Thursday July 13 2017, Daily News Digest

alternative lending deal tracker

News Comments Today’s main news: SoFi aims for 12 ABS deals in 2017. Funding Circle’s business boomed after Brexit. Dianrong acquires Quark Finance asset-origination operations. Mambu recognized as European growth excellence leader. Santander invests in three fintechs. Today’s main analysis: Europe’s alt finance market hits $9.1B in Q1. Today’s thought-provoking articles: How non-prime millennials struggle. Top 40 payments trailblazers. United […]

alternative lending deal tracker

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Canada

News Summary

United States

SoFi preps new deal, aims for 12 in 2017 (Global Capital), Rated: AAA

Online lender SoFi is on track to sell its eighth ABS this month and is said to be looking to bring as many as 12 deals through year end across student loan refinancing and consumer loan platforms.

Money Management by Non-Prime Millennials: How They Struggle and Worry More Than Their Peers (BusinessWire), Rated: AAA

Young people have always struggled with money, but for non-prime Millennials today, managing their personal finances is especially hard, according to the final two studies in a series of Millennial-focused reports by Elevate’s Center for the New Middle Class.

According to the research, 58 percent of non-prime Millennials – those with credit scores below 700 – find themselves living paycheck-to-paycheck and 41 percent run out of money every other month, or more often.

Additional key findings include:

  • 13 percent of non-prime Millennials admit that it is difficult to predict their month-to-month income
  • 13 percent regularly overdraft their savings or checking accounts
  • 64 percent say that they have too much debt right now, twice as likely as prime
  • Only 37 percent of non-prime Millennials express any confidence that they could come up with $1,200 for an emergency expense in a month
  • Non-prime Millennials are 71 percent less likely to turn to credit cards if they needed to come up with $1,200, compared to their prime counterparts
  • Are more likely to experience unexpected car repairs or non-routine medical expenses
  • Are 45 percent less likely than prime Millennials to maintain a monthly budget
  • Are 58 percent less likely than prime Millennials to put aside money for savings

Invesco co-launches robo-advice platform for financial advisers (AltFi), Rated: A

The U.S. platform will provide a digital space for financial advisers to open new accounts.

Investment management giant Invesco is continuing its foray into digital wealth management.

The company is co-launching a U.S.-based platform for financial advisers through its wealth management solution company, Jemsteps. The site is for financial advisors affiliated with Advisor Group, an American network of independent financial advisory firms.

Funding Circle Names New Chief Compliance Officer for US (Corporate Counsel), Rated: A

Funding Circle Ltd. has named Richard Stephenson as its U.S. chief compliance officer. He joins the San Francisco-based small business lending platform after working in financial services for three decades, most recently as the CCO of Silicon Valley Bank.

Stephenson has also held various senior roles with financial institutions and in private practice, including at Bank of America, Union Bank, Washington Mutual Bank and Mechanics Bank.

For a fintech company, particularly one that partakes in lending, Hodges said it has been important to prioritize compliance, given all of the uncertainties in the regulatory space.

Sindeo is back in the mortgage business after acquisition (Inman), Rated: A

“Renren, one of Sindeo’s investors, has acquired Sindeo and all of its assets,” Nick Stamos, one of Sindeo’s co-founders, told Inman in a statement. “We are excited to work closely with the Renren team to execute on our original mission of offering homebuyers a straightforward path to home ownership and refinancing.” He did not disclose the terms or the sum of the acquisition.

Ex-Merrill Lynch FAs with $ 1B in Assets Go Indie (Financial Advisor IQ), Rated: A

A team of Merrill Lynch financial advisors has jumped ship to launch a new independent wealth management practice, according to a press release from Dynasty Financial Partners, with whom the team has partnered.

Celenza, who’s been an advisor for close to 20 years and with Merrill Lynch for six of them, says the decision to go independent was prompted in part by the ability to access “a greatly expanded selection of investment capabilities, lending platforms, sophisticated insurance products, planning resources, capital market solutions, and alternative manager opportunities.”

Treasury quietly looking at revamping CRA (American Banker), Rated: A

The Treasury Department is embarking on an effort to revise the implementation of the Community Reinvestment Act, a law many community groups say is out of step with modern banking practices and that institutions say has devolved into a compliance exercise.

Tucked away in Treasury Department’s regulatory reform report released last month was a nascent effort to reform the way regulators implement the CRA — a law intended to compel banks to offer loans and financial services to low- and moderate-income areas.

Backed by Israeli Bond Funds, Moinian Capital Partners Rides the Nonbank Lending Wave (Commercial Observer), Rated: A

When the Moinian Group tapped Morgan Stanley and UBS alumnus Jonathan Chassin to lead its newly formed real estate lending platform, Moinian Capital Partners, in February, it was a testament to the Joseph Moinian-led firm’s ambitions to become the latest developer to expand its business into the realm of financing.

Thus far, Moinian Capital Partners has sought to focus its energies on “smaller, $50 million to $100 million development deals where we can quote the whole loan,” Chassin said—the sorts of projects that often have greater difficulty securing funds from more established debt lenders.

The operation is also finding success in the market for mezzanine debt, where its flexibility as a nonbank means it can provide “additional terms that other lenders don’t,” Chassin said. “Where banks and traditional mezz funds are doing five-year deals as a rule, we can quote six- or seven-[year terms]. We can do bridge deals because we understand the basis and understand the market.”

Coinsource Launches Five Bitcoin ATMs in Phoenix (Crowdfund Insider), Rated: A

Coinsource, a bitcoin ATM network, announced on Monday it launched five new machines in Phoenix Metropolitan Area, marking its first venture into Arizona. According to the company, the bulk installation caps off a strong first and second quarter, with it installing 50 machines so far this year, now with a portfolio of 116 machines across 10 states. The five new Bitcoin ATMs have been installed in Phoenix, Peoria, and Mesa.

CrediFi enables real time streaming of real estate deal and client data directly into Salesforce (PR Newswire), Rated: A

CrediFi Corp., the market intelligence and deal discovery engine for commercial real estate (CRE) finance, has announced the launch of a new solution that seamlessly streams CrediFi data into the Salesforce® CRM platform with the click of a button.

CrediFi simplifies the work of CRE dealmakers by serving as the one-stop-shop for data and analytics on commercial properties and loans as well as CRE owners and lenders. Now, CrediFi enables users to sync its vast repository of CRE data seamlessly and directly into Salesforce.

The launch of CrediFi for Salesforce® follows the April launch of CredifX, an online marketplace for CRE financing, and CrediFi recently secured $13 million for its Series B funding.  Michael Helpern has joined CrediFi’s team as Head of Strategy, and will oversee further innovation of solutions for this market. Mr. Helpern brings with him over a decade of experience in commercial real estate brokerage, at firms including Marcus & Millichap and CBRE.

Thales provides database encryption solution for Beyond Platform’s peer-to-peer lending service (PR Newswire), Rated: A

Thales announces internet-based financial services technology company Beyond Platform has adopted Vormetric Transparent Encryption from Thales to deliver a secure credit evaluation model for its peer-to-peer (P2P) lending platform.

Beyond Platform wanted to implement a data security system that offered a security level required by the major banks in order to comply with the Personal Information Protection Act (PIPA) in South Korea. In addition, the solution needed to pass a security review by NongHyup Bank (an agricultural and retail bank in South Korea)  with whom Beyond Platform was developing a joint P2P lending service. Beyond Platform adopted Vormetric Transparent Encryption from Thales to encrypt structured and unstructured data in an enterprise system. As a result, it met the database encryption requirements and passed the bank security review, opening the floodgate for developing and launching P2P services. In addition, the company has built a reputation among customers as a reliable and safe P2P provider.

Vormetric Transparent Encryption is a kernel-level encryption solution that encrypts all file types including logs and images as well as database data, so there is no need for enterprises to purchase a separate encryption solution for database encryption and unstructured data encryption.

EPHESOFT SECURES $ 15M SERIES A FUNDING FROM MERCATO PARTNERS (Ephesoft), Rated: A

Ephesoft Inc., the developer of document capture and analytics solutions that extract meaning from unstructured content, today announced that it has completed a $15 million Series A financing round. Mercato Partners, a trusted growth capital partner, is the exclusive investor in this round. The investment will be used to accelerate Ephesoft’s product development while expanding operations, market presence and sales channels. Joe Kaiser of Mercato Partners will join the Ephesoft Board of Directors as part of the investment.

Founded in 2010, Ephesoft has developed advanced machine learning solutions that capture, extract and analyze unstructured content. The company has over 500 customers globally ranging from financial services, Federal government, insurance, mortgage and healthcare sectors.

Why Chicago is the best city to launch a fintech company (Crain’s Chicago Business), Rated: A

Chicago was recently ranked among the top five global fintech hubs by Deloitte and the Global FinTech Hubs Federation, thanks in part to FinTEx Chicago’s strong advocacy. Further, fintech and financial services companies even account for 14 percent of the 50 fastest-growing companies in the region, according to Crain’s 2017 Fast 50.

And most important, the financial sector is driving real job growth in the city. The U.S. Bureau of Labor Statistics reported that as of March, year-over-year employment in Chicago’s financial sector grew 3.6 percent—more than double gains in the next-highest industry. That also trounces growth of 2.2 percent in the financial sector nationally.

AlphaFlow Launches “Tax Implications of Crowdfunding” eBook (Benzinga), Rated: B

To help investors more effectively evaluate real estate crowdfunding investment opportunities and their potential tax implications, AlphaFlow has released its inaugural eBook: “Tax Implications Of Crowdfunding.” This 23-page eBook, written by AlphaFlow and Sundin & Fish, CPA, closely examines the top tax issues investors must consider as they invest across the real estate crowdfunding industry.

  • A few of the topics discussed in this eBook include:
  • Types of crowdfunding platforms
  • Differences between debt and equity deals
  • Federal and state tax issues
  • Pros and cons of using self-directed IRAs
  • Unrelated Business Taxable Income (UBTI)
  • Tax planning and strategies

Ballard Spahr closes San Diego office (Bloomberg Law), Rated: B

Ballard Spahr, which recently lost two partners to Dinsmore & Shohl, said it has closed its office in San Diego, transferring other lawyers from the city to its Los Angeles office. (Legal Intelligencer)

United Kingdom

Funding Circle CEO Says Business Boomed After Brexit (Bloomberg), Rated: AAA

ThinCats teams up with Alderburn Finance to fund Scottish marine trainer (P2P Finance News), Rated: A

THINCATS has sealed a deal with commercial finance broker Alderburn Finance and Stream Marine Training (SMT) to help the latter step up its cost efficiency and growth plans.

The peer-to-peer lending platform, which channels funds to small- and medium-sized enterprises, will help the Scottish training specialist cut time and overall costs as it plan to boost its consultancy services to the global maritime, oil and gas, renewables and construction sectors.

Edinburgh-based Alderburn Finance acted as a loan sponsor, as it vetted the borrower’s funding application and assisted ThinCats in the origination process.

Navigating a complex market (P2P Finance News), Rated: A

Despite being around for many years, direct lending, which also encompasses peer-to-peer (P2P) lending, has only recently been recognised as a mainstream asset class.

There are several fundamental things to consider if you are thinking about direct lending as an addition to your investment portfolio.

  • Your objectives: Be clear about your objectives and your appetite for risk. Why are you investing?
  • Timing: Investing in direct lending can be more effective if you keep your money invested for at least 12 months.
  • Diversification: Diversification is also an effective tactic.
  • Loan opportunities: A good rule of thumb is to use the RADAR principle: reason, assets, duration, amount, repayment.
  • Investing for Capital Growth or Income: The concept of compounding applies to direct lending in the same way as other investments.
  • Taking control: Finally, it’s good to stay pro-active.

 

China

Dianrong Acquires Asset-Origination Operations of Quark Finance (PR Newswire), Rated: AAA

Dianrong today announced the acquisition of Quark Finance’s asset-origination operations, including the new Credit Studio platform. This transaction will significantly expand and strengthen Dianrong’s existing asset-generation capabilities across China.

Quark Finance operates 71 borrower service centers in 47 Chinese cities. These centers provide comprehensive loan underwriting data collection and servicing. Dianrong already operates 28 technology-enabled borrower service centers in 27 cities in China.

Additionally, Quark Finance owns and operates Credit Studio, a platform that provides data analysis through automated and human interactions to achieve mass-production credit evaluations and processing. Credit Studio leverages Dianrong’s technology to minimize manual activities and lower operational risks, expenses and processing time. Marketplace-lending assets generated by Credit Studio are available to Dianrong and Quark Finance lenders.

By combining Quark Finance’s borrower network with Dianrong’s existing local footprint and fintech capabilities, Dianrong is adding significant scale to its overall asset-generation capabilities. The combination also adds new distribution channels for Dianrong’s borrower lending products and services.

Wang Zhengyu: It will take more time to make profit for China Rapid Finance (Xing Ping She), Rated: A

Recently, China Rapid Finance held a media briefing on IPO issues and Q1 financial report. Just before the meeting, Wang Zhengyu, the CEO of China Rapid Finance, revealed that the company currently is still in the loss. Although, it doesn’t mean a bad management for the company, it’s just a problem of time to make money.

In Q1 2017, China Rapid Finance’s net loss is $149 million, decresed by 46 percent on the basis of the earlier time. The net revenue is $10.5 million, declined by 20 percent compared with the beginning of the year. In fact, China Rapid Finance has been being losed for two consecutive years, the loss amount in 2016 and 2017 were $33.366 million and $3002.6 million respectively. In 2014, the profit was only $131,000.

European Union

MAMBU RECOGNISED AS EUROPEAN GROWTH EXCELLENCE LEADER (Financial IT), Rated: AAA

Mambu, the SaaS banking engine powering innovative loan and deposit products, today announced that they have been named the European Growth Excellence Leader for Native Cloud SaaS Banking and Lending by research and consulting firm Frost & Sullivan.

Frost & Sullivan’s global team of analysts and consultants research a wide range of markets across multiple sectors and geographies identifying companies that maintain consistently high standards for delivering customer value, which translates into growth above the industry average.  The award recognises the company which excelled in driving growth and is best-in-class in three key areas: meeting customer demand, fostering brand loyalty and carving out a unique, sustainable market niche.

Santander Buys Stakes in Three Startups as Botin Pushes Into Fintech (Bloomberg), Rated: AAA

Banco Santander SA, Spain’s biggest lender, bought minority stakes in three financial-technology firms as Chairman Ana Botin makes machine learning a hallmark of her growth plan.

Pixoneye’s algorithms can build a profile of a consumer from photographs stored on his or her smartphone or other device, while Gridspace utilizes artificial intelligence to analyze the sentiments of people on phone calls with customer service representatives.

Europe’s alternative finance market hits $ 9.1 billion in first quarter (Consultancy.uk), Rated: AAA

The alternative finance economy for mid-market players across Europe hit $9.1 billion in closed deals across the first quarter of 2017. Deal activity in the relatively new segment hit more than a 1000 accumulative deals this year, with the UK remaining out ahead in terms of closed deals – at almost 400. Fundraising for buyouts remains the driving force for turning to alternative lending platforms.

In response to demand, marketplace lenders (MPLs) have sprung up – usually as online platforms – which, through a range of new mechanisms, offer an easy means for peer-to-peer lending across a range of segments – with low returns on other forms of assets continuing to entice investors to the market.

Source: Consultancy.uk

In total around 1011 deals were completed in the past 18 quarters across the burgeoning market, with 612 of those in Europe and 399 in the UK – making the UK by far the largest contributor in terms of activity.

In the UK the most deals took place in the technology, media & communications segment, at 19% of all deals, followed by the business, infrastructure & professional services segments, at 18%. Human capital represented 6% of deals in the UK, while financial services firms accounted for 10% of closures.

Source: Consultancy.uk

ECN Reminder to Complete Cross Border Crowdfunding Survey (Crowddfund Insider), Rated: A

The European Crowdfunding Network (ECN) is reminding alternative finance industry types to complete the survey on cross-border crowdfunding and online lending (IE P2P lending, marketplace lending etc.).  The survey deadline is 12 Noon this Friday, July 14th.

The survey focuses only on crowdfunding models that entail a financial return, notably:

  • investment-based crowdfunding (where companies issue equity or debt instruments to crowd-investors through a platform) and
  • lending-based crowdfunding (where companies or individuals seek to obtain funds from the public through platforms in the form of a loan agreement)

Paycock Enters Russian Fintech Market with Its Convenient Mobile Payment Service (MarketWatch), Rated: A

The K-ICT Born2Global Centre, a major Korean government agency under the Ministry of Science, ICT and Future Planning (MSIP), announced that Paycock, one of its member companies, has signed a business MOU with AEB IT, a Russian financial IT corporation. As a result, Paycock will now begin commercializing its mobile payment solution to satisfy the needs of the Russian financial market, which is expected to undergo rapid growth in the near future.

Paycock Check is a mobile payment service that does not require a card-reading device, as the entire payment process is conducted using only a smartphone camera and near field communication (NFC) technology.

Fintech lender strikes partnership with major Italian bank (AltFi), Rated: A

iwoca has announced a strategic partnership with Italy’s Intesa Sanpaolo. The fintech lending platform will now sell its credit products into the Italian banking group’s SME client-base.

Intesa Sanpaolo is one of the biggest banking groups in Europe, with a market capitalisation of €42.7bn. The company boasts over 11.1 million customers in Italy alone, but is also active across Central Europe, Eastern Europe, the Middle East and North Africa.

International

Top 40 Payments Functions Trailblazers (Everest Group), Rated: AAA

Australia

Why a majority of Australians don’t know about peer-to-peer lending (news.com.au), Rated: A

New research by Finder.com.au has found despite the sector growing from one to eight lenders since it launched in Australia in 2012, 65 per cent of consumers don’t know about it and women are less likely than men to understand and use it.

Finder’s research found that only 8 per cent of women would consider using a P2P lender, compared with 20 per cent of men, and three-quarters of women do not know what it is.

Finder’s data shows 63 per cent growth in P2P users in the past six months, while data from some providers shows 195 per cent growth last financial year.

India

Accel-backed Good Methods Global acqui-hires fintech startup Save Your Money (VC Circle), Rated: AAA

Save Your Money (SYM), a fintech startup that offers an automated micro-saving platform, has been acqui-hired by health-tech startup Good Methods Global (GMG), a company statement said.

What is LoanAdda doing to make itself profitable in a crowded market? (Your Story), Rated: A

But all this was far from the mind of Anshuman Mishra (39), when he set up LoanAdda in 2015 to make loans available to large sections of people left out from the purview of the informal and formal banking channels.

As someone who was responsible for managing ICICI Bank’s priority sector lending business, he was acutely aware of the limited access to credit for unbanked customers and poor guidance in facilitating loans.

Today, 78 percent of LoanAdda’s customers are first-time loan takers. Moreover, LoanAdda’s technology algorithm follows its own logic while measuring the eligibility of a certain customer to take loans and throws up the best possible product to the consumer.

Currently, LoanAdda has tie-ups with more than 42 banks to provide home, business, personal, gold and collateral loans on its platform. Through a partnership with India Infoline, an NBFC, the company also gives out its own loans.

Anshuman says that 50-60 percent of LoanAdda’s customers are salaried people with a monthly salary of less than Rs 40,000. The average ticket size is Rs 3.39 lakh for unsecured loans and Rs 34 lakh for secured loans. However, 70-75 percent of all loan takers on the platform get loans of less than Rs 30 lakh.

Why Indians Should Invest in Peer-to-Peer Lending (BW Disrupt), Rated: B

Online peer-to-peer lending as a prospective investment class offers many unique propositions.

  • Net Returns and Interest Yields

While savings accounts or fixed deposits usually yield interest rates of 6% to 8% on average, Mutual funds on the other hand, offer returns averaging at 9% to 13%, with some funds yielding up to 15% p.a. Compare this to online P2P loans, which can generate average net returns of 18% to 22% p.a for lenders.

  • No Lock-in period, enjoy benefits of compounding interest
  • Risk Mitigation

As with any debt-based investment, there is a risk of default in online P2P lending as well. But since the premise on which P2P lending is based is similar to that of debt instruments, the capital risk is lower, and there are ways to mitigate it. One of these is diversification.

Asia

Singapore and Thailand Central Banks Unite in FinTech Deal (Cryptocoins News), Rated: AAA

The Bank of Thailand (BOT) and the Monetary Authority of Singapore (MAS) have entered a FinTech Cooperation Agreement (CA) to further develop and enhance the existing financial ecosystem in the ASEAN region.

The agreement aims to “develop a richer financial ecosystem” in both countries and South-East Asia, an announcement revealed. As per the agreement, both central banks will also share information on new and emerging market trends in an era of micro-financing and digitization as well as their impact on traditional regulatory practices.

Vertex Ventures invests $ 2m in Turnkey Lender (Deal Street Asia), Rated: AAA

Turnkey Lender, a cloud- based loan management system, has raised $2 million venture investment from Vertex Ventures. The venture offers a SaaS solution that employs machine learning and data analysis to understand potential loan applicants, ranging from small scale to large scale loans.

Turnkey Lender has previously received seed funding from SMRK VC Fund. The initial development for the company was done in the Ukraine, where it has its roots. It is currently headquartered in Singapore, where the team believes that can have greater flexibility in approaching the different financial needs of their international clients.

Investment proceeds will be used to engage in expanding business operations across the region, product development and talent acquisition. The company told DEALSTREETASIA that the primary growth markets it if focusing on are Indonesia, Philippines and Thailand.

Bank Mandiri invests in cashless payment startup (Nikkei Asian Review), Rated: A

The venture capital unit of Indonesia’s largest lender by assets, Bank Mandiri, on Wednesday said it is leading a $2 million funding round for local financial technology startup Cashlez, which claims to offer a portable, more user-friendly alternative to electronic data capture machines.

Cashlez’s “mobile point of sales” system runs on a slim card-reader device operated with a smartphone application.

Canada

John D. Orr, Senior Banker and Investor, Joins FutureVault as Chief Executive Officer and a Significant Investor (PR Newswire), Rated: A

FutureVault, a personal and business information management company, has named banking executive, lawyer, entrepreneur and investment professional John D. Orr as Chief Executive Officer. In addition to joining the management team, Mr. Orr has made a significant personal investment in the Company for a material ownership position.

Launched commercially in North America in late 2016 after two years of development, FutureVault has created an advanced cloud-based information management platform with patents pending. In an increasingly digital world, characterized by volume, complexity and risk, FutureVault’s secure platform provides both individuals and businesses with the tools and intelligence to select, retain and optimize all their information. The platform represents a new category: an intelligent, secure, encrypted, auditable repository for all the information in one’s life or business. FutureVault’s product suite and feature set accommodate a broad range of customer information management needs, from a relatively straightforward individual’s requirements to those of a multi-jurisdictional business or a large family office.

Authors:

George Popescu
Allen Taylor

Thursday June 22 2017, Daily News Digest

German real estate crowdfunding

News Comments Today’s main news: PayPal, Venmo rolling out instant bank transfers. Sindeo goes out of business. SoFi’s new filing. Wealthsimple expands into UK. PayPal advances 400M GBP to UK businesses. Today’s main analysis: A look at Lending Club’s competition. Today’s thought-provoking articles: Many P2P lenders attract investors by raising interest rates. German RECF booms. International expansion of alternative lending. United […]

German real estate crowdfunding

News Comments

United States

United Kingdom

China

European Union

International

  • Alternative lenders spread their wings internationally. AT: “International expansion could become the big story of 2017 and 2018.”
  • Amazon and the future of fintech, part 2. AT: “Interesting theory. I suppose technology can facilitate more diverse business assets for true technology companies like Amazon, Apple, Klarna, et.al. But I don’t see how this is a lot different than traditional holding companies that expand businesses into multiple sectors other than the fact that the companies themselves are predicted to be the holding companies. Isn’t this what Google’s rebranding into Alphabet was all about? Perhaps Amazon could do the same. That would actually make sense.”
  • Global mobility.

Australia

Canada

News Summary

United States

Instant bank transfers are coming to PayPal and Venmo (TechCrunch), Rated: AAA

PayPal announced this morning a plan to speed up money transfers between its service, Venmo and users’ bank accounts for those with supported MasterCard and Visa debit cards. This new “instant transfers” service will be available at a rate of $0.25 per transaction, and will deliver funds in a matter of minutes, instead of the day or so it typically takes when using PayPal or Venmo.

The company says the feature will be available to the vast majority of cardholders, save for a handful of very small institutions.

In most cases, the funds transferred between PayPal or Venmo and the end user’s bank account (via the supported debit card) will arrive in a matter of minutes. However, some banks may take up to 30 minutes, PayPal notes.

The instant transfer service is now launching into beta with select PayPal users, as a result of these deals, as well.

Lending Club: Take A Look At The Competition (Seeking Alpha), Rated: AAA

CreditKarma is a personal finance website. They provide a list of online personal loan options, given some basic information. I put in $10,000 as my desired loan amount and selected a credit score of 700-749. I got the following list of offers:

That’s eleven online, unsecured personal loan providers. The list does not include some others, like SoFi and Lightstream. Try it yourself here.

Lending Club vs. Marcus

Lending Club is an originate-to-distribute lender, while Marcus is a balance-sheet lender. Lending Club gives much of the profit of a loan to its investors, along with default risk and prepayment risk. Marcus keeps the risks and the profit. If we assume that Marcus’s loans look like Lending Club’s, with interest rates averaging 14% and defaults averaging 6%, then the income from each loan looks approximately like this:

LC: 5% origination fee + 1% servicing fee = 6% of loan principal

GS: 14% interest – 6% default – 1% cost of funds = 7% of loan principal

More importantly, it is a lot more painful for Lending Club to cut back on loan originations, for example in a downturn, and it doesn’t necessarily control the pace of lending. If Lending Club stops originating loans, the lion’s share of its income dries up immediately.

Sindeo closes shop (Sindeo), Rated: AAA

But, startups are hard and simplifying the highly regulated, complex business of mortgages is even harder. I believed we had overcome the biggest hurdles, but unfortunately, we didn’t. Today, we made the difficult decision to wind down Sindeo.

While Sindeo as a startup has failed, our people did not. As a matter of fact, we did what everyone said couldn’t be done.

  • We built a place where people could shop and apply for a mortgage from a robust marketplace of over 1000 loan programs, with one single application and one credit check.
  • We secured partnerships with some of the top real estate and consumer finance brands.
  • We helped our clients save millions of dollars on their home loans.
  • We built a people-centric brand, putting the needs of Sindeo’s clients first.

Sindeo’s Net Promoter Score (NPS) this year is 81, compared to an average of negative three from the top banks.

I am devastated for our employees, their families, our partners and our investors who believed in us, and worked so hard to build Sindeo. We have very talented people who need jobs today. Hire them.

Nick Stamos
CEO, Sindeo

SoFi Lending Corp. (Filer) (SEC), Rated: AAA

We (“us” or “PwC”) have performed the procedures enumerated below, which were agreed to by Social Finance, Inc., Deutsche Bank Securities, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman, Sachs & Co., J.P. Morgan Securities LLC, and SoFi Securities, LLC, who are collectively referred to herein as the “Specified Parties”, solely to assist you in performing certain procedures relating to the accuracy of certain attributes of the private consumer loans with respect to the SoFi 2017-4 securitization transaction (the “Transaction”). Social Finance, Inc. (“SoFi” or “Company”) is responsible for the accuracy of certain attributes of the private consumer loans with respect to the Transaction (the “Responsible Party”). The sufficiency of these procedures is solely the responsibility of the Specified Parties. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.

Where Major US Banks Have Invested in Fintech (CB Insights), Rated: A

Key takeaways

  • Since 2012, the top ten US banks by assets under management have participated in 72 rounds totaling $3.6B to 56 fintech companies.
  • Ranked by the number of unique portfolio companies, the cohort’s three most active investors are Citi, Goldman Sachs, and JP Morgan Chase — in that order. Citi (including Citi Ventures) participated in 29 rounds to 24 companies, Goldman Sachs in 30 rounds to 22 companies, and JP Morgan Chase in 14 rounds to 13 companies.
  • Goldman Sachs is focusing on payments, investing in six companies in the space.
  • All ten banks have blockchain investments.
  • Although the second largest bank by assets, Bank of America takes the sixth spot on this list, with only six fintech companies in its portfolio.
  • Kensho saw lots of overlapping interest, with six of the cohort investing in its $50M Series B, which valued the company at $500M.

Robos get the press, but adviser tech is getting the money (Financial-Planning), Rated: A

Take the $140 million in funding that Silicon Valley-based Addepar recently raised from sources including SpaceX backer Valor Equity Partners.

Addepar CEO Eric Poirier says the eight-year old performance reporting platform has seen the number of assets its clients hold grow from $300 billion last year to $700 billion.

That’s not to say that there isn’t money for robo advice platforms — blending impact investing and robo advice garnered OpenInvest $3.25 million in seed funding from high-profile VC firm Andreessen Horowitz in May.

LendingPoint founders share recipe for success (Bankless Times), Rated: A

During the financial crisis both said they worked with large balance sheets which helped them understand how to position themselves in the marketplace. That experience also taught them that marketplace lenders cannot simply be technology companies, they also need to apply the lessons learned working in different environments, geographies and at different points in the cycle.

What they saw was a space where near prime consumers, those with credit scores between 600 and 700, were in need of better credit products, with many resorting to payday lenders and their ilk.

When lenders place too much emphasis on arbitrary measure such as FICO scores, they miss so much underneath. In one case the employee of a partner company saw her credit score quickly drop after she paid off a loan early. Even though she had fewer debt obligations, by traditional underwriting methods she was deemed a higher risk.

Alternative data sources can play a role in telling those unique stories while protecting everyone from fraud, Mr. Tavares said. Something as simple as how long a phone number has been active can help validate an applicant’s identity.

LendingPoint also believes it is crucial for marketplace lenders to originate and hold assets on their balance sheets, Mr. Burnside said.

LendingPoint offers personal loans up to $20,000 that can be paid back in twice-monthly installments over 24 to 48 months.

American Express invests in insurance startup Next Insurance (Reuters), Rated: A

American Express Co has invested in Next Insurance, a Palo Alto-based technology startup that sells customized insurance for small businesses online, as Silicon Valley companies look to shake up the insurance sector.

Next Insurance will use the new cash injection, which brings the investment round to $35 million, to expand the products it offers and target new business sectors, the company said.

Office of the Comptroller of the Currency Issues Third-Party Relationship Frequently Asked Questions (Lexology), Rated: A

Focusing on bank-fintech relationships, which likely were a key driver for the FAQs, the OCC notes that when “a fintech company performs services or delivers products on behalf of a bank or banks, the relationship meets the definition of a third-party relationship” that should be subject to the bank’s third-party risk management process. Akin to any other third-party service provider, a fintech company arrangement may or may not be considered a critical activity in this regard.  In an important acknowledgement of the diligence challenges banks face from time to time in conducting diligence of third parties, the FAQs also specifically address situations where a bank does not receive sufficient information from a third-party service provider that supports a critical activity. In that situation, the OCC expects a bank board and management to:

  • develop appropriate alternative ways to analyze these critical third-party service providers;
  • establish risk-mitigating controls;
  • prepare to address delivery interruptions;
  • make risk-based decisions that despite the lacking information, these critical third-party service providers remain the best service providers available;
  • retain appropriate documentation of all efforts to obtain information and related decisions; and
  • ensure that contracts meet bank needs.

The FAQs also specifically address marketplace lending arrangements with nonbank entities and relationships to facilitate mobile payments. In the marketplace lending context, the FAQs assert that a bank board and its management should understand the relationships among the entities involved and the risks specific to marketplace lending relationships, including reputational, credit, concentration, compliance, market, liquidity and operational risks. Management must also ensure it has proper personnel, processes and systems to monitor and control these risks, including, for example, adequate loan underwriting guidelines and appropriate board-adopted policies that include concentration limits. The FAQs direct banks to work with mobile payment providers “to establish processes for authenticating enrollment of customers’ account information that the customers provide to the mobile payment providers” as mobile payment environments become more ubiquitous and as customer expectations dictate that transaction accounts as well as credit, debit or prepaid cards issued by banks are able to be used in mobile wallets.

How The Blockchain Can Create A True Peer-To-Peer Sharing Economy (NASDAQ), Rated: A

One of the blockchain’s most prominent features is that it can bestow trust in a network without the need for a central authority.

The sharing economy refers to a new socio-economic phenomenon in which individuals share products or services with other individuals on a peer-to-peer basis for a fee. However, even though the sharing economy is built on a peer-to-peer model, there are intermediaries who charge a fee for facilitating the transactions.

Enter Blockchain Technology

In a true peer-to-peer sharing economy, there should never be an intermediary who dictates the terms and conditions of a transaction or takes a cut of the payment.

Say you want to rent a car for a short trip from one side of town to the other. To do so, you could use a mobile app to identify vehicles that are available in your vicinity. Then, after verifying the digital identities of both yourself and the vehicle owner, you agree to terms and conditions, such as the fee and duration of the rental, and buy a micro-insurance policy  covering the ride, via an immutable smart contract. Once the terms and conditions are agreed upon and the smart contract is created and verified, you can open the car using your smartphone and the payment is directly deducted from your digital wallet and transferred to the vehicle owner upon completing your trip.

While the above example is purely theoretical at this stage, there are two startups aiming to leverage blockchain technology to create a fairer peer-to-peer economy in the rideshare sector. Austin, Texas-based Arcade City and Israel-based La ‘Zooz both aim to take the “Uber out of Uber” by offering ride sharing without a company acting as a fee-charging intermediary. Instead, drivers and riders deal directly with one another and payments are automatically conducted in cryptocurrency once the ride is completed.

FT 300: full 2017 list of top US registered investment advisers (Financial Times), Rated: A

The FT invited qualifying RIA companies — more than 2,000 — to complete a lengthy application that gave us more information about them. We added this to our own research into their practices, including data from regulatory filings. Some 725 RIA companies applied and 300 made the final list.

The formula the FT uses to grade advisers is based on six broad factors and calculates a numeric score for each adviser. Areas of consideration include adviser AUM, asset growth, the company’s age, industry certifications of key employees, SEC compliance record and online accessibility. The reasons these were chosen are as follows:

• AUM signals experience managing money and client trust.

• AUM growth rate can be a proxy for performance, as well as for asset retention and the ability to generate new business. We assessed companies on one- and two-year growth rates.

• Companies’ years in existence indicates reliability and experience of managing assets through different market environments.

• Compliance record provides evidence of past client disputes; a string of complaints can signal potential problems.

• Industry certifications (CFA, CFP, etc) shows the company’s staff has technical and industry knowledge, and signals a professional commitment to investment skills.

• Online accessibility demonstrates a desire to provide easy access and transparent contact information.

 

An AboveLoans.com Review: A Simple Way to Borrow (Saving Advice), Rated: B

Compared to other online lender-matching agencies, AboveLoans doesn’t really stand out among other online lenders. The only part that may seem a bit different is the simplicity aspect. Because AboveLoans only gives out smaller amounts ($35K and less) getting a loan can be a pretty swift process but there is more to getting a loan than how quick it happens.

Loans can range from $500 to $35K and you’ll have anywhere from six to 72 months for repayment.

Applying from anywhere sounds great but how secure is AboveLoans.com? AboveLoans isn’t a lender. It is a lender matching site. The entire process is secure but if you’d prefer a group of lenders not have your information you may want to consider using another site. Once you’ve accepted the lender’s terms, etc. funds will be deposited directly into your bank account.

You can apply for each of the following loans through AboveLoans:

  • Debt Consolidation Loans
  • Emergency Loans
  • Auto Repair Loans
  • Auto Purchase Loans
  • Moving Loans
  • Home Improvement Loans
  • Medical Loans
  • Business  Loans
  • Vacation Loans
  • Tax Loans
  • Rent/Mortgage Loans
  • Wedding Loans
  • Major Purchase Loans
  • General Personal Loans
United Kingdom

WEALTHSIMPLE TAKES SERVICE TO ANOTHER FINTECH HUB WITH UK EXPANSION (Betakit.com), Rated: AAA

Wealthsimple is officially expanding its service to the UK with an invitation-only beta.

The UK expansion comes just four months after Wealthsimple announced its US expansion. The company had been working on its US expansion over the past year.

“Ultimately, our ambition is to be a global financial services company. The UK has a lot of similarities to Canada — similar language and culture, the financial services industry is in a similar place — so it felt like the next logical step,” says Mike Katchen, CEO of Wealthsimple.

Toby Triebel, who previously co-founded online lending platform Spotcap, will lead Wealthsimple’s UK business.

PayPal hits £400m mark in advances to UK businesses (AltFi), Rated: AAA

PayPal Working Capital, PayPal’s small business lending arm in the UK, has hit £400m in cumulative cash advances made to British businesses. Over 22,000 business owners have now taken out an advance from PayPal Working Capital since it launched in 2014. The £400m milestone comes after a 116 per cent increase in total cash advances made by the firm over the past year.

PayPal’s small business lending activities are considerably further advanced in the US, where it topped $2bn in cash advances in the summer of 2016.

The high-yielding trusts more popular than ever (interactive investor), Rated: A

Trust purchases by advisers and wealth managers hit an all-time high over the 12 months to the end of March at £777 million. That’s up 11% on calendar year 2015, when £698 million was piled into closed-ended vehicles.

In addition, Q1 2017 was the second-highest quarterly period for purchases of trusts at £246 million. That’s a year-on-year increase of 85% and 25% more than the previous quarter.

Specialist debt was the most popular sector with advisers and wealth managers in first-quarter 2017. It’s the first time it’s topped the list, accounting for 14% of all investment trust purchases during the period.

He continues that, with the likes of peer-to-peer lending relatively new innovations, another potential risk is that trusts investing in it, which tend to be even newer concepts, are unproven over different economic and investment environments.

The sector average payout is above 6%, with some of the highest-yielding, including Carador Income (CIFU), Ranger Direct Lending (RDL) and Fair Oaks Income, paying over 10%.

SafeCharge reveals research urging fintech innovation for marketplace payments (SafeCharge), Rated: A

According to a study from the Ecommerce Foundation, almost 40% of the world’s online retail market will be controlled by marketplaces by 2020.

This difference creates complex challenges:

  • Regulation – The impending Payment Services Directive 2 regulation requires certain marketplaces which retain funds between a seller and a buyer to hold a payment institution license.
  • Seller Onboarding – Manual processes and Know Your Customer regulatory requirements create friction, which discourages sellers from registering with marketplaces.
  • Payment Checkout – A critical component for any business. Localisation, buyer experience, payment method offering, all must be optimised for conversion.
  • Split Payments – Marketplaces need to split transactions between multiple parties, both for marketplace commission and where a single checkout experience involves multiple sellers.
  • Seller Settlement – Marketplaces are in competition for sellers. Sellers demand frequent settlement of funds, often daily, in their local currency, and using a local payment method.
  • Unique Fraud – Marketplaces face new forms of fraud unique to the sector such as ‘collusion fraud’ where fake buyers and sellers facilitate the sale of non-existent goods with stolen payment cards.

The pros and cons of P2P lending (Bridging & Commercial), Rated: B

Peer-to-peer platforms have revolutionised lending, allowing retail investors to benefit from what was once the preserve of financial institutions and high-net-worth investors.

Pros

1.    Potential returns are excellent, and much higher than can be achieved with dividend yields.
2.    Returns are fixed, and don’t fluctuate like returns from equity investments or the stock market.
3.    Lenders are not charged fees, so the amount stated is the net amount investors receive.
4.    Platforms no longer have to deduct tax at source, so investors will be paid gross and account for their own tax.
5.    Investment terms are typically under 12 months.
6.    Legal charge holders will be paid out as a priority before any owners/equity shareholders.
7.    It is FCA regulated, so platforms must be transparent and are legally obliged to be upfront about risks. Platforms must have contingency plans in place, such as a significant financial buffer.
8.    The launch of the Innovative Finance Isa means peer-to-peer loans can be held within an Isa, so returns are tax free.

Cons

1.    While regulated by the FCA, peer-to-peer lending is not covered by the Financial Services Compensation Scheme, so losses are not underwritten by the government.
2.    Peer-to-peer loans are likely to be tied-in until the borrower has repaid, unless the platform can find a buyer.
3.    Loan periods are short, but investors may have to wait for the loan to complete before they start earning interest. One alternative is for investors to lend money to the finance company and get a fixed return for a fixed period. The rate will be less, but interest will be continuous, so investors can end up with approximately the same return, without having to select individual loans to invest in.
4.    If the borrower does not repay on time, investors need to wait until they have repaid – although they should continue to earn interest in the meantime.
5.    If the borrower defaults, the property will have to be repossessed. If that’s the case, there could be delays of at least several months. The property may not achieve a sale price that allows lenders to be repaid all their capital and/or the interest owed.
6.    While investors will receive a fixed rate of interest that may be higher than average dividends, they will not benefit from capital growth.

China

Many P2P Lending platforms attract investors by increasing interest rate  (Xing Ping She Email), Rated: AAA

Recently, in the background of surging market capital interest rates, the yield of money fund and bank financial products both rose markedly. P2P lending institutions no longer have the advantages in interest rates. In order to attract investors, there comes a new wave of raising interest rates in P2P lending industry.

On June 21st, Tuandai launched a notice of welfare activity, raising the interest rate of product “Futoubao 36”by 0.5%-1.4%.

Recently, Yirendai issued several promotion activities of raising rates, such as rebating 4% for inviting a new user.

On June 17th, JiMu Box announced from that day to June 23rd, if a customer successfully invited new user to invest in the platform, the inviter would receive a coupon of 6% growth in interest rates, in addition to the regular cash coupon and interest rate hikes.

Besides, Ma Tianshuai, the founder & CEO of JieYue United, said they also operated a welfare feedback activity of raising interest rates during the company’s 4th anniversary on June 18th.

Cash and carry (Breaking Views), Rated: A

A Hong Kong Monetary Authority study shows the former British colony is oddly cash-intense. The average person held nearly $6,000 in 2014 – second only to Switzerland.

The first licenses for mobile-wallet apps were granted to Apple, Android Pay, Tencent and others in 2016. Alibaba’s Alipay launched its localised app in May, more than a decade after starting on the mainland. Twenty years after Hong Kong’s reunification with the mainland, in consumer-facing fintech at least, the city looks a decade behind.

European Union

German Real Estate Crowdfunding Market Booms (Crowdfund Insider), Rated: AAA

The road ahead for the German real estate crowdfunding market has been cleared. The threat of being excluded from the scope of application of the crowdfunding regulation, the Kleinanlegerschutzgesetzt (KASG), was taken off the table last month. The crowdfunding market can move ahead on its exponential growth path.

Michel Harms tracks the overall crowdinvesting industry through his crowdfunding barometer and his aggregation site crowdinvest.de which lists all crowdinvesting projects available in Germany. According to his reports, real estate accounts for 80% of the crowdinvesting market. In 2016, the market doubled in size to reach €40 million. In the first five months of 2017 alone, 51 real estate projects raised €52 million. One can reasonably expect the market to triple in size by the end of 2017.

Michel Harms tracks the overall crowdinvesting industry through his crowdfunding barometer and his aggregation site crowdinvest.de which lists all crowdinvesting projects available in Germany. According to his reports, real estate accounts for 80% of the crowdinvesting market. In 2016, the market doubled in size to reach €40 million. In the first five months of 2017 alone, 51 real estate projects raised €52 million. One can reasonably expect the market to triple in size by the end of 2017.

Exporo was incorporated in 2013 by Simon Brunke, CEO, Björn Maronde, Julian Oertzen and Tim Bütecke.

Zinsland was founded in 2014 by Carl-Friedrich von Stechow, CEO, Dr. Stefan Wiskemann and Moritz Eversmann.

Bergfürst was started much earlier than its competitors, in 2011, as an equity crowdfunding platform launched by Dr. Guido Sandler, CEO, and Dennis Bemmann.

Next to the three leaders, around ten new entrants try to carve a market for themselves:

  • Zinsbaustein, launched in 2016, is the number 4 with 8 projects financed to the tune of €9 million.

Others have only financed a few projects so far:

  • iFunded started in 2015 and open for business in 2016, iFunded intends to attract German and international investors who want to invest in Berlin. Its average size of projects is €800K.
  • Home Rocket, started in 2015, Home Rocket operates from Austria but addresses both the German and Austrian investors and developers.
  • immofunding started in 2015, also operates from Austria.
  • Renditefokus started in 2015.
  • ReaCapital started in 2017.

LendIt Partners with Startupbootcamp FinTech For Its PitchIt Europe 2017 Competition (PR Newswire), Rated: A

LendIt, Europe’s largest global show in lending and fintech, today announced its Pitchit @ LendIt contest partnership with Startupbootcamp FinTech for PitchIt @ LendIt Europe 2017, a leading platform for fintech startups who can earn mentorship, endorsement and exposure to leading institutions, investors & press. Online applications also officially opened to qualifying fintech startups.

This year’s competition is slated to see hundreds of applicants all vying for a prestigious spot in the finals, and a chance to present on the keynote stage in front of over 1,000 members and high ranking executives from the global fintech industry at LendIt Europe (9-10 October, Intercontinental O2 Hotel, London.)

This year’s exclusive PitchIt Contest Partner will be Startupbootcamp FinTech, the leading global FinTech accelerator focused on innovation for the financial services industry. The finalists will present to a panel of influential VC judges and mentors, including those from Balderton Capital, Commerz Ventures, Thiel Capital, Index Ventures and Target Global VCs,and other high profile investors in the fintech capital of the world, London.

To apply to PitchIt @ LendIt Europe competition, firms must meet the following criteria:

  • Must be a fintech company
  • Two or more full-time co-founders/employees
  • 2-10 full-time employees
  • Less than 3 years in business (companies founded before 2014 not eligible)
  • Raised less than 4 million GBP since launch date
  • Must have a professional business website
  • Everyone registering on behalf of a specific company must have an email with that company’s domain
  • Past PitchIt Europe finalists are ineligible
International

Alternative Lenders Spread Their Wings Internationally (deBanked), Rated: AAA

As alternative lending gains global traction, a growing number of U.S-based alternative lenders are exploring international growth, with large companies like OnDeck, Kabbage and SoFi leading the way.

To be sure, international expansion requires extensive time, money and regulatory know-how, and some U.S. alternative lenders may never reach the critical scale to be able to compete effectively. Nonetheless, as globalization proliferates, industry observers expect that additional forward-thinking companies will push beyond the limits of their current geographical borders.

Affirm—which works with more than 900 retailers and recently announced that it had processed its 1 millionth consumer installment loan—has focused on domestic growth so far, but the company is now considering a number of options for international expansion, Metcalf says.

Europe, for instance, has seen substantial growth over the past few years, with the U.K. leading the way in alternative finance. It has four times higher volumes in aggregate than the rest of Continental Europe, according to a 2016 report from KPMG and TWINO, one of the largest marketplace lending platforms in Europe. (P2P consumer lending is the largest component of alternative online lending in Europe, capturing 72 percent of the total in the first through third quarters of 2016, according to the report.)

After the U.K., France, Germany and the Netherlands are the top three countries for online alternative finance by market volume in Europe, according to a September 2016 report by the Cambridge Centre for Alternative Finance.

Asian markets, meanwhile, show significant promise for alternative finance players to make their mark due to the sizeable population of digitally savvy consumers who are still largely underbanked. China is by far the largest market for alternative lending in Asia. It’s also the world’s largest online alternative finance market by transaction volume, registering $101.7 billion in 2015, according to the March 2016 Cambridge Centre for Alternative Finance report.

Although there are many possible international markets to explore, U.S. lenders have to tread carefully before planting roots elsewhere, observers say. Some smaller U.S. lenders may find domestic expansion easier and more cost-effective because of the time, regulatory and financial commitment that goes along with exploring international markets.

What’s more, foreign banks looking for alternative lending partners typically prefer to work with larger, more established players.

Within the past several years, OnDeck has begun offering small business loans to customers in Canada and Australia. Frequently Canada is a first step for U.S. companies that want to expand internationally because of the shared language and similarities between the economies, Young explains.

After the Canadian operation was successfully underway, the opportunity arose for the online lender to expand to Australia—which shares several similarities with the Canadian market.

U.S.-based alternative lenders also need to be careful to create products that fit the culture and needs of a particular market.

Take Kabbage, for example. The small business lender expanded into the U.K. in 2013, two years after its U.S. debut. But the company found that having its own small business lending business in the U.K. was too challenging for regulatory and capital reasons. It no longer offers new loans from this platform.

Instead, the funding company decided that a better global strategy was to license its technology to financial institutions in international markets a less capital-intensive, yet economically sound way of doing business.

Kabbage—which recently announced the establishment of its European headquarters in Ireland—has licensing arrangements with Santander in the U.K., Kikka Capital in Australia, Scotiabank in Canada and Mexico and ING in Spain.

For its part, SoFi has announced plans to expand to Australia and Canada this year. The company’s chief executive has also talked about European and Asian expansion in the future.

LendingClub, meanwhile, last November announced a significant partnership with National Bank of Canada and its U.S. subsidiary Credigy.

Amazon And The Future Of FinTech: Part II (Seeking Alpha), Rated: A

The model of the new information age is connectivity and this connectivity comes from building platforms that transcend industries.

But, let’s get back to the FinTech issue. In my previous post, I argued that Amazon, as well as Apple (NASDAQ:AAPL) and PayPal (NASDAQ:PYPL), has entered into the “payments” space and that this is their inroad into the banking field. And the payments space is definitely a “platform market.”

Now, we learn that a major European player in the payments space has actually received its banking license. Klarna is one of Europe’s largest financial technology groups, valued in 2015 at $2.25 billion.

And, now they have a banking license. But don’t expect mortgages from them right away. Expect “payment cards and accounts.”

In other words, they are building a platform that will transform banking, one that works through many different companies and industries. Is that what Mr. Bezos and Amazon are working on?

Global mobility: supporting your business (Relocate Magazine), Rated: A

Transferwise has become one of the world’s biggest fintech companies, valued at $1 billion with 700 employees.

Nilan offered a number of benchmarks for his company’s success since it was established in 2011 – its expansion from two to 200 markets, its ever-growing list of international HQs, its boom from 60 employees to 700 – but the one that’s made headlines most recently is the announcement that customers are now sending $1 billion per month using the service.

The threat of Brexit looms, however, and Transferwise is concerned about the impact it will have on the company’s ability to access talent.

Australia

Need a loan? Then ask a peer (Yahoo! Finance), Rated: A

Interestingly, a finder.com.au survey revealed that the majority of Australians think that a good credit score should come with perks. That is, 67% of people believe that a good financial history should mean better interest rates on products like loans.

Here are four things you need to know about P2P loans: 

When reviewing your options, keep a close eye on the fees involved to ensure that you’re not paying more than you can afford.

As P2P lending isn’t backed by a large corporation, do your due diligence by researching the reputation of the platform you’re thinking of signing up with. A quick way to do this is to check for a credit license.

P2P platforms typically offer lower loan amounts, so you may only be able to borrow up to $50,000 for a personal loan. This could be restrictive, depending on your loan purpose and the amount you need to borrow.

Once you’ve wrapped your head around the ins and outs of P2P lending, decide whether this is the right type of finance for you.

Canada

Alternative investing requires more transparency: survey (Benefits Canada), Rated: B

The survey, which polled 200 institutional investors and asset managers, found respondents cited transparency as the leading investment consideration, for both alternative investments (62 per cent) and traditional investments (62 per cent).

According to the survey, risk management is the most important driver for transparency in both traditional and alternative investments. Nearly three-quarters (73 per cent) of respondents said portfolio risk management was the most important element, while about half said regulatory requirements (53 per cent) and competitive considerations (43 per cent) were the most important elements.

Authors:

George Popescu
Allen Taylor

Bringing the Mortgage Process Out of the Dark Ages

the mortgage process

LendIt’s second day feature an interesting panel discussion on mortgages titled “Bringing the Mortgage Process Out of the Dark Ages.” Panelists includes Clara Lending CEO Jeff Foster, Blend founder and CEO Nima Ghamsari, Digital Mortgage General Manager Simon Moir, Sindeo CEO Nick Stamos, and SoFi Director of Business Development Joshua Tatum. The panel was moderated […]

the mortgage process

LendIt’s second day feature an interesting panel discussion on mortgages titled “Bringing the Mortgage Process Out of the Dark Ages.” Panelists includes Clara Lending CEO Jeff Foster, Blend founder and CEO Nima Ghamsari, Digital Mortgage General Manager Simon Moir, Sindeo CEO Nick Stamos, and SoFi Director of Business Development Joshua Tatum. The panel was moderated by Bankless Times Managing Editor Tony Zerucha.

Moir kicked off the discussion by saying this year’s buzzword is “digital mortgage” and there seems to be a huge focus around the concept.

“It’s all about minimizing stress for the borrower,” he said. “Lenders have to pull data from multiple sources.”

Ghamsari agreed. He said consumers are starting to democratize the digital experience while mortgage companies just want better data and are starting to offer benefits to banks and other institutions for collecting data on their behalf. But he added, “A nice end-to-end solution would both problems.”

Foster noted that when the digital experience comes into conflict with taking on a mortgage, that’s a big deal.

“The nexus is to deliver the digital experience while providing exceptional customer service and education that meets the needs of the customer,” he said. “People also want to take their time, assess the options, and understand what they’re getting into.”

Foster also noted that the digital experience has the opportunity to provide a credible experience for every mortgage customer, but the key is getting the data and the technology to the place where that personal experience can happen seamlessly.

“You can give all the data in the world to the consumer,” said Stamos, “but we try to offer products that are accurate to the situation and not just a bunch of options. They get what they qualify for up front.”

Sindeo’s value proposition is to leverage technology to streamline the mortgage application process while offering access to a marketplace of lenders that fit each borrower’s unique financial situation.

Ghamsari addressed the different needs of consumers and mortgage providers saying “One side needs less friction and one needs more information. Technology is inevitable because it is good at gathering data and delivering rules.”

Moir pointed to Amazon as a prime example of something that was once scary for consumers but is now commonplace. He challenged the mortgage industry to create digital products that will fit the needs of all consumers and not just millennials.

On the other hand, Tatum said, “Under TRID, it’s almost impossible to close a loan in under eight days. Consumer expectations may want things to happen faster, but regulatory structural considerations actually inhibit some of those expectations.”

Ghamsari said the best way to solve regulatory issues is with automation.

“Regulation and technology are well aligned, but historically, there hasn’t been as much focus on technology in the mortgage industry,” he said. “If we focused on technology earlier, we’d be much further along.”

Foster noted that the industry adapted to TRID over time and that a new TRID will come some time down the road. Regulation is always changing.

“The mortgage industry is not a closed ecosystem,” Moir said. “There are a lot of different participants. We’re coming out of the dark ages, but we’re not out yet.” He noted some of the challenges of legacy systems interacting with new technologies.

“We work with about 50 different lenders,” Foster said. “We use the broker model, a one-stop shop for consumers. There is a lot of federal and state regulation so doing business in different states is different. You have to be flexible and build to the consumer first. Build technology around that.”

Tatum agreed.

“You can have all the technology in the world,” he said. It begins with the consumer. If the consumer doesn’t understand the platform, you’re dead.” He also recommended educating the consumer through social channels and educational events.

Ghamsari followed up with an example of a traditional mortgage company trying to leverage the Internet for business, but they required the consumer to log in to three different portals during the application process. He said it’s important for mortgage providers to streamline the process and make it simple for the consumer.

Moir said, “We need to encourage an ecosystem of providers. You can’t do it all yourself.”

Indeed, you can’t. What will bring the mortgage industry out of the dark ages? First, technology, but not just technology. It must be a technology centered around streamlining and enhancing the customer experience. Strategic partnerships and a healthy competitive landscape wouldn’t hurt either.

Authors:

Allen Taylor