Monday September 11th 2016, Daily News Digest

Monday September 11th 2016, Daily News Digest

News Comments Today’s key news in an exhaustingly long news list : US SME borrowers will receive increased regulatory protection starting Nov 12th; Well Fargo and Amazon were called by the CFPB after being contacted by Sen. Brown’s office, and the deal fell apart after 1 month;  large European corporate bonds are also at negative […]

Monday September 11th 2016, Daily News Digest

News Comments

United States

United Kingdom

European Union

News Summary

 

United States

Movement in marketplace lending regulation for small business loans, (Lexology), Rated: A

From 12 November 2016, some businesses will receive the same protection currently available to consumers as unfair contract terms in small business contracts will become prohibited.

Under the new law, a contract term will be unfair if:

  • it would cause a significant imbalance in the parties’ rights and obligations;
  • it is not reasonably necessary to protect the interests of the party who would be advantaged by the term; and
  • it would cause detriment to a party if the term is relied on.

The Government is also considering further protections for small businesses. Earlier this year, the Parliamentary Joint Committee on Corporations and Financial Services conducted an inquiry into the impairment of customer loans. One of the recommendations made as a result of the inquiry was to extend responsible lending obligations and ASIC’s monitoring ability under the National Consumer Credit Protection Act to small business loans. In response to the recommendations, in August the Government directed the Australian Small Business and Family Enterprise Ombudsman to undertake an inquiry into small business lending practices and identify if further reforms are required. The Government is due to receive the final report in November.

Orchard Platform Launches Data Partner Program for Loan Originators, (Email), Rated: AAA

Orchard Platform, today announced the launch of the Orchard Data Partner Program, which includes loan data from a range of leading online lenders. The Orchard Data Partner Program is part of the Orchard for Originators product suite. The suite provides unbiased third-party validation of the internal consistency and quality of an originator’s data. Through the Orchard Data Partner Program, qualifying originators will gain the ability to analyze and compare their loan performance to that of their peers (on an aggregated and anonymized basis), and share their data in a consistent and transparent manner with new and existing capital providers.

The Orchard Data Partner Program establishes a framework for loan originators to share their origination and performance data within the Orchard ecosystem in exchange for detailed asset class analytics. By securely submitting loan and payment data to Orchard — and having Orchard standardize the data — originators have access to a number of unique product offerings, including Education & Insights, Data Integrity, and Reporting & Analytics.  Originators also have access to a centralized data storage facility, which can be opened to current and prospective whole loan buyers and other parties during the due diligence process.  Institutional investors seeking to take a growing position in this market have a desire to utilize this information in a transparent and user-friendly way, and the Orchard Data Partner Program provides originators with a scalable solution that helps investors assess such opportunities.

The Orchard Data Partner Program currently tracks over $33B in loan originations.

Amazon-Wells Fargo Student-Loan Plan Ran Into Political Obstacles, (Wall Street Journal), Rated: AAA

Amazon.com Inc. teamed up with Wells Fargo & Co. in July to promote private student loans as a benefit to members of one of its services. Instead, it walked into a political firestorm.

The Wells Fargo-Amazon partnership was meant to offer interest-rate discounts on private student loans to qualified members of Amazon’s “Prime Student” service.

Ticas called the partnership “a cynical attempt to dupe current students who are eligible for federal student loans with a record low 3.76% fixed interest rate into taking out costly private loans with interest rates currently as high as 13.74%.”

After publicly slamming the Amazon-Wells Fargo Deal, Ticas took its complaints to Capitol Hill, contacting senators such as Elizabeth Warren, Sherrod Brown, Dick Durbin andPatty Murray, who is from Amazon’s home state of Washington, according to a person familiar with the matter.

In early August, Sen. Brown’s office contacted the Consumer Financial Protection Bureau, which has been critical of private student lending, and bank regulator the Office of the Comptroller of the Currency. The senator’s office raised concerns pertaining to potentially deceptive marketing practices in the deal, according to a spokeswoman for the Ohio Democrat.

In particular, the senator’s office questioned marketing of the rate discount, expressing concerns about whether it disclosed that the underlying rate may be much higher than the cost of loans under federal programs, or that the discount was subject to change or cancellation, said the spokeswoman.

By the end of the month, Amazon and Wells Fargo scrapped their arrangement, which had been more than a year in the making.

A spokesman for the CFPB declined to comment on whether the agency contacted the companies after receiving Sen. Brown’s concerns.

The CFPB has been a vocal critic of private student loans since it launched in 2011 for what it has described as the industry’s high default rates.

Wells Fargo is the second-largest private student lender after Sallie Mae and is one of the few large banks that has remained a big player in the sector. It has about $12.5 billion in outstanding private student loan balances.

Now Companies Are Getting Paid to Borrow, (The Wall Street Journal), Rated: A

German consumer-products company Henkel AG and French drugmaker Sanofi SA each sold no-interest bonds at a premium to their face value Tuesday. That means investors are paying more for the bonds than they will get back when the bonds mature in the next few years.

“We’re trying to get our heads around it,” Edward Farley, head of European corporate bonds at PGIM Fixed Income, said of Tuesday’s deals. “It seems pretty bizarre to ask a corporate to look after your money and give you back less in two to three years’ time.”

Roughly €706 billion of eurozone investment-grade corporate bonds traded at negative yields as of Sept. 5, or over 30% of the entire market, according to trading platform Tradeweb, up from roughly 5% of the market in early January.

Tuesday’s deals, however, are among just a handful of corporate offerings that have actually been sold at negative yields. They include offerings of euro-denominated bonds earlier this year by units of British oil giant BPPLC and German auto maker BMW AG, according to Dealogic. Germany’s state rail operator, Deutsche Bahn AG, also has issued euro-denominated bonds at negative yields.

Funding Circle ‘basically halved’ US lending volumes at the start of the year, (Business Insider), Rated: A

Marketplace lender Funding Circle halved its lending volume in the US at this start of the year after spotting underperforming loans in an earlier batch of loans, according to the fintech company’s chief risk officer.

Since publication, Funding Circle has provided the following quote from Sam Hodges, cofounder and US Managing Director of Funding Circle US: “The Q1 2015 portfolio represents approximately 10% of total lending in 2015. The overall portfolio for 2015 has delivered 8% per annum for the whole loan marketplace.”

Jerome Le Luel, who joined the company from Barclays last October, made the disclosure during a press conference at Funding Circle’s London headquarters on Thursday, citing it as an example of the company’s pro-active approach to managing risk and making sure investors who lend money on the platform are properly protected.

Le Luel told journalists: “Last year, when I came in, we looked at the vintages we’d just created and although 2014 was looking fine, the first quarter 2015 vintage for some reason was going off track. Significantly off track. 50%. It was earlier on, 6 months along.”

Le Luel said lending volumes in the UK, by far Funding Circle’s biggest market, have been unaffected and the company is still growing at around 100% year-on-year.

UK-listed VPC Specialty Lending Investments, which invests in peer-to-peer loans, said in a letter to investors last month that it stopped purchasing Funding Circle US loans late in 2015 after its portfolio “continued to substantially underperform our expectations.”

Funding Circle has lent over $2.6 billion globally over its platform. The company has operations in Germany, Spain, and the Netherlands, as well as the UK and US. The company has raised over $270 million from investors including BlackRock, Singapore investment giant Temasek, Scottish investment company Baille Gifford, and a fund owned by billionaire Russian internet entrepreneur Yuri Milner.

Moody’s Expects Residential Mortgage Backed Securities from Marketplace Lenders, (Crowdfunding Insider), Rated: A

Foreshadowing the inevitability for all forms of finance moving online, Moody’s has published a report stating the Residential Mortgage-Backed Securities (RMBS) will soon be issued by marketplace lending platforms. They also believe that current regulatory and securitization frameworks will reduce additional risk with RMBS issued by marketplace lending platform.

Balancing out this opinion, Moody’s says there is a difference between consumer lending and mortgage loans. The existing laws will demand a higher degree of compliance compelling new online entrants to “make significant capital and knowledge investment.” These standards will help maintain online lending quality in the RMBS space.

The Moody’s report is available here.

Escaping The Squeeze: 3 Forces Challenging Mid-Sized Banks And Credit Unions, (The Financial Brand), Rated: A

Squeeze #1: Fintech Startups Carving Out the Convenience Position

Fintech startups are establishing the bar for convenience. Pundits like to say that firms like Uber and Amazon are the ones setting expectations, but I really believe that consumers’ points of references are those within an industry, not across industry lines.

Are these startups making bad lending decisions? Consumers don’t care. All they see is that the process takes a tenth of the time and effort that it does with traditional financial institutions.

Squeeze #2: Merchants are Attacking Traditional Payments Deposits

What’s important, here, is that this represents the new behavior in how consumers manage their money. Paychecks get deposited in a bank account, then some portion of it quickly gets moved to loyalty and closed loop prepaid cards.

Squeeze #3: Megabanks are Winning the Millennial Market

Escaping the Squeeze

Reinvent marketing. A good rule of thumb in banking is that financial institutions spend about one-tenth of one percent of assets on marketing. That means the typical megabank has a marketing budget of $1.3 billion. Do you really think you can out-market that kind of spending? You can’t. You have to use other tactics.

Own the financial health position. Millenials will be moving to the life stage that puts a premium on convenience and into a stage where advice and guidance become more important.

Mobile banking now only trails online banking as consumers’ preferred method, (Mobile Payments Today), Rated: A

This year’s results show a marked increase in mobile banking popularity compared with the association’s 2014 findings, which showed mobile in fourth place. Branch banking and ATMs rounded out the top four spots.

However, when considering the latest results, it is important to note that the new survey was conducted online, while previous years’ surveys were conducted over the phone. This makes a reliable comparison impossible, according to an ABA press release.

Blackmoon: Marketplace Lending Platform of the Future, (Tech.co), Rated: A

Valued at more than $850 billion, this market is still not being fully explored by European alternative finance, which is lagging way behind the United States and the United Kingdom.

Wanting to swim against these tides is Blackmoon, a technological platform that enables institutional investors to directly invest in newly-originated loans issued by balance sheet lenders in a marketplace fashion. This MPLaaS (Marketplace Lending as a Service) has offices in Russia and Cyprus, having recently launched their newest office in the United States.

Investors have been quite successful when using this platform: in the last year, they averaged returns were bigger than 15 percent, and the cumulative turnaround exceeded $13 million. Blackmoon wants to reach $1 billion in cumulative turnaround until the end of 2017, to which the company’s US expansion shall provide a decisive contribute.

CreditEase’s Online Inclusive Finance Becomes Harvard Business School Case Study, (PR Newswire), Rated: A

This is the second time a CreditEase story has been published in Harvard’s case databank since 2014. This makes CreditEase the first ever ChineseFinTech firm to be published twice.

In 2014, Lena G. Goldberg, a professor at HBS, put together CreditEase’s seven-year journey from 2006-2013 into a business case. Subsequently, Tang Ning, the Founder, and CEO of CreditEase, was invited a number of times to Harvard to share his stories in financial innovation.

In January 2016, Professor Michael Chu visited Beijing for field research and conducted in-depth interviews with Tang and his management team.

CreditEase is a leading FinTech company in China. Its majority-owned subsidiary Yirendai (NYSE: YRD), an online consumer finance marketplace, is listed on the New York Stock Exchange.

Takeaway from Finovate and Next Money: Ditch the Humans, (American Banker), Rated: A

The Rise of ‘Regtech’

Technology intended to help companies stay compliant is having its moment.

SME Lending

Marketplace lending might still be trying to figure out its future as an industry, but it succeeded in pushing banks to reconsider how they approach lending.

That’s particularly true in small-business lending, an area that remains one of the more manual (and paper-intensive) areas of the industry.

“If we add a human into banking, we don’t just slow it down to human speed, humans create friction,” King said. “Humans only ever add friction.”

The Impact of Micro-Investing Technology that No One is Talking About, (Dara Albright), Rated: A

Micro-investing technology, coupled with new crowd financing structures made possible by the JOBS Act, enables a small business to cost-effectively and compliantly build a large, impassioned and well-diversified investor base.

Despite the SEC’s implementation of all key components of the JOBS Act, there are many issuers still reluctant to employ these “crowd finance” exemptions. Some express concern that an expansive cap table is too difficult to manage. Others fear that too many small retail investors on the cap table will be an obstacle to obtaining future venture capital financing. Other issuers mistakenly believe that it is easier and less cumbersome to raise capital from a small band of large investors than it is to pool tiny increments from a massive crowd.

Due to advancements in micro-investing technology, many of these apprehensions are unfounded.

Where the 27 Fintech Unicorns Got Their Start, (Equities), Rated: A

United Kingdom

Ex-Lloyds CEO Joins Board of P2P Lender, (Bloomberg), Rated: A

Eric Daniels, the former chief executive officer of Lloyds Banking Group Plc during the 2008 global financial crash, has joined the board of British peer-to-peer lender, Funding Circle Ltd.

The six-year-old lender catering to small businesses is increasingly turning to traditional bankers as it expands into the U.S., Germany, Spain, and the Netherlands. The company, which has arranged $2.5 billion in loans, is also girding for the economic impact of the U.K.’s decision to quit the European Union.

In July, Funding Circle hired Jeremy Bennett, the architect of the U.K.’s toxic-asset insurance program following the crash and a former chief of Nomura Holdings Inc.’s European division, as its chief financial officer. Jerome Le Luel, the onetime chief risk officer at Barclays Plc’s credit-card unit, joined the London-based startup last October to oversee risk management.

He said he will serve on Funding Circle’s risk and audit committees. Daniels will work closely with another one-time bank chief who’s jumped into online lending: Bob Steel, the former CEO of Wachovia Corp. who sold that bank to Wells Fargo & Co. during the crisis. Steel joined Funding Circle’s board in 2014.

Hargreaves Lansdown delays P2P launch until 2017, (Bridging and Commercial), Rated: A

Hargreaves Lansdown has revealed that it expects to launch its peer-to-peer lending operation in 2017.

Hargreaves Lansdown also reported that it had capitalized £1.1m of staff costs relating to the development of the cash deposit and peer-to-peer platforms.

The firm has been helping clients choose and manage investments since 1981 and its latest results showed that profit before tax had increased by 10% on last year.

Fintech: Opportunities For All? – Remarks Given By Victoria Cleland, Chief Cashier, Bank Of England – Given At The 2nd International Workshop P2P Financial Systems 2016, (MondoVisione), Rated:AAA

Complete speech can be found here.

 

Since 2010, more than $50bn has been invested in almost 2,500 FinTech companies. In 2015 alone, the UK alternative finance sector grew by 84%. 5 Over 24 countries are currently investing in DLT with $1.4bn in investments over the past three years. Over 90 central banks are engaged in DLT discussions worldwide and more than 90 corporations have joined blockchain consortia. 80% of banks are predicted to initiate DLT projects by 2017.6

In his recent speech “Enabling the FinTech transformation: Revolution, Restoration, or Reformation?” 7 the Bank of England Governor Mark Carney, set out the ways the Bank is enabling the FinTech transformation:

 widening access to central bank money to non-bank Payment Services Providers;

 being open to providing access to central bank money to new forms of wholesale securities settlement;

 exploring the use of DLT in our core activities;

 partnering with FinTech companies on projects of relevance to our mission;

 calibrating our regulatory approach to FinTech developments.

European Union

French Crowdlending Platform Unilend Receives a €2.5 million Investment from NewAlpha’s FinTech fund, (Crowdfund Insider), Rated: A

Unilend, a pioneer in SME crowdlending in France, announced on September 7 that it has received a €2,5 million investment from NewAlpha Asset Management (NewAlpha).

This is the third investment coming from the venture capital fund dedicated to FinTech and Assurtech that NewAlpha launched in November 2015. Investors in the fund, such as Crédit Mutuel Nord Europe, find in NewAlpha a leading innovation scout and incubator who proactively monitors usage innovation and technology change in areas of finance including banking, insurance, and asset management. NewAlpha has concluded more than 60 strategic partnerships and invested over one billion euros in French and international FinTech and Assurtech firms.

Founded in 2013, Unilend leads retail crowdlending in France with a strong community of 10,600 lenders. It was the first French crowdlender to pass the €20 million mark of funds raised in July this year. The platform is now looking to conquering a larger share of the €90 billion of French SMEs’ financing needs.

Bondora reaches new record-high loan origination of €2.8 mln in Aug 2016, (SMN Weekly), Rated:A

In August, grade C-E loan originations in Estonia took the highest share of 32%. In Finland, 13% of all loans were grade D-F, and in Spain, new originations were primarily in the higher interest grades of E, F, and HR. Overall, interest rates were highest in Spain, followed by Estonia and Finland.

Bondora is a leading Estonia-based P2P lending platform. The platform has facilitated the disburse of more than €66 million. The average Bondora loan is €2,370, but loans range from €500 to €10,000. Bondora also operates a secondary market for P2P loans where investors can buy and sell their existing investments.

Bondora is authorized by the Securities and Exchange Commission (SEC) in the US, the Financial Supervision Authority (FSA) in Estonia, and the Regional State Administrative Agency (RSAA) in Finland.

Kroll Bond Rating Agency (KBRA) is pleased to announce that Ira Powell has been appointed as Chief of Staff and that Mauricio Noé has been hired to build our presence in the European markets, (Email , Kroll Bond Rating Agency), Rated: A

Kroll Bond Rating Agency (KBRA) is pleased to announce that Ira Powell has been appointed as Chief of Staff and that Mauricio Noé has been hired to build our presence in the European markets. In Ira’s new position, he will be taking on a broader management and operating role and will continue to report to Jim Nadler, President and Chief Operating Officer at KBRA. Powell joined KBRA as Chief Credit Officer in early 2015 and has been an integral part of KBRA’s recent success and growth. After receiving his J.D. from Harvard Law School, Ira worked in various positions across Structured Finance before most recently spending 15 years in Goldman Sachs’ investment banking division.

In addition, KBRA has hired 20-year ex- Freshfields, ABN AMRO, and Deutsche Bank veteran Noé to lead its European business. KBRA is in the process of establishing a presence in Europe and expects to be a full service and locally staffed regulated rating agency in the near future. We have been certified by ESMA since March 2013 in accordance with Regulation (EC) No 1060/2009 and are currently establishing a regulated European subsidiary. In the meantime, we continue to conduct a significant amount of business in Europe, predominantly for European clients issuing securities into the US market notably in the Private Placement, Project Finance, and Aircraft space.

Author:

George Popescu

August 16th 2016, Daily News Digest

August 16th 2016, Daily News Digest

News Comments I continue to believe that the P2P market is back in an uptrend : OnDeck, Yirendai and Lending Club stocks are up and there is a lot of demand for securitizations ( Avant, Lending Club, Ernest, etc.). The next battle is going to be regulatory : Madden vs Midland effects, regulators in Washington […]

August 16th 2016, Daily News Digest

News Comments

United States

United Kingdom

  • P2P research firm 4th Way attempts to rate UK p2p platforms. I am afraid it’s a little confusing. I would like to see a clear table of what the rating scale is, what they mean, and then access , for free, the ratings per company. I suggest as a business model that they can charge to get the full report showing the basis of the ratings and their analysis.

Brazil

Australia

China

 

United States

Shares in Yirendai Jump as Chinese P2P Lender Executes on Objectives, ( Crowdfund Insider), Rated: AAA

Yirendai (NYSE:YRD), the publicly traded offshoot of huge P2P lender CreditEase, announced Q2 results last week and the markets liked what they heard. While Yirendai held their earnings call on Wednesday, August 10th, it has taken a few days for the news to sink in.

The shares in YRD were also boosted by a report from Needham & Company that bumped up the price target from $14 to $35.

Yirendai topped expectations by a good amount and delivered solid growth for the quarter as the online lender facilitated RMB 4.5 billion ($683 million) worth of loans, an increase of 118% year-over-year from Q2 2015. According to Dennis Cong, CFO of Yirendai, the quarter also accomplished another milestone by crossing the $3 billion mark in loan originations. Net revenue came in at $110 million – a 140% increase year over year. Guidance for the full year 2016 was also boosted. According to notes from the conference call;

On the conference call, Yihan Fang, Yirendai CEO, reviewed the “positive development of regulation”. Yirendai stated it has been “actively participating in regulation development” something they believe will enhance their leadership position.

Online lenders are ripping higher today — here’s why, (CNBC), Rated: A

Shares of both Lending Club and OnDeck Capital shot up in trading Monday, respectively adding more than 7 percent and more than 3 percent. The moves come on a day when the broader banking sector is edging only slightly higher.

Shares of lenders OnDeck Capital and Lending Club have risen recently, signaling shareholder optimism.

Online lenders, their customers and investors in the companies know: It isn’t demand that counts here, its supply. And the lower-for-longer monetary policies adopted in the U.S. by central bankers play into online lenders’ hands.

There is still plenty more appetite for online lenders’ products, since they often provide capital to borrowers at a rate lower than what they would get from standard credit cards.

“They should be fine growing far into the future at a 25 percent rate,” the source said. “But there are a lot more borrowers than lending capital.”

Avant Secures $ 255 Million Asset-Backed Securitization Led by J.P. Morgan, Credit Suisse and Morgan Stanley and Renews 2 Million Warehouse Facility, ( PR Newswire), Rated: AAA

Online lending platform Avant announced today two closed transactions, including a$255 million 144A asset-backed securitization deal and the renewal of its $392 million warehouse facility held by J.P. Morgan and Credit Suisse.

The three tranche AVNT 2016-C securitization transaction includes Class A, B and C fixed-rate notes that were rated A-, BBB- and BB by Kroll Bond Rating Agency (KBRA). Credit Suisse served as the lead bookrunner with J.P. Morgan and Morgan Stanley serving as joint bookrunners. The ABS deal was strongly received by investors and was significantly oversubscribed. The transaction will provide debt financing for Avant’s core U.S. installment loan business.

To date, more than 500,000 customers have been served worldwide through the Avant platform.

Regulators Renew Interest in Understanding FinTech, (Business2Community), Rated: A

It’s been more than eight years since marketplace lender Lending Club shut down for six months in order to explain their process and platform to the Securities and Exchange Commission.

Part of the reason for the recent interest in FinTech is the mistaken belief that there are currently no laws in place to protect consumers from these new technologies. On the contrary, such firms are not only subject to government oversight but have also worked hard to self-regulate including the formation of the Marketplace Lending Association.

Notably Senators Sherrod Brown and Jeff Merkley recently sent a letter to Fed Chairperson Janet Yellen, Comptroller Thomas Curry, and others requesting more information on what regulators were doing in regards to FinTech. In it the senators said, “These [FinTech] companies are changing financial services, and it is vital that the regulators and Congress understand all the impacts and take actions as appropriate.” This was actually Brown’s third such letter regarding FinTech. Currently the Office of the Comptroller of the Currency (OCC) is in the process of reviewing FinTech regulations and how these companies fit into the current framework.

Congressman Lacy Clay recently alluded to these advantages but also added that the sector must work to do more, saying, “Marketplace lending and FinTech cannot ignore the capital needs of communities of color and women- and minority-owned businesses.”

Two CEOs tell us where alternative lending is headed, (Business Insider), Rated: A

Rob Frohwein, CEO at Kabbage. Kabbage is a US-based small business and consumer lender. The company doesn’t offer a P2P lending marketplace like Lending Club; it originates and holds loans on its books rather than serving as an intermediary between borrowers and investors. “Balance sheet lenders have a more stable source of capital because investors know the return they’re going to get.” Frohwein says that alt lenders can be successful in both good and challenging economies, but that it’s critical firms do not assume past market behavior is indicative of the future. Alt lenders need to have multiple liquidity options in place, even if that means making a trade-off on their balance sheets to achieve such flexibility.

Ron Suber, president at Prosper Marketplace. US-based Prosper offers a P2P marketplace for consumers and closely competes with Lending Club. Suber says that Prosper has no plans to pursue an on balance sheet model.  Suber says that “there is no magic answer,” there are three models in the industry — on balance sheet only, marketplace only, and hybrid — and it’s not clear that one is better than the others. But Suber is confident in Prosper’s marketplace model. “We’ve found investors that have committed to us in the marketplace model and banks who love the ability to work with us in a non-balance sheet format to get the yield and the risk that they require.”

Suber is more optimistic than Frohwein and suspects that the recent slew of bad news is behind the industry. “The insatiable quest for yield around the world is getting even stronger. So more and more pensions, endowments, foundations, and smart money is starting to find the platforms that are institutional, that have enterprise risk solutions, that support securitization.” But while Suber expects profitability to increase for the top platforms, he also expects that the industry will thin out.

RealtyMogul.com Launches Its First Crowdfunded Real Estate Investment Trust, (Realty Mogul), Rated: AAA

MogulREIT I is one of the first such products to launch since the passage of Reg A+, which has opened up the real estate market to more investors than ever. MogulREIT is designed to offer investors distinct advantages:

  • No sales commissions and fees capped at 3% (compared to traditional non-traded REITs, with average total expenses of up to 15%)
  • Access to a diversified pool of curated, pre-vetted commercial investments in cash-flowing properties
  • A minimum investment of $2,500, broadening access to real estate to more retail investors

The launch of the “REIT” marks a new wave of opportunity to invest in real estate. Until recently, private investment markets have been off-limits to the majority of retail investors. However, recent legislation like Regulation A+ and Title III of the JOBS Act has leveled the playing field by allowing non-accredited investors making less than $200,000 per year to access these investment opportunities through online crowdfunding. Through Reg A+, MogulREIT I gives nearly all investors a new entrance to curated and pre-vetted private real estate investing.

Lenny gamifies credit education for millennials, (Lenny), Rated: A

Lenny, the first [Comment: I did not verify this statement of being first, such a statement is always hard to verify.] iOS app to offer credit lines to Millennials, today launched Lenny Points (LPs), an in-app credit education game that offers incentives for users to learn responsible financial behaviors. Users can now accrue LPs to increase their credit line balances and unlock custom offers from bank and credit card partners. The new feature is the first rollout of Lenny’s patent-pending credit education system.

LP rewards users when they achieve specific credit goals on the app such as:

● Making monthly payments in full
● Making monthly payments on-time
● Maintaining a credit utilization ratio under 30% (Learn more)
● An increase in a user’s credit score

Bizfi originates $ 144M + in Financing to Small Businesses in Q2 2016, (BizFi), Rated: A

Today, Bizfi, the premier fintech company with a platform that combines aggregation, funding and a marketplace for small businesses, announced they have originated more than $144M for 3,580+ small businesses in the second quarter of 2016. This is an increase of 25% in year-over-year small business lending originations.

Bizfi’s platform uses APIs to leverage a wide variety of sources to quickly offer loans and other financial products to small businesses. Its technology is strengthened by strategic relationships with more than 45 funding partners, 15 of which are integrated within the platform, including OnDeck (NASDAQ:ONDK), Funding Circle, BHG, Bluevine, Dealstruck and Kabbage. Bizfi is also a direct lender on the platform providing financing to small businesses.

 Small businesses are going to Bizfi.com to access financing directly from Bizfi or the dozens of partners that participate in its marketplace. Several companies that serve small businesses have white-labeled the Bizfi platform in order to provide these businesses with access to SMB financing. In March of this year, Bizfi announced a partnership with Western Independent Bankers (WIB), a trade association with community and regional banks across the Western United States. In July, Bizfi forged a partnership with the National Directory of Registered Tax Return Preparers & Professionals (PTIN). These partnerships provide hundreds of thousands of small business owners across the country with access to financing through the Bizfi platform.

Founded in 2005, Bizfi and its family of companies have provided in excess of $1.7 billion in financing to more than 31,000 small businesses in a wide variety of industries across the United States.

Why Loan Funding And Credit Matter More Than CFO Exit For LendingClub, (Benzinga), Rated: A

LendingClub’s loan origination in the quarter fell to $1.9 billion from $2.8 billion a year ago, but the fact that 15 of its top 20 investors (including Jefferies) returned to the platform may signify some stabilization in the business.

Harralson added that LendingClub’s other positive developments include:

    1. The company beginning to cut expenses.
    2. Additional spend in “saving” the funding base by performing due diligence requests.
    3. The creation of incentive plans for investors to accelerate their activity.
    4. An increase to the rate the platform charges borrows — a move that “shone through in the quarter.”

 

United Kingdom

P2P Lending Research Firm 4th Way Rates UK Platforms, (Crowdfund Insider), Rated: AAA

4thWay, a research and rating firm that wants to be the “Morningstar” of peer to peer lending, has published a list of P2P lenders that have achieved their highest rating of 5/5 stars or “PLUSes”. The 6 plaforms are as follows: Funding Circle, Landbay, Lending Works, Proplend, RateSetter and Zopa.

Source: Crowdfund Insider

4thWay explained their system is based off of “rigorous stress tests carried out on all the platforms using international banking standards – Basel (1)”.  Their ratings seek to indicate whether investors could expect to lose money during a very severe recession. As a risk-adjusted rating, they also take into account interest earned, so they show investors how long it might take to recover from those losses.

Landbay (2) and Proplend (3) received the lowest risk scores. A score of 2 means that stress tests indicate investors will not make any losses in a severe recession even before interest earned is added on. A score of 3 means that losses before interest are modelled at under 2.5%, which is easily recovered by interest earned.

Brazil

Fitch: Brazil Banks to Rethink Digital Strategy as Fintechs Grow, (Yahoo Finance), Rated: A

Brazilian banks face the challenge of competing with companies that are different from their traditional and sometimes rigid business models.

Higher mobile Internet penetration is shifting consumer behavior toward Fintechs as customers move to a digital-only channel. An increasing number of more agile start-up companies (most notably in the peer-to-peer (P2P) lending and digital payment segments) are tapping clients often underserved by traditional banks.

In Brazil, there are around 150 Fintechs.

The Brazilian Central Bank already implemented a set of rules for nonbanking payment institutions and payment arrangers in 2013, but some rules are still not clear. Regulation for P2P lending is still lacking.

Fintechs will always have an advantage by being more agile and offering more customized and convenience alternatives.

Australia

OnDeck Australia launches free credit score service for small business, (PR Wire), Rated: A

The service, which is 100 percent online and free, will give small business owners access to a clearer picture of their financial situation and eligibility for a business loan.

The data for the Know Your Score website is provided by credit bureau Veda. To apply, small businesses simply enter their details and receive the free credit score as soon as the application has been submitted.

SocietyOne chief Jason Yetton says lending jumps tenfold, (The Sydney Morning Herald), Rated: A

Peer-to-peer lender SocietyOne says its new personal lending surged tenfold in the past year, as yield-hungry investors try to grab some of the high returns banks enjoy from consumer finance.

SocietyOne chief executive Jason Yetton, a former senior Westpac banker, said on Tuesday that since the beginning of this year, the business had arranged $50 million of personal loans on its online platform.

This was nearly double the $26 million of new lending in the December half of last year, and 10 times the $5 million from the corresponding period of 2015.

As a result of this growth, Mr Yetton said SocietyOne’s total portfolio of outstanding personal loans was almost $100 million. This is about 0.5 per cent of the $20 billion personal loan market.

P2P lenders such as SocietyOne and rival firm RateSetter operate by offering borrowers lower interest rates than banks, while also delivering high returns to investors, who take on the credit risk and fund the loans directly.

SocietyOne, which has investors including Westpac and companies owned by Kerry Stokes, Lachlan Murdoch and James Packer, only accepts money from institutional and sophisticated investors, and Mr Yetton said it had created a “community of funders” which included various customer-owned lenders.

While record low interest rates may be helping to attract investors to P2P lending platforms, some senior executives in banks have argued the P2P businesses may struggle if interest rates rise, or if more borrowers fail to repay loans.

Mr Yetton, who was hired in March, is aiming to distribute SocietyOne’s loans to a much wider range of borrowers – it has so far lent to around 5000 borrowers, with an average loan size of $20,000.

China

P2P lending platforms tapping overseas markets, ( China Economic Net), Rated: A

Domestic P2P lending platforms have started to tap overseas markets.

Dianrong.com announced the cooperation with Hanwha Group at the end of last year; Maizijf.com has set up the branch office in Boston, USA; and in April, mmtvip.com set up the subsidiary in Los Angeles, USA.

It is known that domestic P2P lending platforms basically choose to cooperate with overseas institutions during overseas market development, to expand overseas market in the form of Joint Venture Company.

It is noteworthy that among a few numbers of platforms expanding into the overseas markets, both Maizijf.com and mmtvip.com choose to penetrate into the overseas market with student loan as the entry point.

According to data, there were more than 300000 Chinese students in the USA in 2014, many of whom cannot enjoy American student loan financial services. Therefore, some domestic P2P lending platforms think highly of loan needs of overseas students.

Meanwhile, at present Maizijf.com and mmtvip.com set the highest credit limit of USD 100,000 to overseas Chinese students.

“Due to American requirements for online loan platform business license and relevant supervisions, it is difficult for domestic P2P lending platforms to develop American local capital and lending business targeting American students shall be limited in many legal aspects,” said Zhang Yexia.

Author:

George Popescu