers.
    4. Regtech (3-5 years) – Regulatory reporting is one area that seems ripe for digital disruption. Today, filing call reports is a quarterly activity that requires significant time. It would not be hard to imagine a software solution that was tied into a bank’s back-end systems and prepopulated all of the key reporting fields. Moreover, it would be possible for regulators to receive a steady feed of data from a bank that would give them an ongoing view into the bank and may reduce the frequency with which exams are necessary.
    5. Artificial Intelligence (5-10 years) – One way this could help bankers is by improving fraud detection. Traditional fraud monitoring systems rely on specific non-personal rules (like geography) to detect fraudulent transactions. Machine learning could be applied to analyze the transactions of each customer, flagging transactions that are out of their normal habits.
    6. Internet of Things (8-10 years) – For example, banks may be able to use internet-connected devices to make better loans and monitor collateral. Inventory or livestock for a small business can be monitored in real time. This would allow a bank to monitor a customer’s balance sheet on an ongoing basis, giving it the tools to make better decisions about lending or adjusting credit lines in real time.

    The biggest long-term impact that IoT is likely to have is in payments. Connected devices are already able to talk to each other, but will also require the ability to make payments back and forth. Today, this may be as simple as using your smart watch to settle a bill, but could evolve to the point at which your refrigerator pays for groceries that are running low. A number of auto makers are experimenting with enabling cars to make payments.

    Scott Zoldi of FICO (Lend Academy), Rated: A

    The Chief Analytics Officer at FICO talks about their use of artificial intelligence in credit models, fraud, alternative data, financial inclusion and more.

    In this podcast you will learn:

    • Why his background in theoretical physics was perfect for studying fraud and credit risk.
    • What the company FICO actually does and how it interacts with the credit bureaus.
    • What his role as Chief Analytics Officer entails.
    • Some examples of the 130+ patents that FICO has been granted.
    • The importance of being able to explain how a credit model works.
    • How their advanced machine learning models can be explained to regulators.
    • How FICO has been using artificial intelligence for decades.
    • What Scott thinks about the sudden embrace of artificial intelligence in the last couple of years.
    • What he worries about with so many new companies coming into the AI fray.
    • How Scott views alternative data and using new data sources.
    • His thoughts on disparate impact and the use of alternative data.
    • How the FICO XD score helps expand access to credit.
    • How FICO’s fraud product called Falcon became the industry standard for banks.
    • Scott’s views on how a 700 FICO score today compares with the same score 10 years ago.
    • What Scott is most excited about today in his work at FICO.

    Citizens Financial Starts Robo-Adviser With SigFig Partnership (Bloomberg), Rated: A

    Citizens Financial Group Inc. is the latest bank to start a robo-advisory product as part of its larger push into wealth management.

    Citizens, a regional bank based in Providence, Rhode Island, is providing the technology to customers beginning Wednesday through a previously announced partnership with SigFig Wealth Management LLC, which uses algorithms to provide financial advice at lower fees than traditional human advisers.

    The minimum initial investment in the Citizens offering will be $5,000, according to the firm. The annual asset-management fee is 50 basis points, or about half the typical cost of a traditionally advised account.

    Real Estate Crowdfunding Shows Signs of Maturation (Real Estate Tech News), Rated: A

    Last month, crowdfunding giant RealtyShares bought smaller rival Acquire Real Estate. This news was a significant in the multibillion-dollar sector, which is not even five years old. It begged the question as to whether this deal was a product of synergies between two platforms or a case of a larger player protecting its turf by taking a smaller rival off the board?

    Whatever the answer, one thing is clear: We are likely looking at the start of a push toward consolidation in real estate crowdfunding. While there are hundreds of platforms now vying for a capital pool that is almost halfway to 12 figures, some clear-cut market leaders have emerged, and a movement toward economies of scale would signal continued maturation. Over the next year or so, it would not be surprising to see companies like FundriseCrowdStreet and Patch of Land join the market for acquisitions, especially as the space continues to establish mainstream legitimacy.

    MPL Market Shows Growing Origination Volume, With Tightening Credit Stance (dv01 Digest/LendIt), Rated: A

    Looking at origination characteristics for the four largest MPL originators, we see origination volume continue to rise: 21% for 2Q17 over 1Q17, and up 52% over 2Q16. Loan coupons have risen from a 14.20% GWAC for the 2Q16 vintage to a 14.31% GWAC for the 2Q17 vintage, while the two year treasury has rallied approximately 50bps over the course of the year. PTI is relatively unchanged, coming in at 9.05% for 2Q17 versus 8.99% for the 2Q16 vintage.

    Average FICO has increased significantly: 703 for the 2Q16 vintage to 711 in 2Q17.

    Prosper closed its second $500MM Consortium securitization, PMIT 2017-2, on which dv01 was loan data agent. Data from PMIT 2017-2 is available for accredited investors through dv01’s Securitization Explorer, and is updated monthly.

    Download and read the full report (with charts) here.

    Debit cards, a trillion in debt, and millennials: What could go wrong? (American Banker), Rated: A

    Fifth Third Bancorp is borrowing inspiration from the fintech world as part of its effort to woo millennial customers and compete with megabanks for consumer deposits.

    The Cincinnati bank on Tuesday is scheduled to roll out a stand-alone app designed to help its customers pay student loan debt. The app, called Momentum, lets customers link Fifth Third debit cards to student loan accounts held by more than 30 servicers. Customers can have their debit card purchases rounded up to the next dollar, or have a dollar added to every purchase; the money is applied weekly to the balances on designated loans once a minimum of $5 is contributed.

    “I see Momentum as being complementary” to apps such as Acorns and Digit, she said. “This [millennial] generation is sitting on $1.3 trillion of [student loan] debt. We wanted to take a relatively simple concept and offer something to help them in their day-to-day life.”

    Op-Ed: Regulatory Sandboxes Can Help States Advance Fintech (American Banker), Rated: A

    The U.S. captured 54% of the $127 billionin global venture capital invested in 2016. This access to capital has allowed some American fintech startups to succeed despite the regulatory burdens. Yet, the U.S. underperforms in fintech venture capital compared to our share of overall venture capital. In 2016, the U.S. obtained only 33% of the $13.6 billion in worldwide fintech venture capital investment.

    I am working with Arizona policymakers to introduce a sandbox in Arizona that would reduce entrepreneurs’ barriers to entry without sacrificing core consumer safeguards. This would be the first state sandbox in the United States.

    Op-Ed: Regulatory Sandboxes Can Help States Advance Fintech (Arizona Attorney General), Rated: B

    Attorney General Mark Brnovich is calling for Arizona to become the first state in the country to adopt a “sandbox” like regulatory environment that would reduce fintech entrepreneurs’ barriers to entry into local markets in a new op-ed penned for American Banker magazine. Key to creating sandbox regulatory systems is ensuring core consumer safeguards are not sacrificed. Sandboxes have already been implemented in countries such as the United Kingdom, Singapore, UAE, Malaysia, and Australia.

    ‘Fintech’ Loans: A Sometimes Costly Lifeline for Small Business (KQED News), Rated: A

    Che Al-Barri remembers feeling like he was drowning in debt last year. He had taken out a $70,000 loan for his small cleaning company, but was struggling to repay it.

    The lender, a financial technology — or fintech — company, automatically collected $331 from his bank account daily, Monday through Friday. The frequent hits depleted his income and took a toll on his business, he said.

    For Al-Barri, taking a big loan seemed like a great opportunity at first. Large clients were taking months to pay him, he said, and he wanted to buy equipment and hire employees to expand. But he underestimated how much he would earn, making it very difficult to repay the loan plus the $30,000 in interest he owed.

    Stanford study examining Airbnb users and data suggests that reputation can offset social bias (Stanford.edu), Rated: A

    new Stanford study analyzing Airbnb users and data suggests measures that enhance a user’s reputation, like stars or reviews, can counteract these harmful prejudices. The results, the researchers said, indicate sites that use reputational tools create a fairer and more diverse online marketplace.

    The share economy, also referred to as “collaborative consumption” and “peer-to-peer lending,” has allowed everyday citizens to turn into entrepreneurs, taking advantage of an industry that’s projected to grow to $335 billion by 2025, according to the Brookings Institution.

    The researchers in this study focused on a certain type of bias called homophily, a natural tendency to develop trustful relationships with people similar to themselves, and how best to counteract it. The study is part of a broader research project analyzing trust and technology at Stanford.

    The 36k-population neighborhood that’s hot for real estate investors (Mortgage Professional America), Rated: A

    Data from real estate crowdfunding firm Sharestates says there has been a 650% increase in demand from investors wanting to put their cash into property in Fishtown.

    That’s because of an attractive 11.8% return on investment and the ratio of the total loan amount compared with after repair value is 14%.

    Cordray Remains Mum About Political Plans in Ohio Speech (Credit Union Times), Rated: B

    Speaking at an AFL-CIO Labor Day picnic in Cincinnati, Cordray did not address one of the most—if not the most—crucial issue facing the agency—whether Cordray will resign to run for the Democratic nomination for governor in the Buckeye State.

    And when questioned afterward, he declined to comment on his intentions.

    The CFPB is working on its most high profile set of rules—those governing the payday lending industry. The bureau is believed to be planning to release those final rules this month.

    LendingTree Partners With Benzinga to Award $ 10,000 to Winner Of Fintech Innovation Challenge At The Benzinga Fintech Summit (Baystreet), Rated: B

    Benzinga, a leading financial media and events company, announced Thursday that it will team up with the nation’s leading online loan marketplace LendingTree to award $10,000 to the winner of an on-site fintech demo competition at the inaugural Benzinga Fintech Summit in San Francisco September 28.

    The Fintech Innovation Challenge Presented by LendingTree will award $10,000 to the company whose product best demonstrates scalable, material innovation to the Summit’s audience.

    United Kingdom

    Assetz Capital Now Second Largest UK P2P Lender (Crowdfund Insider), Rated: AAA

    Assetz Capital, one of the largest peer-to-peer lending platforms in the UK, has announced it has received full authorization from the Financial Conduct Authority (FCA).  Additionally, Assetz Capital has claimed second place in the ranking of UK’s largest P2P lenders as it reports lending in excess of £25 million per month on average to SMEs throughout the UK.

    To date, Assetz Capital has lent over £316 million to businesses across the UK.

    £17m invested into Innovative Finance Isas (Bridging&Commercial), Rated: AAA

    HMRC has revealed that 2,000 Innovative Finance individual savings accounts (IFIsas) were opened during the last tax year.
    The average investment into IFIsas during 2016/17 was £8,500 which meant £17m was invested collectively.

    HMRC also reported that the amount invested in cash Isas had fallen from £58.7bn in 2015/16 to £39.2bn in 2016/17, while investment in stocks and shares Isas edged up from £21.1bn to £22.3bn.

    Peer-to-peer Isas failed to gain much popularity in their first year, with just 2,000 Innovative Finance Isa (IF Isas) accounts opened in the tax year 2016/2017, according to the latest statistics from HMRC.

    The biggest problem is that many peer-to-peer platforms have struggled to gain approval from regulators to become IF Isa providers. There are currently around 60 firms that have received approval from financial regulators, with most of these only starting to operate within the past few months.

    Across the 2,000 IF Isa accounts opened, £17 million worth was subscribed. The average subscription per account was £8,500 – about the same as the average stocks and shares Isa account subscription.

    Peer-to-peer platform Abundance claims it sold the majority of IF Isas in the last tax year. It says 1,436 Abundance IF Isas were opened, representing 72% of all IF Isa products opened last year.

    Overall, the amount held in Isas in 2016/17 fell to £61.5 billion, compared with £80 billion the previous tax year. This decline was largely driven by a steep fall in the amount held in Cash Isas. In 2015/16, a total of £58.7 billion was held in Cash Isas; in the latest tax year this fell by a third to £39 billion.

    Lucky Generals bangs out a new tune for Funding Circle (More About Advertising), Rated: A


    The theme of the campaign seems to be “for those made to do more.” Here’s another in the campaign, not quite so striking.

    If peer-to-peer lenders lack anything, it is not ambition (The Times), Rated: A

    Samir Desai, co-founder and chief executive of Funding Circle, Britain’s largest peer-to-peer lender, says that his business, which has arranged $2.7 billion of loans to small companies, could be lending at least $100 billion within a decade.

    Peter Behrens, co-founder of Ratesetter, one of Funding Circle’s main rivals, believes that his platform could double its annual loans within the next two years to £4 billion.

    China

    China’s fintech firms eye overseas IPOs to fund growth as regulations tighten at home (South China Morning Post), Rated: AAA

    The A-share market, due to its profitability requirements, remains off-limits to most Chinese fintech firms, particularly peer-to-peer (P2P) lending platforms that were once regarded as an important part of the mainland’s reform of the banking system.

    The increasing demand for financing has prompted a clutch of fintech firms to kick off their overseas IPO processes, most of which plan to complete fundraising in the next 12 months.

    Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, is seeking to raise as much as US$1.5 billion via a Hong Kong IPO.

    After five years in business, Zhong An has developed a customer base of about 500 million people.

    Views on China’s coin fundraising ban: someone still have an illusion (Xing Ping She), Rated: A

    The Chinese regulators’ ban on ICO has heightened, and the financing of various tokens of the virtual currency has been put to death. In a consequence, the ICO asset value has evaporated nearly $20 billion, and more than 100,000 investors may be affected.

    However, some ICO initiators still don’t want to stop. ”I don’t think the central bank’s oversight of ICO is going to be that severe,” a charger of the Digital Currency Asset Exchange said, ”and we would wait and see the specific notice of the local financial office and then decide what to do with it.” But in some communities of the ICO, we can see initiators start to announce the withdrawal of investors’ assets.

    European Union

    Perseus start-up seeks to shield German SMEs from cyber threats (Banking Technology), Rated: AAA

    According to fintech incubator FinLeap, which is behind the venture, more than 70% of German companies were affected by cybercrime activities within the last two years, but only one out of ten SMEs holds an insurance policy that covers the resulting damages. Because Perseus offers a platform, it can connect services and offer “best-of-fit” tech solutions.

    There is no specific date yet, but it also plans to add an industry-specific cyber insurance proposition to its portfolio of services.

    Irish P2P lender GRID Finance rules out UK as part of growth plans (P2P Finance News), Rated: A

    IRISH peer-to-peer lending platform GRID Finance has ruled out the UK as part of its current expansion plans.

    The business lender announced it had received €3m (£2.7m) of finance yesterday that will help to fund expansion into new markets, but chief executive Derek Butler says the UK market is already very competitive.

    He said he was focusing on scaling the business in Ireland first and competing with the country’s two main banks, Allied Irish Bank and Bank of Ireland.

    Fintech Pushes EU to Explore Changes to Bank Software Rules (The New York Times), Rated: A

    EU banking rules treat software as a cost rather than an investment, forcing lenders to cover expenditure on digital applications with an equal amount of capital.

    If expenditure on software, which amounts to roughly half of banks’ total digital investment, were treated in the EU as it is in the U.S. it could free up more than 20 billion euros ($24 billion)in capital this year alone, one banking lobbyist said.

    Many European banks have been slow to invest in adapting to rapid changes in the way consumers use technology for finance, with so-called fintech firms starting to steal market share in a variety of sectors from payments to lending.

    Timing problem with Klarna and possibly other payment providers (Our Umbraco), Rated: A

    There are cases when the authorization callback from Klarna doesn’t get processed until after the user arrives at the confirmation page. The reason is that the callback and the redirect are made almost simultaneously by Klarna, so it’s a bit random which wins.

    Workaround: If currentOrder is null, sleep for 500 ms and try again (GetCurrentFinalizedOrder). Repeat for 10 seconds.

    CrowdExplorer Wins Fintech Award at Digitale Innovations Competition (Crowdfund Insider), Rated: B

    CrowdExplorer, a marketplace for “Crowd-investing”, has won the special prize for “Fintech” at this year’s “Digitale Innovations” competition.

    CrowdExplorer is designed to provide investors with a platform to compare access to the international Crowd Investments. CrowdExplorer has launched with the following four categories: Equity, Real Estate, Loans and P2P lending.

    Index Ventures is coming in force to TechCrunch Disrupt Berlin this December (TechCrunch), Rated: B

    Index Ventures started as a European firm in 1996, but 20 years on, it has a strong presence on both sides of the Atlantic and has backed startups in 39 cities in 24 countries.

    Among well-known Index-backed companies are Dropbox, Slack, Farfetch, Funding Circle, Adyen, Squarespace, Deliveroo, Just Eat, King and Supercell.

    Australia

    Spotcap launches $ 10,000 Fintech Scholarship program (Finder), Rated: AAA

    Online lender Spotcap has this week announced the launch of a Fintech Scholarship program, with $10,000 being awarded to an Australian student attending university in a fintech-related field. The lender launched the program with the aim of supporting local fintech talent and ensuring the longevity of financial innovation in Australia.

    Spotcap is also offering one paid internship placement at its offices in Sydney alongside the program.

    Tech-tock, the tech clock is ticking (Bluenotes), Rated: AAA

    The Bank for International Settlements – known as the ‘central banks’ central bank’ – says the rapid adoption of financial technology or ‘fintech’ and the emergence of new business models pose an increasing challenge to incumbent banks “in almost all the scenarios considered”.

    According to the venture capital analysis group CB Insights non-technology companies now invest more in technology than tech companies.

    In the firm’s recent report into fintech investments by major US banks, six – Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo — have made strategic investments in 30 fintech companies since 2009.

    The key sectors banks are investing in – and this is true across the globe, to differing degrees – are payments, data analytics, personal technology, distributed ledgers and/or digital currencies and peer-to-peer lending.

    India

    Here’s why smart Investors in India should opt for P2P lending (Money Control), Rated: A

    Peer-to-peer loans are the perfect alternative investment instrument for income-seeking investors. It enables you to offer personal loans to borrowers for an array of purposes while eliminating intermediaries such as banks, NBFCs, and unorganised lenders.

    Furthermore, a good P2P lending platform can make available all the relevant information on borrowers to lenders, assisting them in assessing the credit profile of a borrower in an efficient manner. It can provide each lender with a customized dashboard with relevant informatics and data to help make an informed decision.

    As per our research, lenders on our platform can earn gross returns to the tune of 18 to 24 percent p.a on an average by building a diversified borrower portfolio. These returns are not merely comparable, but often preferable to returns from other investment instruments such as mutual funds, stocks, real estate, bank deposits, and gold. Income-seeking investors who specifically want to diversify their investments get good returns at the end of the day. As a rule of thumb, at least 20 percent of total investments should be in alternative investments like art, commodity, P2P lending etc.

    Asia

    Peer to Peer Lender Amartha Partners with Largest State Owned Micro-credit Company in Indonesia (Crowdfund Insider), Rated: AAA

    Peer to peer lender Amartha has formed a partnership with the largest state-owned micro credit guarantee company in Indonesia, Perum Jamkrindo. This follows a similar partnership with Bank Mandiri. Amartha is an online lender designed to connect Micro Businesses and SMEs that seek affordable working capital with investors who want to fund their business based on credit risk and expected return. This is a significant agreement for Amartha. Indonesia is the fourth most populous country in the world and support of small business is vital to the economy.

    Jamkrindo is a state-owned enterprise that has been given a special mandate by the Government to guarantee credit and financing, as well as financial transactions particularly in the SME and micro segments. Jamkrindo is the largest credit guarantee company in Indonesia with total guarantee value of more than Rp 270 Trillion and 8 Million credit.

    Regulatory ‘Sandboxes’ in Asia Can Foster Fintech Innovation (Brink), Rated: AAA

    Two years ago the Financial Conduct Authority (FCA) in the UK launched the first formal global regulatory sandbox.

    There are a few technologies in fintech that haven’t launched but are being tested around the world—these include using bitcoin as a remittance channel, using electronic health records for life insurance underwriting and a financial robo-adviser/wallet that has a holistic view of an individual’s finances.

    Things are altogether different in Asia’s developing economies. First, in these countries, the infrastructure is developing. Apart from India, the concept of digital identity is only evolving in countries such as the Philippines and Indonesia. Moreover, in these countries, bureaucracy is generally a bottleneck since multiple government agencies work in silos with differing incentives.

    Developing Asian countries need to prioritize different issues depending on their economies. For example, remittances are of utmost importance in the Philippines and Bangladesh.

    For example, robo-advisers are a great way to enable the burgeoning middle class to put their savings into equities with a view toward investing and long-term retirement preparation; Thailand has none of those at the moment. There are international brokerages such as interactive brokers that enable robo-advisers to operate in other parts of the world and are licensed in Thailand. However, there are no traditional Thai banks/ brokerages that provide these new services to their consumers. Elsewhere in Asia, Indonesia is a great example of where the regulators have worked with new businesses to create regulations around peer-to-peer (P2P) lending.

    Source: Brink

    Senturia Capital Announces Partnership With Funding Societies to Expand Alternative Financing Access to Malaysian Businesses (Crowdfund Insider), Rated: A

    Private equity fund manager Senturia Capital has reportedly announced a partnership with peer-to-peer financing platform Funding Societies to expand alternative financing access and capital solutions for Malaysian businesses.

    MUFG plans ‘fintech’ unit to focus on cashless settlements, automation (Japan Times), Rated: A

    Mitsubishi UFJ Financial Group Inc. will launch a financial technologies unit Oct. 1 in collaboration with 32 regional banks nationwide.

    MUFG will put up ¥3 billion in capital to start Japan Digital Design Inc., which is expected to develop new services including those for cashless settlements using smartphones at small shops. It will also promote the automation of operations through artificial intelligence.

    Authors:

    George Popescu
    Allen Taylor