Friday August 25 2017, Daily News Digest

alternative investing

News Comments Today’s main news: Ellevest raises $32M to target women investors. eOriginal, Notarize close first digital mortgage closing. OFF3R launches SIPPS portal. Zopa reduces higher-risk lending. China issues draft rules on illegal fundraising. TWINO adds second Russian originator. African university to offer fintech degree. Today’s main analysis: Should P2P lending investors worry about default rates?Early-stage fintech investment in UK, Germany. Today’s […]

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United Kingdom

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India

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News Summary

United States

Wall Street alum Sallie Krawcheck just raised $ 32 million for her investing platform (Business Insider), Rated: AAA

But the uncertainty and risk that comes with the markets is very often a major deterrent, especially for women, who invest at a much lower rate than men in the US.

To combat this, former Wall Street executive Sallie Krawcheck launched Ellevest in 2016, a digital investing platform that puts female investors’ money in low-cost ETFs based on a pick-and-choose set of goals, like starting a business, buying a home, having children, and retiring comfortably.

This week, the startup raised $32.5 million in its latest round of funding, according to CNBC. Tennis superstar Venus Williams, who is a champion of equal pay and opportunity for women both on and off the court, was among Ellevest’s first investors.

Just 28% of women are willing to take on high risk to get a good return on their investment, compared to 45% of men, according to a 2015 report by BlackRock.

Man finds it can be hard to return $ 6,000 (WoodTV), Rated: AAA

When 53-year-old Wyoming resident Duane La Varier found $6,180 had mysteriously appeared in his bank account, he never dreamed how hard it could be just trying to give money away.

He said he and his wife never filled out any applications and never sought any kind of loan.

The deposit a week ago had come from a company called LendingClub.

“I said, ‘I did not apply for this loan. Just take it back, just take it all out of my account.’ They said no.”

LendingClub is not the actual lender — it represents lenders — but Dudum said the company will take the hit for the $6,000 loan and its fees.

eOriginal and Notarize Make Digital Mortgage the New Reality (Broadway World), Rated: AAA

With its launch of Notarize for Mortgage, the company’s proprietary signing and remote notarization platform, Notarize recently completed the first-ever online mortgage closing. By integrating directly with eOriginal’s electronic vault, they enable lenders to leverage a joint solution that takes only a few short days to set up and launch before borrowers can start closing loans online. Together, Notarize and eOriginal allow lenders to quickly provide a seamless digital experience spanning the entire closing process all the way through registration with MERS (Mortgage Electronic Registration System, Inc.) and sale into the secondary market.

Connecting lenders, title agents, borrowers and notaries online 24 x 7 to digitize the closing process, the Notarize for Mortgage platform is approved by both Fannie Mae and Freddie Mac, underwritten by national title underwriters, and was launched with five lender customers and numerous warehouse lender and mortgage servicer partners. The platform is available to lenders online or via modern APIs that allow them to integrate an online closing process directly into their existing tools, automating their closing operations entirely.

eOriginal’s platform of integrated solutions delivers a fully digital mortgage and supports every type of digital closing strategy.

TRANSPARENCY IN ALTERNATIVE INVESTING (All About Alpha), Rated: AAA

In February of this year, the Economist Intelligence Unit surveyed 200 senior asset managers and institutional investor executives to learn what factors are most important in the way they make their decisions. Several different types of institution were involved, including hedge funds, private equity firms, insurance companies, and nonprofits.

New Business Models – and Transparency

The 2008 global financial crisis of course had a negative impact on the alternative investments industry.

New business models have arisen to supply demand across the spectrum of investors, including those investors eligible for and interested in alternatives. Publicly traded limited partners are one important example.

Who will win the robo advisor IPO race? (Financial-Planning), Rated: AAA

It’s been a decade since the launch of the industry’s leading independent digital advice platforms — Betterment, Wealthfront and Personal Capital.

The question that now remains for all three: who will cross the IPO finish line first?

In terms of assets, the trio has kept their positions in the market respectively, with Betterment leading all independents with over $10 billion in AUM, followed by Wealthfront’s $7.4 billion and Personal Capital’s $4.9 billion.

Collectively, the three count just over 420,000 clients and over 548,000 accounts, according to SEC filings and company statements.

Personal Capital, which always tailored its services for HNW clients before lowering its account minimums (and then raising them up again) claims its average client account size is roughly $380,000; users with more than $1 million in investable assets, the company says, comprise about 40% of its AUM.

Source: Financial-Planning.com

Online Lenders Featured in the Inc. 5000 (Lend Academy), Rated: A

Every year Inc. pulls together a list of the top 5000 fastest growing private companies in the United States. This year there were around 250 companies that made it in the financial services category and there are several familiar names on the list.

Other lenders readers may recognize are Lighter Capital (634), FastPay (1653), National Funding (2030), and ZestFinance (2202).

How Debit Activity Can Benefit Lenders in a Cashless Society (Clarity Services), Rated: A

With nearly half the American population carrying a subprime credit score, rent-to-own companies, online installment, storefronts and others are embracing new tools to intelligently navigate a market that has been largely overlooked.

  • Cash is only 14 percent of the share of transactions by value of payments (The Federal Reserve System Cash Product Office).
  • While the average American spends roughly $100 per day – not counting the purchase of a home, motor vehicle or normal household bills (Gallop), half of us are walking around with less than $20 cash (Bankrate.com).
  • If given the choice between a cashless and cash-only shop, most consumers in the wealthiest countries prefer the cashless option (ING Group/eZonomics).
  • Nearly 40 percent of Americans said that they would be happy to go completely without cash. (ING Group/eZonomics).

The top 7 startups from Y Combinator S’17 Demo Day 2 (TechCrunch), Rated: A

Standard Cognition is using machine vision to build the checkout of the future. Called autonomous checkout, the technology will allow shoppers to grab what they want and walk out of a store without having to go to a cashier. Standard Cognition believes it tech will enable those companies to save money and reduce theft.

Dharma Labs is building what it calls the first “protocol for debt on blockchains.” Citing the popularity of ICOs, the startup believes there’s a “proven demand for cryptoassets that look and act much like equity.” So Dharma has built a mechanism for decentralized peer-to-peer lending. “Anyone in the world can borrow and anyone in the world can lend.”

Emailage Raises $ 10m in Growth Equity Funding (Finsmes), Rated: A

Emailage, a Chandler, AZ-based provider of global fraud prevention and identity verification using email address scoring, raised $10m in growth equity funding.

The round was led by Anthos Capital, with participation from Radian Capital, Wipro Ventures, Mucker Capital and Tallwave Capital.

The company intends to use the funds to expand existing partnerships, further advance its email address-based predictive scoring system, and accelerate growth in North America, EMEA, LATAM and other key markets.

How to Expand Your Business Online by Offering More Products or Services (Kabbage), Rated: A

Hopefully, increased revenues will help ease cash flow problems and in the end, improve profits. Other advantages of growing business may include the chance to bring in more qualified employees, acquiring more customers and improving credit scores.

Expand service areas

Companies that provide services to homes or other businesses may find that their hometown or neighborhood has a limited customer base.

Expanding to nearby locations is one of the most common ways that local businesses grow into regional businesses. This also allows the company to add some more geographic areas to a business website, directories, and social pages to show up in more local searches.

Expand services

Most small business owners have to work to manage cash flow, and this task is much tougher when revenues are only high for a few months but operational costs last all year.

These are some ways to expand services both offline and online:

  • One good way to promote this kind of service online could be through holding webinars with tax tips for small businesses or even individuals. Some tax preparers might also produce books or videos for sale to help startups and small businesses manage tax planning better.
  • Some of these plucky entrepreneurs have learned to keep business flowing by offering holiday specials for getaways. Others have opened their facilities up to host seminars or workshops for organizations.
  • He kept his local business website to attract repair customers, but he also added an online store to sell products to the DIY crowd all over the country. He promoted this online store by creating some how-to videos.

This credit card alternative could be bad for your wallet (WSBTV.com), Rated: B

The problem is that these instant loans encourage impulse spending — and it doesn’t have to be a pricey vacation! Affirm will spread payments over a period of 12 months for loans of $100 or more.

To put that in perspective, you could easily pay more than $15 in interest on just a $100 loan!

LENDINGCLUB INVESTOR REVIEW: THE BEST PEER TO PEER LENDING SOLUTION (The College Investor), Rated: B

Over the last 8 years, 150,000 investors have lent over $26 Billion in personal loans through the peer to peer LendingClub platfrom. On average, investors in the top grade loans earned 5-7% annualized with strong cash flow.

As an added bonus, LendingClub allows you to invest as little as $25 per note. That means it’s easy to spread your risk across dozens or even hundreds of loans.

First, you need to meet some strict investor requirements.

  •  Income requirements: Must earn $70,000 annually ($85,000 in California)
  • Net Worth Requirements: Must have a net worth (exclusive of your home value) of $70,000 ($85,000 in California). People with a $250,000 net worth do not have to abide by the income requirements ($200,000 in California).
  •  Kentucky residents must be accredited investors (earn $200,000 annually or have a net worth of $1 million)
  •  Residents of Alaska, New Mexico, North Carolina, Ohio, Pennsylvania cannot invest in LendingClub
  •  No more than 10% of your net worth can be investing in lending club notes
  •  $1,000 minimum investment

LendingClub charges $100 per year for their self directed IRA accounts, but they waive that if you maintain $5,000 of investments in your first year or $10,000 in subsequent years.

Once you select your loans, LendingClub will help you evaluate the risk on your portfolio of loans. They will even provide a projected rate of returns based off of history.

Source: The College Investor

TD Auto Monitors Fintech Startups (Auto Finance News), Rated: B

TD Auto Finance is keeping a close eye on fintech startups as it evaluates “opportunities that might exist” for auto refinance and private-party transactions, President and Chief Executive Andrew Stuart told Auto Finance News.

TD Auto is already “in discussions” with several fintech players to evaluate “where that might go,” Stuart said.

5 Things To Know Before Taking A Loan Online (ValueWalk), Rated: B

If you’ve considered taking a personal loan online here’s what you need to know:

  1. More accessible – Smaller, newer financial firms have stepped in to fill the gaps left behind by traditional banks since the crisis.
  2. Tailored products – You can tailor the specifics of the loan, such as the timeline for payback and the purpose of the loan. Businesses can use everything from inventory to invoices without the need for a personal guarantee.
  3. Pricing Variety – Whether the payments are amortized monthly or weekly. Whether the effective annual rate is as attractive as you expected.
  4. Less Regulation – Alternative lenders and online loan providers are not regulated by the FDIC the same way as traditional banks.
  5. More awareness – The lack of regulation means alternative online lenders have more flexibility to provide custom lending solutions. They can be as innovative as they want with these financial products. However, you need to be more careful when dealing with an online lender. Look into their history, get assurances from the company, and do your best to educate yourself about their business.
United Kingdom

OFF3R launches new SIPPS portal (P2P Finance News), Rated: AAA

OFF3R has launched a new channel dedicated to Self Invested Personal Pensions (SIPPs), the tax-free vehicle for pension savings.

The investment aggregator’s SIPPs portal launched on Tuesday 22 August with an initial list of three pension providers: Hargreaves Lansdown, IG, and True Potential Investor. It details the various fees and investment thresholds of each platform, as well as information on the different management styles.

Zopa reduces higher-risk lending (Bridging and Commercial), Rated: AAA

Zopa has revealed it is taking steps to attract more lower-risk customers as it continues its reduction in higher-risk lending.

Zopa has reduced the amount of lending in its higher return D-E markets, which are included in its Plus product.

The Plus product was designed for investors who were willing to accept more risk for higher returns, with rates of between 6-7%.

Zopa expects that the lower-risk approach will mean the targeted returns for new investments in the Plus product will be 4.5%.

“For example, the proportion of D and E loans in the Plus product would go from 30% until now, to 10-15% in the future.”

Peer-to-peer lending: should you worry about default rates? (Your Money), Rated: AAA

Neil Faulkner, managing director of peer-to-peer research and ratings agency 4thWay, explains that investors should pay close attention to published bad-debt figures (which cover loan write-offs as well as simple defaults) of the different platforms.

Zopa

When a loan is approved, Zopa makes an assumption about its likelihood of falling into default over the lifetime of the loan, and then revises this default expectation over the lifetime of the loan.

Source: YourMoney.com

Zopa divides up investor money between many borrowers matching the risk profile specified at the outset by the investor, to spread the risk. If a borrower misses four months of repayments, then a recovery process begins.

RateSetter

The headline rate to note is that over its lifetime, 98.31% of loans are up-to-date – in order words, around 1.7% are in some form of arrears.

Funding Circle

Funding Circle is a little different in that you are lending to businesses rather than people. Over the lifetime of the site, it says that around 2% of loans have turned bad.

Lending Works

To date, Lending Works has an actual bad debt rate of 1.1%.

Assetz Capital Update: Investors Have Earned £25 Million to Date (Crowdfund Insider), Rated: A

Assetz Capital has shared that investors in aggregate have earned gross returns of more than £25 million on their investments in approximately four years. Assetz Capital says lenders earned an average of 8% gross interest across all Assetz Capital loans since platform launch, before allowances for tax or any losses not covered by a provision fund.

Currently, Assetz Capital has about 20,000 registered and active investors. The returns since the launch of the platform were generated from over £309 million lent to UK businesses from a range of industries looking to raise funds, including SME, bridging and development sectors.

ThinCats plans staggered IFISA roll-out before end of 2017 (P2P Finance News), Rated: A

Earlier this month, ThinCats received full authorisation from the Financial Conduct Authority (FCA), which allowed the firm to apply for ISA manager status from the HMRC. While a launch date has not been officially set, Stewart Cazier, head of retail, told Peer2Peer Finance News: “I’m definitely thinking 2017. I’d be very disappointed if it didn’t happen this year.”

Innovate Finance CEO steps down (AltFi), Rated: B

After two and half years at the helm of the fintech member association, Innovate Finance, Lawrence Wintermeyer has stepped down.

Wintermeyer is leaving to pursue other opportunities, he said.

China

China issues draft rules in crackdown on illegal fundraising (Reuters), Rated: AAA

China issued draft rules targeting illegal fundraising on Thursday, as the authorities step up a campaign to crack down on risky and illicit behavior in the country’s financial sector.

The draft rules, issued by the law office of China’s State Council, call for participants engaged in illegal fundraising to cover the losses stemming from those activities.

Regulators will guide financial institutions and non-bank payment service providers on tightening up their supervision of suspicious fund flows, the draft rules said.

Financial institutions and non-bank payment service providers, if found to be negligent, will be subject to having their illegal income forfeited. They will also be subject to a fine of more than 1 time but less than five times of the illegal income, the draft rules said.

The executives responsible for the illegal activity will be removed and banned from entering the financial industry for a certain period of time and could be subject to fines of between 50,000 yuan and 500,000 yuan each ($7,507-$75,072), the rules said.

China Rapid Finance Posted a $ 13.5M Net Loss in Q2, but Very Close to Profitability (Xing Ping She), Rated: A

Recently, China Rapid Finance (NYSE:XRF) released an unaudited financial report for the second quarter of 2017. In the second quarter, the company reported a gross income of $24.5 million, up 59% from a year earlier, and their net income was $15.2 million, up 9 percent year on year. The company posted a net loss of $13.5 million in the second quarter, compared with $5.9 million in the same period last year, as the cost of including customer incentives increased.

However, the company still held the “Low and Grow” business strategy. Compared to the profitability, there are more concerned about gross income. Through analysis of the company’s financial and business data, we can find that some business data is changing and the potential for profit is increasing.

Better Buy: SINA vs. Weibo (The Motley Fool), Rated: A

Chinese internet companies SINA (NASDAQ:SINA) and Weibo(NASDAQ:WB) are closely tied to each other. SINA holds a 46% stake in Weibo, deriving 72% of its top line from the Chinese Twitter clone (as Weibo is referred to by some).

Weibo’s greater gains have made it more expensive with a trailing price-to-earnings (P/E) ratio of 132 as compared to SINA’s 30.

SINA relies on Weibo for 70% of its revenue, which means that investors can still enjoy the latter’s rapid growth via a stock with a lower valuation. Additionally, SINA’s non-Weibo business has started gaining some traction of late, with the company witnessing 8% year-over-year growth from this segment in the latest quarter.

While there is no denying that Weibo’s growth is still impressive — as the 28% year-over-year jump in its monthly active users boosted its advertising revenue by 72% last quarter — at the same time, there will be a limit to the company’s growth given its negligible presence outside China and the competition from the likes of Tencent‘s (NASDAQOTH:TCEHY) WeChat.

Fluid Wins LendIt Choice Award – Aug 2017 (FluidFi), Rated: B

Fluid, a California based FinTech & AdTech startup announces today that it received LendIt LangDi Fintech Choice Award from LendIt Conference in Shanghai, China.

European Union

Latvian P2P Lender TWINO Adds Second Russian Originator (Crowdfund Insider), Rated: AAA

Latvian peer-to-peer lending platform TWINO has reportedly added a second Russian originator to its platform since its December 2016 launch.

According to P2P Finance News, over 40% of TWINO’s investors have funded Russian loans.

Early-Stage Fintech Investment In The UK & Germany Goes To Insurtech, Banking (CB Insights), Rated: AAA

Year-to-date, European fintech companies have raised close to $2.6B across 295 deals, meaning that at the current run rate 2017 could see 500 deals and $4.5B in total funding by year end. For perspective, funding to European fintech companies is already 30% higher in 2017 YTD than the 2016 total.

 

UNITED KINGDOM

UK early-stage fintech financing has remained above 15 deals quarterly since Q2’14. Total disclosed funding has been a bit choppier: at $27M, Q4’16 was the lowest quarter since Q2’14, while the following quarter (Q1’17) saw the third-highest total funding at $81M and the largest number of deals at 33. Most recently, Q2’17 figures fell to $41M across 16 deals.

For example, Monese, which provides banking services for immigrants and expats, raised a $10M Series A in Q1’17, while Wirex, which allows for the holding of fiat currencies and cryptocurrencies in a single account on its personal banking platform, raised a $3M Series A in the same quarter.

Insurance is trending up across Europe at large, with more than 20 early-stage deals closing for approximately $50M year-to-date.

GERMANY

Funding hit its peak in 2016 as well, at $135M, well above the previous high-water mark of $46M in 2013 and more than 4X the $31M total for 2015. 2017 is on pace to surpass 2016 early-stage fintech financing figures, with 22 deals and $83M year-to-date.

Germany has also seen an increase in early-stage deals to small business banking and API-focused mobile banking platforms. Financing rounds to this group have increased steadily since 2015, which saw 5 deals close for $17M and was followed by 7 deals in 2016 (for a much smaller $6M).

Klarna (Hortonworks), Rated: A

Klarna uses Hortonworks Data Platform (HDP) and Hortonworks DataFlow (HDF) to help drive its deep data mining and AI, and to thus mitigate risk for buyers and sellers.

International

San Francisco and Berlin have new competition for the capital of ‘fintech’ (CNBC), Rated: AAA

Dubai has seen a surge of interest from fintech startups and banking assets over the last three years, according to the emirate’s financial center’s management body.

It’s fast becoming a destination for financial technology startups because of its location, private investment and innovation.

He told CNBC that the financial services industry contributes about 12 percent to Dubai’s total gross domestic product and it is expected to increase to 18 percent by 2024.

Increased appetite for fintech investment in Dubai from CNBC.

AXIS Capital Partners with Plug and Play Tech Center (BusinessWire), Rated: A

AXIS Capital Holdings Limited and its operating subsidiaries (“AXIS Capital”) (NYSE:AXS) today announced it has partnered with Plug and Play, a global digital startup innovation platform headquartered in Silicon Valley. By joining Plug and Play’s InsurTech platform, AXIS will gain access to world-class digital insurance startups and will provide mentorship and technical support, along with underwriting and actuarial expertise, to help turn their ideas into products or services.

To help address the rapid and transformative changes underway within the (re)insurance industry, AXIS will work with property and casualty, life/health and general InsurTech startups that have been accepted to Plug and Play’s InsurTech program. This 12-week program attracts applications from hundreds of startups from around the world that utilize technology, data and analytics to develop innovative new business models, products and services.

AXIS will focus on the areas of Insurance, Reinsurance, Health, IoT (Internet of Things), FinTech and Mobility, with leaders from different business areas serving as program mentors and technical advisors.

Australia

Digital advice embraced by all ages (Financial Standard), Rated: AAA

Superannuation fund member engagement via Decimal’s digital financial advice software increased 37% in the past year, latest quarterly statistics show.

Decimal’s digital insights report for the June quarter shows 2366 members in its superannuation client base decided to engage with super via the digital advice channel over a 12 month period, up from 1731 the year prior.

Total funds under advice increased to $8.4 billion, up 72% year-on-year, and Decimal Software chief executive Nick Pollock said compound growth is stimulating for the super sector.

“The insights show that 43% of all logins were by women, 28% of logins took place outside of business hours, with 31% of those logins happening between 10pm and 6am,” Pollock said.

Australian fintech launches industry census (AltFi), Rated: A

Australian fintech has launched an expanded industry census, which will seek to unpack key issues like how to expand overseas and gender diversity and help set lobbying and policy priorities.

Working on the census, consultancy firm EY, and industry group FinTech Australia, have asked Aussie fintechs to complete it by 3 September.

FinTech Australia Reveals Initial Speaker Line Up for Inaugural Fintech Fest (Crowdfund Insider), Rated: B

FinTech Australia and Next Money, along with the State Government of Victoria, a gearing up for their inaugural week long Fintech event –  Intersekt. The Fintech festival will be taking place in Melbourne, Australia from October 27 to November 3rd if you happen to be in Australia.

Confirmed speakers for Intersekt so far include:

  • Anthony Thomson, founder of the UK’s Metro and Atom Banks (and the current chairman of Atom Bank). Atom Bank is one of the leading UK Challenger banks.
  • Ron Suber, called the “godfather of Fintech” due to his globe-trotting reputation for promoting online lending and all things Fintech. Suber recently joined the leadership team at Credible, the multi-lender marketplace for student loans. Suber is also President Emeritus of Prosper Marketplace and holds a broad portfolio of Fintech investments.
  • Megan Caywood, chief platform officer for the UK’s mobile only Starling Bank, who has delivered a range of major customer experience improvements.
  • David Birch, an international thought leader in digital identity and digital money and author of “Before Babylon, Beyond Bitcoin”
  • Van Le, who is the co-founder of Xinja, which is on track to be Australia’s first independent, 100% digital bank made for mobile.
    Lucy Liu, co-founder and chief operating officer of Melbourne-based payments company Airwallex who was this year named as one of Forbes’ 30 Under 30
  • Emma Weston, CEO and co-founder of AgriDigital, which provides a blockchain-enabled, integrated commodity management solution for the global grains industry
India

Over 40% Indians act on financial advice given by spouse, RBI report shows (Zeebiz), Rated: AAA

Key Highlights:

  • Over 50% Indians think that their children will take care of them financially after retirement
  • 44% Indians do not think they will ever retire from work 
  • An average of 66% of randomly selected adult household members have a bank account.
Source: Zeebiz

The report found that the average Indian household holds 84% of its wealth in real estate and other physical goods, 11% in gold and the residual 5% in financial assets.

Source: Zeebiz

The report said that 44% Indians have not thought of retirement as “people like me cannot retire from work,” they said.

Only 13% people surveyed were actively saving for their retirement while 33% had absolutely no planning for retirement.

Only around 5% people had money invested in financial assets for their retirement planning while gold formed nearly 10% of this fund.

India’s Domestic Workers Have A New Ally In This Innovative FinTech Startup (Forbes), Rated: A

The team at SERV’D has a simple but ambitious goal: to organize India’s unorganized domestic workforce. That means bringing financial inclusion to millions of unregistered workers via a mobile contract and payment app.

The lack of written contracts also makes it difficult for low-income domestic workers to build a financial history. Without that, they struggle to save money or obtain insurance, which all but guarantees they will remain in poverty. Exclusion from formal financial services bars people from accessing health insurance, bank accounts, and can even inhibit them from finding affordable housing.

SERV’D seeks to replace the verbal work agreements made between customers and their hired help. Instead of tenuous oral contracts, the fintech startup wants employers and employees to create digital agreements on the SERV’D app. The platform also allows them to make digital payment transfers so neither party has to worry about dealing with cash.

Most importantly, the online payment trail creates traceable income records for poor, unbanked workers. With enough proof of income built up, they will eventually be able to open bank accounts and access financial products that are currently beyond reach.

Ezetap’s fresh funds are the latest VC dollars flowing to Indian fintech (PitchBook), Rated: A

Mobile payments startup Ezetap is the latest Indian fintech company to pull in new equity financing. The company has raised $16 million from investors including JS Capital Management, Social Capital and Horizons Ventures.

Fintech NBFC “Prest Loans” Forays Its Operations In Rajasthan (BusinessWorld), Rated: B

Prest Loans the new age FinTech NBFC, providing online loans to small businesses and MSME segment has expanded its operations by opening new office in Rajasthan.

Asia

LATTICE80 & FINOLAB Sign MOU on Fintech (Crowdfund Insider), Rated: AAA

LATTICE80, a Singapore based non profit Fintech hub backed by Marvelstone Group, has signed a Memorandum of Understanding (MOU) with FINOLAB in Japan to mutually boost their Fintech ecosystems and global networks. Marvelstone is a global VC group based in Singapore.

This Fintech bridge will seek to create a passporting system for Fintech’s in each country to expand into new markets.

PH startups urged: Aspire to be unicorns (Cebu Daily News), Rated: AAA

Aldo Carrascoso, founder and chief executive officer of GlycoProX Biosciences, Veem, and Jukin Media & Verego, said that focusing on becoming “unicorns” detracts the purpose of why people launch startups in the first place.

Lee argued that the first unicorns were founded in the 1990s, Google Inc. being the clear “super unicorn” of the group with a valuation of more than $100 billion. Many unicorns were also born in the 2000s, although Facebook Inc. is the decade’s only super unicorn.

Other prominent unicorns today include Uber, Airbnb, Dropbox, Spotify, Pinterest, and Lazada, to name a few.

Treading the path toward that level takes mindfulness of revenue, a good business model, addressable market, and a product-market fit, said Carrascoso.

Benjamin cited Xoom, a San Francisco-based digital money transfer or remittance provider, which traces its foundations to serving clients between the Philippines and the US.

Since then the company has expanded to India and Mexico, among others, and was bought by PayPal for $890 million. Today, they do $9.1 billion in money transmissions and are operating in 18 countries with a demand for money remittance services.

The search for a unicorn is on (Sunstar), Rated: A

THE Philippines may have its own “tech unicorns” or technology businesses valued at $1 billion in the future. But experts says more work and collaboration is needed to achieve this dream.

To date, no Philippine tech startup has managed to meet the goal of being a billion-dollar company.

Globally, the US and China lead in numbers, having produced the most number of unicorns like Facebook, Uber, Airbnb as well as Xiaomi and Alibaba. Meanwhile, Malaysia in Southeast Asia has produced two unicorns in Grab and the Lazada Group.

First, he said Philippine startups need to know how to be fundable. Instead of aiming to be a unicorn, he advised local startups to become a “cockroach” instead, one that characterizes strong survival skills, or a rhino, “big and realistic.”

Getting payments to pay off (The Edge Markets), Rated: A

“A key advantage of e-wallets is the low cost. You can make payments and transfer money at much cheaper rates than in conventional payment systems,” explains Gunther Zhen, the founder and CEO of iPayLinks Financial Information Service (Shanghai) Co Ltd.

For China, this is certainly the case. While incumbent payment systems that rely on Visa, Mastercard and UnionPay charge merchants an estimated 2.5% to 3% MDR (merchant discount rate), new rivals like Alipay charge between 0.7% and 1.2%.

In Malaysia, however, the landscape could be different as the current MDRs are already quite low. Bank Negara Malaysia’s Payment Card Reform Framework has slashed the MDR on debit and credit cards since July 2015 when it took effect.

Today, domestic debit cards have an MDR of only 0.56% while for international debit cards, it is 0.96%. Credit cards are still relatively expensive with an MDR of 1.35%, but that is expected to drop drastically by 2021 when Bank Negara will cap interchange fees (the largest component of MDR) at 0.48% — less than half the 1.1% ceiling imposed today.

Just look at Touch ’n Go Sdn Bhd, which booked RM15.3 million of interest income in 2015 on RM429.3 million worth of deposits in card balances. And this is merely from the relatively small balance in each card.

Alipay creation, Yu’E Bao, is one of China’s most popular internet-based funds. It had amassed RMB1.43 trillion as at end-June. By comparison, Bank of China, one of the four major commercial banks in the country, had total deposits of RMB1.6 trillion as at end-2016.

Pundi-Pundi Raises $ 4M in Pre-A Funding (Finsmes), Rated: A

Pundi-Pundi, a Jakarta, Indonesia-based mobile payments and micro-loan startup aiming to create a cashless environment in South East Asia, closed a $4M pre-A round of funding.

Africa

UCT to offer fintech-focused degree from 2018 (BusinessDay), Rated: AAA

The University of Cape Town (UCT) has become one of the first tertiary institutions in Africa to offer a degree specifically designed to equip students with the critical skills and knowledge to embrace the technological revolution in the financial services sector.

One of its key focus areas will be blockchain technology, or the distributed ledger system, that has given rise to new crypto-currencies such as bitcoin and ether.

The crypto-currency market is reportedly now worth more than $50bn and the use of virtual currencies is gaining traction in SA.

UCT has sought to tackle this problem by offering a new master’s degree in data science with a specialisation in financial technology, said Georg, who is also the course convener. The programme is due to commence in 2018.

Authors:

George Popescu
Allen Taylor

Tuesday June 27 2017, Daily News Digest

shadow banking

News Comments Today’s main news: Venmo is testing a physical debit card. Zopa shares its banking plans. Ranger Direct Lending enters arbitration with Investee Princeton. Aegon Life explores digital channels for selling policies. Today’s main analysis: What’s driving the growth of shadow banking? Today’s thought-provoking articles: Prosper performance update for May 2017. The fastest consumer lenders to $1B in […]

shadow banking

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Canada

News Summary

United States

Venmo is testing its own physical debit card (recode), Rated: AAA

Venmo has been testing its own version of a physical debit card that would allow people who use its app to make purchases in brick-and-mortar stores using money stored in their Venmo account, according to multiple sources.

One potential advantage is that it would allow Venmo users to immediately spend money that is sent to them via the app without having to wait a business day for a deposit of those funds to appear in their bank account.

Prosper Performance Update: May 2017 (Prosper), Rated: AAA

Today we are sharing performance data for the Prosper portfolio for May 2017.  The weighted average coupon for assets originated through Prosper’s platform in May 2017 was 16.34%i, the highest for a monthly vintage since 2013.

Additional highlights from the May Update include:

  • Continued credit tightening can be seen via an increase in expected loss rate, coupon, Loss/FICO, and Coupon/FICO compared to prior months.
  • Prepayments for the 2017 origination months continue to trend above prior vintages.
  • 2015 and 2016H1 vintage delinquencies continue to trend below their prior peaks.

What’s driving the growth in ‘shadow banking’ (Chicago Booth Review), Rated: AAA

According to Chicago Booth’s Gregor Matvos, Booth PhD candidate Greg Buchak, Columbia’s Tomasz Piskorski, and Stanford’s Amit Seru, much of the growth is due to regulations that have pushed banks out of traditional lending businesses. The researchers also attribute some growth to online technology that has lowered the barrier to entry in markets where lenders once needed networks of physical branches to have any hope of building business.

The researchers focus on the US residential lending market, the largest consumer loan market in the country—and the market that drew the most attention from regulators after 2008. Between 2007 and 2015, shadow banks nearly tripled their market share, from 14 percent to 38 percent.

During the study period, lenders that originated loans online (fintech lenders) saw market share rise from 4 percent to 13 percent—but that remains less than half of the shadow-banking sector.

Source: Review.ChicagoBooth.edu

Fiserv partners with fintech startup to launch digital adviser (American Banker), Rated: A

The core banking software provider Fiserv and the fintech startup GoldBean have partnered to provide a digital adviser meant to provide that extra assistance.

GoldBean has an “investing for beginners” platform that was designed to promote financial literacy. By analyzing people’s spending, it creates customized portfolios featuring companies and brands with which end users are already familiar. GoldBean is a graduate of the INV Fintech Accelerator run by Fiserv and Bank Innovation.

Fiserv hopes that by integrating GoldBean education and advice into its Unified Wealth Platform, some of these investors will eventually interact with the human wealth managers who use Fiserv’s platform, for instance when they need to talk about a life change.

Amazon, Klarna, And The ‘Creative Destruction’ Of The Banking System (Seeking Alpha), Rated: A

As a consequence, Klarna has become “one of the most highly valued technology groups in Europe. A round of fundraising in 2015 valued it at $2.25 billion. And it is solidly profitable.”

The crucial thing here is that Mr. Siemiatkowski wants Klarna to stay focused. He believes that other innovative FinTech organizations will fill in the rest of the financial landscape. That is, banking will be done by numerous FinTech companies moving at the speed of technology innovation, not at the speed of ordinary banks.

First, there is so much to be gained from creating a network or a platform that is more inclusive than separate “specialists” joining together to create “full bank offering.”

Second, there is the issue of regulation. Banks are heavily regulated.

What Mr. Bezos of Amazon.com and Mr. Siemiatkowski of Klarna seem to be doing is reinventing banking on the basis of a payments platform that can serve many purposes. The “creative destruction” of the banking system as we know it appears to be just beginning.

The Fastest Consumer Lenders to $ 1 Billion in Originations (Lend Academy), Rated: A

Anyway, I did a little digging and through publicly available information I was mostly able to figure out how quickly many of the major platforms reached their first billion in total loans issued.

1. Marcus – 8 months

2. SoFi – 14 months – Based on data from Kroll Bond Rating Agency, we know that by August 1, 2016 (when the SCLP 2016-2 securitization closed) SoFi had issued at least $1.3 billion in loans based on the loan pool balance of their first three personal loan securitizations. Based on that data I estimate they crossed the $1 billion mark around April of 2016, 14 months after they launched the product.

3. Marlette – 17 months

4. Avant – 28 months – Avant launched in January of 2013 and when they crossed $1 billion in May 2015 they were the fastest platform to that milestone at the time.

5. Lending Club – 65 months – Lending Club was the first platform to cross a billion dollars back in November 2012.

6. Prosper – 98 months – Prosper was the first marketplace lender to launch in this country all the way back in February 2006. For many years it was just Lending Club and Prosper in the online consumer lending space and for much of that time Prosper was the market leader. Prosper crossed $1 billion in April 2014. They took over seven years to do their first $500 million and just 11 months for them to go from $500 million to $1 billion in total loans issued.

ezVerify and LendingPoint Launch ezCarePoint for Medical Payments (BusinessWire), Rated: A

Today at the HFMA ANI 2017 conference, ezVerify and LendingPoint announced an exclusive partnership that will make it easier and more affordable for consumers to pay their medical bills. Working together, the two companies will provide a new service called ezCarePoint, which will allow patients to accurately predict their out-of-pocket expenses and apply for flexible payment plans and loans to cover the costs of medical procedures.

According to a report by The Commonwealth Fund, more than 30 million people do not get necessary medical attention out of fear that doing so would be financially burdensome. Many Americans do not have a clear understanding of their insurance coverage and out-of-pocket obligations — as a result, consumers face medical costs they weren’t expecting, and practitioners lose money on unpaid bills.

By integrating the ezVerify and LendingPoint technologies, ezCarePoint will help patients verify their insurance coverage and payment responsibility for health care services before the procedure takes place, preventing incidents where patients unexpectedly find themselves responsible for bills outside of their insurance coverage. If the patient can’t pay the out-of-pocket costs up front, they will have the option to apply for a loan and payment plan quickly and easily from the ezCarePoint platform. Patients will be notified of approvals in a matter of seconds, and upon approval, LendingPoint will pay the loan proceeds to medical practitioners within one business day to pay the patients’ out-of-pocket medical costs up front.

Euler Hermes Digital Agency Announces CRiskCo Partnership (PR Newswire), Rated: A

Euler Hermes, the world’s leading trade credit insurer, today announced an innovative partnership with fintech credit risk analysis company, CRiskCo. With a focus on revolutionizing factoring, trade and supply chain finance, CRiskCo uses state-of-the art artificial intelligence (AI) credit analysis and fraud detection processes.

Christophe Spoerry, Euler Hermes Digital Agency (EHDA) co-founder, said, ” EHDA and CRiskCo are working together to evolve trade credit insurance and risk management, particularly at the transaction and single invoice cover levels. This has the potential to offer small-medium enterprises (SMEs) significantly more protection when doing business, by providing innovative, simple and affordable customer analyses.”

EHDA recently launched its first breakthrough product – Single Invoice Cover – which protects companies from non-payment by business customers. Cover is provided transaction by transaction while optimizing end-to-end supply chains and extending optimal credit terms to buyers. Based on a proprietary application program interface (API), it creates a seamless process for businesses, while facilitating a comprehensive and granular management of credit exposure.

RIAs Should Embrace Alternative Investments or Risk Client Attrition (WealthManagement.com), Rated: A

Before the emergence of crowdfunding-style investment platforms, it was hard for investors to reap the benefits of investing in a diversified portfolio of rental real estate. They can now, and you can show them how.

Wealth management is a “share of wallet” game. If you diversify your solutions, clients will end up with more diversified risk—and that’s the point.

Lending Club’s first securitization is a big deal (American Banker), Rated: A

Lending Club’s first securitization of its own consumer installment loans is an important step in rebuilding its business following a scandal last year over its corporate controls.

The company has been seeking to broaden its funding sources after concerns about the integrity of its data caused many investors to pause or scaled back their purchases. Lending Club originally acted purely as a matchmaker, connecting borrowers with lenders over its platform. It did not hold on to the loans.

Money in Cleveland tech-startup community begins to circulate (Cleveland.com), Rated: A

Splash Financial is a perfect example of this long journey.

Splash Financial completed a $3.3 million financing round in January of 2017 from several local angels and will become the newest entrant in the booming digital lending marketplace that includes LendingClub, OnDeck, SoFi and Cabbage.

The company is now working with banks to help build an efficient lending platform where a strong capital source (i.e. – the banks) do not have immediate access to the doctor marketplace.

1 in 5 Small Business Owners Would Give up a Vacation Day Rather Than Their Smartphone (Small Biz Trends), Rated: A

According to a recent survey of small business owners on their mobile device use by peer-to-peer lending marketplace Funding Circle, one in five (20.4 percent) small business owners said they would rather give up a vacation day than their smartphones for a week.

Funding Circle also found more than half (56 percent) of small business owners surveyed find their smartphone gives them the flexibility to work wherever and whenever they want, so they can make time for other passions.

Nearly half (49 percent) said their smartphone keeps them in closer contact with loved ones while away from home — via tools like text messages throughout the day and video calls while traveling for work.

Forty-four percent said having their smartphone helps them relax during vacation time because it gives them peace of mind to know if there’s a problem with the business at home, they are accessible.

Follow the yellow Laurel Road (Transform Magazine), Rated: A

National online lender Laurel Road, previously known as Darien Rowayton Bank Lending Division, is a division of the Connecticut-chartered Darien Rowayton Bank, which launched over a decade ago in 2006. Wishing to define its bank lending division as the first source of income advice and financial security for the state’s many university students, DRB turned to the New York office of international design agency Brand Union to create an identity and help carve out its unique path.

Laurel Road’s new strapline, also developed by Brand Union, is ‘Rewarding determination’ and acts with double meaning, being reminiscent of both the student’s educational motives and the lender’s financial role. It also serves to encourage its customers to pursue their college journey to its conclusion,

loanDepot: “The Momentum is Just Starting” (Crowdfund Insider), Rated: B

One of the most promising is loanDepot, the creation of CEO Anthony Hsieh, has become one of the top mortgage lenders in the US. Additionally, loanDepot has migrated into the personal loan space too challenging online consumer lenders like LendingClub.

RealtyShares Sources Debt For Seattle Student Housing Deal (Bisnow), Rated: B

RealtyShares, an online marketplace for real estate investing, has sourced $11.9M for the acquisition and partial recapitalization of a 10-property portfolio of student housing in Seattle.

3 Alternative Ways To Hedge Against A Market Downturn (NASDAQ), Rated: B

When approached correctly, peer-to-peer lending can be among the safest ways to invest right now.

The key to making it safe is to diversify across many loans. Diversification eliminates the risk of default because any single loan you invest in can default without sinking the entire investment.

I consider peer-to-peer lending via a reputable platform the safest way to invest right now while still earning respectable returns on your money.

United Kingdom

Zopa boss Janardana details plans for customer-centric bank (AltFi), Rated: AAA

Zopa aims to launch its bank next year with a series of products based on simple, flat pricing – and a direct challenge to the industry’s traditional strategy of milking their large “back books” of existing long-term customers who rarely switch or shop around.

Jaidev Janardana, Zopa’s chief executive confirmed in an exclusive interview that credit cards and auto-finance would be among the first products, and would charge a single rate for all customers, instead of ultra-low teaser offers that flip to high rates after a fixed term, catching borrowers who do not switch.

He pointed out that Zopa already follows this approach in its P2P lending with all investors receiving the same rate, and returns changing for everyone simultaneously. The company expects to apply to the Prudential Regulation Authority for its banking licence later this year.

Ranger Direct Lending Enters Arbitration Against Investee Princeton (London South East), Rated: AAA

Ranger Direct Lending Fund PLC said Monday it has entered arbitration proceedings against the parent company of investee firm Princeton Alternative Income Fund Ltd, following a provision taken over a loan portfolio.

Ranger said Monday it is now seeking to enforce redemption and provision of financial information rights against Princeton via the arbitration proceedings.

Lendy highlights gap between property prices and key influences (Bridging & Commercial), Rated: A

Lendy stated that residential property prices have risen by 20% since the start of 2014, however, the LPP, the new property market index, has only increased by 17% during the same period with the gap between them continuing to grow.

Fintech credit firm Quint posts record revenues (Express), Rated: A

FAST-growing UK fintech group Quint is forecasting a £50 million plus turnover this year after seeing a record 64 per cent rise in growth and revenues rise to £32 million.

The main drivers are the launch of its consumer credit comparison site MoneyGuru.com as well as strong growth in its lending platform Monevo and Monevo data services business.

Racefields to buy and sell debt from bridging lending market (Bridging & Commercial), Rated: A

Racefields is seeking to connect with bridging lenders who are interested in refinancing parts of their loan book after opening a trading room to buy and sell debt from the bridging market.

Blockchain raises $ 40 million from Lakestar and Google’s venture arm (Business Insider), Rated: A

Bitcoin and blockchain technology company Blockchain has raised $40 million (£31.5 million) in its second round of institutional funding.

European venture capital fund Lakestar and GV, Google’s venture capital arm, both led the round. Nokota Management and Digital Currency Group also took part in the investment, as did Blockchain’s existing investors Lightspeed Venture Partners, Mosaic Venture Partners, Prudence Holdings, Virgin, and Sir Richard Branson.

The Series B funding takes the total raised by Blockchain to $70 million (£55.2 million).

Why Sipps aren’t yet embracing P2P (MoneyWeek), Rated: A

Since April 2016, investors have been able to shield gains from peer-to-peer (P2P) lending from the taxman in the innovative finance Isas (IF Isas). And while it has taken a while for most P2P platforms to win the necessary approvals from HM Revenue & Customs and the Financial Conduct Authority (FCA) to offer IF Isas, these products are finally beginning to take off, with several launched since the start of the new tax year. However, the same can’t be said for P2P investments through self-invested personal pensions (Sipps).

Referral schemes: earn over £1,000 through family and friends (BT), Rated: B

People using peer-to-peer platform Funding Circle can net £50 if they recommend a friend or relative who goes on to lend at least £2,000. Normally, Zopa investors can earn up to £50 if the person they recommend lends £2,000 with the platform. They’ll receive £50 too. However, at the time of writing Zopa isn’t accepting any more investors due to high demand.

Elsewhere, Alliance Trust Savings will give existing customers a £50 Marks and Spencer voucher when they get a friend or family member to open an Investment Dealing Account, ISA or Select SIPP. Your friend will get £25 worth of vouchers, too.

Mutual Scottish Friendly is offering two £25 MyRewards card to their customers – that’s one for the customer and one for the person they recommend.

China

Internet majors, banks edge closer to fintech success (China Daily), Rated: AAA

China’s internet giants that forayed into online finance are now joining hands with banks, their perceived competitors, to succeed together in the booming financial technology or fintech sector.

The latest such partnership is between Tencent Holdings Ltd and Huaxia Bank Co Ltd, which was announced on Thursday.

Tencent’s peers, Baidu Inc and Alibaba Group Holding Ltd, which together comprise China’s “Tech Trinity”, are jostling for supremacy in the internet finance segment. The two already have partnerships or collaborations with the nation’s top lenders.

JD.com Inc, another e-commerce major, has also joined the fintech partnerships fray. It is working with ICBC, China’s largest bank by assets, on fintech, retail banking, loans for small and medium-sized enterprises, and consumer finance.

European Union

Ingenico ePayments Partners with French FinTech Company SlimPay on SEPA Direct Debit (EuroInvestor), Rated: A

Ingenico ePayments, the online and mobile commerce division of Ingenico Group, today announced that it has teamed up with French recurring payments specialist Slimpay to support a SEPA Direct Debit (SDD) solution the company is developing for online merchants to simply and securely create and manage the e-mandates required to process SDD payments. With the partnership, SlimPay joins a rapidly expanding ecosystem of exciting and innovative FinTech companies that work closely with Ingenico to jointly develop new solutions for online merchants.

International

Aegon Life insurance company explores e-commerce channels to sell policies (Financial Express), Rated: AAA

Private sector life insurer Aegon Life Insurance Company is exploring options to sell policies via fintech and e-commerce platforms. The company’s Chief Digital Officer Martijn de Jong said digital channel is to become the primary channel for the insurers to expand customer base.

The company’s first premium income grew by 30 per cent to Rs 10.40 crore during April-May period of the current fiscal, according to data available with Irdai. Aegon Life Insurance is a joint venture between global insurer Aegon and Bennett Coleman & Company (India).

Australia

Digital advice will bypass member apathy, embarrassment (Investment Magazine), Rated: A

Despite the tremendously importance of retirement planning to the long-term financial security of the working population, the majority of Australians tend to neglect their superannuation funds throughout most of their working lives.

For example, more than 50 per cent of Australians now retire on a date not of their choosing. In addition, research from global banking and financial services firm HSBC showed that a staggering 41 per cent of Australian pre-retirees do not receive any retirement advice.

Digital advice allows users to bypass any potential sensitivities they may feel when consulting a human adviser. Those who have limited knowledge about the basics of their own savings goals or liabilities may feel too embarrassed to talk to a professional and therefore switch off from engagement.

India

Fintech Startup Stashfin Raises $ 5 Mn Funding From Snow Leopard Ventures, Others (Inc42), Rated: A

Delhi-based fintech startup Stashfin has raised $5 Mn Pre-Series A funding from Snow Leopard Ventures and Singapore-based Alto Partners. Snow Leopard Ventures is the VC arm of the Kirloskar Group.

Stashfin is the parent company of digital lending platform, StashEasy. It was founded in February 2016 by Tushar Aggarwal.

Middle East

Machine learning is transforming lending (Khalee Times), Rated: AAA

In June 2015, the World Economic Forum published The Future of Financial Services – How disruptive innovations are reshaping the way financial services are structured, provisioned and consumed. The paper defined a taxonomy for disruption in financial services. It identified six broad areas and within them, 11 clusters of disruptive innovation.

The six areas are Payments, Market Provisioning, Investment Management, Insurance, Deposits & Lending and Capital Raising. Of the 11 clusters in the report, the combination of Alternative Lending and Shifting Customer Preference clusters are most relevant to today’s article. Within this combination, the Banking-as-Platform movement is playing a remarkable intermediary role in matching lenders and borrowers via a seamless, transparent, user-friendly standard API based model which leverages advances in processing power, artificial intelligence, user interfaces and design-thinking.

Traditional lenders, i.e. banks, usually find it difficult to match the agility and granular understanding that P2P Lending players have. Banks’ credit evaluation and origination platforms are often industrial-age processes with a large quantum of human intervention.

Canada

Billionaire Buffett throws lifeline to cash-starved Home Capital (Daily Mail), Rated: AAA

Berkshire Hathaway Inc’s commitment of a C$2 billion (US$1.51 billion) credit facility to Home Capital Group Inc, Canada’s largest nonbank lender, marks the billionaire’s latest effort to shore up a company in dire need of cash.

Home Capital shares soared as much as 18 percent, but was still more than two-thirds below the 2014 peak.

Berkshire also agreed through its Columbia Insurance unit to buy up to C$400 million (US$302 million) of Home Capital shares for a 38.4 percent stake, pending shareholder and regulatory approvals.

Home Capital has suffered a deposit exodus resembling a bank run since mid-April, when the Ontario Securities Commission accused it of deceiving investors.

Authors:

George Popescu
Allen Taylor

Tuesday June 6 2017, Daily News Digest

u.s. FICO scores

News Comments Today’s main news: Proposed U.S. REIT credit rating methodology. Tisa group pushes for P2P lending in Sipps. Dumiao issues first digital lending ABS on Shanghai exchange. Today’s main analysis: Borrowers accelerating paydowns on six-figure student loan debt. Top 10 P2P lending platforms by volume and loan balance in China. Today’s thought-provoking articles: Millions of Americans just got […]

u.s. FICO scores

News Comments

United States

United Kingdom

China

  • Dumiao issues first digital lender ABS in Shanghai. GP:”ABS offering on Shanghai Stock Exchange. In general investors see the Shanghai Stock Exchange as being particularly prone to insider trading and not many international investors participate in the market. Despite this there is a need for Chinese ABS and there will be, with or without international investors, a Chinese ABS bond market due to the needs of local insurance, private equity, banks and other participants.”
  • Top 10 P2P lending platforms. GP:”A very useful list.”AT: “Interesting, Yirendai, #2 by loan balance, isn’t on the volume list.”
  • Renaud Laplanche to keynote at LendIt’s Lang Di Fintech conference. GP:”I think his return to the public speaking circuit in our industry in China will not receive as much visibility as expected. Renaud should speak in the US again.”

International

Australia

India

Asia

News Summary

United States

Proposed U.S. Real Estate Investment Trust Credit Rating Methodology (Morningstar), Rated: AAA

The four key components that drive MCR’s credit rating methodology for REITs are:

  1. Our Business Risk encompasses various measures of a REIT’s business risk.
  2. Our Cash Flow Cushion ScoreTM is an evaluation of a REIT’s ability to cover debt maturities, interest, and other debt-like obligations.
  3. Our Solvency ScoreTM is a predictor of default based on four key metrics.
  4. Our Distance to Default Score is based on a REIT’s likelihood of financial distress using market-based inputs.

Two separate component scores converge to form our final Business Risk assessment: Country Risk and Company Risk. Once we assign these two component scores, we weight them as follows to determine the overall Business Risk assessment for each REIT:

  • Country Risk: 10%
  • Company Risk: 90%

We believe EBITDA is the best measure of size for REITs and assign points for size according to the following scale:

Source: Morningstar

The distance to default metric is a market-based measure of financial health. Both inputs, equity volatility, and the ratio of enterprise value to market capitalization, are calculated using daily updated market data. This allows us to incorporate new information faster through the distance to default calculation compared with accounting-based measures of financial health. As a result, our credit ratings can be more responsive to early signs of financial distress.

  • Step 1: Calculate annualized trailing 300-day equity total return volatility (EQVOL).
  • Step 2: Calculate current enterprise value/market cap ratio (EVMV).
  • Step 3: Transform EQVOL into a percentile [0, 1] by ranking it relative to all other stocks in the calculable universe (EQVOLP). 1 represents high equity volatility, 0 represents low equity volatility.
  • Step 4: Transform EVMV into a percentile [0, 1] by ranking it relative to all other stocks in the calculable universe (EVMVP). 1 represents high leverage companies, 0 represents low leverage companies.
  • Step 5: Calculate new raw DTD = 1-(EQVOLP + EVMVP + EQVOLP*EVMVP)/3
  • Step 6: Transform new raw DTD into a decile [1, 10] by ranking it relative to all calculable U.S.-domiciled stocks. 10 represents poor financial health while 1 represents strong financial health.

Request for Comment (Morningstar), Rated: AAA

Morningstar Credit Ratings, LLC (MCR) will accept comments on this Request for Comment until 5 p.m. Eastern Time on July 5, 2017.

Comments should be submitted by the deadline date and time via email to NRSROconsultations@morningstar.com. Comments should contain your name, your title (if writing on behalf of an organization), your organization (if applicable), address, phone number, and email address.

Millions Of Americans Just Got An Artificial Boost To Their Credit Score (Zero Hedge), Rated: AAA

Stated simply, the definition of the all important FICO score, the most important number at the base of every mortgage application, was set for a series of “adjustments” which would push it higher for millions of Americans.

Now, as the Wall Street Journal points out today, efforts to rig the FICO scoring process seems to be bearing some fruit.  The average credit score nationwide hit 700 in April, according to new data from Fair Isaac Corp., which is the highest since at least 2005.

Meanwhile, the share of consumers deemed to be riskiest, with a score below 600, hit a new low of roughly 40 million, or 20% of U.S. adults who have FICO scores, according to Fair Isaac. That is down from 20.5% in October and a peak of 25.5% in 2010.

Extreme refinancing: Borrowers accelerating paydowns on six-figure student loan debt (Credible), Rated: AAA

A growing number of Americans who have student loan debt are enrolling in repayment plans that ease the burden of their monthly payments by stretching them out over a longer time period. Some borrowers pursuing this strategy may qualify to have their remaining debt forgiven after 10, 20, or 25 years of payments. Others will rack up thousands of dollars in additional interest rate charges without qualifying for loan forgiveness.

Credible’s analysis found most borrowers who have refinanced more than $100,000 in educational debt are taking the opposite approach. Most are on track to dispatch their loans in 10 years or less — saving tens of thousands of dollars in interest payments in the process. Many who have refinanced six-figure educational debt at lower rates will pay it off in just 5 years, Credible found.

Read the full report here.

June Legislative Update (Experian Email), Rated: A

Highlights include:

  • On May 19 Experian submitted comments in response to the CFPB’s Request for Information (RFI) on the use of alternative credit data and alternative credit scoring models. The CFPB sought comments on the types of information that should be considered alternative data and how it could be used to improve financial inclusion.
  • On May 18, Representative Marsha Blackburn (R-TN) introduced the Balancing the Rights of Web Surfers Equally and Responsibly (BROWSER) Act of 2017 (H.R. 2520). Blackburn is joined by Representatives Brian Fitzpatrick (R-PA) and Bill Flores (R-TX) as original co-sponsors of the bill. The legislation seeks to bring internet service providers and edge service providers under the same privacy regime, by designating the FTC as the nation’s sole online privacy enforcement agency.
  • On May 8, Representative Barry Loudermilk (R-GA) introduced H.R. 2359, the FCRA Liability Harmonization Act. The bill seeks to bring consistency to national consumer financial protection laws by capping class action damages and eliminating punitive damages to align the Fair Credit Reporting Act with other consumer financial protection laws.
  • In New York, S.B. 5601 amends the state’s breach law by adding biometric data to the definition of personal information and permitting email notification unless the breach includes access credentials for an email account. Notification would instead be provided in real time by providing clear and conspicuous notice when the consumer is accessing the account from their usual location.

Read the update here.

Marketplace ABS evolving (Structured Credit Investor), Rated: A

At the upcoming SCI Marketplace Lending Securitisation Seminar in New York on 22 June, panellists will discuss the structuring and evolution of marketplace loan ABS. The fact that deals are increasingly incorporating features to reduce risk is one area that is expected to be covered.

This trend is supported by the recent US$495m Prosper Marketplace Issuance Trust Series 2017-1 – the first ABS launched by Prosper via its own branded shelf, when previous deals had been issued by Citi on the CHAI shelf. Rated by KBRA and Fitch, the deal comprises US$311m A/A- class A notes and US$70.67m BBB/BBB- class B notes. KBRA rated the US$113m class C notes single B-plus, but these are unrated by Fitch.

Plaid Is Powering the Future of Banking and Finance (Inc.), Rated: A

Plaid co-founders William Hockey and Zachary Perret noticed the need for something simpler, a system that would do the heavy lifting for other companies aiming to work with real financial data. The pair developed APIs that can ingest the mass volumes of financial data on the backend, transform it into a useable format, and then build a service on top – in other words, a platform.

As developers themselves, they focused on building a platform that was developer-friendly and for building integrations. Due to this focus, they quickly saw growing demand from developers and the emerging fintech industry to help build new applications for financial services.

Hockey and Perret’s goal is to drive innovation in financial services. Instead of attempting to serve consumers directly, the pair believed it was a smarter move to build a business- and developer-facing platform, one that would power the entire fintech ecosystem for consumers indirectly.

Moving forward, Plaid will focus on scaling this year. Its main goal is to continue to grow the platform that is seeing a lot of demand — which also means recruiting more people to join the team. Although the team currently numbers around 90, the leadership hopes to grow the team to somewhere around 120 by the end of the year, hiring across all departments.

How this Ohio mutual is getting an edge in tech (American Banker), Rated: A

Recently, First Federal was one of the founders of an Ohio-based fintech accelerator. It’s also invested in Numerated Growth Technologies — a commercial lending technology that lets banks make lending decisions in as little as five minutes.

“Why can’t a group of 10 community banks figure out how to make investments in an innovative platform down the road?” he said. “Or a group of banks being part of a development fund to steer a variety of tech initiatives?”

With the accelerator, First Federal is teaming up with larger banks. Its partners in the accelerator include Fifth Third Bancorp, Huntington Bancshares, KeyCorp and the insurer Progressive. JPMorgan Chase and Silicon Valley Bank are also part of the initiative.

Sweden’s Klarna looks to fuel US growth with e-commerce financing products (451 Research), Rated: A

The vendor has grown from a niche Nordic payments specialist to a global player with operations in 18 markets in little more than a decade. Recently launching in the US, Klarna has chosen to orient its primary go-to-market efforts around an alternative financing offering for e-commerce purchases.

Sequoia raises $ 2 bln for global growth fund, additional capital for China, India funds (PE Hub), Rated: A

Sequoia Capital said it has raised more than $4 billion for venture and growth funds in the United States, China, India and elsewhere in the world, according to filings with the SEC.

The Silicon Valley-based firm said it raised nearly $2 billion ($1.9995 billion) for its Sequoia Capital Global Growth Fund II, according to the filings. The firm had unveiled the fund in 2015 but without a target. Commitments came from 104 LPs.

What is Nevada’s Pro-blockchain Bill? (The Merkle), Rated: A

The state of Nevada has proven to be quite open-minded when it comes to blockchains and cryptocurrencies these days. In fact, the State Legislature approved a bill preventing local governmental entities from taxing any blockchain transaction.

Senate Bill 398 was first introduced in March of this year and is now presented by Governor Brian Sandoval to be signed. Governmental entities can’t impose any tax or fee on the use blockchains by both individuals and entities alike. Moreover, they can’t require these users obtain a license or permission to use blockchain technology either.

Is Marketplace Lending a Safer Investment Than the Stock Market? (National Real Estate Investor), Rated: B

While equities are often thought to yield high returns with fairly low risk, it takes time for them to fully develop and come to fruition. Alternative investment vehicles are coming into the market that are becoming particularly attractive when investing with a low appetite for risk.

With consistency and diligence, the stock market can make for a profitable long-term strategy. According to Credit Suisse, as of February 2017, the U.S. averaged 6.4 percent in inflation-adjusted equity return.

Marketplace lending, on the other hand, has consistent returns with lower volatility. Investopedia names marketplace lending as one of the best investments for high return rates.

Essentially, the main risk associated with marketplace lending is that you are loaning to people who may not have been able to get approved through traditional outlets.

United Kingdom

Tisa group pushes for P2P lending in Sipps (Citywire), Rated: AAA

A working group run by the Tax Incentivised Savings Association (Tisa) is gathering advisers’ views on the use of alternative finance products such as peer-to-peer (P2P) lending in Sipps.

The group, which consists of the heads of several P2P and crowdfunding firms along with consultants and Tisa technical policy director Jeffrey Mushens, first met on 19 January.

It has highlighted tax regulation as a key barrier, as well as wider concerns about non-standard assets being held in Sipps.

Despite the industry body helping to push P2P into the mainstream, advisers may take some convincing, with many hesitant until the market has ‘matured’.

The survey is available here.

Most investors not expecting to beat cash, says peer-to-peer lender (AltFi), Rated: A

Major peer-to-peer lender RateSetter has unveiled the findings of a new survey of 2,000 people, of whom more than 500 invest their money via products like equities, bonds or peer-to-peer loans. The findings suggest that most of these investors expect their portfolios to be outperformed by cash over the next 12 months.

The average return on cash currently stands at a meagre 0.15 per cent, according to Bank of England data.

LendInvest launches new three-year bridge (Financial Reporter), Rated: A

LendInvest has launched a new three-year bridge product with 110% ICR as a funding alternative to a conventional buy-to-let loan.

The product is available on loans between £100,000 and £2 million with a maxmimum LTV of 70% on day 1, rising to 75% as interest on the loan is deferred and rolled up.

China

PINTEC Subsidiary Dumiao is First Digital Lending Tech Provider to Issue ABS on Shanghai Exchange (PR Newswire), Rated: AAA

PINTEC Group, China’s leading financial technology provider, announced that its wholly owned digital lending technology subsidiary Dumiao successfully issued RMB245 million worth of asset-backed securities (ABS) on the Shanghai Stock Exchange, in the first such issue by a digital lending technology provider.

The underlying assets of the ABS are receivables facilitated by Dumiao on Qunar’s “Naquhua” installment payment service. Qunar, a leading online travel agency in China, is supporting the ABS program, ensuring the asset formation and stable service operation. Dumiao, a leading digital consumer lending technology provider, supplies Qunar with a digital lending technology solution and offers consumers flexible and efficient financial service.

The Dumiao offering represents the first internet consumer finance ABS sponsored by a third-party digital lending technology provider. Prior to the listing of Dumiao’s ABS on the Shanghai Stock Exchange, ABS offerings from the internet finance sector had been dominated by e-commerce companies.

Top 10 P2P Lending Platforms (Xing Ping She Email), Rated: AAA

By the end of May 2017, the total loan balance of P2P lending platforms in China reached to $1146.30 billion, and the total volume reached to $366.05 billion. According to the ranking list issued by Online Lending House, we picked out the top 10 P2P lenders per Loan Balance and Volume.

Top10 P2P Lending Platform per Loan Balance in May 2017
Rank Lending Platform Location Loan Balance

(Billion dollars)

Growth of loan balance (%) Overall yield Rate(%) Loan term (Month)
1 Lufax Shanghai 19.48 4.34 7.9 31.01
2 Yirendai Beijing 4.90 5.12 11.56 30.68
3 JBH Beijing 4.18 1.37 7.45 5.39
4 Eloancn Beijing 4.10 -5.12 9.1 10.32
5 PPDAI Shanghai 3.28 12.49 17.22 11.24
6 Xiaoying.com Guangdong 3.06 21.35 7.34 8.4
7 IQianJin Beijing 2.82 13.31 10.96 30.17
8 Hongling Capital Guangdong 2.56 1.68 7.67 2.66
9 Niwodai Shanghai 2.49 -0.02 10.73 16.98
10 Renrendai Beijing 2.35 5.08 10.19 35.07

 

Top10 P2P Lending Platform per Volume in May 2017
Rank Lending Platform Location Volume

(Billion dollars)

Growth of loan balance (%) Overall yield Rate(%) Loan term (Month)
1 Lufax Shanghai 1.65 -0.68 7.9 31.01
2 Xinhehui.com Zhejiang 1.60 8.34 7.13 0.75
3 Hongling Capital Guangdong 1.30 2.22 7.67 2.66
4 Wei Dai Network Zhejiang 1.09 -7.70 7.62 2.81
5 Xiaoying.com Guangdong 1.02 52.99 7.34 8.40
6 Tuandai Network Guangdong 0.73 24.64 9.05 3.59
7 IQianJin Beijing 0.68 42.77 10.96 30.17
8 PPDAI Shanghai 0.61 -7.52 17.22 11.24
9 Yidai.com Sichuan 0.57 53.67 11.70 7.57
10 PPmoney Guangdong 0.52 185.77 9.50 6.35

Renaud Laplanche Joins LendIt’s Lang Di Fintech as Keynote Speaker (Crowdfund Insider), Rated: A

Now Laplanche is returning to the public stage as a keynote speaker roster for Lang Di Fintech 2017, LendIt’s Chinese conference. Lang Di Fintech, said to be the largest Fintech conference in China, marks Laplanche’s first public speaking role since founding Upgrade. His presentation is said to focus on the concept of online lending 2.0, including how new technologies such as Blockchain are increasingly incorporated into a Fintech company’s technology architecture.

International

Singapore fintech hub LATTICE80 launches initiative to connect Asia and Nordic fintech ecosystems (e27), Rated: AAA

Singapore-based fintech hub LATTICE80 has signed a memorandum of understanding (MOU) with the Nordic Finance Innovation (NFI), an independent Nordic executive network for the finance industry.

The partnership will raise awareness of fintech’s potential between Asia and the Nordics; office space sharing; events collaboration; in-country exclusivity; exchange programs for members; and the leveraging of mutual contacts and networks.

Meanwhile, 42 per cent of Nordic financial institutions surveyed want to expand their existing partnerships with fintech firms. 42 per cent of Nordic banks surveyed also intend to set up fintech incubators.

Tommaso Zanobini to Lead Fintech at Deutsche Bank (Crowdfund Insider), Rated: A

Deutsche Bank has hired Tommaso Zanobini as Managing Director and Global Head of Financial Technology (Fintech), a joint venture between Deutsche Bank’s FIG and TMT banking team.

SAIL Capital Awarded Most Innovative Sustainable Investment Firm, Recognised Leader in Global Resource Investing (PRWeb), Rated: B

Wealth & Finance magazine have announced the winners of the 2017 Alternative Investment Awards. SAIL Capital of Newport Beach, CA has been awarded Most Innovative Sustainable Investment Firm 2017 (Energy & Water) & Recognised Leader in Global Resource Investing 2017.

SAIL Capital has been a pioneer and thought leader in impact/alternative investing since the early 2000’s under the leadership of Founder and CEO Walter Schindler.

Now in its fourth year, the 2017 Alternative Investment Awards casts a light on the individuals, firms and departments from across all sectors that have played a part in shaping this dynamic and imitable industry.

Australia

How peer-to-peer lending could hit big bank profits (The Motley Fool), Rated: AAA

For example ANZ pays 2.4% annual interest on its one-year term deposit, and charges 13.95% annual interest on its personal loan.

Direct banks usually offer slightly higher interest rates on deposit accounts, lower loan costs, and reduced fees because they do away with the costs and inefficiencies (and arguably some of the service) of the traditional banks.

For example, the direct bank ME pays 2.85% annual interest on its term deposit, and charges 12.49% annual interest on its personal loan, making for a spread of 9.64%. Compare this to ANZ’s spread of 11.55% and you’ll note that ME’s more bare bones set up allows it to better cater to the more cost-conscious customers.

For example, the P2P lender DirectMoney Ltd (ASX: DM1) pays the investor around a 7.50% annual return for their personal loan fund, and charges the borrower around 9.50% annual interest on their personal loan. The spread is just 2.0% – a fraction of the banks with ANZ at 11.55% and ME at 9.64%.

Big BankANZ Direct BankME P2P LenderDirectMoney
Lender (Personal Loan) 13.95% 12.49% 9.5%
Borrower (Term Deposit) 2.4% 2.85% 7.5%
Net interest spread 11.55% 9.64% 2.0%

* All rate as of 2/6/17

Australia’s ASIC Proposes Next Steps on RegTech (The National Law Review), Rated: A

On Friday 26 May 2017, ASIC released its Report 523 titled “ASIC’s Innovation Hub and our approach to regulatory technology”. This report gives an update on the work of ASIC’s Innovation Hub and outlines ASIC’s current and proposed future approach to RegTech.

The report proposes that ASIC increase its focus on supporting RegTech developers, including by:

  • establishing a new RegTech liaison group comprising industry, technology firms, academics, consultancies, regulators and consumer bodies to enable networking, discussion of RegTech developments and collaboration opportunities that promote positive applications of RegTech;

  • continuing to hold RegTech trials and sharing knowledge about those trials with the market to promote wider use of technologies that promote good consumer and market integrity outcomes; and

  • hosting a problem-solving event (“hackathon”) later in 2017 to stimulate thinking and approaches to deal with problems of regulation commonly faced by the financial services sector.

India

Sundaram Finance backs online education loans marketplace GyanDhan (VC Circle), Rated: A

GyanDhan, an online marketplace for education loans operated by Delhi-based Senbonzakura Consultancy Pvt. Ltd, has secured an undisclosed amount from Sundaram Finance Holdings, a subsidiary of Chennai-based Sundaram Finance Ltd, it said in a statement.

The platform had raised an undisclosed amount in seed funding from Stanford Angels & Entrepreneurs and Harvard Angels in July last year .

It had earlier received angel funding from Satyen Kothari, founder of Cube and Citrus Pay.

Fintech platform MaxMyWealth raises funds from two UK firms (VC Circle), Rated: A

London- and India-based Heathwalk Advisors Pvt. Ltd, which runs financial technology platform MaxMyWealth, has raised an undisclosed amount from two UK-based firms, it said in a statement.

The firm will use the funds to build the team, enhance its offering and grow its customer base.

Asia

Top 10 Fintech Companies South Korea (TechBullion), Rated: A

According to Statista, the Transaction Value in the fintech market amounts to US$43,032m in 2017.

Developed by Samsung electronics, Samsung Pay allows users to make payments using compatible phones and other Samsung-produced devices.

Founded in 2013, Viva Republica is a fintech company that offers innovative peer-to-peer money transfer services via a mobile app called “Toss”.

8percent is a leading start-up that brings together savvy investors and creditworthy borrowers together so that both can benefit financially.

Founded in 2012, Rainist offers financial products recommendation based on individual’s life patterns and purchase behaviour.

DAYLI Financial Group is a leading financial technology platform consisting of innovative technologies such as machine learning, payment solutions, big data analytics, bitcoin exchange, and blockchain solutions.

‘Stocks Plus for Kakao’  enables users to check their stock quotes in real-time via Kakaotalk, a multi-platform messaging app.

Founded in 2011, Newsystock is a Robo-Portfolio platform that provides accurate analysis and equity purchase recommendations in the stock market.

Infosonic is the start-up that produces Sonic Pass as mobile authentication and payment app.

Authors:

George Popescu
Allen Taylor