Wednesday August 8 2018, Daily News Digest

OnDeck KPIs

News Comments Today’s main news: SoFi reports $200M loss in Q2. OnDeck jumps 18%. LendingClub sees record net revenues in Q2. Alipay fined for regulation violations. Dianrong raises $40M. Even Financial raises $18.8M. Today’s main analysis: OnDeck’s Q2 2018 earnings presentation. Today’s thought-provoking articles: GreenSky, OnDeck, LendingClub earnings. Where did it go wrong for Wonga? OnDeck’s Q2 earnings presentation. United States SoFi reports […]

OnDeck KPIs

News Comments

United States

United Kingdom

China

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News Summary

United States

SoFi Is Said to Report Second-Quarter Loss of $ 200 Million (Bloomberg), Rated: AAA

Writedowns of underperforming loans drove Social Finance Inc. to a second-quarter adjusted loss of about $200 million, according to people familiar with the matter.

OnDeck jumps 18% after Q2 beat and raise (Seeking Alpha), Rated: A

OnDeck (NYSE:ONDK) surges 18% in early trading after reporting Q2 adjusted EPS that beat consensus by 8 cents and boosting year adjusted net income guidance to $30M-$36M.

OnDeck Reports Second Quarter 2018 Financial Results (Markets Insider), Rated: AAA

OnDeck today announced second quarter 2018 Net income of $5.8 million, Adjusted Net income of $10.0 million and Gross revenue of $95.6 million.

Source: OnDeck Earnings Presentation

Review of Financial Results for the Second Quarter of 2018

Net income was $5.8 million, or $0.07 per diluted share, improved from the Net loss of $1.5 million, or $0.02 per diluted share, in the year-ago period.

Adjusted Net income was $10.0 million, or $0.13 per diluted share, compared to Adjusted Net income of $4.7 million, or $0.06 per diluted share, in the year-ago period.

Unpaid Principal Balance grew 3% sequentially and 8% from a year ago to $1,027 million. Originations of $587 million were consistent with the prior quarter reflecting an increase in the number of loans funded and decrease in the average loan size.  Originations increased 26% from a year ago with growth in both term loans and lines of credit.

Gross revenue increased to $95.6 million, up 6% from the prior quarter and 10% from the year-ago quarter, driven by higher Interest income. The Effective Interest Yield was 36.1%, up from 35.6% in the prior quarter and 33.5% in the year-ago quarter, primarily reflecting increases in average loan pricing.

Source: OnDeck Earnings Presentation

Guidance for Full Year 2018

OnDeck increased its guidance for the full year ending December 31, 2018:

  • Gross revenue between $380 million and $386 million, up from between $372 million and $382 million,
  • Net income between $10 million and $16 million, up from between $0and $10 million, and
  • Adjusted Net income between $30 million and $36 million, up from between $18 million and $28 million.
Source: OnDeck Earnings Presentation

See OnDeck’s full Q2 2018 earnings presentation here.

Why On Deck Capital Stock Is Soaring Today (The Motley Fool), Rated: A

Shares of On Deck Capital (NYSE:ONDK) were soaring by nearly 25% as of 1 p.m. EDT on Tuesday as the company beat consensus earnings expectations in the second quarter and raised its outlook for the remainder of the year.

Lending Club: bob and weave (Financial Times), Rated: AAA

Now, the top-line numbers are improving. Second-quarter figures released after market close on Tuesday showed record net revenue, up 27 per cent from a year earlier at $177m, from record quarterly loan originations of $2.8bn.

On top of all that, there was a big writedown this quarter of an acquisition made four years ago, during an ill-fated push into supplying loans to medical patients. Over the first six months, total expenses came to $1.28 for every dollar of net revenue.

Roundup of Q2 2018 Earnings: GreenSky, OnDeck, LendingClub (Lend Academy), Rated: AAA

GreenSky went public just a few months ago on May 24, 2018. Their IPO was significant for a couple of reasons. One was the lack of US based fintech IPOs over the last few years and the second was that GreenSky is a wildly successful business. Last year they reported $139 million in net income on revenues of $326 million.

Source: Lend Academy

OnDeck reported net income of $5.8 million for the quarter with gross revenues of $95.6 million, up 10% year over and 6% from the previous quarter. Originations grew to $587 million, up 26% from the prior year period, but down slightly from the previous quarter. The company’s trend of increasing the number of loans funded and decreasing the average loan size continues.

Source: Lend Academy

CEO Scott Sanborn noted that LendingClub’s core business is firing on all cylinders with record revenue and originations. The company has seen a 50% increase in applications year over year. Originations were $2.8 billion, up 31% year over year and up from $2.3 billion in the previous quarter. For context, the company originated their last high water mark of $2.75 billion in the first quarter of 2016. Revenues came in at $177 million, up 27% year over year.

Source: Lend Academy

Even Financial raises $ 18.8 million from GreatPoint Ventures, Goldman Sachs and others (TechCrunch), Rated: AAA

Even Financial, a fintech startup that connects the disparate entities of the financial services industry, recently raised a $18.8 million Series A round led by GreatPoint Ventures with participation from Goldman Sachs, Canaan Partners, F-Prime Capital, Lerer Hippeau and others.

What’s missing from the OCC’s fintech charter (American Banker), Rated: A

Although the OCC emphasizes that it’s holding these special-purpose charters to standards equivalent to those demanded of national banks, this is only sort of true with regard to the named prudential requirements, and it looks to be completely incorrect on critical restrictions on competitive and financial risk. These omissions have significant consumer protection, safety and soundness and structural impacts. Absent egregious violations, a charter granted cannot be revoked. The OCC should be sure it isn’t a shadow-bank enabler before it hands out these high-powered charters.

Is the backing of the banks enough for Zelle to beat Venmo? (Marketplace.org), Rated: A

Rahul Chadha follows peer to peer mobile banking for the research organization eMarketer. His firm says Zelle will overtake Venmo this year.  Chadha spoke with Marketplace’s Lizzie O’Leary about the two payment systems.

US challenger banks: who’s who and what’s their tech (Banking Tech), Rated: A

BankMobile
A digital bank created by an established US-based financial services player Customers Bancorp. BankMobile opened for business in early 2015.

It caters mainly for students and offers a low-fee checking account with no monthly fees and no overdraft/non-sufficient funds (NSF) fees. It also provides personal loans.

Chime
Founded in 2014, Chime has raised over $100 million funding to date, values the business at around $500 million and has over one million accounts. It employs around 100 people.

Endeavor Bank
Endeavor Bank opened its doors for business in San Diego, California in January 2018, following an initial capital raise of $26.6 million and the backing of over 450 investors/owners. It is a brand new bank, with no merger legacy.

Finn
Finn is a digital bank account for smartphones created by JP Morgan Chase.

GoBank
GoBank was launched in 2013 by Green Dot Corporation, which claims it to be “the first bank account designed from scratch to be opened and used on a mobile device”.

Iam Money
Iam Money has its HQ in Chicago and an office in San Francisco. It also has two offices outside the US, in Dublin and London.

It has secured $3 million of funding, and plans to have $20 million when it launches.

Marathon International Bank
A start-up bank for the Ethiopian American community, based in the Washington DC area. Its founders are Tekalign Gedamu, a retired economist and former MD of the Development Bank of Ethiopia, and Tesfaye Biftu.

Marcus
An online platform launched by Goldman Sachs – named after Marcus Goldman, one of the firm’s founders – offering no-fee personal loans and high-yield savings to consumers.

Moven
Launched in 2011 by Brett King, Moven describes itself as “the world’s first real-time mobile money tool”. It is a digital bank account with a mobile app.

N26
A challenger bank from Germany, now working on its US presence, including obtaining a banking licence. It opened early access to users in the US in October 2017 and has an office in New York with eight staff.

PurePoint Financial
PurePoint Financial was launched in early 2017 by MUFG Union Bank. It is a “hybrid digital bank” offering savings accounts and certificates of deposit (CDs).

Revolut
European banking challenger Revolut opened early access to users in the US in September 2017. It says it aims “to clean up the American banking system”. It provides digital banking services to consumers and businesses.

Simple
Digital banking service Simple was founded in 2009 in Portland, Oregon. It describes itself “a tech company, not a bank”.

In early 2014, it was acquired by BBVA Compass for $117 million.

SoFi

In early 2017, it raised another $500 million, and spent $100 million (in stock) on Zenbanx, a mobile banking start-up. Zenbanx offered a mobile account in the US and Canada that lets people save, send and spend money in multiple currencies. This deal demonstrated SoFi’s interest in branching into other financial services, with a wealth management tool in beta at the time of the acquisition.

Stash

In early 2018, Stash raised $37.5 million in Series D funding for product expansion, and shortly afterwards teamed with Green Dot Corporation and its subsidiary bank, Green Dot Bank, to launch mobile-first banking services (underpinned by Green Dot’s Banking-as-a-Service platform).

Studio Bank
In 2017, Tennessee-based Studio Bank filed an application to become Nashville’s “first newly chartered de novo bank in nearly a decade”.

Varo Money
San Francisco-based mobile banking service Varo Money was founded in 2015. It applied for a national bank charter and federal deposit insurance in mid-2017, to form Varo Bank.

Treasury urges mortgage sector to embrace digital tech (National Mortgage News), Rated: A

The Treasury Department’s recent report on how to regulate nonbanks drew praise not just from tech startups but also from mortgage industry insiders.

In addition to recommendations for a new federal fintech charter and that regulators pull back from payday lending rules, the report contained a section that might be music to a mortgage banker’s ears, including support for the industry’s automation efforts and another call to soften the use of the False Claims Act against lenders.

Blend Launches Insurance Agency (Finovate), Rated: A

Mortgagetech company Blend is venturing into insurance. The San Francisco-based company launched Blend Insurance Agency, an extension of its digital mortgage platform that offers borrowers a range of options for homeowners insurance.

RealtyMogul Sells Four Real Estate Properties on Behalf of Digital Investors (Citizen Tribune), Rated: B

The first property is a 1,242-unit self-storage facility in Fayetteville, NC. It was acquired in December 2013 and sold in January 2018. It was acquired for $6,750,000 and sold for $9,645,000, representing a 43% increase in capital value from acquisition.

The second property is a 40,000-square foot office building in Tamarac, FL. It was acquired in May 2016 and sold in February 2018. It was acquired for $4,150,000 and sold for $4,900,000, representing an 18% increase in capital value from acquisition.

The third property is a 72-unit multifamily apartment building in Ogden, KS. It was acquired in July 2013 and sold in April 2018. It was acquired for $4,000,000 and sold for $4,450,000, representing an 11% increase in capital value from acquisition.

The fourth property is a 208-unit multifamily apartment building in Euless, TX. It was acquired in February 2015 and sold in May 2018. It was acquired for $12,375,000 and sold for $20,900,000 after a value-add renovation program, representing a 69% increase in capital value from acquisition.

Zillow gets into the mortgage business, acquires Mortgage Lenders of America (TechCrunch), Rated: B

Zillow, the publicly traded real estate portal and lead generation service, has acquired Mortgage Lenders of America. This is Zillow’s first move into originating mortgages.

DriveWealth and Bambu Launch Robo Platform for Registered Investment Advisors (BusinessWire), Rated: A

DriveWealth Holdings, Inc. (“DriveWealth”), a fintech company providing brokers, digital advisors and mobile online financial services companies seamless access to the U.S. securities market, and Bambu, a global provider of robo-advisory technology, today announced the launch of a white-label, end-to-end robo-advisory platform solution for the wealth management industry.

Arizona’s Regulatory Sandbox Is Open for Play (The National Law Review), Rated: B

To be considered for admission, applicants must complete the nine-page application and pay a $500 application fee.  Each application must be for an innovative financial product or service as defined by the enabling legislation.

United Kingdom

RateSetter: FCA marketing restrictions are “disproportionate” (P2P Finance News), Rated: AAA

RATESETTER has hit back at proposed marketing restrictions for peer-to-peer lenders, stating that they are “disproportionate” and “clunky”.

Where did it all go wrong for Wonga? (The Guardian), Rated: AAA

Just when things were meant to be getting better for Wonga, it emerged at the weekend that the payday lender’s investors had to rescue it with a £10m capital injection.

The emergency fundraising is the latest episode in Wonga’s rapid rise and fall. Just six years after the company was touted for a flotation that would have valued it at more than $1bn (£770m), it is reported to be worth just $30m.

Regulation didn’t wipe out Wonga – losing its reputation did (City A.M.), Rated: A

WHEN PAYDAY LENDER Wonga launched in 2007, it was tipped to become a £1bn success story. Today, the company is worth just £23m and has only managed to avoid insolvency thanks to a last-minute £10m boost from investors. So what went wrong?

Rothschild’s Augmentum receives £3.5m Zopa boost (Citywire), Rated: A

Augmentum Fintech (AUGM), the venture capital fund spun off from RIT Capital Partners (RCP) earlier this year, has received a £3.5 million boost from the revaluation of peer-to-peer lender Zopa.

LendInvest makes a series of changes to BTL product (Bridging and Commercial), Rated: A

The specialist lender has removed its requirement for a debenture or floating charge on limited company applications.

It has also reduced its ICR assessment rate to 5% across all products with the exception of the five-year fixed interest product, which remains at 4.19%.

Why brokers should be allowed to speak to decision makers (Bridging and Commercial), Rated: A

Roy Armitage, head of credit at LendInvest (pictured above), is clear that, for a specialist lender, a good working dialogue between the underwriters and the brokers placing the business is crucial.

Participate in the Cambridge Centre for Alternative Finance Research Study (Lend Academy), Rated: B

They are winding up their largest survey ever right now. In the past they have produced multiple reports targeting the various regions around the world including: the United Kingdom, Europe, the Americas, Asia and Africa. This year they are combining everything into one big study.

If you have not participated in the survey yet time is running out (while the survey says it closes on July 22nd, they have extended the deadline for another week or so). We need every platform in this country and around the region to participate. To learn more you can read more about this comprehensive piece  in 

China

China’s Central Bank Fines Alipay (PYMNTS), Rated: AAA

Alipay, a payment affiliate of Alibaba, has been hit with a $601,846 fine by the Shanghai head office for the People’s Bank of China.

According to a report in Reuters, citing the central bank, the fine was for payment services regulations violations. The regulator didn’t provide any other details.

Dianrong pockets $ 40 million funding amid mounting P2P defaults in China (Technode), Rated: AAA

Chinese P2P lending platform Dianrong announced that it has raised $40 million of funding from Dalian Financial Investment Group Co. Ltd. The current round will increase the company’s total funds raised to date to over $500 million. Its previous investors include big titles such as Standard Chartered, GIC Private Limited, Singapore’s sovereign wealth fund, CMIG Leasing, Simone Investment Managers, etc.

China’s P2P lending meltdown (CNBC), Rated: A

China’s P2P lending meltdown from CNBC.

International

Prime Trust to Enable Real Estate Syndicators & Securities Issuers to Accept Funds in Bitcoin & Ethereum (Crowdfund Insider), Rated: A

Prime Trust, a blockchain driven trust company, announced on Monday it has launched a new technology that enables real estate syndicators and securities issuers to accept funds from investors in the form of Bitcoin and Ethereum, frictionlessly and with zero crypto-market risks to the syndicator or issuer. According to Prime Trust, the technology enables holders of these virtual currencies to invest in real estate, crowdfunding and other private and public securities offerings without having to go through the cumbersome and often confusing process of liquidating tokens and then wiring funds in USD to an escrow account at Prime Trust.

TransUnion Partners with EXL to Create Turnkey Current Expected Credit Loss (CECL) Solution (MarketWatch), Rated: B

TransUnion TRU, +0.56% announced today it is partnering with global technology and analytics company EXL EXLS, +0.93% to create a seamless technology solution for lenders to comply with the new Current Expected Credit Loss (CECL) accounting rule. Information about the new accounting rule will be highlighted during TransUnion’s webinar, “Major Hurdles to Overcome to be CECL-Ready,” scheduled for 1 p.m. CDT on August 15.

Australia

Financial advice institutions to refund over $ 800 million (Business News Australia), Rated: AAA

As the revelations from the Royal Commission continue to pour in, the Australian Securities and Investment Commission (ASIC) has revealed that, in total, Australian financial advice institutions will refund customers over $800 million in reparations over fees for no service (FFNS) programs.

Australian challenger banks: who’s who (and what’s their tech) (Banking Tech), Rated: A

86 400

Launched in June 2018, the bank is led by former ANZ Japan CEO, Robert Bell, and ex-Cuscal Payments CIO Brian Parker. Joining as incoming chairman is Anthony Thomson, co-founder and former chairman of Atom Bank and Metro Bank.

Judo Capital

For its tech, it uses a variety of different vendors. Unifii’s Business Transformation Platform is used for its technical infrastructure. For its small business lending platform, it will use one from Realtime Computing, based in Perth, Australia.

Pelikin

Digital banking start-up Pelikin aims to reshape the way people save, send and spend their money in Australia and while travelling abroad. The company’s slogan is “spend like a local”. The founder is Sam Brown.

UBank

Unveiled in 2008 and developed and supported by National Australia Bank (NAB). It operates under NAB’s banking licence, and offers home loans, online savings accounts, and term deposit accounts. UBank has more than 400,000 customers.

Volt Bank

Sydney-based Volt Bank was given Australia’s first new restricted banking licence and is now working towards becoming a fully licensed bank.

Xinja

The neobank emerged from the shadows to unveil its plans for a mobile-only digital bank in 2017. It will have no bricks and mortar branches.

MENA

Visa Invests In Israeli Start-up Behalf (RTT News), Rated: AAA

Visa, Inc. (V) on Tuesday announced an investment and partnership with Israeli start-up, Behalf, to support small business growth through easy-to-access capital and financing.

Authors:

George Popescu
Allen Taylor

Wednesday May 23 2018 Daily News Digest

Interest rates & new delinquencies on CC debt

News Comments Today’s main news: SoFi to get into crypto investing by 2019. How Goldman Sachs predicts economic slumps. How SoFi personalizes the mobile experience. A Monzo case study. Klarna acquires Shop.co. Today’s main analysis: More Americans are struggling to pay with credit cards. Today’s thought-provoking articles: 4 in 10 Americans can’t cover a $400 emergency expense, Fed survey […]

Interest rates & new delinquencies on CC debt

News Comments

United States

United Kingdom

European Union

International

India

Other

News Summary

United States

SoFi will get crypto investing by 2019, says CEO Anthony Noto (CNBC) Rated: AAA

SoFi CEO Anthony Noto says the “modern finance” company wants members to be able to invest in cryptocurrency as soon as 2019.

“We want to accelerate our investment in some new products, one of which is our wealth products, and we want to add cryptocurrency to that,” Noto said on CNBC’s “Power Lunch.”

Goldman Sachs has a novel method for predicting the next economic slump  (Business Insider) Rated: AAA

You might remember that Goldman Sachs is lending to subprime borrowers. Turns out, it’s all part of a plan to help predict the next credit cycle.

In February, Goldman Sachs surprised Wall Street when it said that more than 80% of borrowers for its Marcus consumer-lending product had a FICO score of more than 660 at year end. The implication was that nearly 20% had a score of less than 660, placing them in a group often referred to as subprime.

In September, the bank said it saw a $1 billion revenue opportunity in the Marcus loan-and-deposit platform based on a $13 billion lending opportunity over three years. Whether it reaches that goal will depend in part on how those subprime borrowers behave.

More Americans are struggling to pay their credit cards (Business Insider) Rated: AAA

Interest rates, which influence the cost of borrowing, are on the rise after the Federal Reserve kept them near zero for years. That period of super-low interest rates achieved one key outcome: encouraging Americans to borrow, spend, and help grow the economy after the Great Recession.

Last June, credit-card debt finally hit a new high. But the share of borrowers who make payments more than 30 days late is rising along with interest rates.

Source: Business Insider

The Fed is set next month to raise its benchmark rate for the seventh time since late 2015.

Source: Business Insider

How SoFi is personalizing its mobile experience (Tearsheet) Rated: AAA

SoFi is personalizing its digital customer experience by fusing event planning, career services and personal finance insights inside its mobile app.

SoFi is joining a group of financial institutions that are letting customers aggregate accounts to get a full financial picture — even if they’re not with the same institution, with recent examples including Citi and HSBC.

As it grows its digital offerings, the company is adding services to meet the needs of a fast-growing customer cohort. SoFi currently has 500,000 customers — up 200,000 from last year.

 

 

 

50. SoFi (CNBC) Rated: A

This has been quite a year for SoFi (short for Social Finance).

The company claims to have 500,000 members and has made $25 billion in loans to date. SoFi has raised $2.1 billion in funding, including $500 million in a round led by Silver Lake Partners. In early interviews after taking over the top spot, Noto spoke about eventually taking SoFi public, but did not outline a timetable.

For millennials, it’s about having a house, children and retiring early (CNBC) Rated: A

Julia Boorstin live with SoFi CEO Anthony Noto discusses running what he describes as a “modern day” financial services company.

Watch the interview here

SoFi Makes Graduation From Student Debt An Epic Experience (PR Newswire) Rated: A

In a video released today on YouTube, SoFi made that moment of relief from student debt a grand occasion for one Midwestern woman. The company surprised Candice, a SoFi member who had refinanced her student debt, with an epic surprise “debt graduation” ceremony with friends, family, and some unconventional surprises planned by the company, together with production and entertainment studio GenPop.

Guaranteed Rate Partners with DocMagic to Cut Closing Time (Florida Newswire) Rated: A

DocMagic, Inc., the premier provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced that retail mortgage lender Guaranteed Rate can now cut closing time by electronically signing mortgage closing documents in advance.

Guaranteed Rate has branded the solution FlashClose, which allows customers to opt-in, review and complete most documents in advance of the notary arriving, saving an hour or more at the closing table – with some averaging a mere 10-minute appointment to provide inked signatures.

First wave of neobanks resets for new offensive (American Banker) Rated: A

BankSimple (now just called Simple) was bought by BBVA and went through a painful process of migrating accounts to the big bank’s systems; its founder recently announced he’s leaving. Moven became a seller of software to large banks including TD Bank and Westpac, while still maintaining its own mobile banking service. Varo Money has been trying for almost a year to get a banking license. Chime remained independent (in partnership with The Bancorp Bank) but is going through growing pains.

This year, all are taking up their swords again, renewing an anti-bank message of helping consumers lead financially healthy lives, with fewer fees and more helpful products and software than traditional banks. Following is a look at how the neobanks are fighting back.

Cadre seeks at least $ 100M from SoftBank (The Real Deal) Rated: A

Real estate crowdfunding platform Cadre is seeking at least $100 million from a fund started by the SoftBank Group.

Representatives for the SoftBank Vision Fund met with a top executive from Cadre recently, Bloomberg reported. The fund gets nearly half of its $100 billion from the Saudi Arabian government and at least $15 billion from the United Arab Emirates.

Lending Express garners $ 2.7 mln (PE Hub Network) Rated: A

Lending Express, the only AI-powered marketplace for business loans, today announced the securing of a $2.7 million investment round led by Entrée Capital, iAngels, and existing investors. The funds will be used to build out their innovative loan-matching technology and scale up operations in the United States and Australia.

How fintech gave this SBA lender an edge (American Banker) Rated: A

Add Seacoast Banking in Stuart, Fla., to the list of community banks that now believe in working with fintechs.

The $6 billion-asset company is gaining traction in Small Business Administration lending after partnering with SmartBiz Loans to speed its approval process. The move halved the interval from application to funding, to as little as 10 days, said Julie Kleffel, Seacoast’s community banking executive.

Four in 10 can’t cover an emergency expense of $ 400, Fed survey finds (Market Watch) Rated: AAA

The Fed’s new survey of household economics and decision-making found 41% could not cover a $400 emergency expense using cash in 2017. That’s actually a slight improvement, since 44% could not in 2016, 46% could not in 2015 and only 50% could in 2013.

Those that couldn’t afford the expense turn to credit cards or borrowing from family or friends, while only 5% would turn to a payday loan or similar product.

Source: Federal Reserve

Read the full report here.

Why real estate tech won’t kill the middleman (The Real Deal) Rated: A

Not too long ago, it seemed like the real estate business was about to enter a new era. To some observers, websites like Zillow and Trulia or their office equivalents 42Floors and LoopNet threatened to put brokers out of business (although officially these firms said no such thing). Crowdfunding startups dreamed of doing the same to pricey fund managers. Why pay a cut to an agent if you can just find your house or office online, for free? Why give your savings to a pension fund, which gives it to an asset manager, which gives it to a real estate lender, which gives it to a developer, if you can just lend the money to a developer yourself, online, and save a fortune in fees?

ENACOMM Adds FoneLogix as Ally to Bring Data-Driven AI and Phone Banking to Financial Institutions (Globe Newswire) Rated: B

ENACOMM—a fintech company that empowers banks, credit unions and credit card companies with solutions for improving the customer experience (CX), fighting financial fraud, and increasing operational efficiency—today announced a new reseller agreement with FoneLogix, an Atlanta-based provider of cloud-hosted VOIP Phone Systems, Solutions and Support.

Through the partnership, FoneLogix’s bank and credit union customers will be able to take advantage of ENACOMM’s VPA (Virtual Personal Assistant) Conversational Banking and the ENACOMM Financial Suite (EFS), which includes a hosted, dynamic interactive voice response (IVR) system for personalized customer interactions.

AI Challenging Bank Lending Practices (Forbes) Rated: A

CultureBanx notes 

The Best Business Loans and Financing Options for Freelancers (The Entrepreneur) Rated: A

Most banks view freelancers as high-risk, and as such, may be unwilling to enter a loan agreement. Because a freelancer is considered a sole proprietor, he or she alone is liable for all losses and debts his or her business may incur. If the freelancer gets hurt or sick and cannot work — or is just terrible at running a business — the bank is left holding the bag.

Online lenders offer an interesting alternative. Typically, these non-traditional lenders have more relaxed loan approval criteria and a swifter approval process. Importantly, your personal income, assets and credit score are assessed for loan approval, not the value of your business. You should expect to pay higher rates of interest, a natural trade-off for the perceived risk you present.

First Tech Federal Credit Union Personal Loans: 2018 Review (Nerdwallet) Rated: A

First Tech offers unsecured and secured personal loans as well as personal lines of credit. Annual percentage rates start at 9% on unsecured loans, or 3% on secured loans, which can be backed by a First Tech savings account, First Tech share certificates, or stock you own in the company you work for or one listed on the NYSE, Nasdaq or Amex.

You can apply for a loan of as little as $500, making First Tech a good option for borrowers looking for small loans. Payments for unsecured and secured loans are fixed over two to seven years, and you can choose between monthly or biweekly payments.

 

 

Trump signs resolution overturning CFPB auto lending rule (Consumer Affairs) Rated: B

President Trump has signed a resolution, passed by Congress, overturning the Consumer Financial Protection Bureau’s (CFPB) auto lending rule, designed to prevent racial discrimination by dealers who finance purchases.

United Kingdom

Monzo Case Study (AWS) Rated: AAA

Monzo has grown from an idea to a fully regulated bank on the AWS Cloud. A bank that “lives on your smartphone,” Monzo has already handled £1 billion worth of transactions for half a million customers in the UK. Monzo runs more than 400 core-banking microservices on AWS, using services including Amazon Elastic Compute Cloud (Amazon EC2), Amazon Elastic Block Store (Amazon EBS), and Amazon Simple Storage Service (Amazon S3).

Open banking regulations, which came in at the start of 2018, required the nine largest banks in the UK to provide an API for their users’ account information.

 

Meet the 35 most exciting young entrepreneurs, engineers, and advisors in UK fintech (Business Insider) Rated: AAA

Business Insider has covered UK fintech since our 2014 launch. The UK Fintech 35 under 35 highlights the most promising young entrepreneurs, engineers, marketers, and sector experts under the age of 35. It spans both startups and big banks operating in the sector.

35. Pierce Glennie, iwoca

The company has lent over £400 million since its founding in 2011. Glennie was one of iwoca’s first outside hires and just 21 when he joined the business.

27. Aneesh Varma, Aire

Varma, who started his career at JPMorgan, set up Aire in 2014. It is his second startup, having previously founded enterprise software business FabriQate in 2005.

24. Anil Stocker, MarketInvoice

MarketInvoice is an online platform that lets businesses borrow against unpaid invoices. The lender isn’t MarketInvoice itself but institutional investors and high net worth individuals looking for strong returns.

23. Karen Kerrigan, Seedrs

Seedrs is one of the UK’s first equity crowdfunding platforms, letting ordinary people invest in startup businesses. 600 businesses have raised over £320 million since the platform launched in 2009.

17. Simon Miller, Scalable Capital

Scalable Capital is one of a number of so-called “robo advisors” — online investment advisors and platforms — that have sprung up around the world in recent years. The company already has £600 million in assets under management and has attracted investment from asset management giant BlackRock.

13. Joe Cross, TransferWise

Cross was one of TransferWise’s first employees and has seen the international money transfer business grow from a small East London startup to business worth over $1 billion.

6. Megan Caywood, Starling Bank

She is now chief platform officer at startup, app-only bank Starling, which is trying to make a new kind of bank that functions more like an app store than a traditional lender.

5. Martin Ijaha, Neyber

Neyber works with employers to let staff borrow money then repay through salary deductions. Neyber was founded in 2012 and now works with 160 employers with a combined 1 million staff. Last year Goldman invested £100 million into the platform.

3. Tom Blomfield, Monzo

The fully licensed bank now has over 500,000 current account customers who have spent £1 billion on Monzo’s iconic hot coral cards. The company has raised over £71 million to date and is valued at £280 million.

2. Samir Desai, Funding Circle

Their platform has now lent over £4 billion to businesses across the UK, Germany, US, and the Netherlands. Desai was awarded a CBE for services to financial services in 2015 and his company is tipped to float on the stock exchange later this year with a price tag of at least £1 billion.

1. Nikolay Storonsky, Revolut

Revolut began life as a foreign exchange card linked to an app that offered rock-bottom FX prices. The company is less than three years old but the popularity of its product has already seen it hit 2 million customers and a valuation of $1.7 billion.

Proptech Startup When You Move Raises £3M in Funding (Finsmes) Rated: A

When You Move, a UK-based proptech startup, secured new funding which brings the total amount raised to £3m.

Backers included Fig, a proptech VC, and a hybrid network of friends and family, private HNW investors and incumbent shareholders.

The company intends to use the funds to build out it customer excellence teams, scale up the development team and solidify its position as the solution for professionals involved in property purchases.

The UK fintech economy will create different pockets of excellence all over the country (Computer Weekly) Rated: A

He said fintechs such as Leeds based White label Crowdfunding which build peer to peer lending software, business lender Rebuildingsociety.com also in Leeds, and Accespay in Manchester have been involved with the Fintech North events.

Mark Carney: Every household £900 worse off because of Brexit (The Telegraph) Rated: A

UK households are £900 worse off than they would have been because of Brexit, Bank of England Governor Mark Carney has claimed.

Mr Carney revealed in a Treasury Select Committee grilling that growth has been up to 2pc lower than the central bank had expected because of the UK’s decision.

Banks ‘charging more’ for overdrafts than payday lenders (BBC) Rated: A

Unarranged overdraft fees can cost borrowers up to seven times more than a payday loan, a consumer group warned.

Which? compared the cost of borrowing £100 for 30 days in an unarranged overdraft across 16 high street banks with borrowing the same amount through a payday loan.

Ireland Issues Tax Guidance On Peer-To-Peer Lending (Tax News) Rated: B

A company that pays interest on finance raised via peer-to-peer lending or crowdfunding is obligated to withhold income tax at the standard rate of tax on interest payments made on the finance raised. The underlying lenders are liable to pay income tax on any interest they earn on which withholding tax has not been suffered.

‘Lenders need to be more transparent about portfolios’ (Bridging & Commercial) Rated: A

Far from deserting the sector, lenders are now presenting landlords with a wider range of borrowing options than ever before. New figures from financial information site Moneyfacts suggests that there are currently more than 2,000 buy-to-let mortgage deals available, a new record high.

And while the various regulatory and tax changes have spelt trouble for the small-time landlords, the professionals seem to be in the ascendency. A recent study by Aldermore suggested that more than four out of 10 portfolio landlords are looking to expand their portfolios in the next 12 months.

China

Chinese fintech’s global future is arriving now (Financial Times) Rated: AAA

Ant Financial recently raised an oversubscribed $10bn round which values the firm higher than Goldman Sachs, American Express and BlackRock; the Alipay product has more than 500 million users and is incredibly simple to use; they have integrated into Alibaba’s retail operation and have the world’s largest money market fund with Yu’E Bao; they have begun expanding globally as well as they have built partnerships with firms in Africa and have tried to enter the U.S. market through an acquisition of MoneyGram which was blocked by regulators; regulators will need to figure out how handle a company that doesn’t look to fade from the financial scene anytime soon.

Legal concerns heat up for wanted Founders Group leader as partner testifies in China (Myrtle Beach Sun News) Rated: A

Liu’s partner in the Chinese company Yiqian Funding, a peer-to-peer lending business that seeks investors, testified May 3 in her fraud trial in Nanjing that Liu was in control of the company when it became unable to pay many investors what prosecutors estimate to be $1.17 billion — or 7.4 billion yuan.

 

European Union

Klarna acquires universal shopping cart Shop.co (Ecommerce News) Rated: AAA

Klarna has acquired Shop.co, a small German startup that wants to simplify online shopping by offering a universal shopping cart. There’s little known about the deal, but according to Klarna it’s mostly about the acquisition of intellectual property and taking over a mere Shop.co employees..

According to t3n, a purchase sum somewhere in the mid double-digit millions is also likely. But later on, Klarna told another media outlet, Tech.eu, that the purchase price is far lower than some media have been speculating. It also said that it’s most acquiring intellectual property and employees.

Keeping on Top of Emerging Payment Solutions – Q&A with Klarna (Retail Tech News) Rated: A

Luke Griffiths: Klarna’s approach to online commerce is very different from that of traditional providers. Our overarching philosophy is to give consumers the freedom and flexibility to decide how and when they want to pay. At Klarna, we offer three payment options that cover all consumer needs for seamless shopping: ‘Pay now’, ‘Pay later’, and ‘Slice it’.

Pay now enables straightforward and immediate online payment purchases. This option allows customers to pay for their purchases in full via Klarna’s speedy online checkout and payment service using a card. Many of our merchants choose the Klarna checkout as it is proven to reduce abandoned baskets and provide a better user experience for shoppers.

Our second payment option, Pay later, allows shoppers to ‘try before they buy’. Customers have either 14 or 30 days to pay for their goods (depending on the merchant) after their items have been delivered, with no interest or fees – or they can return the items if they’re not what they expected.

EMaC launches ‘Drive Now Pay Later’ service for dealers (Motor Trader) Rated: B

EMaC, the service plan specialist, is widening the services it offers dealers and end consumers with the launch of a pay later credit facility for vehicle repairs and accessories.

The company, which is has also launched a new identity, has teamed up with credit provider Klarna to offer the “Drive Now Pay Later” service.

EMaC said its new Drive Now, Pay Later product would give dealers access to a credit facility to assist their customers in financing repairs and other vehicle related accessories.

Banks seek tech talent for digital shift (Financial Times) Rated: A

European Banks have increased advertising for IT and engineering roles by more than 10 times in the last 3 years; a new report by the Economist Intelligence Unit and Temenos shows for the first time that bank executives believe technology like AI and blockchain will have a bigger impact than regulation; being about 10 years removed from the financial crisis has help shift the view of banks to focus more of their time on digitization instead of regulatory compliance.

 

 

International

Meet the Goldman Sachs-Backed Fintech Startup Aiming to Take Over North America (Fortune) Rated: AAA

Now Plaid, which raised $44 million in a funding round led by Goldman SachsInvestment Partners nearly two years ago, is looking to expand internationally. The company announced Tuesday that Plaid is available in Canada for the first time—and compatible with both U.S. and Canadian dollars—a move designed to both support current clients’ Canadian expansions as well as attract new Canadian fintech players.

Companies use Plaid’s APIs (or application programming interfaces) as a foundation for building their own fintech products, depending on that secure way to link customers’ bank accounts. Its extension into Canada is a sign that the nascent fintech industry is gaining traction in more parts of the world. TransferWise, a London-based cross-border payments startup that uses Plaid, recently expanded into Canada as part of a global push. And Toronto-based Drop, a loyalty rewards app, is one of Plaid’s first Canadian clients.

Is Fraud a Solved Problem? (Lend Academy) Rated: AAA

But one statement stood out to me. Jeff Stewart, the Chairman and Co-Founder of LenddoEFL said that “fraud is a solved problem”.

That is quite a bold statement. So, I reached out to Jeff yesterday to get some more color on what he really means here. He stood by what he said on the panel at LendIt. While we can’t get rid of 100% of fraud what we can do is catch fake identities, fraud rings, and large-scale theft of identity.

It is not surprising that the type and amount of fraud varies between countries. We learned from Thomas Wang of China Rapid Finance in this same session that a staggering 97% of loan applications in China are fraudulent. Think about that for a moment. Only 3% of the applications that a Chinese online lender receives is from a real person. The rest is fraudulent activity often from established fraud rings.

Small Business Banking Catching Up in Innovation Race (Bank Innovation) Rated: A

There are quite a few lending solutions these days for small businesses — Funding Circle, OnDeck, Kabbage, and Square Capital, to name a just a few — but innovation and digitization are lagging in other areas, such as digital account opening. Enter Gro Solutions, a sales and marketing platform for financial institutions.

Australia

Understanding the SME mindset (Australian Broker) Rated: A

More than one in five SMEs – a total of 22% – opted for non-bank alternatives to funding their growth. A further 24% looked to borrow from their main relationship bank, and this bank lending percentage has trended down from 38% in our initial 2014 Index.

The most popular funding choices for SMEs using alternative working capital options in 2017 were debtor finance, which was used by 77%; merchant cash advances, used by 23%; P2P lending, with a total share of 10%; and crowdfunding, utilised by 9%.

India

Payday loan firm EarlySalary acquires CashCare (Media Nama) Rated: AAA

Payday loan firm EarlySalary has acquired CashCare. CashCare sells loans to customers on websites like Infibeam and Shopclues, and accepts repayments in EMIs at annual interest rates ranging between fifteen and 25%, according to CashCare’s website. The service is offered to people who don’t have a credit card too.

While CashCare’s 15% annualized interest rate is not too different from what credit card companies charge, EarlySalary’s payday loans come at a steeper cost. Charging ₹9 for each dayper ₹10,000 borrowed, their interest rate comes out to over 30%, compared to the 1.5–3% annualized interest credit cards charge, as we’ve pointed out before.

Xiaomi to start lending operations in India; to target salaried professionals (The Economic Times) Rated: AAA

IPO-bound Chinese smartphone company Xiaomi has launched its first lending product in India on the lines of the microlending product Mi Credit that it offers in China.

The new credit product, launched in partnership with lending platform KrazyBee, has already gone live and will be officially announced in a few weeks, as per a person aware of the development.

Called CreditBee, the credit product is a payday loan starting from Rs 1,000 up to Rs 1 lakh for a period of 90 days, as per the person cited above. The credit will be offered at an interest rate of 3% per month and will be targeted at salaried professionals, the person said.

P2P lending startup Cashkumar secures angel investment (VC Circle) Rated: A

Cashkumar, a peer-to-peer (P2P) lending startup, has raised angel investment of Rs 5 crore (around $735,000) through deals platform LetsVenture.

The startup’s first external funding was led by Mohan Kumar, executive director at global investment firm Norwest Venture Partners, and telecom company Reliance Jio’s chief digital officer Vishal Sampat.

Capacity-building workshop by RBI (Tribune India) Rated: B

Rachna Dikshit, Regional Director, RBI, Chandigarh inaugurated the workshop. In the event, topics like RBI guidelines, credit guarantee architecture for MSME financing and recovery management, alternative tech driven approaches to financing MSMEs like big data, fintechs, P2P lending, TReDS, movable asset based financing, role of CERSAI, management of sick account, credit scoring and rating models for MSMEs, assessment of term loans and composite loans, effective communication were covered.

 

Asia

Fintech Firm Flywire Teams Up With SP Jain For New Student-Led Singapore-Based Startups Competition (Crowdfund Insider) Rated: A

Flywire, a fintech firm that provides global payment and receivable solutions for education, healthcare, and commercial enterprises, announced this week it has partnered with SP Jain School of Global Management to launch a startup competition, the Flywire Challenge, to power a new generation of transformative entrepreneurship in Singapore and the APAC region.

According to the duo, this competition, which is set to launch this month, solidifies Flywire’s dedication to partnering with powerful regional universities, government bodies and industry, and investing in education and the start-up space, as well as their long-term relationships with international educational and healthcare institutions as a leading payments solutions provider. Flywire will host, sponsor and evaluate a contest following an open call for teams to submit proposals for innovative start-up ideas. Any and all students and graduates, not limited to SP Jain students, will be invited to compete for three awards in the Health Technology, Education Technology and Travel Technology sectors.

Latin America

Mexican investors back microlending startup Vola (VC Circle) Rated: AAA

Bengaluru and US-based Vola, which offers an alternative lending platform for students, has raised $500,000 (Rs 3.4 crore) in a pre-Series A funding round from Mexican insurance and credit firm Credika and unnamed angel investors from the North American nation.

MENA

AI Business Loan Company Lending Express Raises $ 2.7 Million (CTech) Rated: AAA

Israeli business loan startup Lending Express announced on Tuesday it has raised $2.7 million in a seed investment round led by Entrée Capital and iAngels, among other investors.

The company said it would use the capital to further develop its loan-matching technology and scale up its operations in the U.S. and Australia.

Authors:

George Popescu
Allen Taylor

Wednesday May 23 2018 Daily News Digest

Interest rates & new delinquencies on CC debt

News Comments Today’s main news: SoFi to get into crypto investing by 2019. How Goldman Sachs predicts economic slumps. How SoFi personalizes the mobile experience. A Monzo case study. Klarna acquires Shop.co. Today’s main analysis: More Americans are struggling to pay with credit cards. Today’s thought-provoking articles: 4 in 10 Americans can’t cover a $400 emergency expense, Fed survey […]

Interest rates & new delinquencies on CC debt

News Comments

United States

United Kingdom

European Union

International

India

Other

News Summary

United States

SoFi will get crypto investing by 2019, says CEO Anthony Noto (CNBC) Rated: AAA

SoFi CEO Anthony Noto says the “modern finance” company wants members to be able to invest in cryptocurrency as soon as 2019.

“We want to accelerate our investment in some new products, one of which is our wealth products, and we want to add cryptocurrency to that,” Noto said on CNBC’s “Power Lunch.”

Goldman Sachs has a novel method for predicting the next economic slump  (Business Insider) Rated: AAA

You might remember that Goldman Sachs is lending to subprime borrowers. Turns out, it’s all part of a plan to help predict the next credit cycle.

In February, Goldman Sachs surprised Wall Street when it said that more than 80% of borrowers for its Marcus consumer-lending product had a FICO score of more than 660 at year end. The implication was that nearly 20% had a score of less than 660, placing them in a group often referred to as subprime.

In September, the bank said it saw a $1 billion revenue opportunity in the Marcus loan-and-deposit platform based on a $13 billion lending opportunity over three years. Whether it reaches that goal will depend in part on how those subprime borrowers behave.

More Americans are struggling to pay their credit cards (Business Insider) Rated: AAA

Interest rates, which influence the cost of borrowing, are on the rise after the Federal Reserve kept them near zero for years. That period of super-low interest rates achieved one key outcome: encouraging Americans to borrow, spend, and help grow the economy after the Great Recession.

Last June, credit-card debt finally hit a new high. But the share of borrowers who make payments more than 30 days late is rising along with interest rates.

Source: Business Insider

The Fed is set next month to raise its benchmark rate for the seventh time since late 2015.

Source: Business Insider

How SoFi is personalizing its mobile experience (Tearsheet) Rated: AAA

SoFi is personalizing its digital customer experience by fusing event planning, career services and personal finance insights inside its mobile app.

SoFi is joining a group of financial institutions that are letting customers aggregate accounts to get a full financial picture — even if they’re not with the same institution, with recent examples including Citi and HSBC.

As it grows its digital offerings, the company is adding services to meet the needs of a fast-growing customer cohort. SoFi currently has 500,000 customers — up 200,000 from last year.

 

 

 

50. SoFi (CNBC) Rated: A

This has been quite a year for SoFi (short for Social Finance).

The company claims to have 500,000 members and has made $25 billion in loans to date. SoFi has raised $2.1 billion in funding, including $500 million in a round led by Silver Lake Partners. In early interviews after taking over the top spot, Noto spoke about eventually taking SoFi public, but did not outline a timetable.

For millennials, it’s about having a house, children and retiring early (CNBC) Rated: A

Julia Boorstin live with SoFi CEO Anthony Noto discusses running what he describes as a “modern day” financial services company.

Watch the interview here

SoFi Makes Graduation From Student Debt An Epic Experience (PR Newswire) Rated: A

In a video released today on YouTube, SoFi made that moment of relief from student debt a grand occasion for one Midwestern woman. The company surprised Candice, a SoFi member who had refinanced her student debt, with an epic surprise “debt graduation” ceremony with friends, family, and some unconventional surprises planned by the company, together with production and entertainment studio GenPop.

Guaranteed Rate Partners with DocMagic to Cut Closing Time (Florida Newswire) Rated: A

DocMagic, Inc., the premier provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced that retail mortgage lender Guaranteed Rate can now cut closing time by electronically signing mortgage closing documents in advance.

Guaranteed Rate has branded the solution FlashClose, which allows customers to opt-in, review and complete most documents in advance of the notary arriving, saving an hour or more at the closing table – with some averaging a mere 10-minute appointment to provide inked signatures.

First wave of neobanks resets for new offensive (American Banker) Rated: A

BankSimple (now just called Simple) was bought by BBVA and went through a painful process of migrating accounts to the big bank’s systems; its founder recently announced he’s leaving. Moven became a seller of software to large banks including TD Bank and Westpac, while still maintaining its own mobile banking service. Varo Money has been trying for almost a year to get a banking license. Chime remained independent (in partnership with The Bancorp Bank) but is going through growing pains.

This year, all are taking up their swords again, renewing an anti-bank message of helping consumers lead financially healthy lives, with fewer fees and more helpful products and software than traditional banks. Following is a look at how the neobanks are fighting back.

Cadre seeks at least $ 100M from SoftBank (The Real Deal) Rated: A

Real estate crowdfunding platform Cadre is seeking at least $100 million from a fund started by the SoftBank Group.

Representatives for the SoftBank Vision Fund met with a top executive from Cadre recently, Bloomberg reported. The fund gets nearly half of its $100 billion from the Saudi Arabian government and at least $15 billion from the United Arab Emirates.

Lending Express garners $ 2.7 mln (PE Hub Network) Rated: A

Lending Express, the only AI-powered marketplace for business loans, today announced the securing of a $2.7 million investment round led by Entrée Capital, iAngels, and existing investors. The funds will be used to build out their innovative loan-matching technology and scale up operations in the United States and Australia.

How fintech gave this SBA lender an edge (American Banker) Rated: A

Add Seacoast Banking in Stuart, Fla., to the list of community banks that now believe in working with fintechs.

The $6 billion-asset company is gaining traction in Small Business Administration lending after partnering with SmartBiz Loans to speed its approval process. The move halved the interval from application to funding, to as little as 10 days, said Julie Kleffel, Seacoast’s community banking executive.

Four in 10 can’t cover an emergency expense of $ 400, Fed survey finds (Market Watch) Rated: AAA

The Fed’s new survey of household economics and decision-making found 41% could not cover a $400 emergency expense using cash in 2017. That’s actually a slight improvement, since 44% could not in 2016, 46% could not in 2015 and only 50% could in 2013.

Those that couldn’t afford the expense turn to credit cards or borrowing from family or friends, while only 5% would turn to a payday loan or similar product.

Source: Federal Reserve

Read the full report here.

Why real estate tech won’t kill the middleman (The Real Deal) Rated: A

Not too long ago, it seemed like the real estate business was about to enter a new era. To some observers, websites like Zillow and Trulia or their office equivalents 42Floors and LoopNet threatened to put brokers out of business (although officially these firms said no such thing). Crowdfunding startups dreamed of doing the same to pricey fund managers. Why pay a cut to an agent if you can just find your house or office online, for free? Why give your savings to a pension fund, which gives it to an asset manager, which gives it to a real estate lender, which gives it to a developer, if you can just lend the money to a developer yourself, online, and save a fortune in fees?

ENACOMM Adds FoneLogix as Ally to Bring Data-Driven AI and Phone Banking to Financial Institutions (Globe Newswire) Rated: B

ENACOMM—a fintech company that empowers banks, credit unions and credit card companies with solutions for improving the customer experience (CX), fighting financial fraud, and increasing operational efficiency—today announced a new reseller agreement with FoneLogix, an Atlanta-based provider of cloud-hosted VOIP Phone Systems, Solutions and Support.

Through the partnership, FoneLogix’s bank and credit union customers will be able to take advantage of ENACOMM’s VPA (Virtual Personal Assistant) Conversational Banking and the ENACOMM Financial Suite (EFS), which includes a hosted, dynamic interactive voice response (IVR) system for personalized customer interactions.

AI Challenging Bank Lending Practices (Forbes) Rated: A

CultureBanx notes 

The Best Business Loans and Financing Options for Freelancers (The Entrepreneur) Rated: A

Most banks view freelancers as high-risk, and as such, may be unwilling to enter a loan agreement. Because a freelancer is considered a sole proprietor, he or she alone is liable for all losses and debts his or her business may incur. If the freelancer gets hurt or sick and cannot work — or is just terrible at running a business — the bank is left holding the bag.

Online lenders offer an interesting alternative. Typically, these non-traditional lenders have more relaxed loan approval criteria and a swifter approval process. Importantly, your personal income, assets and credit score are assessed for loan approval, not the value of your business. You should expect to pay higher rates of interest, a natural trade-off for the perceived risk you present.

First Tech Federal Credit Union Personal Loans: 2018 Review (Nerdwallet) Rated: A

First Tech offers unsecured and secured personal loans as well as personal lines of credit. Annual percentage rates start at 9% on unsecured loans, or 3% on secured loans, which can be backed by a First Tech savings account, First Tech share certificates, or stock you own in the company you work for or one listed on the NYSE, Nasdaq or Amex.

You can apply for a loan of as little as $500, making First Tech a good option for borrowers looking for small loans. Payments for unsecured and secured loans are fixed over two to seven years, and you can choose between monthly or biweekly payments.

 

 

Trump signs resolution overturning CFPB auto lending rule (Consumer Affairs) Rated: B

President Trump has signed a resolution, passed by Congress, overturning the Consumer Financial Protection Bureau’s (CFPB) auto lending rule, designed to prevent racial discrimination by dealers who finance purchases.

United Kingdom

Monzo Case Study (AWS) Rated: AAA

Monzo has grown from an idea to a fully regulated bank on the AWS Cloud. A bank that “lives on your smartphone,” Monzo has already handled £1 billion worth of transactions for half a million customers in the UK. Monzo runs more than 400 core-banking microservices on AWS, using services including Amazon Elastic Compute Cloud (Amazon EC2), Amazon Elastic Block Store (Amazon EBS), and Amazon Simple Storage Service (Amazon S3).

Open banking regulations, which came in at the start of 2018, required the nine largest banks in the UK to provide an API for their users’ account information.

 

Meet the 35 most exciting young entrepreneurs, engineers, and advisors in UK fintech (Business Insider) Rated: AAA

Business Insider has covered UK fintech since our 2014 launch. The UK Fintech 35 under 35 highlights the most promising young entrepreneurs, engineers, marketers, and sector experts under the age of 35. It spans both startups and big banks operating in the sector.

35. Pierce Glennie, iwoca

The company has lent over £400 million since its founding in 2011. Glennie was one of iwoca’s first outside hires and just 21 when he joined the business.

27. Aneesh Varma, Aire

Varma, who started his career at JPMorgan, set up Aire in 2014. It is his second startup, having previously founded enterprise software business FabriQate in 2005.

24. Anil Stocker, MarketInvoice

MarketInvoice is an online platform that lets businesses borrow against unpaid invoices. The lender isn’t MarketInvoice itself but institutional investors and high net worth individuals looking for strong returns.

23. Karen Kerrigan, Seedrs

Seedrs is one of the UK’s first equity crowdfunding platforms, letting ordinary people invest in startup businesses. 600 businesses have raised over £320 million since the platform launched in 2009.

17. Simon Miller, Scalable Capital

Scalable Capital is one of a number of so-called “robo advisors” — online investment advisors and platforms — that have sprung up around the world in recent years. The company already has £600 million in assets under management and has attracted investment from asset management giant BlackRock.

13. Joe Cross, TransferWise

Cross was one of TransferWise’s first employees and has seen the international money transfer business grow from a small East London startup to business worth over $1 billion.

6. Megan Caywood, Starling Bank

She is now chief platform officer at startup, app-only bank Starling, which is trying to make a new kind of bank that functions more like an app store than a traditional lender.

5. Martin Ijaha, Neyber

Neyber works with employers to let staff borrow money then repay through salary deductions. Neyber was founded in 2012 and now works with 160 employers with a combined 1 million staff. Last year Goldman invested £100 million into the platform.

3. Tom Blomfield, Monzo

The fully licensed bank now has over 500,000 current account customers who have spent £1 billion on Monzo’s iconic hot coral cards. The company has raised over £71 million to date and is valued at £280 million.

2. Samir Desai, Funding Circle

Their platform has now lent over £4 billion to businesses across the UK, Germany, US, and the Netherlands. Desai was awarded a CBE for services to financial services in 2015 and his company is tipped to float on the stock exchange later this year with a price tag of at least £1 billion.

1. Nikolay Storonsky, Revolut

Revolut began life as a foreign exchange card linked to an app that offered rock-bottom FX prices. The company is less than three years old but the popularity of its product has already seen it hit 2 million customers and a valuation of $1.7 billion.

Proptech Startup When You Move Raises £3M in Funding (Finsmes) Rated: A

When You Move, a UK-based proptech startup, secured new funding which brings the total amount raised to £3m.

Backers included Fig, a proptech VC, and a hybrid network of friends and family, private HNW investors and incumbent shareholders.

The company intends to use the funds to build out it customer excellence teams, scale up the development team and solidify its position as the solution for professionals involved in property purchases.

The UK fintech economy will create different pockets of excellence all over the country (Computer Weekly) Rated: A

He said fintechs such as Leeds based White label Crowdfunding which build peer to peer lending software, business lender Rebuildingsociety.com also in Leeds, and Accespay in Manchester have been involved with the Fintech North events.

Mark Carney: Every household £900 worse off because of Brexit (The Telegraph) Rated: A

UK households are £900 worse off than they would have been because of Brexit, Bank of England Governor Mark Carney has claimed.

Mr Carney revealed in a Treasury Select Committee grilling that growth has been up to 2pc lower than the central bank had expected because of the UK’s decision.

Banks ‘charging more’ for overdrafts than payday lenders (BBC) Rated: A

Unarranged overdraft fees can cost borrowers up to seven times more than a payday loan, a consumer group warned.

Which? compared the cost of borrowing £100 for 30 days in an unarranged overdraft across 16 high street banks with borrowing the same amount through a payday loan.

Ireland Issues Tax Guidance On Peer-To-Peer Lending (Tax News) Rated: B

A company that pays interest on finance raised via peer-to-peer lending or crowdfunding is obligated to withhold income tax at the standard rate of tax on interest payments made on the finance raised. The underlying lenders are liable to pay income tax on any interest they earn on which withholding tax has not been suffered.

‘Lenders need to be more transparent about portfolios’ (Bridging & Commercial) Rated: A

Far from deserting the sector, lenders are now presenting landlords with a wider range of borrowing options than ever before. New figures from financial information site Moneyfacts suggests that there are currently more than 2,000 buy-to-let mortgage deals available, a new record high.

And while the various regulatory and tax changes have spelt trouble for the small-time landlords, the professionals seem to be in the ascendency. A recent study by Aldermore suggested that more than four out of 10 portfolio landlords are looking to expand their portfolios in the next 12 months.

China

Chinese fintech’s global future is arriving now (Financial Times) Rated: AAA

Ant Financial recently raised an oversubscribed $10bn round which values the firm higher than Goldman Sachs, American Express and BlackRock; the Alipay product has more than 500 million users and is incredibly simple to use; they have integrated into Alibaba’s retail operation and have the world’s largest money market fund with Yu’E Bao; they have begun expanding globally as well as they have built partnerships with firms in Africa and have tried to enter the U.S. market through an acquisition of MoneyGram which was blocked by regulators; regulators will need to figure out how handle a company that doesn’t look to fade from the financial scene anytime soon.

Legal concerns heat up for wanted Founders Group leader as partner testifies in China (Myrtle Beach Sun News) Rated: A

Liu’s partner in the Chinese company Yiqian Funding, a peer-to-peer lending business that seeks investors, testified May 3 in her fraud trial in Nanjing that Liu was in control of the company when it became unable to pay many investors what prosecutors estimate to be $1.17 billion — or 7.4 billion yuan.

 

European Union

Klarna acquires universal shopping cart Shop.co (Ecommerce News) Rated: AAA

Klarna has acquired Shop.co, a small German startup that wants to simplify online shopping by offering a universal shopping cart. There’s little known about the deal, but according to Klarna it’s mostly about the acquisition of intellectual property and taking over a mere Shop.co employees..

According to t3n, a purchase sum somewhere in the mid double-digit millions is also likely. But later on, Klarna told another media outlet, Tech.eu, that the purchase price is far lower than some media have been speculating. It also said that it’s most acquiring intellectual property and employees.

Keeping on Top of Emerging Payment Solutions – Q&A with Klarna (Retail Tech News) Rated: A

Luke Griffiths: Klarna’s approach to online commerce is very different from that of traditional providers. Our overarching philosophy is to give consumers the freedom and flexibility to decide how and when they want to pay. At Klarna, we offer three payment options that cover all consumer needs for seamless shopping: ‘Pay now’, ‘Pay later’, and ‘Slice it’.

Pay now enables straightforward and immediate online payment purchases. This option allows customers to pay for their purchases in full via Klarna’s speedy online checkout and payment service using a card. Many of our merchants choose the Klarna checkout as it is proven to reduce abandoned baskets and provide a better user experience for shoppers.

Our second payment option, Pay later, allows shoppers to ‘try before they buy’. Customers have either 14 or 30 days to pay for their goods (depending on the merchant) after their items have been delivered, with no interest or fees – or they can return the items if they’re not what they expected.

EMaC launches ‘Drive Now Pay Later’ service for dealers (Motor Trader) Rated: B

EMaC, the service plan specialist, is widening the services it offers dealers and end consumers with the launch of a pay later credit facility for vehicle repairs and accessories.

The company, which is has also launched a new identity, has teamed up with credit provider Klarna to offer the “Drive Now Pay Later” service.

EMaC said its new Drive Now, Pay Later product would give dealers access to a credit facility to assist their customers in financing repairs and other vehicle related accessories.

Banks seek tech talent for digital shift (Financial Times) Rated: A

European Banks have increased advertising for IT and engineering roles by more than 10 times in the last 3 years; a new report by the Economist Intelligence Unit and Temenos shows for the first time that bank executives believe technology like AI and blockchain will have a bigger impact than regulation; being about 10 years removed from the financial crisis has help shift the view of banks to focus more of their time on digitization instead of regulatory compliance.

 

 

International

Meet the Goldman Sachs-Backed Fintech Startup Aiming to Take Over North America (Fortune) Rated: AAA

Now Plaid, which raised $44 million in a funding round led by Goldman SachsInvestment Partners nearly two years ago, is looking to expand internationally. The company announced Tuesday that Plaid is available in Canada for the first time—and compatible with both U.S. and Canadian dollars—a move designed to both support current clients’ Canadian expansions as well as attract new Canadian fintech players.

Companies use Plaid’s APIs (or application programming interfaces) as a foundation for building their own fintech products, depending on that secure way to link customers’ bank accounts. Its extension into Canada is a sign that the nascent fintech industry is gaining traction in more parts of the world. TransferWise, a London-based cross-border payments startup that uses Plaid, recently expanded into Canada as part of a global push. And Toronto-based Drop, a loyalty rewards app, is one of Plaid’s first Canadian clients.

Is Fraud a Solved Problem? (Lend Academy) Rated: AAA

But one statement stood out to me. Jeff Stewart, the Chairman and Co-Founder of LenddoEFL said that “fraud is a solved problem”.

That is quite a bold statement. So, I reached out to Jeff yesterday to get some more color on what he really means here. He stood by what he said on the panel at LendIt. While we can’t get rid of 100% of fraud what we can do is catch fake identities, fraud rings, and large-scale theft of identity.

It is not surprising that the type and amount of fraud varies between countries. We learned from Thomas Wang of China Rapid Finance in this same session that a staggering 97% of loan applications in China are fraudulent. Think about that for a moment. Only 3% of the applications that a Chinese online lender receives is from a real person. The rest is fraudulent activity often from established fraud rings.

Small Business Banking Catching Up in Innovation Race (Bank Innovation) Rated: A

There are quite a few lending solutions these days for small businesses — Funding Circle, OnDeck, Kabbage, and Square Capital, to name a just a few — but innovation and digitization are lagging in other areas, such as digital account opening. Enter Gro Solutions, a sales and marketing platform for financial institutions.

Australia

Understanding the SME mindset (Australian Broker) Rated: A

More than one in five SMEs – a total of 22% – opted for non-bank alternatives to funding their growth. A further 24% looked to borrow from their main relationship bank, and this bank lending percentage has trended down from 38% in our initial 2014 Index.

The most popular funding choices for SMEs using alternative working capital options in 2017 were debtor finance, which was used by 77%; merchant cash advances, used by 23%; P2P lending, with a total share of 10%; and crowdfunding, utilised by 9%.

India

Payday loan firm EarlySalary acquires CashCare (Media Nama) Rated: AAA

Payday loan firm EarlySalary has acquired CashCare. CashCare sells loans to customers on websites like Infibeam and Shopclues, and accepts repayments in EMIs at annual interest rates ranging between fifteen and 25%, according to CashCare’s website. The service is offered to people who don’t have a credit card too.

While CashCare’s 15% annualized interest rate is not too different from what credit card companies charge, EarlySalary’s payday loans come at a steeper cost. Charging ₹9 for each dayper ₹10,000 borrowed, their interest rate comes out to over 30%, compared to the 1.5–3% annualized interest credit cards charge, as we’ve pointed out before.

Xiaomi to start lending operations in India; to target salaried professionals (The Economic Times) Rated: AAA

IPO-bound Chinese smartphone company Xiaomi has launched its first lending product in India on the lines of the microlending product Mi Credit that it offers in China.

The new credit product, launched in partnership with lending platform KrazyBee, has already gone live and will be officially announced in a few weeks, as per a person aware of the development.

Called CreditBee, the credit product is a payday loan starting from Rs 1,000 up to Rs 1 lakh for a period of 90 days, as per the person cited above. The credit will be offered at an interest rate of 3% per month and will be targeted at salaried professionals, the person said.

P2P lending startup Cashkumar secures angel investment (VC Circle) Rated: A

Cashkumar, a peer-to-peer (P2P) lending startup, has raised angel investment of Rs 5 crore (around $735,000) through deals platform LetsVenture.

The startup’s first external funding was led by Mohan Kumar, executive director at global investment firm Norwest Venture Partners, and telecom company Reliance Jio’s chief digital officer Vishal Sampat.

Capacity-building workshop by RBI (Tribune India) Rated: B

Rachna Dikshit, Regional Director, RBI, Chandigarh inaugurated the workshop. In the event, topics like RBI guidelines, credit guarantee architecture for MSME financing and recovery management, alternative tech driven approaches to financing MSMEs like big data, fintechs, P2P lending, TReDS, movable asset based financing, role of CERSAI, management of sick account, credit scoring and rating models for MSMEs, assessment of term loans and composite loans, effective communication were covered.

 

Asia

Fintech Firm Flywire Teams Up With SP Jain For New Student-Led Singapore-Based Startups Competition (Crowdfund Insider) Rated: A

Flywire, a fintech firm that provides global payment and receivable solutions for education, healthcare, and commercial enterprises, announced this week it has partnered with SP Jain School of Global Management to launch a startup competition, the Flywire Challenge, to power a new generation of transformative entrepreneurship in Singapore and the APAC region.

According to the duo, this competition, which is set to launch this month, solidifies Flywire’s dedication to partnering with powerful regional universities, government bodies and industry, and investing in education and the start-up space, as well as their long-term relationships with international educational and healthcare institutions as a leading payments solutions provider. Flywire will host, sponsor and evaluate a contest following an open call for teams to submit proposals for innovative start-up ideas. Any and all students and graduates, not limited to SP Jain students, will be invited to compete for three awards in the Health Technology, Education Technology and Travel Technology sectors.

Latin America

Mexican investors back microlending startup Vola (VC Circle) Rated: AAA

Bengaluru and US-based Vola, which offers an alternative lending platform for students, has raised $500,000 (Rs 3.4 crore) in a pre-Series A funding round from Mexican insurance and credit firm Credika and unnamed angel investors from the North American nation.

MENA

AI Business Loan Company Lending Express Raises $ 2.7 Million (CTech) Rated: AAA

Israeli business loan startup Lending Express announced on Tuesday it has raised $2.7 million in a seed investment round led by Entrée Capital and iAngels, among other investors.

The company said it would use the capital to further develop its loan-matching technology and scale up its operations in the U.S. and Australia.

Authors:

George Popescu
Allen Taylor

Competing With Banks Through a Mobile App

mobile banking

According to the Federal Deposit Insurance Corporation (FDIC), over 7% of Americans are still without banking services. Even more shocking is the number of the underbanked population – a whopping 19.9%. These numbers only go to show that brick-and-mortar banks have left the general American population down. Especially since the financial crisis, people have lost […]

mobile banking

According to the Federal Deposit Insurance Corporation (FDIC), over 7% of Americans are still without banking services. Even more shocking is the number of the underbanked population – a whopping 19.9%. These numbers only go to show that brick-and-mortar banks have left the general American population down. Especially since the financial crisis, people have lost trust in traditional banks, and millennials don’t see the appeal in standing in line for banking services. To fill the void, Varo Money has launched a mobile banking business. The aim is to disrupt how banking is done in the United States. Its goal as to help customers cover their expenses, pay their bills, and build wealth over time.

Varo Money was founded in 2015 by Assaf Guery, Colin Walsh, Mykola (Kolya) Klymenko, and Roger Van Duinen. Its headquarters is located in San Francisco, California. The company has managed to raise over $78 million in various funding rounds with PE giant Warburg Pincus as the lead investor. CEO and Co-Founder Colin Walsh previously served for over 25 years in various reputed financial institutions like Amex in Europe, Lloyd Banking group, and Wells Fargo.

More Than a Bank

Throughout his professional career, Walsh realized a growing need to empower the next generation with tools that will help them improve their overall financial condition. He also realized incumbents were too entrenched in their existing business models to concentrate on developing products for the millennial generation. This became the driving force behind Varo Money. So he built a talented team with deep financial services expertise and a strong consumer technology knowledge. Varo Money is trying to be a one-stop shop for users’ banking needs and wants to inculcate better financial habits among customers by providing them with the right tools and financial guidance.

Last year, Varo Money launched their mobile app and banking products through a partnership with The Bancorp Bank. The partnership helped the platform come to the market with a FDIC-insured product. This helped them compete against incumbent banks and appeal to a larger cross section of the population. But Varo has big ambitions and wants a bigger share of the pie. That’s why the company applied for a national bank charter through the OCC. Even though obtaining this charter will be an uphill task, considering no new charter has been issued in the last decade or so, it’s a courageous move. It puts the spotlight on the young entrant and highlights its intention to be a serious regulated player in the industry.

Varo’s Business Model

The foundation of the Varo Money platform is relationship banking. It offers a basic consumer checking account just like any other bank, but the difference is a customer can perform all the basic functions like deposits and money transfers without having to go visit a bank branch. It even issues a debit card to customers and has started offering savings accounts. A customer can open a savings account on his or her mobile app and Varo offers interest rates up to 50 basis points as compared to 1 or 2 basis points offered by traditional banks.

Apart from the bank account, Varo also offers short- and long-term financing solutions. The short-term line of credit is a flexible line of credit (LOC) and is available to customers unexpected financial challenges. The LOC helps customers manage cash flows while avoiding the need to take a payday loan or cash advance. Also, 3- and 5-year fixed rate installment loans are aavailable for long-term financial needs.

Varo Money’s Technology and Competitive Posture

Varo Money is available as an iOS application with an Android version coming soon. The app is loaded with features like touch ID, a geolocation service to spot nearby ATMs, and the ability to link other accounts through APIs. The app is free and requires no minimum balance to open an account. Also, there are no foreign exchange charges or overdraft fees. Its customer base has access to over 55,000 ATMs worldwide as compared to 18,000 ATMs for Chase and 12,000 for Wells Fargo.

Varo charges a nominal fee for debit card usage. It also sells financial products of its partner bank earning income from that partnership. However, its lending products are a primary income generator. The pricing and structure of LOC products are developed to compete with other alternative lenders in the market.

Varo has a lot of competitors in different niches of banking. Players like Discover, Ally, and Goldman Sachs concentrate on only a few lending segments; these lenders do not follow a complete relationship model, but only offer a specific product. On the other hand, there are neobanks like Chime, Simple, and BankMobile that are single-purpose saving apps. Though they are doing a great job when it comes to user experience, the range of products offered by them is narrow compared to a full suite of products offered by a traditional bank.

This is where Varo Money is different. It is focused on customer relationships and wants the ability to offer the entire gamut of banking services to consumers. This gives it multiple cross-selling opportunities and reduces the cost of client acquisition. Its strategy seems to be paying off. In just 7-8 months, Varo has garnered tens of thousands of customers and over 100k downloads.

Conclusion

Varo Money is focused on replacing traditional banks with its comprehensive suite of online banking services and products. Coupled with its obsession for helping millennials make smarter financial decisions, Varo Money is looking to be an emerging player in the digital bankin sector.

Author:

Written by Heena Dhir.

Why Banking Should Be in the Palm of Your Hand

Bank 2.0

Brett King was an author before becoming CEO and founder of Moven (pronounced like moo ven). In 2009, he penned Bank 2.0, which he calls a manifesto for the future of banking. In that book, he explains how technology was going to change banking. While he had thought about starting a bank similar to what […]

Bank 2.0

Brett King was an author before becoming CEO and founder of Moven (pronounced like moo ven). In 2009, he penned Bank 2.0, which he calls a manifesto for the future of banking. In that book, he explains how technology was going to change banking. While he had thought about starting a bank similar to what he was describing in the book, he hadn’t so until he began promoting the book.

“I was on the road doing the book launch in the U.S. in July 2010,” he said. He had already promoted it at the Asia Banking Summit before going to New York then Los Angeles. He met with Josh Reich and Shamir Karkal of Simple, who invited him to work with them on a simiar project, but he turned them down. “The idea for Moven crystallized in August while I was in Los Angeles for a book signing.”

King’s idea was to put banking in the palm of customer’s hands, so he created a mobile app that allows them to open a bank account and manage it right from their smartphones.

Why Go to a Bank?

Bill Gates famously opined, “ banking is necessary, banks are not” in 1994. King’s mantra is similar: “Bank branches are not necessary. The utility of banking is required.” With that idea in mind, he asks, “Why go to a bank when you can just dowload it into the palm of your hand?”

When he presented his idea for a mobile banking application to venture capitalists, they told him that banks wouldn’t go for it. That only confirmed for him that mobile was going to disrupt banking. A few hours later, he started Moven Bank. A year after that, the company dropped “bank” from its name and simply became Moven. In 2011, he put a team together and got going. Two years later, the app launched and immediately became the No. 1 app at Google Play.

Moven raised $2.5 million in its initial seed round. A second seed round produced another $2 million. Series A raised $8 million, and Series B netted another $10 million. To date, the company has raised $24 million.

Last year, the company signed a deal with TD Bank to license its technology. Since launching, Moven has reduced customer spending by four to eight percent per month, and attrition is near zero.

“The mobile tech we’ve licensed as a mini-app that complements their own,” King said. “It bears the distinction of being the No. 1 mobile app in Canada with 1.4 million users.

The Smart Bank Account

Moven falls into the category of neobank, a terms devised for banks with no physical branches. Other neobanks include Portland-based Simple, Canadian neobank GoBank, UK-headquartered Atom Bank, and Monzo, also based in the UK. Moven was the first bank of offer an in-app account opening process. Users download the app, sign up for an account, receive a debit card in the mail, and then start banking.

Beyond that, the way Moven helps its customers save money is unique. By giving immediate feedback to customers on transactions, they see themselves affecting change in behavior. Before they’re done signing a merchant receipt, they’ve got a notification on their phone that tells them how much money they’ve spent in the current month on similar transactions.

For instance, if they’ve used Uber several times in one month, Moven will let them know with each transaction how much money they’ve spent on Uber rides.

“The best way to change spending behavior is to make people aware of how they spend,” King said.

By contrast, many banks and finance apps will provide similar metrics on a monthly basis. With Moven, customers get it in real time. King says this subtle change in reporting makes people more aware of how they spend their money, so instead of buying daily lattés, they’ll skip the latté two days a week and save that money instead.

Customers use Moven to pay bills, spend money on retail purchases, find ATM machines and withdraw cash, and almost anything they can do at a traditional bank. As I write this, the company is rolling out its first two credit products:

  1. Emergency Credit – Looks at customer behavior and, if a customer normally spends $400 when shopping at Whole Foods, if they only have $200 in their account, Moven will front them the other $200 in what King calls “contextual credit.” The terms include a fixed fee for 30 days, which is less than what the average customer pays for an overdraft fee, King said.
  2. Wish List – The other credit option is when a customer wants to buy an item on their wish list. So they can create a Moven stash and put money aside for a purchase – let’s say an iPhone. With built-in intelligence, Moven encourages the customer to save money toward the purchase. When the customer has saved a certain percentage of the necesssary purchase price, Moven will offer the rest on credit at competitive rates King said are better than credit card terms. At present, customers can’t buy real estate or automobiles, but they can consolidate debt, pay for student loans, and make retail purchases.

Moven is working to expand its list of merchants for in-store credit arrangements to help its customers make their wish list purchases. King said they’re not trying to be a bank. Rather, they offer a smart bank account that helps customers save more money long-term.

How Moven Assesses Creditworthiness

People most often use their credit cards when they go to the doctor or the grocery story and don’t have enough money to pay for the bill. They know they’ll have the money in a few days, so they use their credit card to make the purchase and pay it off when the money arrives. Or keep it revolving and pay the interest rate. But King said 45% of American consumers are declined for a credit card. He calls it a broken system.

Another difference between Moven and traditional credit cards is that Moven doesn’t judge creditworthiness by looking at the customer’s FICO score.

Instead, they look at spending behaviors.

“If you’re a higher credit risk,” King said, “you won’t see an offer for emergency credit. If you fit our credit profile, you will.”

Customers who are approved can save a lot of money on overdraft fees and credit card interest, he said. Interest on a $250 grocery bill, for instance, might only be $7. King said the average overdraft fee in the U.S. is around $30. Customers who pay their bills on time, have good cash flow, and have regular salary deposits into their accounts get approved for credit more often. Those are the signs of a good credit risk with Moven, King said.

Where the Real Money Comes From

King said most Moven customers use the app five times or more per day. The most active users are using it at least twice a day. While interest on customer purchases is making the company some money, it’s making its biggest returns on licensing the technology to other banks. That includes TD Bank in Canada, Westpac in New Zealand, and banks in Indonesia and other parts of Southeast Asia.

Through licensing and other revenue, Moven has a recurring revenue of $5 million per month with a quarter million end users in the U.S., 1.4 million in Canada, and another quarter million in New Zealand. King said there will be 5 million users in Indonesia by the end of the year. There are 10 million total users on the platform on a geographically distributed basis, and King expects that to double next year.

“Relationships with banks speeds up adoption,” King said. “We can license our technology to banks at a fraction of the cost it would take them to build it for themselves, and at a fraction of the time.”

Banks would have to spend $15 million and take two or three years to build their own smart technology. With Moven, it can be deployable in six weeks and costs much less.

The Future of Banking

Since starting Moven, King has written other books. His ouvre includes Bank 3.0, Breaking Banks, and Augmented. He is working on Bank 4.0 right now.

“If you look at the development of banking in the last 100 years, people are being pushed further away from needing to physically go to a bank.”

King sees that in the development of self-service ATMs in the 1980s, the rise of Internet banking, and mobile banking apps. In the future, he believes banking services will be deployed through Amazon Echo, smartglasses, other wearables, and similar technology. It will eventually be embedded as a technology layer in everyday devices people are currently using.

“In the past, when banks deployed a solution on technology, they owned it. Today, the major technologies customers use are not bank-owned technologies,” he said. “Mobile is the No. 1 technology people use for banking today, and banks don’t own that technology.”

In other parts of the world, like China, King said they’re a decade ahead of the U.S. because they don’t have legacy banking systems to build upon. So they’re going straight to the non-bank technology and creating more agile customer-centril solutions faster. In the use, most customers are still inserting their credit card numbers into their smartphones. He sees the U.S. catching up to the rest of the world by the end of the next decade.

“All banking products we have today will disappear and be replaced by behavior and contextual experience-based products,” King said.

When that happens, consumers will be able to buy a car, a house, save for retirement, and virtually everything else financial through an app in their smartphones. It’s already happening on a small scale today, but it won’t be long before it will be ubiquitous.

Authors:

Allen Taylor