Thursday September 21 2018, Daily News Digest

Chinese companies surge on debut after US IPOs

News Comments Today’s main news: LendingClub spent $6.4M to relocate two executives. Funding Circle to price IPO between 420-530 pence. Funding Circle to set valuation at $2.4B after IPO. Qatar fund to invest in Lufax. X Financial completes IPO. Today’s main analysis: Fintech investors like ‘stodgy’, not ‘sexy’. Prospa has written $750M in loans. Today’s thought-provoking articles: How machine learning helps P2P […]

Chinese companies surge on debut after US IPOs

News Comments

United States

United Kingdom

China

Other

News Summary

United States

Some Companies Spend Plenty to Lure Executives Willing to Relocate (Wall Street Journal) Rated: AAA

Some businesses have gone so far as to shell out millions to move key players from miles away. LendingClub Corp. LC -2.63% spent nearly $6.4 million to bring two new top officers and their families to the San Francisco Bay Area in 2017, according to an analysis of data from company proxies by research firm Equilar Inc. That sum largely reflects $3 million in relocation bonuses for Steve Allocca, the new president, and Thomas Casey, LendingClub’s chief financial officer. Both men moved from less-costly cities in Texas.

Source: Wall Street Journal

Fintech investors like ‘stodgy more than sexy’ (Financial Planning) Rated: AAA

A good chunk of the money being invested in wealth management and banking technology is going toward funding artificial intelligence-driven tools.

But forget the popular concept of conversational, British-voiced computers, chatbots or even cute robot assistants greeting customers at branches; the applications that investors want in on are focused on improving operational efficiency.

The industry’s current methods of handling compliance issues, back-office processing, clearing and settlements, he says, are ripe for reinvention.

Source: Financial Planning

How Does Machine Learning Help Peer to Peer Online Marketplaces Succeed? (Tech Pluto) Rated: AAA

Machine learning technology brings a real ROI to peer to peer marketplace owners. Airbnb, a company known for their personalized approach to each customer has seen a significant growth in the number of bookings after they started using machine learning. Other popular P2P marketplaces such as Etsy, Uber, Lending Club also apply intelligent algorithms to increase their conversion rates and acquire a competitive advantage.

Machine learning helps leading marketplaces and companies that provide AI consulting services develop features that bring tangible value to business and consumers. So how exactly do P2P marketplace companies use this cutting-edge technology? Let’s find out.

Predicting which products a user will like is a widely adopted use case for machine learning. A variety of digital products today have recommender systems powered by this technology. In the past product recommendation systems were based on hard-coded rules. Those rules determined what item to show to a user based on some predefined scenarios. For example, if a user buys a fancy red dress, she’s likely to also buy shoes that match this dress.

SoFi’s Former Head Of Venture Strikes Out On His Own (Benzinga) Rated: A

For this installment, Benzinga interviewed an intriguing fintech venture capitalist: Logan Allin, general partner at Fin Venture Capital and former head of venture at SoFi.

Allin’s career has been largely spent “in and around” financial services, he said, including stints at SoFi, City National Bank and Invesco Ltd. IVZ. He launched Fin Venture Capital in April with a focus on the global fintech sector, greenfield areas and B2B and B2B2C players in particular.

BZ: Fintech funding rounds are getting larger, some consolidation is occurring and the space in general is maturing — is there still room for small startups to have a major impact? What verticals are ripe for disruption?

According to Pitchbook’s data, the U.S. funding environment is skewed increasingly to growth and late stage startups and is on pace to surpass $100 billion in deal value for the first time since the dot-com era.

Indeed, there was $57.5 billion of VC invested in U.S. companies through the first half of the year, and the second quarter of 2018 is higher than six of the past 10 full-year totals. Despite the volume, the deal count has remained stable due to later-stage entry points and larger round sizes, and as a result, deployment is at a slower pace than seen in 2013-2015.

You’re seeing a move toward larger fund sizes with the same investment period as they’ve always had, five years, which leads to larger check requirements per deal and thus a move downstream to growth and late-stage rounds where the valuation math and round sizes align.

Goldman Sachs nears deal to sell its fintech app – WSJ (Reuters) Rated: A

Goldman Sachs is in advanced talks with several financial companies to spin off ‘Simon’, its three-year-old app that sells financial products to retail investors, the Wall Street Journal reported on.wsj.com/2OzaWmf on Wednesday, citing people familiar with the matter.

JPMorgan Chase, Barclays, HSBC Holdings , Credit Suisse, Wells Fargo and insurer Prudential Financial have expressed interest for a stake in the business, the report said.

The deal, which would value the app at around $100 million, is likely to be finalised in the coming weeks.

Lendio Franchising Growth Soars, Doubling Amount of Loans Funded Quarter Over Quarter Since Inception (Lendio) Rated: A

LendingTree Announces Startup Innovators Program at LEND360 (PR Newswire) Rated: A

LendingTree®, the nation’s leading online loan marketplace, today announced it will sponsor a $10,000 award to be given at LEND360 to the fintech startup with the most cutting-edge solutions propelling the online lending ecosystem forward.

As the desire to enter the fintech space continues to heat up, LEND360’s Startup Innovators Program will highlight startup organizations’ crucial part of the fintech ecosystem, bringing new and innovative thinking to the industry.

LEND360 will be held October 8-10, 2018 at the Sheraton Grand Chicago.

iCapital Buys Bank of America Alt Feeder Fund Ops (Wealth Management) Rated: A

Alternative investing platform iCapital Network announced it has entered into a definitive agreement with Bank of America to acquire the bank’s alternative investment feeder fund operations. iCapital expects the volume on its platform to more than quadruple as a result, growing from $6 billion in invested capital across 14,000 underlying accounts to $25 billion across nearly 70,000 accounts.

Bank of America’s Merrill Lynch and U.S. Trust account holders and advisors will continue to use their existing interfaces and their client relationships, but the inner workings of the system will be improved, said Lawrence Calcano, CEO of iCapital.

More Americans With Low Credit Scores Buying Homes (Laredo Morning Times) Rated: A

If you have a low credit score and want to buy a home, your odds of getting a loan have improved. A study by the Fair Isaac Corporation (FICO) shows that credit scores for new mortgage originations have been dropping, suggesting that lenders are slowly relaxing the tight credit policies imposed after the housing crisis.

According to the study, new mortgage loans with credit scores less than 700 increased from 21.9% of all mortgage loans in 2009 to 29.7% in 2017. These include scores in the subprime market that can reach down into the 400s. (While the typical lower credit score limit is 620 for conforming loans and 500 for FHA loans, loans may be granted at even lower credit scores with extenuating circumstances.)

The shift in average credit scores is driven by FHA loans – as expected by the lower acceptance criteria for FHA loans. The latest Origination Insight Report from Ellie Mae shows that only 16.7% of conventional mortgage loan originations in July 2018 were associated with FICO scores less than 700.For FHA loans, over 65% of FHA loans went to borrowers with scores below 700.

2Wheel Partners With Affirm to Offer 0% Financing (Motorcycle & Powersports News) Rated: A

Affirm Inc., a financial technology company, provides transparent alternatives to traditional credit. Customers can select the Affirm payment option at checkout and quickly and easily receive real-time approval of their loan amount. The payment terms are clearly stated with no hidden fees or compounding interest.

5 Surprising Traits of Digital Banking Winners (Financial Brand) Rated: A

Ever since JP Morgan declared itself a technology company that provides financial services — not the other way around — analysts and investors have been scrambling to discern which banking companies are doing tech well, and which are not. They know the institutions that harness the power of artificial intelligence, machine learning and big data, and more importantly, the applied business insights these technologies can generate, will be the banks that will be the winners in the long run.

“Long term I think this will determine the split between winners and losers,” one investor told the Financial Times in a story on AI and banking earlier this year.

New Research Indicates Non-Prime Hispanics Have a Leg up on Financial Health (Market Watch) Rated: A

When it comes to personal finances, Hispanics in the U.S. are more stable and optimistic than other groups studied. A newly released study from Elevate’s Center for the New Middle Class (CNMC) found that non-prime Hispanics – or those with credit scores below 700 – experience higher levels of employment and less volatile monthly income. When compared to the broader non-prime community, non-prime Hispanics in the U.S. are:

  • 65% more likely to plan for major expenses
  • 86% more likely to feel financially stable
  • 38% more likely to save money each month
  • 20% less likely to have had a vacation expense in the last 12 months
  • 23% less likely to spend on routine medical expenses
  • 50% more likely to be able to cover a $1200 unexpected expense
  • 3x more likely to regularly pay using a smartphone
  • 20% less likely to have a credit card
  • 25% less likely to have a personal retirement account
  • 2x more likely to regularly give money to a child or grandchild
  • 40% more likely to be employed

Why those high-profile bank glitches just won’t stop (American Banker) Rated: A

The glitch that left SunTrust customers without access to mobile and online banking for two days is just the latest digital snafu to afflict the banking industry. Upgrades by banks or their vendors that went haywire have resulted in multiple outages this past year.

So it begs the question: If there’s such potential for an upgrade to go wrong, why aren’t banks more prepared for the eventuality, instead of scrambling to get service back up and running?

Industry experts bear some bad news about the state of technology in banking: Banks can’t really be proactive enough to prevent the problems.

Why do state regulators want to limit consumer choice? (American Banker) Rated: A

The decision by the Office of the Comptroller of the Currency to begin accepting applications for special purpose national bank charters from fintech companies promotes innovation, gives consumers and businesses greater choice and creates economic growth and opportunity.

It is also good for America’s dual banking system, which the president of Conference of State Bank Supervisors and the superintendent of the New York Department of Financial Services ignore in their recent articles and statements.

Fed will have the say on key parts of OCC’s fintech charter (American Banker) Rated: A

The Federal Reserve is under increasing pressure to provide clarity on whether nonbank fintech firms that receive a special federal charter will have direct access to central bank lending and to the U.S. payment systems.

The Office of the Comptroller of the Currency confirmed in July that it would accept applications from fintech firms for a “special-purpose” national bank charter, although the new license has been legally challenged by state regulators.

But many experts say the OCC’s charter would lose value if the Fed did not allow direct entry to fintech firms. Those firms now, for example, can access the payments system only through bank partners.

White Oak Healthcare Finance Refinances Texas SNFs for Granite Investment Group (Digital Journal) Rated: B

White Oak Healthcare Finance, LLC (“White Oak”), today announced it acted as sole lender and administrative agent on the funding of a $33.2 million senior credit facility for Granite Investment Group (“Granite”). The funds were used to refinance a portfolio of four skilled nursing facilities in Texas.

Granite Investment Group is a privately held, real estate investment firm focused on multi-family, senior housing, and post-acute care.

AlphaFlow Continues Expansion with Launch of New York Office, Hiring of Fintech Executives Stephan Leccese and John Woodruff (PR Newswire) Rated: B

AlphaFlow, the first automated alternative investment platform for real estate, announced today the opening of a new office in New York City. The office launch and expansion operations will be helmed by recently hired fintech executive Stephan Leccese, who joins the firm as Vice President of Partnerships & Servicing.  John Woodruff, a former credit fund senior analyst, will be joining Stephan in New York, serving as Vice President of Investments.

United Kingdom

Funding Circle to price 71.4 mln IPO shares between 420-530 pence (Nasdaq) Rated: AAA

British peer-to-peer lender Funding Circle plans to sell up to 71.4 million new shares in its initial public offering for between 420 pence and 530 pence per share.

Funding Circle, which expects to list in October with a valuation of more than 1.5 billion pounds ($1.92 billion), said it plans to raise gross proceeds of about 300 million pounds.

Peer-to-peer lender Funding Circle to be valued up to $ 2.4 billion after IPO (CNBC) Rated: AAA

Peer-to-peer lending platform Funding Circle announced the pricing range for its initial public offering (IPO) on Wednesday that could value the company up to around £1.8 billion ($2.4 billion).

The British fintech firm said the price range of the offer has been set at 420 pence to 530 pence per share. The flotation will comprise a maximum of 71.4 million new shares and a secondary component to be determined.

After the completion of the IPO, the issued share capital of the company is expected to comprise between 329.7 million and 345 million shares.

Is real estate crowdfunding the investment option for you? (Born2Invest) Rated: A

Equity crowdfunding has been a great alternative investment for many, but there are other principles that branched out from it. Some investors direct their funds not only on startups that offer unique products or services as others become virtual landlords through property crowdfunding.

Platforms like LendInvest, Landbay and Lendy have risen to make real estate investing more interesting because of higher returns. Some sources suggest that peer-to-peer lending (P2P) schemes like crowdfunding in real estate allow for returns in excess of 5-6 percent compared to traditional real estate investment trusts (REITs).

There are three ways to get into real estate crowdfunding: P2P, debt crowdfunding and virtual buy-to-let.

China

China’s Online Lender Lufax Attracts Potential Investment From Qatar Fund (Gooruf) Rated: AAA

China’s online lender Shanghai Lujiazui International Financial Asset Exchange Co. (Lufax) has attracted a potential investment from sovereign wealth fund Qatar Investment Authority (QIA).

QIA has been negotiating the probable purchase of a minority stake in Lufax with an estimated price range of about US$500 million to US$1 billion, said Bloomberg citing the source.

The company has been aiming to file for an initial public offering in Hong Kong since 2017, but only to witness its flotation on ice because of Beijing’s probes into online lenders.

Fintech / Peer to Peer Lender X Financial Trades on NYSE (Crowdfund Insider) Rated: AAA

Chinese peer to peer lending platform X Financial (NYSE: XYF) completed its initial public offering (IPO) today trading shares on the New York Stock Exchange. Deutsche Bank Securities Inc. and Morgan Stanley & Co. were joint book runners on the IPO.

The IPO saw the Class A ordinary shares priced at $9.50. The offering was for 11 million American Depository Shares (ADSs) thus representing a raise of about $104.5 million. Shares initially traded much higher jumping to over $20/share at one point but are now currently hovering around $13/share.

The underwriters have been granted an option to purchase up to 1,650,000 additional ADSs at the IPO price less the underwriting discount.

X Financial on IPO: We Have Built One of the Strongest Fintech Businesses in China (Crowdfund Insider) Rated: A

Earlier today, China based X Financial (NYSE:FXE) traded on the New York Stock Exchange (NYSE) in its initial public offering raising approximately $104.5 million as 11 million shares were floated at $9.50/share. The shares quickly jumped higher in early trading and eventually closed about 25% higher than the offer price. X Financial, a peer to peer lender and Fintech platform, is part of a growing group of Chinese firms deciding to list their shares on US exchanges. In fact, this was the 9th Chinese company to list on the NYSE this year.

X Financial reports experiencing dramatic growth in the past few years. Top line revenue was approximately USD $270 million for all of 2017. As of the first six months of 2018, the company had already topped this number (USD $279.3) as it appears to be on track to double the year prior total.

Investors Love Chinese Tech Stocks (Bloomberg) Rated: AAA

Peer-to-peer online lender X Financial soared on its first day of New York trading, adding to a string of frenzied U.S. debuts by Chinese technology companies.

Source Bloomberg

Banks give China’s Web lenders a second life (The Business Times) Rated: A

China’s online lenders have found an unlikely lifeline. Investors are fleeing the country’s US$200 billion peer-to-peer (P2P) lending sector as regulators crack down. The funding squeeze has pushed many companies to team up with traditional banks that they once sought to disrupt.

Beijing is reining in the country’s non-bank lending sector. Strict rules, such as caps on loan balances for sites matching small borrowers with individual investors, have shut down hundreds of unruly upstarts. Regulators delayed a June deadline for companies to apply for licences, putting larger groups in legal limbo. New York-listed Yirendai has seen its market value more than halve to US$1 billion since the start of the year.

The stakes are huge. Chinese consumer finance – which includes credit card loans, e-commerce credit, and unsecured personal loans – is on track to top 11 trillion yuan (S$2.2 trillion) by 2020, up from four trillion yuan in 2015, according to Oliver Wyman. But banks prefer to lend to customers with credit histories, which much of the population lacks. They often spurn private corporate borrowers for similar reasons. That has opened the door for P2P operators as well as Web giants like Ant Financial.

Lending hand (Breaking Views) Rated: A

China’s online lenders have found an unlikely lifeline. Investors are fleeing the country’s $200 billion peer-to-peer (P2P) lending sector as regulators crack down. The funding squeeze has pushed many companies to team up with traditional banks that they once sought to disrupt.

Beijing is reining in the country’s non-bank lending sector. Strict rules, such as caps on loan balances for sites matching small borrowers with individual investors, have shut down hundreds of unruly upstarts. Regulators delayed a June deadline for companies to apply for licenses, putting larger groups in legal limbo. New York-listed Yirendai has seen its market value more than halve to $1 billion since the start of the year.

The stakes are huge. Chinese consumer finance – which includes credit card loans, e-commerce credit, and unsecured personal loans – is on track to top 11 trillion yuan ($1.6 trillion) by 2020, up from 4 trillion yuan in 2015, according to Oliver Wyman. But banks prefer to lend to customers with credit histories, which much of the population lacks. They often spurn private corporate borrowers for similar reasons. That has opened the door for P2P operators as well as web giants like Ant Financial.

China Rapid Finance to Participate in DBS Fintech Corporate Day (Acrofan) Rated: B

China Rapid Finance (NYSE: XRF), a leading online consumer finance platform in China, today announced that its Chief Executive Officer Zane Wang will participate in the DBS Fintech Corporate Day, to be held at the Fullerton Hotel in Singapore on Thursday, September 27, 2018.

The Company will also host investor meetings throughout the day.  Attendance at the conference is by invitation only.  Interested investors should contact your DBS sales representative to secure a meeting time.

International

Growth of Investor Numbers on P2P Lending Marketplaces (P2P Banking) Rated: AAA

The disadvantage of showing indexed numbers for growth is that it gives smaller, younger an advantage as their percentage increase of investor base is likely still higher because they come from smaller absolut numbers. An example for this effect is Peerberry where percentage growth of investors is rapid, but the absolute number as of Sep, 1st has reached only 2468 investors as it is a very young marketplace.

Source: P2P Banking

ETHLend Blockchain Crypto Lending Launches New Tech Firm Aave To Induce Innovation (Bitcoin Exchange Guide) Rated: A

Decentralized, peer-to-peer (P2P) financial marketplace, ETHLend has recently revealed the launch of a new tech firm dubbed, Aave. The reason for creating Aave is to induce consumers to come up with innovative ways to expand on “evolving and imaginative technology”. Simply put, the team is working towards bridging the gap centralized players like PayPal and Coinbase have left behind.

Aave will serve as the parent company for ETHLend and the team will remain the same. In other words, the CEO for Aave will be that of ETHLend, Stani Kulechov, Jordan Lazaro will serve as COO, Nolvia Serrano is the CMO, Mika Soyring is the CFO and Ville Valkonen is the CCO.

Australia

Fintech Prospa has now written $ 750 million in loans (Business Insider) Rated: AAA

Fintech Prospa, a lender to small business which in June postponed an ASX-listing after being pinged about unfair loans terms, says it has now written $750 million in loans.

Loans for the year to June were $367 million, a 70% increase on the previous 12 months and 9% higher than prospectus forecasts with strong momentum in the fourth quarter.

For the six months to June 2018, loans hit $211 million, up 16% on prospectus forecasts and up 61% on the previous corresponding period.

MENA

OurCrowd Still on Track to Top USD $ 1 Billion in Investment Crowdfunding (Crowdfund Insider) Rated: AAA

In many ways, OurCrowd epitomizes the aspirations of what investment crowdfunding has the potential to deliver for both issuers and investors. By providing access to quality deals to smaller (accredited) investors, OurCrowd has opened up an asset class previously closed off to all but the very fortunate. On OurCrowd, you can find yourself investing alongside some of the biggest names in venture capital – at the exact same terms – an important distinction. It is also important to note that OurCrowd has skin in the game for each offering it lists on the platform – thus interests are aligned: OurCrowd wants the company to succeed and it also very much wants to see a return on its own investment. These qualities make OurCrowd a compelling option for investors that are willing to shoulder an element of portfolio risk that can also drive some outsized returns.

OurCrowd is based in Israel – where many of its investments are made – but its vision is to empower investors globally and fund companies regardless of geographic borders. This is what you want to see in the digitized, internet fueled Fintech age.

Build a real estate portfolio starting with as little as $ 1000 (AME Info) Rated: A

Real estate crowdfunding comes to Dubai in the form of Smart Crowd

In the US, investors are utilizing crowdfunding sites like Realty Mogul, CrowdStreet, and Fundrise to start and/or build their portfolios, Investopedia notes.

Smart Crowd, an innovative new digital real estate investment platform that supports crowd-funding endeavors in the real estate sector, is trying to fill in a similar role in the region.

Asia

P2P operations launched in Hyderabad (Telangana Today) Rated: AAA

LenDenClub, a peer-to-peer (P2P) lending platform, launched its operations in Hyderabad. It will also expand to other cities later.

LenDenClub chose Hyderabad as the city is a major hub of the IT industry and houses a large number of young professionals, who are among the largest users of digital lending services in the country. It expects 10 per cent of its loan requests originate from Telangana in the next six months.

It is aiming to disburse loans worth Rs 100 crore in 12 months.

European Union

INLOCK Signs MoU with Institutional Lending Provider – Partners with Major CEE Crypto ATM Manufacturer to Test Its Platform (Bitcoin News) Rated: B

INLOCK, a crypto lending platform where licensed lenders can compete for borrowers who want to use their cryptocurrency as collateral for loans, announced today that it has signed a Memorandum of Understanding (MoU) with an institutional lending provider and entered a partnership with one of the Central and Eastern European Countries (CEE) region’s biggest crypto ATM manufacturers to test its Minimum Viable Product (MVP). The company launched the ICO for its ILK token on September 15, the anniversary of the Lehman Brothers collapse.

The CEE region’s crypto ATM manufacturer plans to integrate INLOCK’s services into all of its machines, enabling users to directly take out loans and receive funding in cash within hours. The crypto ATM manufacturer will act as a matching service provider by forwarding customers to INLOCK.

Authors:

George Popescu
Allen Taylor

Monday July 10 2017, Daily News Digest

marketplace securitizations PeerIQ

News Comments Today’s main news: LendingClub receives unsolicited offer from IEG for nearly 10% stake. Goldman looks to spin off Simon at $75M valuation. Assetz Capital to expand UK broker network. Stripe integrates with Alipay, WeChat. Australian advisers drop big banks. Today’s main analysis: MPL securitization tracker. Will China Rapid Finance turn the tide for Chinese IPOS in the U.S.? […]

marketplace securitizations PeerIQ

News Comments

United States

United Kingdom

China

European Union

International

Australia

Canada

Middle East

News Summary

United States

LendingClub gets unsolicited offer from IEG for 9.99 pct stake (Business Insider), Rated: AAA

LendingClub Corp said it had received an unsolicited offer from IEG Holdings Corp to buy a 9.99 percent stake in the online lender.

IEG’s proposal offers two shares for each LendingClub share, and is at a 38 percent discount to LendingClub’s Thursday’s close.

The online lender urged its stockholders to ignore the offer, if and when made.

Marketplace Lending Securitization Tracker Q2 2017 (PeerIQ), Rated: AAA

 Some highlights:
  • This quarter we see quarterly issuance of $3.0 Bn, representing 76% growth over 2Q2016.  To date, cumulative issuance equals $21.9 Bn across 92 deals.
  • Multi-seller club deals and self-sponsored deals have emerged at several leading platforms.  All deals were rated in this quarter, including record-sized consumer deals from SoFi, large multi-seller deals from Marlette and Prosper, and the first self-sponsored, near-prime deals from Lending Club and Upstart.
  • Dealer and rating agency participation continues to intensify. Fitch rated its first Consumer MPL, Prosper’s PMIT 2017-1, indicating broadening acceptance across ratings agencies. Goldman Sachs, Morgan Stanley, and Deutsche Bank lead over 47% of MPL ABS transaction volume. Noteworthy is the rising presence of BNP Paribas, which co-managed CLUB 2017-NP1. DBRS leads the rating agency league table, and Kroll dominates the unsecured consumer sub-segment.
  • New issuance spreads continued to tighten and flatten—a credit friendly environment for securitization.  In 2Q2017, we saw spreads tighten in riskier tranches of consumer ABS, indicating strong investor appetite for MPL ABS paper in the market.
  • Delinquency rates have continued to increase across in several verticals—such as subprime auto, student, and personal loans—due to exposure to riskier borrowers, a re-leveraging of consumer balance sheets, “loan stacking,” and shifting payment priority trends.
  • Initial pricing is near record tight levels. Lending Club’s inaugural deal priced at Libor + 110, second only to Marlette’s MFT 2017-1 (L+100) on the Class A bond. Overall, spreads have tightened with greater investor acceptance in an overall “risk on” environment.

Get the full report here.

Source: PeerIQ

Online Lenders Work Wall Street For Capital (ValueWalk), Rated: AAA

Equity financing events dropped to $2.2 billion in deal value across 145 transactions in 2016 down from $5.1 billion across 174 deals in 2015. This pace has continued to trend down in 2017, with 25 deals completed through March, yet SoFi’s $453 million Series G has bumped the total deal value to $754 million.

Instead of an IPO, Prosper has resorted to a major down round to stop the bleeding. The company is raising a $59 million Series E venture round that values the company at $460 million (post-valuation), a steep drop from the $165 million series D raised in 2015 that valued the company at a postval of $1.87 billion.

Goldman Sachs is looking to spinoff one of its tech bets at a $ 75 million valuation (Business Insider), Rated: AAA

Goldman Sachs is looking to sell a stake in one of its fintech bets — an online platform for retail bond investors called Simon — that would value the web app at about $75 million, according to The Wall Street Journal.

The investment bank launched Simon — which stands for Structured Investment Marketplace and Online — a couple years ago to help clients more easily learn about structured investments and execute transactions.

How financial advisers can “bridge the digital” divide (Investment News), Rated: A

Of those surveyed, 55% said that an aggregated view of their key financial accounts would be “extremely useful” or “very useful.” An account reporting dashboard was the second most popular tool, at 50%, followed by customized notifications and alerts (44%) and financial calculators (43%). Each of these tools provides investors with easy access to their own financial information in an easily digestible way. The good news is that advisers agree with investors on what is “extremely” or “very” useful, with financial account aggregators (69%) and account reporting dashboard (67%) being seen as the top tools.

VW Credit, Inc., Invests In AutoGravity Leading Financial Technology For Vehicle Financing (Cision), Rated: A

VW Credit, Inc. (VCI) today announced that it has committed to make an equity investment in AutoGravity, pending customary regulatory approvals. With this strategic investment, VCI is supporting its goal to create a digital experience that enhances the customer financing process. AutoGravity is a FinTech pioneer facilitating car shopping and financing with the power of the smartphone.

In addition to this investment, VW Credit, Inc., has worked with AutoGravity to bring Volkswagen and Audi financing directly to car buyers across the United States. Through this project, VW Credit, Inc., has launched the Volkswagen Creditsmartphone app, powered by proprietary AutoGravity technology and available for iOS and Android. Finance options from Volkswagen Credit are now available on the AutoGravity platform, extending the range of options available to more than 400,000 consumers who have downloaded AutoGravity. Volkswagen dealers now can benefit from a new source of potential car buyers.

How the U.S. compares to others in fintech use (Benefits Pro), Rated: A

Why OCC fintech charter may have life under new leader (American Banker), Rated: A

With legal challenges and uncertainty about the agency’s leadership, the Office of the Comptroller of the Currency’s fintech charter appeared dead in the water just months ago. But industry observers say the OCC’s interim chief is emerging as a potential savior for the controversial initiative.

“We’re seeing an assertive OCC,” said Brian Knight, a senior research fellow at the Mercatus Center.

Podcast 108: Perry Rahbar of dv01 (Lend Academy), Rated: A

In this podcast you will learn:

  • How Perry’s time at Bear Stearns during the financial crisis influenced his thinking on transparency.
  • What problem dv01 is trying to solve.
  • The different ways they work with securitization buyers and whole loan buyers.
  • The details about their reporting partnership with SoFi.
  • How they are able to create data standardization with disparate data from many platforms.
  • How they are using Experian data in their partnership.
  • Why updated credit attributes on loan data is going to be critically important when the credit cycle turns.
  • When and how dv01 is going to expand beyond the online lending space.

SoFi Announces Partnership With Alaska Air (Crowdfund Insider), Rated: A

Online lending platform SoFi announced this week it has teamed up with Alaska Air to help its new members save money on student loans while also earning extra summer travel points.

CreditEase Fintech Fund continues to invest in strong Fintech companies in CB Insights’ Global Fintech 250 (Broadway World), Rated: A

As many as 13 companies backed by investments from CreditEase Fintech Investment Fund (CEFIF) were named today by CB Insights to the prestigious global Fintech 250, a select group of emerging private companies working on groundbreaking financial technology. The list was revealed during The Future of Fintech conference in New York on June 27th.

The winners in relation with CreditEase investments include Addepar, NAV, Tradeshift, Upgrade, Circle, TruMid, WorldCover, TrueAccord, Bocheng (CreditEase Insurance Agency) and others.

Apple Bank here we come (LinkedIn), Rated: B

According to the limited information available, Apple will automatically issue a virtual payment card to all iOS users, allowing them to receive and hold money in Apple Wallet.

This isn’t Venmo. Or even Paypal. We aren’t linking up accounts and plastic cards here. We are issuing cards. Virtual cards. To all iOS users.

How soon will they start to pay interest? What about something like Apple Wealth? The scale and impact really boggle the mind. We are breaking new ground here. Only WeChat and Alipay are operating on this scale, but let’s face it, they are still one trick ponies operating in a single market.

Private bank Brown Brothers Harriman creates fintech position (American Banker), Rated: B

Brown Brothers Harriman promoted Michael McGovern to the newly created position of head of investor services fintech offerings, as custodial banks ramp up digital offerings in the face of competition.

United Kingdom

Assetz Capital to Expand UK Broker Network to Further Scale P2P Business (Crowdfund Insider), Rated: AAA

Assetz Capital is looking to increase its active broker network significantly in the next two years, and has announced a strategy to further support brokers through several methods.  This includes using its network of nationwide Regional Relationship Directors to locally support more brokers, further product and pricing improvements, dedicated staff in the head office and a series of regional broker events which are specifically aimed at educating and supporting brokers.

Funding Options founder sees limit to P2P growth (P2P Finance News), Rated: A

THERE is a limit to how much peer-to peer lending platforms can grow, according to Funding Options’ founder Conrad Ford.

The head of the online small- and medium-sized enterprise (SME) finance aggregator told Peer2Peer Finance News that there are lots of “smallish, niche opportunities” for P2P firms but that they would not be able to graduate to originating larger facilities.

Authorised P2P property lender clinches seed funding (AltFi), Rated: A

LandlordInvest, a property-focused peer-to-peer lender, has clinched a round of seed funding from Alan Gabbay, director of O&H Properties, a London-based privately owned investment firm with assets valued at around £1bn. Further details of the investment have not been disclosed. The platform is also backed by LNK Capital, and angel investors Reece Chowdhry and Lee Josephs.

FCA applications have cost the P2P sector up to £2m (P2P Finance News), Rated: A

THE FINANCIAL Conduct Authority (FCA) has pocketed up to £2m from full authorisation of the peer-to-peer lending sector, figures suggest.

A freedom of information request by Peer2Peer Finance News shows that the City watchdog has considered 146 applications for full permission from P2P platforms since 2014 – when the FCA took over regulating the sector – with firms paying application fees of £600 to £15,000 depending on their income at the time.

This reveals that the regulator has raised up to £2.1m if all firms paid £15,000, or a minimum of £87,600 if all firms paid the lowest fee of £600.

Happy Birthday, Landbay!: P2P Platform Celebrates Three Years of Online Lending (Crowdfund Insider), Rated: A

On Friday, UK-based peer-to-peer lending platform Landbay celebrated its third birthday. The online lender revealed that in the past three years, it has lent a total of £47.31 million, which is funding buy-to-let mortgages throughout the UK.

New P2P business lender launches as Appointed Representative (AltFi), Rated: A

Huddle Capital is the UK’s newest peer-to-peer business lender, but its route to market is somewhat different to those that went before it. Huddle launched too late to operate under the FCA’s interim permissions regime, and achieving full authorisation – as even the biggest peer-to-peer lenders have discovered – takes time.

Huddle has come to market as an Authorised Representative of fully authorised peer-to-peer firm rebuildingsociety.com.

British venture capital investing trends in the tech sector (RealBusiness), Rated: A

Peer-to-peer lender Funding Circle and mobile banking service Atom Bank secured the biggest amounts of British venture capital investing, raising £83m apiece. In fact, the five largest deals accounted for a third of overall British capital investing.

Indeed, 27 fintech companies secured £262m from 49 investors.

People are raising hundreds of millions selling digital coins online (Business Insider), Rated: B

Over half a billion dollars has been raised through so-called “Initial Coin Offerings” (ICOs) since the start of the year, according to Richard Kastelein, a partner at the Cryptoassets Design Group, a company that helps launch ICOs.

Gnosis, a prediction market for digital currency Ethereum, raised $12 million in just 10 minutes in April. Brave, a new web browser startup set up by the founder of Mozilla, made that look pedestrian, raising $35 million in less than 30 seconds selling “Basic Attention Tokens” last month.

To raise money through an ICO, a company issues a new digital currency that can either be spent within its ecosystem, a bit like Disneyland dollars, or used to power part of the business, like the fuel you put in your car.

China

Bitcoin-Friendly Stripe Strikes Major FinTech Deal with China’s Alipay, WeChat (Cryptocoins News), Rated: AAA

The integration will now enable all Stripe merchants in over 25 countries make money from Chinese consumers. Alipay, the payments platform of Ant Financial – the financial arm of e-commerce giant Alibaba has over 500 million users on its platform. WeChat Pay, the digital payments platform of WeChat – China’s most popular messaging app – has over 600 million users. The two firms were responsible for handling near $3 trillion in 2016, according to a UN report.

The integration coincides with the payments processor’s official launch in Hong Kong.

Alibaba-Backed Company Could Turn The Tide For Chinese IPOs in US After String of Busts (Frontera News), Rated: AAA

The pipeline of Chinese (FXI) IPOs planning to list on the New York Stock Exchange (SPY)(NYSE) (NDAQ)could make 2017 the biggest year for the country’s stocks since 2014 when Alibaba (BABA) listed its shares.

2016 saw new listings worth $119.4 billion on the New York Stock Exchange with Chinese logistics company ZTO Express (ZTO) being the largest with an IPO worth $1.4 billion. So far in 2017, 137 IPOs worth $27.2 billion have been announced in the United states, 6.6% higher year over year.

Shares of Alibaba(BABA) are up 42% while shares of JD.com have surged 94.9% since their IPOs in2014. Shares of Baidu are currently trading 19 times of its IPO price.

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

On June 27th, The Alibaba Group financial affiliate rolled out an artificial intelligence-driven, image-recognition system to aid vehicle insurance claims adjusters in operating faster and more efficiently.

Yu’E Bao, one of China’s most popular internet-based funds, had amassed CNY 1.43 trillion of assets under management by the end of June, which has already exceeded the size of individual deposits at some of China’s largest banks.

The development of the Shenzhen Municipal Government Financial Services Office, the local banking regulator in Shenzhen, has released guidelines to prompt large and medium-sized banks to set up inclusive finance divisions, a move to increase loans for money-starved small firms, which is the latest native government’s effort to improve links in economy.

European Union

Visa’s Long-Term View On Klarna (PYMNTS), Rated: A

Though the actual terms of the Klarna investment, such as dollar size and the magnitude of the equity ownership stake, remain under wraps, the intent was more clearly shaped in an interview between Karen Webster and Bill Gajda, SVP of Innovation and Strategic Investments at Visa following the announcement.

This is Visa, after all, so … think credit — but transactional credit extended at the online point of sale. Think payments, but not just card-based payments, since Klarna today is a pay-by-bank account model. Think cards, but digital ones, accounts issued digitally by the Bank of Klarna.

That comes against a backdrop where Klarna’s transactions grew more than 50 percent over 2015 and volume was up 44 percent in Europe, driven by mobile commerce.

International

Fintech VC Funding on the Decline: What Next? (TechBullion), Rated: AAA

According to a call co-hosted by Lawrence Wintermeyerof Forbes and Peter Rentonof LendIt, fintech venture funding has declined both in the U.S and the U.K.

In 2016, venture funding for fintech in the US fell by 13% to $6.2 billion. Much of this decline is attributable to poor performance by lending platforms coupled with a contraction of investment as venture capital firms went slow on investments to figure out what would be the most profitable fintech investment in future.

The situation in the UK was not any better as there was even a greater decline in VC fintech investment during the same year, 2016. The sector attracted only $834 million worth of investment, translating to a 38% decline.

Despite the general decline in fintech VC funding, some sectors are still thriving. For instance, the payments subsector has witnessed sustained growth. Similarly, Insurtech is flourishing especially as far as seed investment is concerned.

Fintech enterprise solutions have increased with innovations around machine learning, distributed ledger, big data and cloud heralding the entry of global tech giants into the fintech sector.

How the FinTech revolution is changing the regulatory approach (Fintastico), Rated: A

Some national authorities have chosen to regulate fintech companies through preexisting frameworks. This mean using the same set of rules previously applied to all financial and banking institutions. Other authorities have preferred introducing specific and tailored regulations for fintech companies with the aim of adapting the system to the particular needs of the sector and of stimulating the growth of these companies.

Continental Europe

For instance, Germany does not have specific regulations for fintech credit platforms. In other words, a fintech credit company must be granted a banking license to pursue a credit activity; however, it must ascertain what type of service the business is providing to verify if the business offer might qualify as a regulated activity under general German financial regulatory laws.

As in Germany, the Netherlands does not have specific regulations for fintech companies. In the Netherlands, a fintech credit platform must obtain a regular license for credit activity from the Dutch Central Bank (“DNB”) and the Netherlands Authority for the Financial Markets (“AFM”) before providing credit to customers.

Several authorities have created specific and tailored regulations for fintech companies by introducing new licenses for fintech platforms. For instance, one of the most customized and effective one is in Switzerland. The national policymakers have introduced a new licensing category for fintech companies. This regulation would give the Swiss Financial Market Supervisory Authority (“FINMA”) the chance to analyze the fintech platforms individually and to tailor the appropriate regulation according to the activity they pursue.

China

The core of the regulatory framework is represented by the Guiding Opinions on Promoting the Sound Development of Internet Finance and the Provisional Rules for the Administration of the Business Activities of Online Lending Information Intermediary Institutions, respectively were amended by the People’s Bank of China and the China Banking Regulatory Commission (CBRC) with the assistnace of other authorities. However, there is something unusual characterizing the Chinese approach in the way it conceives fintech credit platforms as being essentially information intermediaries rather than credit intermediaries.

English-speaking countries

Some jurisdictions, such as United Kingdom, Australia and Singapore have introduced a different kind of approach to regulate fintech service providers. Using the innovative approach dubbed “regulatory sandbox”, fintech providers offer their products or services to a limited group of customers to minimize the risks, allowing them to test the market without any risk or regulatory sanctions.

United States 

Fintech providers in the United States are not subject to a fintech-specific regulatory framework. However, fintech providers are subjected to numerous and fragmented federal and state licensing or registration requirements depending on the activities of the company, and are also subject to laws and regulations at both the federal and state levels. Such complexity has appeared as an obstacle to the expansion and growth of the entire sector because it may subject fintech companies, looking to expand their business across the U.S., to regulation and supervision by the laws and regulations of different regulators.

FinTech players are taking away the remittance business from banks (Moneymail), Rated: A

Commercial banks remain the most expensive channel for sending money, pricing their services at 11.12%, while a post office is the least expensive channel (5.88%). As for money transfer operators, they were able to decrease the price of sending money to 6.24%.

Non-bank providers charge an average of 0.9% on £10,000, which is 4 times less than the average for banks.

 

Australia

Advisers quit big banks, AMP as watchdog intensifies scrutiny (The Australian), Rated: AAA

Financial advisers are deserting the major lenders, voting with their feet as the corporate watchdog heightens its scrutiny of the controversial cross-selling of wealth products in the “vertically integrated” lenders.

The big four banks and AMP, which control nearly half of all financial advisers in Australia, have bled more than 400 advisers in the last six months, according to Bell Potter analyst Lafitani Sotiriou.

Mr Sotiriou believes the rush for the exit has been caused by major banks limiting the freedom of their advisers to recommend products offered by rivals.

In the past six months, Commonwealth Bank, Westpac, ANZ, NAB and AMP have lost nearly 2 per cent of their market share in the country’s advisers.

SocietyOne’s lending tops $ 300 million, bucking personal credit weakness (The Sydney Morning Herald), Rated: A

SocietyOne will on Monday report its total loans arranged since it launched in 2012 have exceeded $300 million, with new lending in the first half of 2017 up 67 per cent on a year ago.

Rival P2P lender RateSetter has also funded about $130 million of loans since its inception in late 2014, according to its website, a figure that has roughly doubled since December.

Canada

Power Corp. venture capital fund plays the long game (Montreal Gazette), Rated: A

Faced with a changing market, one of Montreal’s largest companies is using an in-house venture capital fund to give it access to new technologies and new ideas.

Power Corp. of Canada (TSX: POW) runs some of the largest insurance and financial services companies in the country, it’s a market where new, technologically-enabled computers are emerging.

Last October, through three of its subsidiaries, Power launched Portag3, a venture capital fund that invests in fintech startups.

Last October, through three of its subsidiaries, Power launched Portag3, a venture capital fund that invests in fintech startups.

Middle East

FinTech comes to the fore in the GCC (Gulf Business), Rated: AAA

It’s an industry that is blossoming in earnest across the world, with investments worth $7.7bn taking place in China last year, $6.2bn in the US, and $1.5bn in the UK. It’s an industry that was valued at a staggering $867bn in 2016.

To date, the Middle East has accounted for only a small proportion of this, with regional FinTech companies expected to raise $50m in 2017, according to a report by Wamda Research Lab and Payfort – a marked improvement on last year’s $18m. In total, the report shows that only $100m has been raised in the past 10 years, while a 2016 report by FinTech Week said less than 0.1 per cent of global FinTech investments originated in the Middle East.

Authors:

George Popescu
Allen Taylor