Thursday March 29 2018, Daily News Digest

Thursday March 29 2018, Daily News Digest

News Comments Today’s main news: SoFi changes wealth portfolios. Silver Lake buys $500M of Credit Karma stock. Half of Zopa deposits are into IFISA accounts. Landbay considers IPO, opens Seedrs campaign. Wonga South Africa enters personal lending. Today’s main analysis: 7 reasons to hate the long bond (A GREAT READ). Today’s thought-provoking articles: The benefits of additional data from […]

Thursday March 29 2018, Daily News Digest

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News Summary

United States

SoFi Announces Changes to Wealth Portfolios (Crowdfund Insider), Rated: AAA

On Tuesday, online lending platform SoFi announced it was making changes to wealth portfolios. SoFi made changes in all five risk strategies – Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive.


“Our lowest risk portfolio invests heavily in bonds, which may be appropriate for someone investing with a lower tolerance for risk or a shorter time horizon, like under three years. With bonds, there are three options: Short-term bonds are considered lower-risk/lower-reward, intermediate-term bonds are considered moderate-risk/moderate-reward, and long-term bonds are considered higher-risk/higher-reward.

Source Crowdfund Insider

Moderately Conservative

“The Moderately Conservative strategy is also weighted toward short-term bonds, so it’s a fairly cautious approach. Historically, we’ve selected both investment-grade bonds (lower risk, lower interest rate) and high-yield bonds (higher risk, higher interest rate). Now, we’re reducing some of that high-yield exposure and increasing the amount of investment-grade bonds to lower the overall risk of this portfolio. This strategy also invests a bit in the stock market. Our approach here (and in other strategies) is to balance our investments across the globe. We’re putting a little less in Emerging Markets, less in U.S. Markets, and more in Developed Markets outside the U.S. (like Japan, parts of Europe, and Canada). We believe that these new allocations will give this portfolio a relatively better chance to grow.”

Source Crowdfund Insider

Silver Lake Buys $ 500 Million Stake in Credit Karma (Fintech Collective), Rated: AAA

San Francisco based Credit Karma has received $500m in a secondary offering from Silver Lake, valuing the company at $4b.

Credit Karma isn’t receiving any proceeds or issuing any new shares as part of the transaction, Chief Executive Kenneth Lin said in an interview. Rather, Silver Lake is amassing common shares from earlier investors and employees in a so-called secondary sale that values the 11-year-old company at roughly $4 billion, according to a person familiar with the matter.

How You May Benefit from Additional Data When Reviewing Subprime Applicants (Lendit), Rated: AAA

Nearly 80 million adults have what is considered subprime credit, according to Experian data.

The takeaway: while Darrell has a higher biweekly income than Nancy, he is much less stable in his borrowing history. And, while Nancy has been late on a few payments, she has a proven track record of ultimately satisfying her debts.

These examples illustrate why lenders hoping to help consumers in the growing nonprime and subprime markets stand to benefit from alternative credit data.

Sophisticated Investors May Be Harming Fintech Lending Platforms (Harvard Business School), Rated: AAA

But lending platforms, also called peer-to-peer lending, must address a major design problem: Sophisticated investors have been gaming the system by applying specialized screening tools to scoop up the choicest loans with the lowest default rates, leaving less experienced investors with less attractive loans to choose from. After these lower-grade loans perform poorly—that is, the borrowers fall into arrears with payments or default altogether—these less savvy investors may flee the platform.

Can lending platforms make their systems more equitable for all investors?

In their new working paper Marketplace Lending: A New Banking Paradigm? Vallée and Yao Zeng, an assistant professor of finance at the University of Washington, address these issues from the perspective of what platforms can do to level the investing playing field.

The key variable to control, Vallée and Zeng found, is the amount of information available about loan applicants. When platforms share a lot of information about applicants with potential investors—data such as income, debt level, and credit history, and even whether the loan is financing a wedding, for instance—experienced investors can precisely pin down the safest loans to back.

The researchers looked at all transactions executed by LendingRobot users for a three-year period between January 2014 and February 2017, including more than $120 million invested on the two major lending platforms, LendingClub and Prosper. They found that using the LendingRobot screening model paid off by reducing the average loan default rate by more than 20 percent compared to the average level on the platforms.

Bond Investors Should Double Down On Due Diligence As Yields Rise (Seeking Alpha), Rated: AAA

Appealing to this new financial demographic is the idea behind such companies as Upstart and Social Finance Inc. (commonly known as SoFi). Since 2013, SoFi has securitized about $9.5 billion in loans, while Upstart last year packaged $338 million of personal loans into two deals.

SoFi targets top college graduates – Harvard lawyers, Yale doctors, Wharton bankers – people whose outstanding student-loan balances match their outstanding career potential. For SoFi, this cohort is a good bet to provide lower-cost loans that allow the buyers to de-lever faster and hopefully return for car loans, mortgages and wealth management services such as college and retirement savings plans. Upstart took the idea a stage further by widening the customer base beyond the Ivy League.

Kabbage Data Shows Mobile is the Future for Small Business Lending (Lend Academy), Rated: A

Mobile devices have changed consumer expectations. People now expect that you can have access to anything you might need right from your mobile device. While this has historically been the case for consumer financial apps, Kabbage released data today on small businesses which shows they too are leveraging mobile to better manage their business.

They analyzed behavior of almost 150,000 small business and found that between April 2014 and February 2018 loans accessed through mobile increased by more than 360 percent. Dollars accessed through mobile increased over 1,220 percent.

Petal, WebBank to launch card for ‘credit invisibles’ (American Banker), Rated: A

The fintech startup Petal announced a partnership Wednesday with WebBank to officially launch a credit card for the estimated 65 million people who have insufficient credit history to qualify for a traditional credit card.

The CFPB has identified 45 million people who have no credit score,” Gross said. “Experian and others have indicated that there are 50 million more people that are thin file people and have a have a credit score that’s not accurate because of limited data at the credit bureau. Andreessen Horwitz has estimated 90 million people are misscored — that’s a third of the U.S. population.

Property Coin ICO: A Securities Token for a Real Estate Portfolio (Crowdfund Insider), Rated: A

Aperture is a new platform that is focusing on the real estate marketplace putting a new spin on property crowdfunding. While not the first blockchain based real estate startup, Property Coin (PCX) is in the midst of a security token offering that is claiming first when it comes to crypto denominated securitization / structured real estate portfolio using distributed ledger technology.

Operating in the fix and flip space, Aperture says they have delivered over “50% un-levered IRRs so far – a claim that is pretty impressive.

In aggregate, their team claims they have been involved in the closing of over $150 billion of real estate financing transactions and have originated over $10 billion in mortgage loans, having worked for some of the largest investment banks in the world.

A mortgage in 30 minutes? Fintech says it’s coming (American Banker), Rated: A

Lenda claims to make the fastest mortgages out there — currently two weeks start to finish, with an eventual goal of 30 minutes in a nearly all-digital process.

Launched in 2014, Lenda has made $200 million worth of mortgages, is licensed in 12 states and plans to expand to 12 more later this year. Jason van den Brand, its co-founder and CEO, said that despite other big players, the mortgage arena is ripe for further disruption.

How Lenda works

Lenda lets the consumer log in to their bank account from its portal to retrieve the necessary three months of bank statements. (They could also download the statements from their Dropbox, Box or Google Drive account and then upload them to Lenda.)

Income verification and employment verification are automated where possible. To be sure, some employers don’t share employment data with databases used by lenders. In such cases employment verification needs to be manual.

Consumers ready for a digital mortgage

Consumers, meanwhile, seem to be increasingly ready for digital mortgages. According to a Harris poll commissioned by Fiserv, 69% of consumers already research loan options online and 68% said they review loan documents online. Among millennials, 48% said they would be comfortable researching loan options on their smartphone.

New small businesses have a tough time in these 10 cities, report says (Fast Company), Rated: A

Specifically, it looked at businesses that earn an annual revenue of less than $7,500,000, have been in business for at least six months and no longer than 60 months, and submitted a loan query to LendingTree between Jan. 1, 2016, and Jan. 23, 2018. The self-reported data was then limited to the 50 most populous metropolitan areas, and with that, a list was born.

Here are the 10 worst cities, per LendingTree:

  1. Cincinnati
  2. Rochester, N.Y.
  3. Philadelphia
  4. Louisville, Ky.
  5. Birmingham, Ala.
  6. Detroit
  7. Harrisburg, Pa.
  8. New Orleans
  9. Virginia Beach, Va.
  10. Chicago

Here are the 10 best cities, per LendingTree:

  1. Sacramento, Calif.
  2. Grand Rapids, Mich.
  3. Portland, Ore.
  4. Knoxville, Tenn.
  5. Denver
  6. Seattle
  7. Tulsa, Okla.
  8. Albuquerque, N.M.
  9. Fresno, Calif.
  10. Los Angeles

With No Movement On Lending Reforms, Catholic Group Starts Microloan Program (WOSU), Rated: A

Faced with watching some parishioners struggle to pay back high-interest loans, the Society of St. Vincent de Paul Diocese of Columbus launched its own microloan program in Licking County in late 2016. Since then, it’s expanded to four other counties.

The non-profit organization has partnered with a local credit union to offer loans of up to $500. Borrowers then make monthly payments for 12 to 15 months to pay off loans that carry an interest rate of 3 percent.

That’s a fraction of the rate for loans from payday lending businesses, where interest can exceed 600 percent.

The Catholic microloan program is open to people of all faiths, and Zabloudil says about 75 percent of loan recipients have made good on their payments. Part of the reason for that, Zabloudil says, is they work to ensure borrowers don’t get in over their head.

The program currently offers loan to people from Franklin, Delaware, Fairfield, Knox, Licking and Ross Counties. Zabloudil hopes to eventually take the program to the 17 other counties served by the Roman Catholic Diocese of Columbus.




Lennar Corp. plans to start using mortgage-application technology from San Francisco, Calif.-based startup Blend in an effort to attract younger buyers. By applying for a mortgage online or on a phone, consumers can shave 10 days off the process, executives say. The Wall Street Journal’s Laura Kusisto reports:

Making it easier for those buyers to get mortgages could help Lennar with attracting millennials, a critical group of home buyers that have been put off from buying new homes by the high prices and long commute times to many communities. An additional obstacle on the margins for younger home buyers is the complicated process of applying for a mortgage.

GoKapital Launches Its Nationwide Business Loans Affiliate Program (PR News), Rated: B

GoKapital, an online lender from Miami Florida, has launched an affiliate program that will allow bloggers, webmasters, and digital marketers to earn commissions when they refer new customers to one of their business loan programs.

GoKapital’s Affiliate program highlights:

  • Business loans ranging from $10,000 to $1,000,000 for every industry. Servicing businesses in all 50 states, Canada, and Puerto Rico
  • 24-hour funding with 95% approval rate
  • Dedicated support and integration manager

Marshall Lux Joins Marlette Funding as an Advisor (Business Wire), Rated: B

Marlette Funding, LLC, owner of the Best Egg personal loan platform, today announced the addition of Marshall Lux as an Advisor to the Board and Company.

Marshall Lux has been a Financial Services consultant and practitioner for 30 years. He began his career at McKinsey where he served all manner of financial service firms across a variety of subsectors and functional areas. Marshall led McKinsey’s and BCG’s private equity practice. He has extensive relationships across PE Firms.

Seven banks in seven months select Jack Henry’s Core Director platform (Fintech Futures), Rated: B

Jack Henry & Associates’ banking division is in seventh heaven with the revelation that seven US community banks within the last seven months have selected to implement its Core Director processing platform.

The platform can be installed in-house or implemented through JHA OutLink Processing Services, Jack Henry Banking’s outsourced offering.

The firm names two of the banks – California International Bank and the State Bank of Bottineau, located in North Dakota. FinTech Futures has contacted Jack Henry for the other five names but they won’t be revealed yet.

United Kingdom

Accounts promising rates up to 15% are drawing in savers – with 12,000 at Zopa alone (This Is Money), Rated: AAA

Half of all customer deposits at peer-to-peer lender Zopa since the start of the year have come via its Innovative Finance Isa, despite only launching the tax-free accounts in June 2017, This is Money can reveal.

Zopa, which was the first to offer the new style Isa product, said 12,000 customers have opened one of its two Isas, which offer up to 4.6 per cent interest.

For savers with a cash Isa, the FSCS offers protection of up to £85,000 per banking licence. This means that if something goes wrong with the bank or building society where you have deposited your money, you will never lose the first £85,000.

Meanwhile for those with a stocks and shares Isa, the first £50,000 is protected, as long as the provider belongs to the scheme.

Landbay opens Seedrs round to new investors as chief eyes IPO (Peer2Peer Finance), Rated: AAA

LANDBAY has announced that it is opening its latest equity funding round to new investors on Seedrs, as its chief executive unveils the company’s flotation ambitions.

The peer-to-peer lender, which specialises in buy-to-let mortgages, has already raised its target of £1.25m from this funding round but it has been opened up again to new investors.

Landbay recently hit the £100m cumulative lending milestone, with over 25 per cent of that amount having been originated in the last three months.

LendingCrowd raises $ 2.8 mln (PE Hub), Rated: A

LendingCrowd said March 28 that it secured another 2 million pounds ($2.8 million) in funding led by Equity Gap. Also participating were a number of private investors from Scotland’s entrepreneurial and finance scene and the Scottish Investment Bank. LendingCrowd, of Edinburgh, Scotland provides a peer to peer lending platform.

Credit unions and the tech revolution: Lessons from the Abcul conference (Coop News), Rated: A

But technology also presents opportunities to reach new markets – making it vital that credit unions keep up with new developments, delegates at this year’s conference of the Association of British Credit Unions (Abcul) were told.

Pitching his fintech to the conference, he said it could offer new possibilities to the sector, such as partnering with the Post Office to offer branch facilities where members can deposit and withdraw money.

“Mobile use is continuing to shoot up. 78% of the UK population is using a smartphone two-four hours a day – and fastest growth is the over -55s. In the South Manchester Credit Union 65% of traffic comes from mobile devices. It’s something we’ve got to accept.”

Colchester is top area for buy-to-let (Mortgage Introducer), Rated: A

Colchester in Essex is the top area to invest in buy-to-let based on capital growth, transaction volumes, rental yield and rental price growth, LendInvest research shows.

In Colchester prices are rising by 9.98% per year, rental growth is increasing by 3.41%, transaction volumes are rising by 2.79% and yields stand at 3.71%.

Despite topping LendInvest’s list Colchester is far from the best in terms of yield, with Manchester offering returns of 5.42%.

The worst area to invest is in East Central London, where capital gains are falling by 3.76%, rental price growth is sliding by 1.1% and transaction volume growth is down 1.73% year-on-year. Despite all of these factors landlords in that area still make a yield of 2.9%.

Scott Wright: Will RBS fund lead to better deal for SMEs? (Herald Scotland), Rated: A

In a growing economy there is a balance to be struck between ensuring banks are well-capitalised and providing the credit private companies need to expand. That much is recognised by leading business figures such as Mike Welch and Jim McColl, with the latter planning to launch his own bank to help address the funding issues.

In that context, the £425 million Royal Bank of Scotland has set aside to boost competition in the banking sector for SMEs is to be welcomed.

And it is encouraging that Nationwide said it would direct that funding to the UK’s 5.7 million smaller and micro businesses rather than the big corporates, given that is arguably firms of this size which have suffered most from the tightening of bank lending. It is also SMEs, broadly speaking, which have been caught up in the shocking mistreatment scandals that have to occurred at certain banks since the financial crisis.

Cryptocurrencies yet to convince the savvy investor – Assetz Capital (Finextra), Rated: B

Investors in the Assetz Capital platform are yet to be convinced by cryptocurrencies, with just 16% seeing them as worthwhile investments.

The peer-to-peer lending platform canvassed the views of its investors in the Q1 Assetz Capital Investor Barometer. 43% believe the entire market is on the brink of collapse, while 40% feel cryptocurrencies are still too immature at present with significant risks attached. 14% feel it is a worthwhile investment but only in moderation, with just 2% thinking it is the future of investments.

The doors are open to MBAs in finance, including fintech, wealth management and venture capital (Find MBA), Rated: B

One route into the fintech sector is the Spotcap Fellowship, which provides up to £8,000 towards the cost of an MBA and a path to working at the Berlin-based online lender.

Niels Turfboer, UK managing director of Spotcap and an IE Business School MBA graduate, says he created the scholarship to address a talent shortage. A survey by recruitment website Indeed found that 20 percent of top fintech job vacancies were left unfilled after 60 days.




CreditEase FinTech Investment Fund Invests in Branch International (PR Newswire), Rated: AAA

CreditEase, a Beijing-based leading FinTech conglomerate in China, announced that its venture fund, CreditEase FinTech Investment Fund (“CEFIF”), recently joined a group of prestigious investors to participate in the Series B investment round of $70 million in Branch International. Other strategic investors in this round of financing include International Finance Corporation (IFC), Andreessen Horowitz, Trinity Ventures and Victory Park.

According to the report recently published by CreditEase, jointly with IFC and Stanford Business School, there are over two billion adults globally in the emerging markets who do not have access to basic financial services (click here to download the Financial Inclusion Report). On a daily basis, Branch processes tens of thousands of loans, in amounts ranging from $2.50 to $500, and expects its total loan origination to exceed $250 million in 2018. Recently entered into the Nigerian market, Branch is currently growing 50 percent month-over-month within that country and 20% month-over-month overall.

European Union

How Fintech is Fixing Broken Credit (Lend Academy), Rated: AAA

For millions of people, a lack of access to credit is just another part of life. Yet, without this access, it can be incredibly difficult for businesses and customers to connect with each other. In fact, according to The World Bank, despite a 20% increase between 2011 and 2014 in the number of adults with access to formal financial services worldwide, an expected 2 billion adults worldwide are unbanked. In addition, some 200 million businesses are excluded from the formal financial system.

The problem is particularly prolific in high growth markets; with a 2015 PwC report putting India’s unbanked population at 233 million (that’s nearly every 1 in 6 people). In South East Asia, a further 264 million people are without access to credit (including a staggering 80% of Cambodians). And even beyond the individuals affected, some 200 million businesses are excluded from the formal financial system.

A key way that we are achieving this at PayU is through our €110 million investment in German fintech company Kreditech, a leading technology group for digital consumer credit using machine-learning based underwriting. With traditional credit models simply not catering to large sections of the population, collaborative partnership can be instrumental in finding new ways to offer innovative solutions to the huge problem at hand.


Seven reasons to hate the long bond (INTL FCStone Email), Rated: AAA

The price of long-term treasuries will fall because:
1 – The global savings glut is turning into a global savings squeeze
2 – Just look at a chart of Treasury yields
3 – Speculative traders have a massive one-way bet on curve-flattening
4 – China could (should?) sell long-term Treasuries to teach Trump a lesson
5 – The Federal Reserve is reducing the size and duration of its holdings: it still has $526 bn of long bonds to sell!
6 – U.S. public debt is abnormally short: deficit-driven issuance will hit the long end disproportionately
7 – Forward guidance artificially compressed term premia: economic uncertainty will make them rise again

Source: INTL FCStone
Source: INTL FCStone

Chinese savings are unlikely to support anymore U.S. bonds for at least five reasons:
• The disappearance of China’s trade surpluses: China’s trade surplus has fallen from 10% of GDP in 2007 to 1% last year. China may become a deficit country next year.
• The Belt and Road initiative: China has found much better uses for its savings than financing the U.S. military and boomers’ Social Security claims. Going forward, China’s mountains of savings will build the infrastructure of Central Asia, the horn of Africa, Russia, Iran, Southeast Asia, and Eastern Europe, rather than flood the U.S. Treasury market.
• American protectionism: In the unlikely event that Trump’s bid to reduce the U.S.-China trade deficit by $100 billion next year is successful, China will have $100 billion less to invest in the U.S. Treasury market.
• China’s retaliation against American protectionism: Despite Trump’s claim that “trade wars are easy to win”, other countries have national interests too. China also has industries to protect, jobs to defend, and face to maintain. China is sitting on $3.1 trillion in currency reserves: according to the U.S. Treasury, China holds about $1.2 trillion in U.S. national debt (that just includes official accounts).

Source: INTL FCStone


Fintech and Property: What You Need to Know (The Urban Developer), Rated: A

Fintech is disrupting the global finance industry, to the benefit of both businesses and consumers.

Advancements in communication and information technology has enabled the rapid growth of technology platforms that provide transactional services. Online payment systems, debt platforms and online exchanges allow companies to better manage their clients and use the data collected to provide the best possible service.

What Fintech products will the property industry gain the most benefit from?

Data Analytics: Using information and data from Fintech platforms will help advisors and agents to make informed decisions for their clients. They will be able to get a better understanding of the client’s overall position, while also increasing the level of personalisation for the client.


Raising Capital: There are a number of avenues available for raising capital and the digitalisation of fundraising will open up new opportunities. Using Fintech products will not only speed up the process, but it will also open the door for reaching new investors through a number of online platforms.


Nuo Bank, India’s First Decentralized Cryptocurrency Bank, Raises $ 250,000 from Directors of PayU India (Crypto News), Rated: AAA

Despite government’s discouraging stance towards cryptocurrencies India’s crypto startups are getting their deserved thumbs-up from the industry and investors. One such promising startup known as Nuo Bank just raised about Rs. 1.6 crore ($250,000) from the CEO and MD of PayU India within a week of its launch, which shows the kind of trust that both PayU directors have in its growth potential.

Next, like other major cryptocurrency companies Nuo bank will also have its own coin. It’s going to issue 200 million Nuo tokens to customers, which represent 20% of its 1 billion token supply. The value of these tokens will be determined from smart contracts, and the smart contracts stipulate that 25% of Nuo Bank’s revenue should be kept reserved for these tokens.

P2Ps are in a race to build 1st blockchain platform here (The Economic Times), Rated: A

From established players like Faircent to early stage companies like India Money Mart, Paisadukaan and OML P2P, all are trying to develop the industry’s first blockchain platform and also share data about lending transactions between them in order to mitigate frauds.

All these companies have applied and are waiting for the NBFC P2P licence from the Reserve Bank of India.

Faircent, the country’s largest P2P platform has committed upwards of $1 million for this kind of a solution which they feel will help them reap huge benefits when traction on these platforms gains.



Fintech startup takes receivables platform to blockchain (Global Trade Review), Rated: A

The Singapore-based firm forecasts a US$2tn market opportunity in its use of blockchain to provide a secure invoice factoring solution using its customised cryptocurrency. With its token pre-sale set to end on April 8, the group’s initial coin offering will launch on April 9.

Acudeen Technologies brands its platform as “an inclusive environment for small businesses who are having a hard time getting financing using traditional means”.


Wonga South Africa Enters the Personal Loans Market (The African Exponent), Rated: AAA

Fintech craze changing face of lending (Business Daily), Rated: A

The numbers are in and the jury is out. The world over the fintech craze that underpins lending outside the traditional banking ecosystem continues unabated.

Whether the channel of consumption is online, mobile or the services packaged differently such as payday lending and layaway financing, investments continue to pour in chasing opportunities in a vertical that is quickly getting overcrowded with little to no service differentiation and a continued insistence on insight wizardry riding off copious amounts of personal data ingested.

Will technology save independent financial advice? (Money Web), Rated: B

Essentially technology can do two things for the advisor. It can significantly reduce the costs of administration and record keeping, while also making these processes simpler and more efficient.

“The whole market place is talking about digital – the rewiring of the investor and the investment advisor,” Wilson says.


George Popescu
Allen Taylor

Wenesday March 1 2017, Daily News Digest

PayNet small business outlook

News Comments Today’s main news: BlueVine secures $75M financing from Fortress.  FCA tells P2P lenders to stop lending to each other. Australian FinTech investments hit $656M in 2016. Today’s main analysis:  U.S. small business credit outlook. Today’s thought-provoking articles: The rise of the cross-country landlord. Australian FinTech investments hit $656M in 2016. Trends that can put Indian crowdfunding […]

PayNet small business outlook

News Comments

United States

United Kingdom

European Union



News Summary

United States

Silver Lake’s SoFi Deal Shows Appeal of Upscale Online Lending (Institutional Investor), Rated: AAA

Private equity firm Silver Lake and Japanese asset manager SoftBank Group were part of a group that this month agreed to invest $500 million in Social Finance, or SoFi, an online lender that started as a refinancer for student loans and is rapidly morphing into a private bank for Silicon Valley’s newest recruits. The latest round of funding created a $4 billion valuation for the company, according to the Wall Street Journal.

SoFi’s model diverges from other online lenders in a few significant ways. Rather than ignoring traditional financing structures entirely, SoFi melds them with technology to create a high-tech private bank for borrowers with Silicon Valley sensibilities and high salaries. Borrowers who work with SoFi to refinance student debt are offered career counseling, mortgages, and wealth management services as a way to keep them with the company.

“SoFi&’s issuance in 2016 had an average FICO of 777, so that tends to equate to good performance,” said Roelof Slump, a New York-based managing director at Fitch.

It’s no surprise then, that high-profile private equity names are lining up as investors. But it’s also different from the egalitarian hymnal that fintech largely sings from.

Mass market lending platforms tend to bring in borrowers through a somewhat generalist approach: They rely on direct mail, web site ads, and other forms of advertising to get applicants. SoFi, by contrast, is crafting a proprietary deal flow network from its affluent user base.

(TheStreet), Rated: AAA

A dismal fourth quarter at Lending Club  (LC) and On Deck Capital  (ONDK)  highlights the risks for publicly traded companies that make high-interest loans to riskier borrowers.

Regulatory scrutiny, delinquent customers and investor satisfaction pose conflicting challenges for such companies, which are part of the so-called fintech industry that encompasses more than 4,000 firms in the U.S. and the U.K. Investment in such businesses has climbed to $24 billion from $1.8 billion over the past five years, according to the Office of the Comptroller of the Currency, a U.S. regulator.

While Laplanche’s successor is leading a recovery effort that includes stricter internal controls, Lending Club’s loan originations dropped 23% to $1.99 billion during the fourth quarter. The company reported an adjusted loss of 2 cents a share for the period, its third straight quarterly loss.

As investors return to Lending Club’s platform, many want “higher credit quality grades” and are shifting away from the riskier grades that typically have higher margins.

On Deck, meanwhile, reported its fifth consecutive quarterly loss, of an adjusted 44 cents a share, after the firm added additional reserves for potential loan losses of $19 million. That brought total reserves to $55.7 million, up 53%, the company said.

Still, fourth-quarter loan originations climbed 21% year-over-year to $81.8 million.

Both San Fransisco-based Lending Club and New York-based On Deck had initial public offerings in 2014. Lending Club’s shares fell 4.3% to $5.34 on Tuesday, while On Deck dropped 7.3% to $5.34.

U.S. Small Business Credit Outlook (PayNet Email), Rated: AAA

While the mood among the nation’s entrepreneurs has generally brightened since the November election, many uncertainties remain about what lies behind the next door in the form of policies. Our impression is that, before small businesses celebrate, they want to see the substance and the fine print on initiatives such as tax reform, infrastructure spending, foreign trade and government regulation.

Our latest data confirms this uncertainty. A combination of slightly rising delinquencies, developments in higher-risk sectors, and a more robust macro-economic climate suggest that small-business defaults are set to rise from the all-time lows posted in 2015-16. The good news is that we expect defaults to remain within the range associated with the expansionary phase of the business cycle.

Download a copy today of the most recent quarterly

Ghostbed offers Klarna financing option (Furniture Today), Rated: A

Klarna ( ), one of the world’s most innovative payment providers, is partnering with GhostBed ( ), a leading online mattress e-tailer, to provide an instant financing solution for GhostBed customers.

Made in America and purchased via the website, GhostBed prices are among the most competitive in the mattress in a box space, starting at $495 . The full product line features complimentary items that complete the sleep experience, including an all-wood foundation and the popular real-time cooling GhostPillow.

At checkout, GhostBed customers now have additional options which have been seamlessly integrated into the e-tailer’s checkout system. In addition to using a credit or debit card, they can choose from two Klarna financing options—planned payments over six to 36 month periods with a special promotional rate, or flexible month-to-month payments.

Competition heats up as Goldman Sachs enters the personal loan market (Times Leader), Rated: A

Marcus by Goldman Sachs is slated to be a formidable opponent to major online marketplace lenders for a variety of reasons. First and foremost, Marcus loans are funded out of the coffers of Goldman Sachs’ reserves; as a bank, the firm has a substantial amount held in deposit accounts from its customers which it will use to fund its new personal loan offerings. The majority of marketplace lenders currently available to consumers fund loans through the crowd – outside investors who use personal money to fund individual loan requests. Since Marcus loans are funded through Goldman’s deposit accounts, individual borrowers have a great chance of being approved for a loan so long as other underwriting criteria, like credit score and income, are met.

Another differentiating factor of Marcus loans is the fee structure for borrowers. Unlike alternative lenders, Marcus loans tout no hidden or glaring charges for origination or funding, late payments, or prepayment of a loan. A number of marketplace lenders assess fees for each of these activities, making the total cost of borrowing more involved than the cost of interest alone. Marcus loans also allow for tailored due dates and, like most other personal loan solutions, a fixed repayment amount due each month.

Lendit’s Cofounder Jason Jones Talks Fintech Trends (Forbes), Rated: A

Next week, more than 5,000 attendees, 350 thought leaders and more than 2,400 companies will participate in the fourth annual NYC conference.

Jones: Our strength is in our community, and the education. We are operators in our industry and we do what we can to help our community network and learn.

The first year the focus was online lending, the second year we added real estate, the third year digital wealth, and this year we now have tracks focused on insurtech, financial inclusion and banking technology.

Jones: Payments is the area we need to grow in the most, but in the future we will add speakers from payments companies and develop specific tracks into the program.

Jones: We don’t have Hackathons at LendIt, but we have a great startup competition: PitchIt, which we co-host with 500 Startups. This year we had 260 companies apply. Out of the 260 applications, we will choose eight startup finalists that will pitch themselves on stage at the conference to a team of investor judges.

Jones: Personal Financial Management + Messaging is a killer combination. We like the customer engagement on the front end combined with distribution on the back end – it is the Trojan horse of financial services.

Blockchain smart contracts used in the enterprise for things like trade finance and marketplaces will be a game changer.  This will be a big area of focus at LendIt this year.

Our conference this year is going to be dominated by artificial intelligence. Computing is extending beyond the desktop and natural language processing is finally taking center stage.

Jones: In the past, real estate was the least attended – this year it’s totally going to flip.  Companies like Point, Unison, Opendoor, Offerpad,and Knock are rethinking home ownership financing in new ways.

Jones: We have many early stage companies at LendIt including a startup competition. Axoni in the blockchain space is rebuilding credit derivatives and T0 (Overstock spinout) is actively launching new capital markets products on the blockchain.  Knock is a new online real estate startup that will sell your home in within 6 weeks. AutoFi and AutoGravity are creating a new software layer in car financing.  Juvo is focused on financial wellness and financial inclusion through mobile operators.

Jones: The future of traditional banking is about knowing your client in new ways and finding ways to de-risk those clients. Education, community, and communication are not commonly associated with banking, but expect these trends to play an increasingly important role in the future of banking.

12 Top Fintech Companies to Watch (Entrepreneur), Rated: A

Financial technology (or “fintech”) has become an extremely trendy industry for startupsbecause of its high growth potential and opportunity for nearly endless disruptive innovation. In fact, these scrappy companies have the potential to take away $4.7 worth of revenue from traditional financial services, according to Goldman Sachs.

1. Stripe

Stripe recently raised $150 million in November of 2016 in a deal co-led by General Catalyst Partners and CapitalG, which valued the startup at $9.2 billion. This almost double the $5 billion valuation it had achieved in 2015.

2. YapStone

YapStone, founded in 1999, has focused on providing end-to-end payment solutions to multi-billion dollar sharing economy marketplaces and vertical markets, such apartment and vacation rentals.

4. Adyen

Adyen is a technology company based in Amsterdam that provides businesses with a single solution to accept payments anywhere in the world. Adyen serves more than 4,500 businesses including Facebook, Uber, Airbnb, Netflix, L’Oreal, Spotify, Dropbox, Evernote,, Vodafone, Mango, Crocs, O’Neill, SoundCloud, KLM, and JustFab.

5. Lending Club

Lending Club has gone from birth to IPO while arranging $7.6 billion in financing, and now lending to small businesses. Lending Club stated that $15.98 billion in loans had been originated through its platform in 2015.

7. Commonbond

With student loan debt being a real issue, Commonbond is a marketplace lender that lowers the cost of student loans for borrowers and provides financial returns to investors. The company refinances graduate and undergraduate student loans for graduates, saving the average borrower over $14,000 over the life of the loan.

8. Kabbage

In 2016, Kabbage raised $135 million, giving it a valuation of $1 billion. In 2016, Kabbage was named to CNBC’s annual Disruptor 50 List and was named to the Inc. 500 list for the second year in a row.

10. Wealthfront

The company started 2013 with $97 million in assets under management and grew by 450% in one year. As of December 2016, Wealthfront had more than $4 billion of assets under management. The company has a valuation of $700 million.

11. SoFi

The firm’s lending algorithms ignore strict credit scores used by banks in favor of practical indicators of ability to pay. As of 2016, SoFi has funded more than $12 billion in total loan volume and has 175,000 members. The company now plans to compete directly with traditional banks.

FinTech Pioneer BlueVine secures $ 75 million financing from Fortress (PRNewswire), Rated: A

BlueVine, the leading provider of online working capital financing to small and medium-sized businesses, announced today that it has secured a warehouse credit line of up to $75 million from Fortress Credit Corp. and/or funds managed by affiliates of Fortress Investment Group LLC.

The financing will allow BlueVine to expand its fast-growing line of credit financing solution called Flex Credit and enhance the FinTech pioneer’s ability to help business owners meet their working capital needs.

Founded in 2013, BlueVine offers business owners convenient access to capital for their everyday funding needs through a sophisticated online financing platform.

BlueVine expanded its reach last year with the introduction of Flex Credit, an on-demand revolving business credit line of up to $100,000. Flex Credit has become an exceptionally popular BlueVine financing option and is expected to grow more than four times in 2017.

BlueVine is best known as the pioneer of online invoice factoring, which allows businesses to turn their unpaid invoices into working capital. BlueVine offers a factoring credit line of $20,000 to $2 million and is the only company providing a completely online, cloud-based invoice factoring service.

Business Giants to Announce Creation of a Computing System Based on Ethereum (The New York Times), Rated: A

Microsoft, JPMorgan Chase and other corporate giants are joining forces to create a new kind of computing system based on the virtual currency network Ethereum.

The new organization, a nonprofit, is part of a broader movement to harness the technological concept known as the blockchain, which was introduced to the world by Bitcoin.

Accenture released a report last month arguing that blockchain technology could save the 10 largest banks $8 billion to $12 billion a year in infrastructure costs — or 30 percent of their total costs in that area. Accenture is one of 11 companies on the governing board of the Ethereum alliance.

The current Ethereum network has an internal virtual currency known as Ether, the value of which has risen and fallen over the last two years. On Monday, a single Ether was worth around $15, and all the outstanding Ether were worth around $1.3 billion.

Ethereum, however, is much more than just a system for tracking currency. It also allows people to write what are known as smart contracts into the Ethereum blockchain. Two companies could, for instance, create a contract that would automatically send money to one of them if a particular news authority reported that the Chicago Cubs won the World Series or that “La La Land” won the Oscar for best picture. (As the latter example shows, what would happen if the authority was wrong is a more difficult question.)

The companies working on the Enterprise Ethereum Alliance want to create a private version of Ethereum that can be rolled out for specific purposes and be open only to certified participants. Banks could create one blockchain for themselves, and shipping companies could create another for their own purposes.

Investing for Millennials, digital financial advice among topics at Wright State’s third annual LIFT2 Symposium (Sidney Daily News), Rated: B

The future of financial planning — including investing for Millennials and digital financial advice — will be some highlight topics addressed by leaders in the industry at the third annual LIFT2 Symposium hosted by Wright State University.

LIFT2 (Leading Innovation in Finance Today and Tomorrow) will be held Friday, March 24, in the Student Union from 8 a.m. to 6 p.m.

It is expected to attract hundreds of financial planning professionals from as far away as Columbus, Cincinnati and Indianapolis.

United Kingdom

Peer-to-peer loan groups told to stop lending to each other (Financial Times), Rated: AAA

The City watchdog has written to chief executives of peer-to-peer loan companies to warn them against lending to other lenders.

In the latest sign of the growing complexity of the sector, the Financial Conduct Authority said businesses borrowing money and lending it out must have permission to “accept deposits” — which is a feature of the banking sector.

The letter on Tuesday will fuel further debate about what P2P lenders should be allowed to do without seeking full banking permissions. The FCA recently signalled plans to impose tougher rules on the sector, warning that it was “testing the boundaries” of what crowdfunding regulations allowed.

In its letter to chief executives on Tuesday, the FCA’s director of supervision Jonathan Davidson told lenders that any company borrowing and lending onwards without correct regulatory permission may be committing a criminal offence.

RateSetter, one of the three largest UK P2P lenders, has engaged in the practice of lending to lenders — known as wholesale lending — since 2013.

RateSetter said it stopped writing wholesale loans in mid-December, shortly before being asked to do so by the FCA.

The rise of the cross-country landlord (Bridging&Commercial), Rated: AAA

The South East continues to offer eye-catching returns for property investors, as revealed by this month’s LendInvest Buy-to-Let Index.

Only one postcode from outside the South East – Northampton – managed to sneak into the top 10, but it could not compete with the likes of Romford, Luton and Dartford that dominate the top of the table.

In contrast, Liverpool still represents a great option. As the index reveals, it enjoys one of the highest rental yields in the country at 5.5%. Even with the harsher stress tests employed by buy-to-let lenders as a result of the new rules, securing a 75% mortgage is relatively straightforward.

For some time now, we have suggested that the UK is likely to see a growth in the ‘cross-country landlord’ – those who own investment properties across the UK, in some cases a significant distance from where they themselves are based. The new lay of the land in the buy-to-let world is only likely to encourage more investors to adopt that cross-country approach.

Dynamic Planner launches white-labelled robo-advice (FT Adviser), Rated: AAA

Dynamic Planner has launched an automated, white labelled online advice application for firms.

The company claims AccessAdvice will use automation to allow firms to bring down the cost and time involved in handling clients.

AccessAdvice goes live tomorrow (1 March) with a stocks and shares Isa product but Mr Goss said it could be extended to a number of other products such as pensions.

The service asks a series of dynamic questions about the customer’s needs and circumstances, including risk profiling, capacity for loss and investment experience.

It uses the Dynamic Planner risk profiling algorithms which have been augmented with financial planning rules, which a firm can configure, for an automated environment.

Dynamic Planner has also worked with asset managers and platforms to provide a suite of pre-configured off-the-peg options.

How to keep online advice fit for purpose (money marketing), Rated: A

Even if Said So has more in common with traditional advice services than it has with fully automated robo-advice, there is more to it than creating a website and expecting clients to flock there.

Interestingly, more people in the 55-64 age bracket (16 per cent) are using the site than those aged 18-24 (11.7 per cent). The remaining 10.5 per cent of users are 65 and over.

Said So is working hard to build trust in online advice and ensuring people do not confuse its services with algorithm-based ones. The security of data is another important issue that has been addressed.

Last year, Said So launched a wealth dashbord app, which has been shortlisted in the Surrey Digital Awards 2017. The app is a projection tool, allowing people to input a range of factors to get an idea of how much money they will have in the future; for example, when they retire.

Treasury’s redefinition of financial advice will enhance investor protection, says WMA (The Investment Observer), Rated: B

The Treasury’s latest move to ensure that only regulated firms are able to provide financial advice to clients will enhance investor protection, says the industry’s trade body.

The UK Treasury have committed to bring the UK definition of advice in line with the Markets in Financial Instruments Directive definition’s of advice as a ‘personal recommendation’.

European Union

France Fintech Announces Second Annual Fintech Revolution Event in Paris (Crowdfund Insider), Rated: AAA

France Fintech, the French Fintech association, announced it is set to host its second annual Fintech Revolution on March 28th. The event will be held at the la Gaîté Lyrique in Paris and will reportedly have over 1,000 participants.

Speaks of the event include:

  • Alexa Von Tobel, CEO of LearnVest
  • Ron Suber, CEO of Prosper.
  • Phin Upham, Managing Partner of Thiel Capital.
  • Nilan Peiris, VP Growth of TransferWise.
  • Vilius Sapoka, Minister of Finance, Lithuania.

Australian fintech investments hit $ 656m in 2016 (ZDNet), Rated: AAA

Investment in Australian fintech reached a record $656 million in 2016, more than triple the $185 million invested in 2015, according to a report by professional services firm KPMG.

This equates to an annual average growth rate of around 90 percent over the four years leading to 2016.

The growth was driven by large mergers and acquisitions, and venture capital transactions, including CHAMP Private Equity’s acquisition of Pepperstone, Stirling Products’ acquisition of Mx360 Group, and large funding rounds from Tyro and Prospa, according to KPMG’s The Pulse of Fintech report.

The report shows venture capital investment in fintech reached $71 million in 2016, a substantial drop from 2015’s $175 million total, though on a similar level to 2014’s $88 million total.


Trends that can put Indian crowdfunding on the global map (Your Story), Rated: AAA

However, this growth rate cannot yet be applied to the Indian crowdfunding scene.  By simply adding the funds raised by various crowdfunding platforms, it will be fair to estimate that the Indian crowdfunding industry stands at approximately Rs 300 crore. Considering that it is just a miniscule part of the global value, this leaves the crowdfunding industry in India with enormous space before it hits a plateau in its growth curve.

We have shortlisted three trends which have been game-changers for the crowdfunding industry in countries such as the US and UK. These trends can help India inch closer towards having a significant presence in the global crowdfunding scenario.

Product innovation

There is no shortage of crowdfunding platforms in India, and their success has shown us that we do not lack motivated funders to support innovators. However, India still has miles to go in order to match up to the scale of innovation taking place in a country like the US.

P2P lending

Globally, the P2P lending model holds the highest share of the $34 billion pie. with $25 billion. Recent statistics value this model at Rs 20 crore, with leading platform lending about Rs 1.25 crore every month.

However, in India, it still remains unregulated by the RBI, restricting it from reaching a larger audience. There are guidelines which have been proposed by the premier banking body last year to regulate P2P lending. Regulation of this model will make it a lot more credible, resulting in a massive boost in its acceptance amongst a wider consumer base.

Recurring funding

Patreon has been the flag bearer for this model globally, raising over $50 million for the creators.  In India, award-winning singer-songwriter and composer Suraj Mani adopted this model last year, providing subscribers with exclusive access to the recording of performances by indie artists at his venue OO Heaven.


George Popescu
Allen Taylor