According to the Small Business American Dream Gap Report, almost 25% of all small businesses consider shutting down due to cashflow issues. With a reported 30 million SMBs in the United States, 7.5 million SMBs are at risk. Traditional banks literally vacated the SMB lending space after the 2008-09 financial crisis. Moreover, changes in minimum […]
According to the Small Business American Dream Gap Report, almost 25% of all small businesses consider shutting down due to cashflow issues. With a reported 30 million SMBs in the United States, 7.5 million SMBs are at risk. Traditional banks literally vacated the SMB lending space after the 2008-09 financial crisis. Moreover, changes in minimum wage and competition from automation, Amazon, and cash burning startups have disrupted the SMB ecosystem. SmartBiz Loans understands the pain point of the market and was launched to help minimize this funding gap.
About SmartBiz Loans
Set up in 2010 by Ryan Gilbert, SmartBiz Loans was incubated through PayPal and Venrock.
The company started as a consumer credit delivery platform and later pivoted towards small businesses. The San Francisco-based startup has raised almost $40 million in funding from a list of marquee investors including its original incubators.
Currently headed by Evan Singer, SmartBiz Loans has been the pioneer in creating the leading online marketplace for SBA loans. It partners with banks across the country and establishes a win-win situation for both small businesses and lenders by ensuring that the “tedious” process of loan application becomes as intuitive and hassle-free as possible.
What SmartBiz Loans Can Do for SMBs
Businesses across the nation struggle to meet their day-to-day requirements for working capital and maintaining optimum cash flow. SmartBiz Loasn bridges the gap between the bankers and the borrowers by avoiding unnecessary loan application rejections by banks. The startup uses artificial intelligence to act as third-party advisor to small businesses and give them insight into what happens during the credit decisioning process. It helps entrepreneurs understand why SBA loan applications are rejected so that borrowers can mitigate the chances of loan application rejection. Also, SmartBiz focuses on reducing unnecessary delays in the loan application process.
SmartBiz Lending Products
SmartBiz specializes in SBA loans for working capital, refinancing, and SBA 7(a) commercial real estate loans.
SBA loans are considered the gold standard in the industry due to their lower interest rates and longer tenures. The company’s average loans range from $30,000 to $5 million, tenure ranges up to 10-25 years for different products, and APR ranges form 6%-8.25%.
Another feather in SmartBiz Loans’ cap is the advisory services the company extends to clients through its SmartBiz Advisor service. This product is an amalgamation of all SmartBiz services and helps businesses find out how bankers view them as a potential borrower for an SBA loan while helping the business take the necessary steps to ensure SBA loan approval. From viewing the tax returns of businesses to providing them with a proprietary credit score to performing debt analysis, SmartBiz Loans recommends ways to improve their clients’ financial health.
Working the SmartBiz SBA Loan System
The SmartBiz SBA Loan system is designed to be intuitive and simple. It evaluates a borrower’s score by using AI and machine learning technology to ensure the borrower is an ideal fit for an SBA loan. Then the right borrower is directed to the right bank. On the other hand, SmartBiz Loans partners with banks and licenses its software to help them in automatic loan underwriting. Most impressive is the fact that almost 90% of borrowers referred by SmartBiz Loans are approved for bank loans. Such a high acceptance rate reduces the cost of client acquisition for banks and improves the overall borrower experience.
Dealing with Competition
According to the Singer, SmartBiz Loans is the AI-powered chief financial officer for small businesses that find it hard to hire their own CFOs. Although SmartBiz faces aggressive competition in the industry, its pace of growth, proprietary artificial intelligence and machine learning technology, and access to in-house databases, including tax data, have helped it create its own alternative lending niche.
SmartBiz Loans recently crossed originations of $500 million in funded SBA loans. It was the biggest facilitator for funding of SBA 7(a) loans in the year 2016, and it overtook JPMorgan Chase as the leading provider of SBA 7(a) loans.
Diversity of Customers
SmartBiz Loans caters to a broad customer base across 50 states. Most of the borrowers that approach the lender have been in business for 5-10 years, work with less than 10 employees, and their average annual revenue ranges between $500,000 to $2 million.
SmartBiz Loans has helped reduce the underlying gender bias in SMB funding by originating almost 17% of its SBA loans to women-owned small businesses. Also, SBA loans for veterans account for 8% of its total originations.
SmartBiz Loans and the Future of SBA(7a) Lending
Apart from boosting its other products, SmartBiz plans to delve deep into SmartBiz Advisor in order to streamline the process of making SBA credit easily available for small businesses. Though currently serving the United States, it is also looking to expand abroad in the coming years.
Creating the ideal marketplace for SBA Loans, SmartBiz Loans is the number one online marketplace for SBA 7(a) loans. Its deep domain expertise coupled with its customer service obsession make its an easy bet for future unicorn status.
News Comments Today’s main news: SoFi, Lending Club gear up for a busy quarter. RateSetter drops unsecured business loans. Zopa’s targeted returns rise to 4% and 4.5%. Monzo to phase out prepaid cards. Funding Societies surpasses SGD 100M in SME crowdfunding in SE Asia. Today’s main analysis: CEO optimism grows worldwide. Today’s thought-provoking articles: Which car brands borrowers stretch […]
Up to four transactions from marketplace lenders SoFi and Lending Club are slated to hit the market this quarter, including prime and non-prime consumer and student loan refinancing offerings.
SoFi is preparing to bring at least one consumer loan offering and possibly one more refinanced student loan offering over the next two months. The planned offerings could be in the range of previous transactions, said a source familiar with the company’s plans.
Shares of Twitter dipped on Monday after it was reported that Twitter’s chief operating officer, Anthony Noto, may leave the company for an offer to become the CEO of Social Finance, or SoFi, an online lending company.
Twitter’s stock was down 1.16% on Monday at $23.39 per share.
A recent LendingTree survey found that 27 percent of Americans plan to purchase a car in 2018. To discover if consumers are more likely to stretch their available incomes to own certain brands, LendingTree looked at people who found auto loans on the LendingTree.com platform in 2017 to buy used vehicles.
Contrary to popular assumptions, the results revealed that people aren’t going broke to buy used luxury cars. In fact, buyers of the most expensive cars seem to handily afford them.
On the other hand, LendingTree found Buick owners have the hardest time affording their car payments — not because they’re indulging in particularly expensive vehicles but because their income tends to be on the lower side, meaning they use a larger share of take home pay to cover their monthly payments.
Car Makes Borrowers Stretch the Most to Buy Used
Estimated Monthly Payment as a Percent of Estimated Monthly Income
The online small-business lender Fundbox says it is integrating its automated lending service with several software programs commonly used by its borrowers — and it’s a move that could hold a lesson for banks.
What’s striking about what Fundbox is doing, and the reason bankers could learn from it, is it is capitalizing on the concept of open banking — allowing a piece of a lender’s products and services to be accessed through a third party — in a way that few U.S. banks have.
Capital One comes the closest — its application programming interfaces let third parties offer services like prequalifying customers for Capital One credit cards and sharing its reward information.
When Wall Street compares one of Jack Dorsey’s two public companies to Amazon and Google, you’d expect them to be talking about the one in the tech sector — Twitter. But on Friday, Nomura analyst Dan Dolev said that Square, Dorsey’s payments company, is the one that resembles today’s tech giants in their early days.
Dolev thinks that these new initiatives will massively increase the number of payments Square processes by a long-term compound annual growth rate of 20%. Dolev also says that this growth will provide a 40% to 45% boost to earnings margins.
Loan origination solutions company defi SOLUTIONS just closed on $55 million in funding. The Series C round comes from Bain Capital Ventures, offering social proof along with a stamp of approval for defi’s suite of loan services. This is the Texas-based company’s first round of financing.
The primary capital portion of the investment will be used to accelerate product development, expand resources and facilities, and grow the number of employees by nearly 50% this year.
Recently disclosed results showed Citigroup, JPMorgan Chase, Bank of America and Wells Fargo took a combined $12.5 billion hit from soured card loans last year, about $2 billion more than a year ago. The FT reported.
Reuters recently warned that U.S. banks, already under pressure from slower loan growth and low interest rates, could be facing yet another challenge as a rising number of Americans fall behind on their credit card payments.
U.S. consumer credit outstanding rose in November by the most in 16 years as credit-card balances surged, recent Federal Reserve data showed, by $11.2 billion, to $1.023 trillion.
The news marks a significant month for Manhattan’s sometimes-struggling fintech scene, with MoneyLionhaving raised a whopping $42 million during its Series B in early January. And while these numbers are a drop in the bucket compared to the U.S. fintech industry surpassing $5 billion in Q3 ’17, the momentum is already being felt, and it comes as a welcome change for the city.
At the top end, some personal financial advisorscharge an annual fee plus investing expenses as a percentage of your assets under management, typically about 1% to 1.5%. As a result, these advisors often require that new clients have an account minimum of $250,000 in assets.
By comparison, robo-advisors — which use algorithms to build and manage a client’s investment portfolios and require little human interaction — charge fees from 0.45% to 0.70% of the amount managed. And many will take on new clients with $0 to open an account.
The downside of robo-advisors: Investment choices are more limited — often a small selection of low-cost index funds or exchange-traded funds — than the asset choices that full-service brokers and advisors may provide. And while many offer financial advice via email, chat or phone consultations, those hybrid services are likely to come at an additional cost.
The Tanda app, launched by the company Friday and available on Android and shortly on iOS, does exactly what its name implies. It lets you join groups of people to work toward savings goals together, in tandem: Each user pays an agreed-upon amount into a pot, choosing when they receive the money. Those who need it soonest pay a fee, and those who wait the longest receive a two-percent bonus. Yahoo Finance takes eight percent of the first payout and seven percent of the second payout, according to Android Police.
Yahoo Finance isn’t the first to think to monetize a more formal version of this sytem—the site eMoneyPool has been available to the public since 2013, servicing over $3 million, and the apps KyePot and Cashare serve a similar purpose. On Tanda, users receive a trust score, with higher scores allowing users access to larger money pools, up to $2,000.
In a national ranking, Dayton ranks relatively low for factors Lending Tree deems indicative of a competitive housing market. Prospective buyers in this area have relatively low average down payments, among other factors Lending Tree placed in the ranking.
On the list of 100 cities with the “most competitive home buyers,” Dayton ranks overall at 96, below Augusta, Ga. and above El Paso, Texas. Youngstown Ohio is last on the list at No. 100. San Francisco, Calif. is first.
In 2016, Fannie Mae named FormFree its first designated vendor for automated asset verification as part of the Day 1 Certainty initiative. Since then, FormFree has signed more than 800 lender clients, including 70 percent of the nation’s top 40 mortgage originators, and accepted over 1.25 million orders for the company’s flagship AccountChek® Asset Report. The company also increased its total number of technology integrations and reseller partnerships to over 100, making AccountChek available for more than 90% of mortgage transactions nationwide.
Peer to peer lender RateSetter said its commercial lending vertical will focus solely on secured lending in its commercial finance vertical. Following a review of its commercial finance operations, RateSetter said it would move to “simplify” its commercial finance by funding only property backed or asset backed loans.
RateSetter said it will continue to maintain a diversified approach to lending into consumer, business and motor finance markets, however, the commercial finance offer will no longer include unsecured business finance.
Challenger bank Monzo has announced it will close its popular prepaid Mastercard in early April, although its half a million customers can still enjoy valuable travel perks if they upgrade to Monzo’s current account.
Until this month, Monzo cards also offered fee-free cash withdrawals from foreign ATMs. However, this has now been capped at £200 of overseas withdrawals within a rolling 30-day period, and customers pay a 3 per cent fee if they exceed this limit.
While the UK remained the largest alternative finance market in Europe by far, at €5.6bn (£4.9bn), the rest of Europe began to play catch-up as it grew its own market by 101 per cent, the data from the university’s Centre for Alternative Finance showed.
Excluding the UK, Estonia ranked first for alternative finance volume per capita for the second year in a row, at €63, followed by Monaco and Georgia.
Britain’s start-up revolution is stalling, with the number of businesses created last year falling for the first time in almost a decade.
There were 5.5 per cent fewer start-ups in 2017 compared with 2016, according to research by DueDil, a financial analysis company. It found that 647,923 new businesses were started last year — down from 685,928 in 2016, bringing to an end what had been annual increases since 2008.
A £600 loan repaid over six months would typically cost an extra £330 to repay to a door step lender and over £500 to repay via a payday lender. Repaying via a social lender could easily halve this cost.
Hollywood actor and social activist Michael Sheen has supported the launch of a new £1 million fund set up by the Carnegie UK Trust and features in a new short film called Speaking out for Fair Credit.
“The need for ethical alternative providers is clear, whether they be on our local high streets or available online. But it’s not just about creating more providers – we need to do more to enable them to compete with the high cost providers and to provide vital financial support to communities across the UK, putting people before profit.”
It is estimated that around 150,000 people in Scotland borrow £250m from high cost lenders like pay day loan firms, door step lenders and rent-to-own shops annually.
Excluding the United Kingdom, which remained by far the largest alternative finance market in Europe at 5.6 billion euros, online alternative finance grew 101 per cent in Europe to 2.06 billion euros from 1.02 billion euros a year earlier. The UK’s market share in Europe declined to 73 per cent in 2016 from 81 per cent a year earlier as other markets grew faster.
France (444 million euros), Germany (322 million euros) and the Netherlands (194 million euros) are the three largest European alternative finance markets outside the UK, followed by Finland (142 million euros), Spain (131 million euros), Italy (127 million euros) and Georgia (103 million euros).
Peer-to-peer consumer lending is the largest alternative finance segment in Europe for the third year in a row, at 34 per cent, followed by peer-to-peer business lending (17 per cent), invoice trading (12 per cent), equity-based crowdfunding (11 per cent) and reward-based crowdfunding (nine per cent).
Fifty seven percent of business leaders say they believe global economic growth will improve in the next 12 months.
Optimism in global growth has more than doubled in the US (59%) after a period of uncertainty surrounding the election (2017: 24%). Brazil also saw a large increase in the share of CEOs who are optimistic global growth will improve (+38% to 80%). And even among the less optimistic countries such as Japan (2018: 38% vs. 2017: 11%) and the UK (2018: 36% vs. 2017: 17%), optimism in global growth has more than doubled since last year.
According to a September 2017 report from the Asian Development Bank (ADB), the trade finance gap remained relatively steady at $1.5 trillion in 2016 compared to a record high $1.6 trillion gap the year prior.1 MSMEs remain hardest hit by gaps in trade finance: the ADB report attributed 74 percent of rejected trade finance requests to MSMEs and midcap firms in 2016, compared to just 57 percent in 2015.2
ADB says this is despite fintech investment in trade finance that exceeded $13 billion in 2016 – more than half of the estimated $24 billion in total 2016 fintech investment cited in a separate report from the International Chamber of Commerce (ICC).3 Some experts – including Steven Beck, Head of Trade Finance at ADB – say fintech efforts may need to be redirected before their impact on import-export trade finance can be fully realized.4
Funding Societies, the leading peer-to-peer (P2P) lending platform in Southeast Asia, welcomed the start of the year by crossing the SGD 100 million mark in total crowdfunded SME loans across Singapore, Indonesia and Malaysia. In line with the platform’s goal of responsible growth, Funding Societies expanded its crowdfunding book by 400% in 2017 while maintaining a default rate of 1.5%.
According to statistics by the Ministry of Planning and Investment (MPI), SMEs contributed approximately 48% of Vietnam’s GDP in 2012. Moreover, based on research by the United Nations Economic and Social Commission for Asia and the Pacific, since SMEs are usually labour intensive they employed 77% of Vietnam’s labour force.
The Ministry of Planning and Investment in their survey in 2012 of SMEs ability to access financing indicated that approximately 30% of SMEs in Vietnam could not get any financing from financial institutions and another 30% that could get financing faced numerous difficulties in accessing funds.
The 2015 survey found that the percentage of firms having bank loans in 2015 for micro-sized firms was 40%, small firms 62%, medium firms 74% and 81% for large firms. Access to bank services in 2015 also took into consideration how common it was for these enterprises to give bribes to the bank staff: Micro (64%), small (56%), medium (49%) and large firms (39%). The percentage of firms that experienced how interest rates and other lending conditions applied to private businesses are always more difficult than those for SOEs: micro (74%), small (71%), medium (65%) and large (48%).
News Comments Today’s main news: SoFi seeks to poach Twitter COO for CEO slot. Zopa increases investor interest rates. SoftBank considers IPO in London. TransferWise launches borderless bank account. Spotcap partners with BAWAG Group for same-day financing. Today’s main analysis: Super high-interest loans in California have boomed. Today’s thought-provoking articles: How online branding can help businesses get a loan. Today’s […]
SoFi offers Twitter COO top slot. AT: “I’m sure they’re making a lucrative offer, but the indication here is that Anthony Noto may decline. I would imagine this would be a good move for him, a high-profile move in a growing industry with a chance to make a historical mark. Of course, if Twitter counters with a more lucrative offer to keep him, then the ball will be in SoFi’s court.”
How businesses can use online branding to get a loan. AT: “To my knowledge, no alternative lender in the U.S. is using social media as the primary source of credit data. It’s more than they use alternative data as additional information to traditional metrics, but this could change.”
California’s super high-interest loans are booming. AT: “I’d be curious to see how they’re doing in other states, as well. Given that Texas-based Elevate Credit is one of the top three lenders in this segment, it’s likely that other states have seen a similar increase in these types of loans.”
Anthony Noto, a top Twitter Inc. executive, is in discussions to become the next chief executive of Social Finance Inc., according to people familiar with the matter, as the online lender grapples with accusations of improper workplace culture.
The San Francisco-based company has offered the job to Mr. Noto, currently Twitter’s operations chief and before that a top Silicon Valley banker atGoldman Sachs GroupInc.,people familiar with the matter said. Mr. Noto is likely to make a decision in the coming days, the people said.
He may turn down the offer, as terms haven’t yet been completed, or Twitter might lobby hard to keep him, especially with CEO Jack Dorsey splitting his time between the social-media service and Square.
An increasing number of the largest online lenders, such as Kabbage (a ValuePenguin affiliate) and Funding Circle (also a ValuePenguin affiliate), are relying on online data in addition to traditional data points to gain a fuller picture of a business’s health.
Kabbage, which recently received $200 million in funding from Credit Suisse, uses a fully automated underwriting process (involving no humans) to approve applicants and requires business owners to link online accounts, which run the gamut from bank accounts to vendor accounts, to complete an application.
Even traditional lenders are getting in on this trend. JPMorgan Chase (a ValuePenguin affiliate), which recently renewed its partnership with online lender OnDeck (also a ValuePenguin affiliate), the largest online lender to small businesses, uses the latter’s underwriting technology, which considers online data points, to help it offer online business loans.
Not long ago, personal loans of this size with sky-high interest rates were nearly unheard of in California. But over the last decade, they’ve exploded in popularity as struggling households — typically with poor credit scores — have found a new source of quick cash from an emerging class of online lenders.
These pricey loans are perfectly legal in California and a handful of other states with lax lending rules. While California has strict rules governing payday loans, and a complicated system of interest-rate caps for installment loans of less than $2,500, there’s no limit to the amount of interest on bigger loans.
In 2009, Californians took out $214 million in installment loans of between $2,500 and $5,000, now the most common size of loan without a rate cap, according to the state Department of Business Oversight. In 2016, the volume hit $1.6 billion. Loans with triple-digit rates accounted for more than half, or $879 million — a nearly 40-fold increase since 2009.
The number of loans between $5,000 and $10,000 with triple-digit rates also has seen a dramatic 5,500% increase, though they are less common. In 2016, loans of that size totaled $1.06 billion, with $224 million carrying rates of 100% or higher.
Many of the loans can be tied to just three lenders, who account for half of the triple-digit interest rate loans in the popular $2,500-to-$5,000 size range. LoanMe, Cincinnati firm Check ‘n Go and Fort Worth’s Elevate Credit each issued more than $100 million in such loans in 2016, as well as tens of millions of dollars of loans up to $10,000 with triple-digit APRs.
Within this large document, there are four key actions being proposed:
Affordability test: This imposes two burdens on payday lenders. First, conducting an affordability analysis would increase the cost of underwriting a loan. Second, people generally turn to payday lenders when they are broke.
Limit payday rollovers
Exemptions made for alternatives to payday lenders, including credit unions and community banks: If a lender derives less than 10% of its revenue from payday loans, it is exempt from some of the most onerous rules. This particular restriction is odd. Why is the hated payday lending product acceptable, so long as the institution making the loan only generates 9.99% of its revenue from such activities? Are high rates and frequent rollovers acceptable when coming from a bank? Or is there a presumption that payday lenders are evil while bankers are not?
Limit on the number of times a checking account can be debited. This rule limits the lender to two unsuccessful debit attempts. Afterwards, the lender can only attempt to debit the account if it receives authorization from the borrower.
The outrageously high APRs paid on payday loans can make anyone’s stomach churn. But why are APRs so high? I believe there are three main drivers:
Risks are high: The people using payday loans are very high risk borrowers.
Price competition is absent: For a payday loan, people value speed and access.
Good behavior does not get rewarded: Payday lenders generally do not report to credit bureaus.
The Consumer Financial Protection Bureau on Thursday dropped a lawsuit against four payday lenders.
Since 2012, two of the firms — Golden Valley and Silver Cloud Financial — offered online loans between $300 and $1,200 with interest rates of up to 950%. The other two firms — Mountain Summit Financial and Majestic Lake Financial — also offered similar terms on loans, according to the bureau.
BofA added about 2 million users to its digital channels, predominantly to mobile. The bank’s active digital users jumped from 32.9 million to 34.9 million annually, an increase largely driven by mobile banking users, which increased by 2.6 million users year-over-year (YoY).
Engagement is rising too. Mobile channel usage rose 34% YoY to reach 1.3 billion interactions in the quarter.
BofA consistently updated its digital and mobile offerings throughout 2017, adding contactless ATM functionality, for example, and integrating tools like the popular peer-to-peer (P2P) offering Zelle. These innovations have likely contributed to rising interactions.
Just under 30 percent of U.S. households are underbanked or unbanked, according to the FDIC. What these terms mean has been up for debate and subject to misconceptions. Let’s look at some of the most pernicious myths regarding underbanked Americans and debunk them:
The person-to-person payments service Zelle differentiates itself from rivals by promising users that transactions sent over its network will clear in near-real time. Yet in recent months, the service has faced a number of complaints from consumers who say they are having problems sending or receiving money or setting up accounts in the first place.
Zelle has acknowledged the problems, but says the occasional delay is the price some users will have to pay as the big banks’ rival to PayPal and Venmo aims to create one of the industry’s strictest fraud-prevention programs.
One of the biggest (and most unique) new companies working in the online lending space is Loanable – a platform that brings together crowdfunding and peer-to-peer lending, but with a twist.
According to Bernard Worth, who created Loanable along with co-founder Justin Straight, there is a whopping $1.3 trillion in American student loan debt.
This system, which just launched in October of this year, is designed specifically for loans from friends and families. Loanable is an innovative way to get a low-interest loan from multiple friends and family members, without of lot of the awkwardness and tension that’s typically involved with borrowing from people you know.
The friends and family loan set-up process is pretty straightforward. You simply need to enter some information:
The full amount of the loan
Each lender’s name, address and email
The borrower’s name, address and email
The interest rate – which is usually between 2% and 10% for friends and family loans
With tax season around the corner you might have noticed a deluge of Jon Hamm commercials for interest free tax refund advance loans. This is a newer product used by tax preparation firms to build their customer base around tax season.
Zopa, one of the largest peer to peer lenders in the UK, has announced an increase in interest rates paid to investors. Zopa currently offers two diversified investment tiers: Zopa Core and Zopa Plus. Returns have increased from 3.7% for Core and 4.5% for Plus respectively. The higher rate reflected by Plus is indicative of an increase in risk profile. Zopa said this is the first time target returns have increased since 2015.
Softbank Group, the Japanese technology conglomerate, is considering the sale of 30 per cent of the shares in Softbank Corp, a subsidiary that is Japan’s third-biggest mobile phone operator, in an initial public offering.
The mega-deal could raise up to two trillion yen (£13 billion) and may take place this year in Tokyo and London, with the proceeds channelled into investments in new technology businesses, the newspaper Nikkei reported last week.
Research from an independent senior recruitment specialist firm, Tindall Perry, reveals that 74 per cent of finance directors describe their knowledge of alternative finance as average or above. However, only a quarter said they were comfortable with accessing crowdfunding or peer-to-peer lending.
In contrast, 85 per cent of companies said that they understood how best to access asset-based lending (ABL), while invoice finance, trade finance and venture capital all saw a positive response rate of between 55 and 75 per cent.
Despite this, traditional bank lending remained the funding of choice for financial directors, with 83 per cent suggesting that they would approach their bank for finance in the first instance.
Envestnet | Yodlee has launched a single API solution to make it easier to comply with the UK’s PSD2 and open banking API specifications for account information services, reports David Penn at Finovate (FinTech Futures’ sister company).
“We’ve recruited more than 1,000 specialised consultants across BCG working on topics which didn’t exist just five years ago,” says Mr Morel. They are technologists, data scientists and process specialists who help banks decide what to prioritise and how to design and implement solutions. Most of those newcomers work in financial services, including 100 who work with UK institutions.
In fact, with real estate crowdfunding services like Fundrise Reviews you can invest with as little as £500 in commercial real estate. Something that means you could be looking at a return of over 10 per cent, not bad for such a small investment.
Peer to peer lending is another fantastic option for investors that have a smaller pool of capital to work from.
The past New Year’s Day holiday might not have been a time of celebration for some Peer-to-Peer (P2P) investors in China.
Several Chinese online lending platforms announced a repayment delay or liquidation amid tightening government regulations.
On Dec. 26, 2017, a Beijing-based online lending platform ishoutou.com made an online announcement that it was going into liquidation due to compliance risks. It promised to pay back all loans by 30 percent, 30 percent and 40 percent respectively in the three months from February to April.
However, the company owner, Yang Yinghua, went missing the next day.
And yet it is Orange that has launched one of the most audacious attempts to break into mainstream banking and challenge tarnished incumbents. A couple of months ago Orange Bank was launched with a mission to attract 2m clients and shake up the staid world of French finance.
The shift to smartphone banking should put telecom operators, handset makers and the big technology groups in a strong position to go head to head with the traditional banks.
Springhouse today announced that it has received Morningstar Credit Ratings, LLC’s MOR RV2 residential-vendor ranking as an asset valuation provider. Morningstar’s forecast for the ranking is Positive.
As a member of the Altisource Portfolio Solutions S.A. family of businesses (“Altisource”), Springhouse leverages Altisource’s shared services.
Eiffel Investment Group actively supports the development of digital lending throughout Europe.
We are excited to sponsor the first EUROPEAN DIGITAL LENDING AWARDS.
The event will take place on February 1st, 2018, in Paris (25 Rue du Petit Musc, 75004 Paris) at 7 pm. If you would like to attend, please send us an email at email@example.com (advanced registration is mandatory).
Launched in January, the company’s ‘borderless’ account – coupled with a debit card – allows users to hold up to twenty-eight currencies. Once signed up, account holders can carry out transactions in a currency of their choice as they travel around the world.
But there are other new players in the market. For instance, Revolut – which styles itself as a digital banking alternative, offers a prepaid debit card that allows users to hold up to sixteen currencies. Again, transactions can be carried out in the currency of choice.
Meanwhile, WorldFirst – a foreign exchange broker serving companies and relatively wealthy individuals – last year announced that it was launching a World Account, Aimed at SMEs, the new account offers the ability to open local bank accounts overseas and hold dollars, sterling and euros.
To Illustrate the potential demand for its service, Worldfirst cited research suggesting that small and medium-sized companies were carrying out foreign-exchange trades to a value of £76bn every month.
According to Bank of America’s Year-end Millennial Snapshot, 49% of Millennials believed that the Great Recession drastically altered their attitudes about banks, specifically with regard to their saving, investment and expenditure.
According to PwC’s Global FinTech Report 2017, FinTech startup funding is over $40 billion in cumulative investment, growing at a compound annual growth rate (CAGR) of 41% over the last four years.
Embrace the Millennial Banking Revolution
59% of Millennials interviewed by BNY Mellon says they’ve never come across a financial product specifically meant for them. A report by The Millennial Disruption Index cited that all the four leading banks in the US are among the least-loved brands by millennials.
AlfaToken, a service enabling startups and innovative entrepreneurs to create their own ICO tokens and smart contracts without coding skills, is gearing about to conduct its Initial Token Offering with the help of ICOBox, the world’s leading provider of ICO solutions. AlfaToken plans to offer services in 14 smart contract areas, from initial coin offerings and real estate rentals, lending and insurance, to business process management, smart homes and property transfers.
Founded in 2017, AlfaToken identified a gap in the ICO market where initial coin offerings are forecast to rise from 43 in 2016 to 537 in 2017, according to coinmarketcap.com. In particular, the company perceived an opportunity for its Ethereum smart contracts in the real estate rentals market, worth $2.8 billion (Airbnb forecasts), in the peer-to-peer lending market (including mortgages), worth up to $180 billion according to Business Insider, and also the insurance market valued at $4.5 trillion according to a 2016 report by the Institute of International Finance.
Every digital financial transaction you’ve ever made in your life has had to go through a bank or large financial institution at some point. They authorise, facilitate and record the transaction, often taking a cut along the way. Blockchain essentially replaces the middleman in this process. It’s international, unregulated, instant and unhackable.
94% of economists surveyed by finder.com.au in November 2017 expect blockchain will have widespread use in the financial sector and economy.
2. Biometric payments
Although biometric payments are increasing, finder.com.au research shows 60% of Aussies – over 11 million people – either feel uncomfortable using biometric identification when logging on to their mobile banking apps, or aren’t really sure about it.
3. The end of our low-interest world
Australia’s cash rate sat stagnant throughout 2017 at a record low of 1.5%, producing low savings rates, cheap mortgages and escalating property prices.
4. The declining human face of banking
A sharp rise in mobile and online banking has meant Australians are less likely than ever to need to visit their local branch. We expect the number of branches to fall further in rural, regional and remote areas.
5. The rise of one-to-one lending
For example, the average three-year term deposit in December 2017 paid 2.55% interest. However, peer-to-peer lender RateSetter are currently offering 7.4% for the same period.
6. The disappearance of ATMs and cheques
The number of ATM withdrawals per month has fallen from a high of 73 million in 2010 to just 47 million in 2017.
It has been noted that youngsters are averting eyes towards quick personal loans with lesser interest rates rather than the credit cards, says Aditya Kumar, founder of Qbera, a Bengaluru based fintech company. They recently compiled a stats on spending on travel loan trends in 2017. “Millennials, covering more than 50 percent of the Indian population are constantly looking for online digital platforms to plan their finances for holidays; unlike their predecessors who’ve always relied on savings. It has been a regular practice to narrow down their search to fintech lenders for financing their travel needs,” he adds.
According to his company’sstatistical report, out of 1700 applicants of travel loans till last year November, the age of 728 applicants is below 28 years and 105 female applicants within the age span of 20-28 years (both single and married), he adds.
The Financial Services Authority (OJK) is planning to issue a policy in financial services institutions, including guiding principles for Digital Financial Services Providers that include registration and licensing mechanisms as well as the application of regulatory sandbox and policy on crowdfunding.
Not only has the US Federal Reserve started to raise interest rates – a move mirrored by China’s central bank and the Hong Kong Monetary Authority with more developed countries expected to follow suit – but a market correction may be in the works following a strong run in both the US and Malaysian stock markets.
Yet despite its prices taking a plunge recently, its demand is still going strong. Similarly, ethereum, ripple, litecoin and Zcash continue to enjoy the mania status garnered by anything related to cryptocurrency. Equally enticing opportunities are abound with the rapid growth of equity crowdfunding (ECF) and peer to peer (P2P) lending platforms.
Russia’s biggest lender Sberbank plans to help small firms raise funds from private investors with a peer-to-business platform, three sources familiar with the plans said, competing with two other ventures that support the cash-starved companies.
The state bank’s foray into p2b lending suggests it sees a revival in fortunes for small businesses as consumer spending picks up.
It also reflects the commitment of chief executive German Gref to enhance the bank’s use of new technology.
News Comments Today’s main news: IEG Holdings wants to turn Lending Club into a balance sheet lender. Groundfloor launches nationwide. Crowd2Fund launches 30M GBP fundraise. China may get a second consumer credit bureau. Klarna expands e-commerce footprint. Today’s main analysis: LendingTree releases mortgage offer report for December. Today’s thought-provoking articles: Are corporations posting fake comments on government regulatory websites? History […]
Groundfloor expands nationwide under Reg A. AT: “To my knowledge, this is the biggest and the best opportunity for non-accredited investors in marketplace lending. Larger platforms that have been around much longer, such as Fundrise, Prosper, and Lending Club, have opportunities for non-accredited investors, but Groundfloor was started specifically to give non-accredited investors opportunities to invest in real estate, and their offerings are something the average non-accredited investor can understand. Not to mention, their minimum investment is only $10. In a world where the average person can’t afford a $400 emergency fund, that’s a huge door of opportunity. The big question is, is their business model sustainable?”
On January 5, 2017, IEG Holdings (OTC:IEGH) launched a tender offer for up to 4.99% of LendingClub (NYSE:LC).
– Management believes it can convert LendingClub from a broker of loans into a balance sheet lender
Non-accredited and accredited investors in all 50 states can now participate in real estate crowdfunding investment opportunities with Groundfloor. Groundfloor, the first issuer qualified by the U.S. Securities & Exchange Commission to offer real estate debt investments via Regulation A that are available to non-accredited investors, today announced that it has received qualification as an issuer under Tier 2 of Regulation A. The qualification allows over 150 million additional investors to access real estate investment opportunities that have been previously unavailable to them, tripling Groundfloor’s addressable market.
In 2017, Groundfloor saw tremendous growth of over 380% in origination volume and 786% in revenue, prior to announcing a partnership with its first institutional investor, Direct Access Capital (DAC).2 Groundfloor lends in 27 states, and has self-originated over $50 million in loans for 398 real estate projects earning individual investor portfolios average annualized returns of 11.74 percent to date. Groundfloor has also raised $9.1M in venture capital from leading fintech VCs and angel investors.
LendingTree®, the online loan marketplace, today released its monthly Mortgage Offers Report which analyzes data from actual loan terms offered to borrowers on LendingTree.com by lenders on LendingTree’s network. The purpose of the report is to empower consumers by providing additional information on how their credit profile affects their loan prospects.
December’s best offers for borrowers with the best profiles had an average APR of 3.80% for conforming 30-year fixed purchase loans, up from 3.75% in November. Refinance loan offers were up 1 bps to 3.70%.
For the average borrower, purchase APRs for conforming 30-yr fixed loans offered on LendingTree’s platform were up 12 bps to 4.42%, the highest since July 2016. The loan note rate hit the highest since March 2016 at 4.32% and was up 14 bps from November.
Consumers with the highest credit scores (760+) saw offered APRs of 4.26% in December, vs 4.56% for consumers with scores of 680-719. The APR spread of 30 bps between these score ranges was 3 bps wider than in November and the widest since this data series began in April 2016. The spread represents nearly $15,000 in additional costs for borrowers with lower credit scores over 30-years for the average purchase loan amount of $233,586. The additional costs are due to higher interest rates, larger fees or a combination of the two.
Refinance APRs for conforming 30-yr fixed loans were up 7 bps to 4.31%. The credit score bracket spread widened to 24 from 20 bps, amounting to $12,000 in extra costs over the life of the loan for lower credit score borrowers given an average refinance loan of $241,973.
Average proposed purchase down payments have been rising for 8 months and reached $63,740.
A significant number of fake comments appear among thousands criticizing a proposed federal rule meant to prevent conflicts of interest in retirement advice, according to a Wall Street Journal analysis.
Consider the experience of Robert Schubert, a Devon, Pa., salesperson. A comment posted in his name on the Labor Department website opposed the rule, saying: “I do not need, do not want and object to any federal interference in my retirement planning.”
In an interview, Mr. Schubert said the comment was a fraud. He didn’t post it and doesn’t agree with it. “I am disgusted that people can post comments using my name,” Mr. Schubert said.
Mr. Schubert is among 50 people who responded to a survey last week conducted by research firm Mercury Analytics for The Journal—40%, or 20 of whom said they didn’t post the comment listed under their name, address, phone number and email.
A pattern of cyber deception is appearing across the federal government in the nooks and crannies of the process where White House directives or Congress’ laws are turned into the rules Americans must abide by—or in the Trump era, are repealed.
Hundreds of thousands of comments, purportedly made by Americans, have come in over the electronic transom to at least five different federal agencies calling for an end to Obama-era consumer protections and other regulations that impede profits, a series of investigative reports by the Wall Street Journal found. Except, the people who supposedly sent these comments never did.
The US economy added 148k jobs in December and the unemployment rate held steady at 4.1%. The jobs number was below economists’ estimates of 190k, but average hourly earnings rose 2.5%, a strong increase, and a metric that market participants are watching as a precursor to higher inflation.
In regulatory news, Indiana is planning legislation that would cap the interest rate on personal loans at 36%, down from the current cap of 391% on payday loans. If passed, this legislation would affect the payday lending industry and some experts have expressed concerns that this may crimp credit availability to the neediest individuals. The US government is also considering updating the credit scoring methodology used in evaluating mortgage applications, to use competitors to FICO score like VantageScore, with the hope that the new scores would expand mortgage credit access to borrowers.
Frank, a New York-based student loan startup, announced this week that it has secured $10 million through its Series AFunding Round, which was led by Apollo Global Management, with participation from Reach Capital, and Aleph. This funding round brought its total funding amount to $15.5 million.
Digital superannuation advice startup SuperEd has completed a $5 million capital raise from both external investors and staff members to ramp up its expansion, with the 2012-founded company betting on digital advice being a big deal for fund managers going forward.
Earlybird Advance is a no-fee, no-interest loan from MetaBank that allows users who file through Credit Karma to claim from $500 to $1,000 of their tax refund as soon as 24 hours after the IRS accepts their tax return. This is a step up from the three-to-four week time period it generally takes for taxpayers to receive their funds.
“Digital leaders report an 8.6 percent increase in revenue, an 11.3 percent rise in productivity, and a 6.3 percent improvement in market share. Advanced firms now generate 32 percent of their revenue through digital channels, and expect that amount to rise to 48 percent by 2022,” the study pointed out.
Digital leaders acknowledge what will be the growing importance of AI in the digital transformation of industry from the front office to the back office over the next five years. According to the study, while more than half of the digital leaders are already using AI to increase productivity, some 40 percent are extending AI applications to investment management as well.
Community Reinvestment Fund, USA (CRF) – a mission-driven non-profit lender dedicated to improving communities and transforming lives – announced today that it has partnered with U.S. Bank to deliver a new solution for connecting small business borrowers with responsible lending options from community-based lenders across the country.
There are approximately 28.8 million small businesses in the U.S., accounting for more than 63 percent of the net new jobs created between 1993 and 2013. However, the Federal Reserve Bank’s 2016 Small Business Credit Surveyfound the most common challenge facing small businesses was “credit availability or securing funds for expansion.”
Second, Comptroller Otting may be helpful to Fintech companies in addressing important issues such as the Second Circuit’s decision in Madden v. Midland Funding and the so-called “true lender” issue. For example, the OCC could adopt a rule or issue interpretative guidance: (1) providing that loans funded by a bank in its own name as creditor are fully subject to Section 85 and other provisions of the National Bank Act for their entire term; and (2) emphasizing that banks that make loans are expected to manage and supervise the lending process in accordance with OCC guidance and will be subject to regulatory consequences if and to the extent that loan programs are unsafe or unsound or fail to comply with applicable law. (The rule should apply in the same way to federal savings banks and their governing statute, the Home Owners’ Loan Act.) In other words, it is the origination of the loan by a supervised bank (and the attendant legal consequences if the loans are improperly originated), and not whether the bank retains the predominant economic interest in the loan, that should govern the regulatory treatment of the loan under federal law.
To ease your anxiety, you might consider adding a small dose of alternative investments–things that zig when the stock market zags–to your portfolio, even if it means giving up some potential returns.
Wells Fargo Investment Institute, the research and strategy arm of the giant bank, recommends a 23% allotment to various alternative investments for moderate-risk investors, for example, up from 16% two years ago. At Altfest Personal Wealth Management, in New York, 15% of client assets are invested in alternatives, up from 10% last year.
Market-neutral funds. If your goal is to invest in an asset that doesn’t move in sync with the S&P 500, consider a market-neutral fund, such as a merger-arbitrage fund.
Options-based funds allow you to maintain your stock exposure–or even put new money in the market–with some degree of safety.
Long-short stock funds. These funds bet on some stocks and against others with the goal of delivering respectable returns with low volatility. The funds have been 15% to 25% less volatile than an S&P 500-stock index fund over the past decade.
What do an undocumented immigrant in the South Bronx, a high-net-worth entrepreneur, and a twenty-something graduate student have in common? All three are victims of our dysfunctional mainstream bank and credit system. Today nearly half of all Americans live from paycheck to paycheck, and income volatility has doubled over the past thirty years. Banks, with their high monthly fees and overdraft charges, are gouging their low- and middle-income customers, while serving only the wealthiest Americans.
I recently left RealtyShares, the online marketplace for real estate investing, as CEO after founding the company in my living room back in 2013.
When Zach realized I was leaving the CEO role at RealtyShares, he reached out and asked if I wanted to get involved with MetaProp, the first real estate technology incubator based out of NYC.
This opportunity would give me a chance to pursue my passion in real estate technology through a different lens while mentoring startup founders and CEOs and helping them as they embark on the same journey I embarked on four years ago.
AlphaFlow, the first automated alternative investment platform for real estate, announced today that Chris Woida has joined the company as co-Chief Investment Officer. Woida will serve as co-CIO alongside the firm’s CEO Ray Sturm, who will act as both CEO and co-CIO.
Woida brings over 10 years of experience in the financial services industry, previously helping build BlackRock’s smart beta and factor-based platforms and serving as the lead investment strategist for its flagship style-factor hedge fund during his seven years with the company. Most recently, he served as Managing Director, Head of Index Solutions at Axioma, a provider of enterprise market risk and portfolio analytics solutions. In this role, Woida helped the index business expand into derivatives, fixed income and alternative data sources, including AI and ESG.
MPOWER Financing, a public benefit corporation focused on removing financial barriers to higher education in the U.S., has appointed Lutz Braum as its vice president of marketing and business development.
LendingTree®, the online loan marketplace, and Access Intelligence, a business information and marketing company, today announced a new initiative to showcase the top innovations in financial technology (fintech) lead generation at LeadsCon Las Vegas this March.
Startups and established businesses from around the world can apply today for a chance to receive exposure, bragging rights and $25,000 in cash.
Crowd2Fund has embarked on an ambitious series of fundraises that it hopes will see £30m raised within the next 24 months.
The peer-to-peer lender, one of the first to launch an Innovative Finance ISA, has already raised £1.5m from 113 of its own investors (all of whom are either sophisticated or high net worth individuals). More shares were made available after demand exceeded the initial target of £1m. These investors have bought shares in the company at a valuation of £33m. The capital is being raised through Crowd2Fund’s platform.
Rapid growth in Britain’s consumer credit has been driven by borrowing by people with good credit scores, not subprime lending, according to research from regulators on Monday.
Unsecured consumer lending grew at near double-digit rates in 2016 and 2017, and concern that lenders had overestimated their borrowers’ creditworthiness led the Bank of England to tell them in September to hold 10 billion pounds ($13.54 billion) of extra capital.
However, research jointly published by Britain’s Financial Conduct Authority and a BoE blog showed that two-thirds of outstanding lending as of November 2016 was held by borrowers with credit scores in the top 30 percent.
Wherever you are on your life cycle, knowing the financing options available to you is a crucial part of growing and running your business.
Equity finance can be used at various stages of your business life cycle and giving up equity can be a big decision.
Private equity focuses on more medium to long term investment and will usually involve the development of the product and a new management structure to improve the performance of the business.
Crowdfunding aims to connect businesses with a large number of potential investors via a shared online platform.
Debt finance is usually used as a means of long term investment or funding working capital.
Peer to Peer (P2P) lending
P2P lending brings individual borrowers and lenders together via an online platform by by-passing traditional banks with the aim of achieving better rates for all.
Assets can be purchased via leasing or hire purchase agreements which can assist the cash flow of the business. The asset is not fully paid for upfront but over a fixed period of time and the lease or hire purchase agreement is secured on the asset being financed.
A debt factor will take on the sales ledger of the business and chase money owed by your customers. The factor will advance most of the value of the outstanding sales invoices to the business with the balance being paid once the customers have fully repaid their debt.
Last week, on January 4, the People’s Bank of China (PBoC) accepted a license application for consumer credit bureau led by the National Internet Finance Association of China. As of now, the Credit Reference Center of the central bank is the only consumer credit bureau in China.
A boom in asset-backed securities issued by micro-lenders aiming to expand in China’s fast-growing online credit market looks set to slow this year amid growing regulatory scrutiny.
Rules announced on Dec. 1 limited the amount of lending backed by the products the companies can make. They were also required to consolidate them on their balance sheets.
Ant Financial is the largest issuer of consumer loan securities, accounting for 60 percent of all issues in 2017, according to Reuters calculations based on data from China Securitisation Analytics.
Its two Chongqing-based micro-loan companies had total net capital of 10.6 billion yuan, but issued 265.1 billion yuan in loans by the end of June, according to CIB Research, a unit of Industrial Bank Co (601166.SS). Outstanding loan securities issued by the two units have exceeded 250 billion yuan, it said.
ACI Worldwide (NASDAQ: ACIW), a global provider of real-time electronic payment and banking solutions, today announced an extended partnership with Klarna, leveraging ACI’s UP eCommerce Payments solution. This will enable online businesses in 10 major markets, including the U.S. and U.K., to easily integrate Klarna’s payment products, and offer shoppers a fast and frictionless checkout process that can improve conversion rates immediately.
The peer to peer lending platform has seen a decent spike after it featured heavily across exchange Coinspot’s Facebook page as they look too soon be listed on the exchange. That exposure has also highlighted the achievements the Estonian company has made recently, including launching its fiat based loans at the end of 2017.
Strict terms and conditions usually govern the circumstances in which prepay cards can be issued by unlicensed (non-bank) institutions due to their popularity with the unbanked or low-credit community as well as their propensity to be taken advantage of for money laundering reasons. These T&Cs tend to be jurisdiction dependent, and can in some cases restrict the types of funds that can be loaded onto cards by source (for example the source of funds might be restricted to welfare payments and/or employer compensation for services rendered).
Take as an example the following condition attached to a card brought to market by an outfit called TenX:
LOADING FUNDS TO YOUR ACCOUNT
Five.1 Your Card is a payout card tied to an account directly or indirectly established by an employer or other such corporate payor (each, a “Payor”) on behalf of a consumer to which electronic funds transfers of the consumer’s wages or other compensation are made on a recurring basis, whether the account is operated or managed by the employer, a third party payout processor, or a depository institution. Only funds from a Payor may be loaded to your Account In case of errors or questions about the funds loaded to your Account, contact your payout provider.
Globally, venture investors put $7.6 billion in cybersecurity companies last year, which was up from $3.8 billion in 2016, according to the research firm. The number of cybersecurity-related investments jumped to 548 in 2017 from 467 deals the year before.
Global spending on cybersecurity was estimated to reach $83.5 billion in 2017, and that number could hit $119.9 billion in 2021, according to an IDC report from October.
Banks will increasingly start looking at startups in the FinTech, RegTech and InsurTech space as their extended innovation arms with a view to collaborate with them.
The BharatQR code, a unique interoperable payment acceptance solution developed by the NPCI (National Payments Corporation of India), Mastercard and Visa will enable point of sale (POS) transactions to be made more seamlessly. Along with banks, payment wallets like Paytm and MobiKwik will continue to make huge investments to leverage this new standard.
Startups in this space are likely to well as adoption by banks and other financial institutions rises in AI, ML, NLP (Natural Language Processing) and NLG (Natural Language Generation).
In credit-scarce Myanmar, obstacles abound for budding entrepreneurs with bright ideas, big potential and dry pockets. With banks reluctant to lend to individuals without appropriate collateral and proven track records, many small businesses ultimately fail.
Ma Khin Yadana is among those with a success story behind her garment business, which she started from scratch around five years ago.
To get back on her feet, Ma Khin Yadana sought help from a small business group on Facebook, where she met with other garment shop owners across Myanmar who were willing to invest in start-up businesses like hers by extending credit via a peer-to-peer (P2P) lending system. In return, the funds would be paid back with interest within 15 days.
However, the constant pressure of having to repay loans has begun to take a toll on the young entrepreneur. “Most of the loans from investors are on six-month terms. So far, I have 70 investors to whom I must repay K100 million in total.
When the loans are due, I have to repay in full plus interest. The main problem is the 15pc interest rate, which is too high,” she said.
In mid-2017, with higher levels of debt coming due, Ma Khin Yadana negotiated with investors for lower interest rates of 10pc.
Today, CIBC (TSX: CM) (NYSE: CM) introduced CIBC Innovation Banking, a full-service business that delivers strategic advice and funding to North American technology and innovation clients at each stage of their business cycle, from start up to IPO and beyond.
News Comments Today’s main news: Lending Club rolls out its next-generation small business credit policy. Elevate’s RISE surpasses $300M in outstanding loans. Upgrade, Corridor collaborate on big data, credit analytics. Assetz Capital completes Seedrs funding round with 1.6M GBP. Alibaba seeks majority stake in SenseTime. Revolut banks on cryptocurrency. Comunitae suspends activities due to fraud. Today’s main analysis: The hidden relationship between […]
Who wants to take out a loan for a pair of jeans? AT: “This illustrates that its all about psychology. Millennials, who have shown an aversion to credit cards, feel better about buying high-dollar fashion items–like designer jeans–on credit when they’d feel guilty for paying cash for the same items. But, really, is POS credit any different than credit card debt, which are often used at the POS to buy the same vanity items. Affirm has designed a smart product targeted at the psychology of a generation that wants to do things differently than their parents. You can’t beat that.”
Elevate Credit, Inc., a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced its RISE product has surpassed $300 million in total outstandings, with more than 130,000 open accounts.
Lending Club arguably pioneered peer-to-peer lending, which has been one of the most vibrant segments of the credit market. Some analysts, however, have questioned the company’s ability to continue growing without adopting some traditional banking practices, like taking deposits.
Lending Club has failed to manage costs well over the past two years, leading to its inability to net profits. As illustrated in the chart below, the company’s trailing 12-month revenue now stands at about $551 million, but it has managed to reduce the net loss from about $175 million in the first quarter to about $94 million in the third quarter.
Lending Club’s first-half 2017 loan originations figure, however, declined from the prior-year period, dropping to approximately $4.1 billion versus $4.7 billion last year.
Jocelyn Vera Zorn is not eager to talk about the loan she took out to buy the pants. “It’s kind of embarrassing,” she grimaces.
For merchants, Affirm provides exceptional benefits, increasing average order values across the board; perhaps not surprisingly, people will shop more, and more often, when they don’t immediately feel the costs. And for many customers, including Jocelyn, the predictable, convenient payments are worth the higher interest rates.
Affirm claims to be a more transparent and honest, if not cheaper, line of credit for the underserved. Using internal, proprietary data science and artificial intelligence, the company says it approves 126 percent more borrowers than traditional lenders, based on soft credit pullsand an opaque mosaic of consumer information.
While more than two-thirds of Americans own at least one credit card, 20 percent are considered subprime, with a FICO score of 600 or below. Another 10 percent are on the bubble.
Upgrade, Inc. (), a consumer credit platform that combines personal loans with tools that help consumers understand and monitor their credit, today announced a strategic partnership with Corridor Funds (), a new credit analytics and portfolio management platform founded by Manish Gupta. Mr. Gupta was recently EVP, Global Head of Information Management and Advanced Decisioning at American Express and prior to that spent many years as Chief Credit Officer of the Amex US consumer lending business. Under the terms of the partnership, Corridor will provide independent analytical review and validation to investors in Upgrade’s personal loan products, and will collaborate with Upgrade on new product design.
Announced today at CoinDesk’s Consensus: Invest in New York, TechCrunch founder Michael Arringtonrevealed he’s raising $100 million for a hedge fund that will buy and hold crypto assets while making investments in token sales and (some) equities and debt.
Launched under a new entity called Arrington XRP Capital, the fund claims to be the first that will require all limited partners (LPs) to make investments in XRP, the cryptocurrency that powers San Francisco startup Ripple’s RippleNet software.
Five years later, LendUp customers are improving their credit scores, and now I’m proud to say that LendUp Loan customers have saved $150 million versus what they would have spent with traditional small dollar lenders, all while improving their credit score to open up more financial options in the future.
Two-thirds of LendUp Loan customers report having income swings of $100 or more a month. And since our newest customers lack short-term savings — 83% aren’t confident they can cover a $400 emergency — 77% report that they often miss bill payments.
Agile, customer-experience-focused financial technology businesses continue to drive innovation, modernization and access to credit in America’s financial services marketplace when banks and other traditional providers can’t meet consumers’ needs. For example, fintech lenders help consumers and small businesses alike find financial products and services that meet their credit needs, whether it’s a short-term loan for an emergency expense or capital to help grow a small business — even when these applicants have been denied by their banks.
Online small business lender OnDeck today launched a new monthly series spotlighting the achievements of its small business customers and how they are thriving as a result of receiving capital from OnDeck.
For December, the customer success spotlight is on Dana Donofree, the owner of AnaOno, a lingerie and loungewear company for women with a unique mission.
“Applying for a loan can be incredibly stressful but fortunately, OnDeck had quick questions and quick responses. Right away, I could see how much financing I was approved for and what that meant regarding payback. I had the opportunity to review everything before I took the loan.”
The old saying goes, ‘money can’t buy happiness.’ It should also say ‘and debt can make you anxious, keep you up at night and cause problems in relationships.’ That’s according to a new telephone survey of 1,004 U.S. adults conducted by Harris Poll on behalf of the American Institute of CPAs (AICPA). The survey found nearly three-quarters of Americans (73 percent) are living with debt driven by factors such as everyday expenses, a lack of income, mortgage costs and student loans, reflecting the far-reaching potential impact of debt upon society.
Recent data shows outstanding household debt reached a record high of $12.84 trillion, making this survey timely. With U.S. consumer spending growing at its fastest pace since 2009, it appears the frugal habits many Americans adopted directly after the Great Recession are a thing of the past.
More than half of Americans with debt (56 percent) say it has negatively impacted their life.
Of those, one-in-five (21 percent) say debt is causing relationship tension with a spouse or partner and one-in-ten (11 percent) have misled family or friends about their financial situation. Debt is not just impacting life at home, it has found ways to creep into all aspects of the day. Nearly a third (31 percent) admit to worrying about their debt in general while nearly one-in-five (18 percent) say they worry while at work and one-in-four (25 percent) worry at bedtime.
Living with debt has become a financial and mental burden for nearly three-in-ten Americans with debt (28 percent) who stress about everyday financial decisions because of their debt. Nearly one-fifth of Americans with debt (19 percent) have received letters and calls from collection agencies. While the low interest rate environment has the potential to keep payments lower, one-in-four (25 percent) say that they’re worried a rate hike could change that.
Nearly seven-in-ten Millennials with debt (68 percent) admit it has had a negative impact on their everyday life compared with roughly half of Baby Boomers (48 percent) and three-fifths of GenXers (59 percent) with debt. Most concerning, the survey found that of those with debt, Millennials are twice as likely to worry about debt compared to Baby Boomers (M: 43 percent, BB: 19 percent) and more than a third (37 percent) admit that their debt causes them to stress about everyday financial decisions.
The world’s largest bitcoin exchange by trading volume is launching in the U.S.
BitFlyer, based in Tokyo, announced Tuesday it became the fourth digital currency exchange to receive a “BitLicense” to operate in New York. The exchange said it also has licenses to operate in 40 other states.
Curry, who was integral in leading the federal banking regulator’s efforts in advancing financial technology, including through the proposal of a special purpose national bank charter for fintechs, joined Nutter McClennen & Fish this week. He is a partner and will co-lead Nutter’s Banking and Financial Services practice group.
How involved with fintech do you plan to be?
That will be a key area and something I’m excited about working with the other members of the firm on. Fintech is interesting, especially if you’re talking about online lending and marketplace lending.
Do you expect the fintech charter will, in fact, move forward?
From my standpoint, I would not have pursued the charter without being very comfortable with the legal foundation for it.
How will you advise clients in the meantime until any special purpose charter is finalized?
Today institutions, banks as well, need to be making strategic decisions about which direction they’re going in. Well before you decide whether to apply to a fintech charter, you should be thinking through the process, so I think the time is now.
This year’s blockchain craze has pushed a huge amount of new money into cryptocurrencies, private blockchain projects, and companies holding initial coin offerings (ICOs). As of now, the total market capitalization of cryptocurrencies stands at more than $340B — a huge leap from where it started the year at $18B.
But you shouldn’t make the decision to refinance your loans lightly. Refinancing can help some borrowers save money, but what refinancing can do for you depends on a number of factors, including the repayment term and repayment options that you choose for your new loan.
Yours Clothing, a UK independent retailer of plus size ladies clothing, has announced a partnership with Klarna which will allow its customers to use the Pay later and Slice it payment options.
Klarna’s Pay later allows customers to try goods first. When checking out online or on mobile, Yours Clothing customers who use Klarna’s Pay later will receive their products and then have 14 days to pay Klarna back interest-free.
Klarna’s second payment option – Slice it – gives shoppers the ability to spread the cost of any purchases over £60 into equal monthly instalments.
Improve your personal credit. Yes, this has everything to do with money. You see, the higher your credit score, the more likely you’ll be able to score lower interest rates on the money you borrow. This can save you hundreds of thousands of dollars over your lifetime, so it’s definitely a resolution worth making.
The rise of online consumer loans in China has spawned a thriving black market in stolen user data.
Virtually non-existent in the country five years ago, consumer lending through websites and mobile apps has expanded rapidly over the past 18 months amid a proliferation of fintech start-ups that use big data to assess credit risk.
In a chatroom devoted to consumer lending on Tencent’s QQ social-media platform, the Financial Times contacted a person claiming to be an employee of an online lender who was offering user data for sale.
For Rmb4 ($0.61) per user, he offered to provide the full name, national ID number, phone number and loan limit. He added that for some borrowers, the data would also include a credit score from Sesame Credit, the unit of Alibaba’s financial affiliate Ant Financial that sells credit scores to banks and consumer lenders with users’ consent.
Alibaba Group Holding Ltd. is in discussions to invest about 1.5 billion yuan ($227 million) and become the largest backer of Chinese facial recognition startup SenseTime, according to a person familiar with the matter.
SenseTime, which says it’s valued at more than $2 billion, is backed by Qualcomm Inc. and considered one of the more advanced players in machine vision technology.
A number of Chinese peer-to-peer (P2P) lending companies went public in the US this year. Those P2P firms have been growing quickly, with some venturing into high-risk segments such as campus loans and cash advances. As they go public overseas, it creates potential risks that may eventually affect China’s financial stability. Supervision is needed to bring the P2P lending sector in order.
That these companies listed in the US reflects several factors. One main reason is the companies are expanding. Most are underperforming, and some are in the red. US stock exchanges do not have strict requirements for indicators such as net profit and cash flow. Also, the US market attracts investors from all over the world, easily raising more funds.
Policy makers from the People’s Bank of China and the China Banking Regulatory Commission convened in Beijing on Nov. 23 to discuss new measures to crackdown on online consumer loan platforms, including those for payday loans and peer-to-peer lending. On the same day, Alibaba Group affiliate Ant Financial said it will enforce a cap of 24 percent on interest rates charged by lenders on its website, or 12 percentage points lower than current rates.
Although the measures haven’t been made public, our industry checks suggest three notable changes. First, the issuance of new licenses to online micro-loan platforms is being suspended, suggesting that regulators are scrutinizing online lending practices. Second, banks and bank-holding companies are being told not to buy loans underwritten by online platforms because such assets are deemed too risky. Third, turning the loans into securities will be forbidden because regulators believe securitization amplifies risks and gives investors less of an incentive to perform due diligence on the underlying assets.
So-called P2P online lending platforms have mushroomed from fewer than 10 to more than 2,000 in just over seven years, but only a few hundred operate with government-issued permits.
According to a report in El Español, peer to peer lender Comunitae has ceased all operations indefinitely due to fraud detected on the platform this past October. The Comunitae web site is still live but certain portions are not functional.
The Swedish Chamber of Commerce for the Netherlands, The Embassy of Sweden and Business Sweden are very proud to announce the winner of the Swedish Chamber Export Prize 2017; Klarna.The prize aims to strengthen the Swedish-Dutch business relations and has been awarded since 2012 to Swedish related companies in the Netherlands.
Paytm Payments Bank aims to create the world’s largest digital bank with 500 million accounts, envisioning an online financial services provider of everything from wealth management to credit cards and stock market trading.
The bank, backed by the country’s largest digital wallet of the same name, launched formally Tuesday and is targeting people who don’t have access to professional financial services. That aligns with Prime Minister Narendra Modi’s ambition to broaden access for the under-banked in the nation of 1.3 billion people.
Paytm was one of fewer than a dozen entities that secured permits to start payments banks, which can accept deposits and remittances but cannot lend.
It said it will operate a mobile-first bank with zero fees on online transactions and no minimum balance.
A major trend shaping the small-business landscape is the rise in cryptocurrency, which can provide alternative means for a variety of cross-border financial transactions.
Cryptocurrency is ideal for cross-border transactions in several ways. In addition to being secure and permanent, cryptocurrency transactions allow borrowers and lenders to sidestep time spent working through a bank, as well as converting from one currency to another. For many investors, the speed and convenience of cryptocurrency-based transactions presents an opportunity to magnify gains.
Along with crowdfunding and peer-to-peer lending, cryptocurrency can improve access to both payments and credit for SMEs.
Independent asset managers shall maintain relationships not only to custodians. Due to disintermediation and distributed ledger technology they will be able to profit from a much broader range of financial assets.
Brussels-based SWIFT has been urging banks to bolster security of computers used to transfer money since Bangladesh Bank lost $81 million in a February 2016 cyber heist that targeted central bank computers used to move funds.
Taiwan’s Central News Agency last month reported that Far Eastern International Bank (2845.TW) lost $500,000 in a cyber heist. BAE later said that attack was launched by a North Korean hacking group known as Lazarus, which many cyber-security firms believe was behind the Bangladesh case.
Nepal’s NIC Asia Bank lost $580,000 in a cyber heist, two Nepali officials told Reuters earlier this month.
He’s now in Sydney at fintech business Prospa, the nation’s leading online lender to small business, where’s he talking to Business Insider about the sector as well as the 12-month investigation into misconduct by the banks.
The article that someone tweeted about, posts that they liked on Facebook, and a new phone just bought on an e-commerce site—all these events now play a crucial role in determining if an individual is eligible for a loan or not.
Online lending firms have seen rapid growth in the last two years, despite the presence of a wide network of banks and non-banking financial companies (NBFCs) in India. That’s because, till 2015, about 70% of Indians remained under-served by banks and other financial institutions, an opportunitythat these firms are trying to cash in on. Now, even banks and NBFCs are tying up with online lending firms to reach out to more customers.
The 166 million households that make up middle-income India—with annual earnings of between Rs2.2 lakh ($3,414)to Rs3.59 lakh ($5,572)—typically apply for personal loans to buy consumer durables, for weddings, to meet medical expenses, set up a new business, and the likes.
“We have about 80-90 parameters that are used to check a consumer’s credit worthiness. And that’s where technology comes into play to ensure that it can be done swiftly and efficiently,” said Satyam Kumar, co-founder, LoanTap, an online fintech platform that provides retail loans to salaried individuals.
GyanDhan, a Delhi-based start-up working in the space of education loans, emerged winner of a GIST pitch competition for enterprises in the Fintech and Digital Economy, one of the four focus sectors at the Global Entrepreneurship Summit, here on Wednesday.
Lupiya Circle, an online market place created by women in Zambia to financially empower women in the African nation through a branchless banking model was declared the runners-up.
Since 2005, the top 200 funded startups in the MENA region have attracted more than $2 billion in capital, according to a report issued by MAGNiTT, which tracks the development of startups across the region.
To date, the majority of top funded startups in the region were established in the UAE, and the primary financial backers have also tended to be UAE-based.
But a recent uptick in funding from Saudi investment firms points to a developing ecosystem for startups in the Kingdom, according to MAGNiTT founder Philip Bahoshy.
Bahoshy said that startups providing solutions for broader regional challenges such as sticky logistics and cross-border banking frictions stand the best chance of attracting meaningful investment.
Next year will be a good year for Sub-Saharan Africa. After a challenging 2017 for many of its nations, 2018 will see economic growth return across the continent, gas activity boom and fintech innovation pick up in speed.
The research department of the Pan-African bank forecasts three key trends that will take hold across Africa during the next 12 months. GTR takes a closer look at them.
3. Africa’s evolving role in fintech leadership
But 2018, he emphasises, will see African fintech firms increasingly driving this innovation. “There will still be international investors, but the actual leadership of fintech development is going to start coming increasingly from the Africans. It’s not going to be the Europeans and Americans going in, saying, ‘you should do this’.”
Ecobank’s research highlights South Africa, Kenya, Rwanda, Nigeria, Ghana and Côte d’Ivoire as tech hubs that will nurture the next wave of African startups and help connect them with investors.
One fintech that has caught Ecobank’s attention in particular is IroFit, a firm that uses the mobile network to enable real-time financial payments without the need for an internet connection.
Other emerging innovations in Africa include digital tools to build credit profiles for the previously ‘unbankable’ or using blockchain technology for digital identity and KYC solutions.
News Comments Today’s main news: Earnest has Barclays looking for a buyer. Kabbage raises $250M. KBRA assigns preliminary Kabbage Asset Securitization ratings for Series 2017-1 Additional Notes. Funding Circle revamps website. Today’s main analysis: Small Business Credit Survey. Today’s thought-provoking articles: How good is POS financing? How the People’s Bank of China is changing online payments. Goldman Sachs on China’s […]
Affirm leads in POS financing. AT: “While Affirm may have an early lead in U.S. point of sale financing, competition is heating up. Klarna leads in Europe and has entered the U.S. market with force. Other companies are getting in on the action. It will be interesting to see how this sector develops in the next 2-5 years.”
PayPal acquires Swift Financial. AT: “This acquisition significantly increases PayPal’s ability to provide small business loans. The money transfer and payments processor has made some bold moves lately and looks to be shaping up its fintech and lending portfolio. PayPal could become a powerhouse in lending.”
Vanguard posts unrivaled digital platform AUM. AT: “I think it’s interesting that a traditional money manager is leading in assets under management when their are robos who pioneered the industry–heck, created the industry–and aren’t even close.”
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of additional Series 2017-1 notes (the “Series 2017-1 Additional Notes”) issued by Kabbage Asset Securitization LLC.
Kabbage Asset Securitization LLC (the “Issuer”) issued $525 million of Series 2017-1 Class A, Class B, Class C and Class D Notes (collectively, the “Series 2017-1 Notes”) on March 20, 2017. The Series 2017-1 Additional Notes include $25 million of additional Series 2017-1 Class A, Class B, Class C, and Class D Notes (together with the Series 2017-1 Notes, the “Notes”). The ratings for the $525 million of original Series 2017-1 Notes will be confirmed in conjunction with the issuance of the Series 2017-1 Additional Notes. The Series 2017-1 Additional Notes will have the same terms as the corresponding classes of Series 2017-1 Notes, including same Note Rate, Advance Rate and Legal Final Payment Date. The proceeds of the sale of the Series 2017-1 Additional Notes will be used to provide extra funding capacity for Kabbage.
Not surprisingly, there is a lot of easy money to be made in loans. If we look at the CB Insights list of unicorns, we see 211 of these mythical creatures grazing in a field of rainbow colored grass. If we break these unicorns into categories, here are the top-3:
eCommerce/Marketplace – 16%
Internet Software and Services – 13%
Fintech – 12%
When we drill into the fintech category, we see that just over half of the companies are based in the USA (13 fintech companies). Of these 13 fintechs, almost half are enabling people to spend money they don’t have:
Social Finance – $20 billion in loans funded (vs. just $1.45 billion in savings)
Credit Karma – Helps you see how much money you can borrow
Greensky – Instant credit decisions
Avant – Personal loans using artificial intelligence (AI) for credit scores
Prosper – Loan money to your neighbors so they can buy more isht
Kabbage – Loan money to small businesses at ridiculous rates
San Francisco startup Affirm has taken in a whopping $420 million in funding so far from high profile investors like Andreessen Horowitz, Khosla Ventures, Morgan Stanley, and Peter Thiel’s Founders Fund.
The ability for Affirm to be right there at the point of purchase is what puts them in front of everyone else who is trying to finance purchases. When you select Affirm, then you’re required to create an account after which your ability to pay is assessed.
This is not a revolving line of credit, but rather each transaction is evaluated on its own merits. The transactions are reported to Experian so that you can build up your credit to buy even more isht. For the privilege of instant credit at the point of purchase, you’ll pay between 10% and 30% APR simple interest.
San Francisco fintech Earnest has hired Barclays (NYSE: BCS) to help it find a buyer and raise $50 million in equity, a “dual track” process that could see the company sold for around $200 million, The Information reports.
A sale of the online lender at that price would be lower than previous valuations, which have been pegged higher after the company raised $200 million in debt and $100 million in equity.
Startups are of particular interest since they account for 34% of all small employer firms and play an outsized role in U.S. innovation and productivity. Young firms are the drivers of job growth in the United States, accounting for nearly all net new job creation and almost 20% of gross job creation. Yet, even as their importance has become more widely recognized, the rate of startup creation has been decreasing for years. And, of those ventures that launch, failure rates are high. Approximately one-third of new establishments fail within their first two years, and half fail within five years.
While funding is the lifeblood of every company, capital is especially critical for startups. To reach scale, startups need to be able to secure expansion capital. The Report on Startup Firms offers detailed intelligence on startups’ financing needs and challenges, asking questions about capital requests, borrowing qualifications, applications and success levels.
This report addresses several important borrower-centric questions:
How strong is demand for financing among startups?
Are startup firms seeking financing and credit from traditional lenders, or are younger firms attracted to new capital sources?
How successful are new firms in obtaining financing, and how do they rate their experiences with lenders?
Policymakers pushing to scale back regulation have relied heavily on a core argument — bank lending is being held back by post-crisis capital rules and other restrictions.
Federal Reserve Board Chair Janet Yellen has repeatedly said that banks’ lending activities have not been appreciably affected by new rules. In a hearing last month, she pointed to a survey of members by the National Federation of Independent Business which suggested that only a small fraction of small businesses are unable to get the credit they desire.
But loan demand is a difficult thing to measure, in part because it’s hard to count loans that aren’t made. By some metrics, lending demand is down.
But the industry says there is a worrisome trend that those aggregate numbers fail to address, and that is the heightened challenges that banks — particularly larger institutions — face in lending money to borrowers with less than perfect credit scores.
Bill Nelson, chief economist and head of research at The Clearing House Association, said that the new capital and liquidity rules — and especially the Fed’s stress testing program — have made it especially hard for the largest banks to make loans that run a risk of default under economic stress.
An analysis of rate requests submitted by students and their families through the Credible marketplace found that when borrowers prequalified with more than one lender:
The average difference between the high and low interest rate on 10-year, fixed-rate loans was 1.7 percentage points.
Borrowers choosing the loan with the lower interest rate could expect median savings of $2,769.
In addition, private student loans funded through the Credible marketplace so far this year carry rates that can be competitive with federal PLUS loans.
When students and families request rates through the Credible marketplace and prequalify with more than one lender, the difference between their high rate and low rate averages 1.1 to 1.7 percentage points, depending on the loan term and type.
The firm’s hybrid advice offering, Personal Advisor Services, is now at $83 billion in assets under management, according to the firm, putting it in position to be the first digital platform to cross $100 billion.
Since the first quarter of the year, the platform’s assets have experienced a 66% growth increase.
Even during its pilot phase with no paid advertising support, assets for Personal Adviser Services rose from $755 million in 2013 to $10.1 billion at the time of its launch in 2015.
FastPay, a prominent financial technology company that provides lending and payment solutions to digital businesses, along with Tennenbaum Capital Partners, LLC today announced the close of an $80 million international credit facility for Videology. Videology is a leading, global converged TV and video software provider with offices across the United States, Europe, Canada, Asia and Australia.
The gist of its new report is that the alternatives asset industry has grown to nearly $6.5 trillion in assets under management. The world’s largest 100 alternative asset managers make up more than 61% of the pie, with $4 trillion, which represents an increase of 10% in the latter AUM number over the course of 2016.
The survey divided those 100 managers into seven classes, and found that of the ten, the largest share of assets is that held by real estate managers. The full breakdown among the seven classes is as follows:
Real estate – 35% of the whole, over $1.4 trillion;
Private equity fund managers – 18%, and $695 billion;
iFunding, a real estate crowdfunding platform, is getting hammered on Bigger Pockets – a real estate investment forum. iFunding has had a choppy operational history at best. The platform has been peppered with high profile partnerships and then departures. Two unrelated lawsuits, in which the platform allegedly prevailed, certainly did not help. iFunding has not been originating any new deals since 2016 – as far as we know. Now there are allegations of deals gone back and the possibility of insolvency.
Little Rock, Ark., home to the VC FinTech Accelerator, wasn’t quite as sexy a locale, but the 12-week program was sponsored by FIS, the largest FinTech company in the world. It offered funding as well as access to 30 executives from a variety of major banks and FinTech companies who’d signed on as mentors and advisors.
The decision has been a good one. WalletFi has signed on its first customer and two high profile advisors including the CEO of a publicly-traded bank.
It is becoming extremely hard to correctly determine the eligibility of a loan borrower. Even after careful evaluation of all available parameters, some successful companies and individuals still default their bank loan.
Loan eligibility evaluation tasks will be taken over by the smart machine learning technology. To determine the credit score of a client, machine learning can apply regression algorithms which are accurate.
As the financial world transition to digital currencies and digital transactions, there is going to be no physical theft because the money is virtually held. For this reason, thieves are starting to change tact and are now switching to digital means of stealing money.
When put in place, machine learning begins by gathering and segmenting data into at least three segments to create models which eventually amounts to datasets. These datasets can be obtained from historical information. The machine learning models and datasets can then be used to predict the possibility of fraud occurring in financial transactions.
Forbes reported earlier this year that real estate crowdfunding was a $3.5 billion industry in 2016, up from $1 billion in 2014.
Real Estate Investing Is No Longer (as) Local. With online tools and search algorithms, you can put searching for properties ‘on automatic’ and find properties that match your criteria – locally, nationally or even anywhere in the world.
Transparency. Many online platforms, in addition to doing most of the due diligence before presenting their investment opportunities, have built-in tools that allow investors to analyze risk, assess property valuations, calculate internal rates of return and loan-to-value calculations, and do market research.
Availability of Information. This availability of information has spurred some investors to create their own investment groups where they pool (i.e. crowdsource) their collective knowledge to evaluate the investments presented, and often will use other resources and means to further evaluate an investment opportunity.
Document Delivery Is More Efficient.
Convenience. Investors in this century no longer have to drive to view properties because images and virtual tours online make it unnecessary. Technology has taken real estate from the ground to the cloud.
Lower Barriers to Entry. Many real estate investing platforms facilitate investments for$1,000, $5,000 or $10,000. Through online real estate platforms, investing can be done with just a few hundred dollars per month, as many investments are simply equity trades where investors are buying a stake in a project or stakes in multiple projects within a single portfolio. Even debt-based instruments can be entered into with a small fraction of the investment needed 10 or 20 years ago. A few up-and-coming real estate platforms allow non-accredited investors ways to invest for as low as $100 per month.
Greater Diversification. With today’s online options, an investor can diversify into fix-and-flip projects, rental properties, and debt or equity across residential, multifamily and commercial more easily than even 5 years ago.
Kabbage processes data generated through ordinary business activity, such as accounting data, online sales, shipping and dozens of other sources, to understand performance and deliver fast, flexible funding in real time. Kabbage has raised nearly $500 million in funding, with a whopping $250 million Series F that closed just a few days ago. According to the company, Kabbage has provided in excess of $3 billion in loans to more than 100,000 small businesses across all 50 U.S. states.
According to the company, more than 13,000 customers around the world use PrimeRevenue to optimize their financial supply chain. PrimeRevenue has raised more than $115 million in funding from Battery Ventures, Brown Brothers Harriman, and RRE Ventures.
Over the past 12 months to August 2017 investment trusts have raised £9.6 billion from investors in these two ways – known as issuance. Of this, 74% has been within what could broadly be termed alternative income; those assets not directly comparable to equities or conventional bonds and which distribute a structured yield to shareholders.
Issuance in what could be termed conventional income, such as multi-asset or UK and global equity income trusts, totalled £668 million. Finsbury Growth & Income (FGT) led the way with £112 million of issuance. Conventional issuance amounted for around £950 million which was dominated by activity in the secondary market from Scottish Mortgage (SMT) £299 million. Alternative income accounted for the remaining £7.2 billion.
The regulator should stop pandering towards banks when it develops rules for robo-advice, evestor chief executive Anthony Morrow has argued.
‘If [evestor co-founder] Duncan Cameron and I can build a business to provide financial advice to customers then banks should be able to.
‘The only reason is absolute greed. There is probably an argument to say if, and it is a massive if, interest rates went up three or four percent, would the banks even be bothered because at that sort of rate they would probably still be getting a 2% margin on current accounts which is more than they would make on these new robo-advice things, and with absolutely no risk there,’ he said.
In particular, it cited fee transparency and the removal of commissions as steps forward, and that the results of its recent suitability review, which showed that 93 per cent of advice cases were suitable, demonstrated positive results.
The FCA writes: “A market where advisers aren’t driven by commission and are better qualified will provide a better quality of advice for consumers.”
The new document requires all third-party platforms, such as WeChat Pay, Alipay and others, to connect with Wang’lian (网联), an independent clearing house jointly established by PBoC, other Chinese regulatory bodies and some payments companies.
The new model adopts a centralized clearing procedure where Wang’lian will act as the sole intermediary clearing entity to handle all transactions between payments companies and banks.
According to Chinese media, the document from PBoC requires that banks and payments companies be ready with the internal infrastructure changes required for the new model by October 15. From June 30 2018, all payments and transfers will be processed by Wang’lian.
Data from online transactions, for instance transactions through WeChat’s red packet function, will be monitored by PBoC.
Recently, a third-party institution has launched the Monthly Report of P2P Lending Industry of Chinese First-tier Cities. According to the report, the total number of P2P lending platforms in Chinese first-tier Cities has reached to 1,100 by the end of July, among which 403 platforms are in Beijing, 279 in Shanghai, and 418 in Guangdong Province.
Meanwhile, the total Volume of P2P lending industry in the three areas has reached to $27.37bn, increased by $592m from the last month. The volume of Guangdong Province ranked No.1, which amounts to $9.53bn, with growth rate of 2.01 percent from the last month. The following was Beijing, where the volume amounted to $9.19bn, with the month-on-month growth of 6.69%. And Shanghai reached the p2p industry volume of $8.65bn, which was down 1.95% from the previous month.
China Rapid Finance Limited Sponsored ADR (NYSE:XRF) is scheduled to announce its earnings results before the market opens on Thursday, August 17th. Analysts expect the company to announce earnings of ($0.17) per share for the quarter.
China Rapid Finance Limited Sponsored ADR (NYSE:XRF) last posted its quarterly earnings data on Thursday, May 25th. The company reported ($1.01) earnings per share for the quarter.
Robo.Cash, an automated peer to peer lending platform with a buyback guarantee, reports that July was a solid month for the online lender as investments jumped 30%. In the first half of the year, Robo.Cash says that over 700 investors have signed up and 85,720 loans have been originated. In July, 187 investors joined the platform.
The best partnerships between financial institutions and fintechs are a win-win for both partners, as well as for financial inclusion. Mainstream financial institutions partner with fintechs to improve product offerings, increase efficiency, and lower costs – goals with special relevance to low-income customers. By partnering with mainstream financial institutions, fintechs get to scale their technology and can access capital to grow. As a result of these partnerships, low-income customers who are left out of – or poorly served by – the financial sector have greater access to higher quality, more convenient, and less expensive financial products and services.
To facilitate productive fintech partnerships, mainstream financial institutions are organizing internally for innovation, strategically integrating systems and staff, and developing contractual agreements to ensure stability and success. Fintech partnerships enable legacy institutions to engage with and learn from new technology in low-risk, low-cost ways. They are also key to allowing incumbents to compete in a world where alternative players, like Facebook and Amazon, are threatening the central role of financial institutions in the lives of customers. By offering better, less expensive, and more innovative products, financial institutions can assert their continued relevance as customer-facing institution.
One encouraging and somewhat unexpected finding is that the partnerships between financial institutions and fintechs represent a slow but pervasive financial industry shift toward customer-centricity. Better data management and use, new digital banking products, and greater customer engagement all enable better service for underserved customer segments.
VISA handles on average around 2,000 transactions per second (tps) and peaks around 4,000 tps during high shopping periods. This is just a fraction of their capacity, which is said to be around 56,000 transactions per second.
Paypal, in contrast, handled around 10 millions transactions per day or 115 transactions per second according to data from late 2014.
Today, the Bitcoin network is restricted to a sustain rate of around 7 transactions per second or a little over 600,000 transactions per day.
REAL will disrupt global real estate investing by moving it on to the Ethereum blockchain and enabling the average investor to build a real estate portfolio.
Property owners and developers will apply to have their assets tokenized and listed on the REAL crowdfunding website. The REAL team – which is composed of successful entrepreneurs, venture capitalists, and developers who have already invested $350,000 of their own funds in the project – will carefully analyze the properties to select the ones that will provide investors with the greatest long-term value, with targeted annual returns of 12-20%.
The REAL token sale will begin on August 31, but investors contributing greater than 100 ETH will have the opportunity to participate in a 24-hour pre-sale on August 24. During the ICO, investors will be able to acquire tokens at the rate of 220 REAL per 1 ETH until the investment cap has been reached.
The Board of DirectMoney Limited (ASX: DM1), (“DirectMoney”, or the “Company”) are delighted to announce the completion of a wholesale funding agreement with 255 Finance.
The agreement is structured around the purchase of $50 million in DirectMoney originated loan assets, with the intent to increase this in the future. 255 Finance will also receive equity in DirectMoney and options that vest based upon specific hurdles being met. Significant growth in both lending volumes and the operational performance of DirectMoney is anticipated as a result of the facility.
One technical difficulty is the need for compatible payments systems across different entities. The ISO 20022 XML format is a standardized and popular format for payments among financial institutions. However, payments under the XML standard still need to be reformatted if the transaction goes through the United States’ Automated Clearing House network.
Regulatory requirements, which can include know-your-client checks and anti-money laundering, as well as risk and control, can mandate that a part of the process is completed manually.
Getting a small business loan is such an easy process nowadays if you have access to the Internet. In some cases, it’s just as effortless as shopping for a new pair of shoes on the Web. You can now go to a lender’s website, be approved, and get funded in a day, or even a […]
Getting a small business loan is such an easy process nowadays if you have access to the Internet. In some cases, it’s just as effortless as shopping for a new pair of shoes on the Web.
You can now go to a lender’s website, be approved, and get funded in a day, or even a few hours.
But then again, getting a small business loan or a business line of credit online is not the same as buying a new pair of sneakers or loafers.
Technology has made many things quicker and easier. But when it comes to business financing, applying and getting approved takes time and preparation.
Here are some tips based on my ten years in the fintech industry, including six years experience in evaluating and approving small business financing applications:
1. Know your funding needs
These are the three basic questions you need to answer before applying for a business loan:
Why do you need the money?
How much do you need?
What debt payments can you afford?
Whether you’re applying for financing through a bank or an online lender, knowing and understanding your funding needs is important. It can spell the difference between a business loan that would help your business grow and one that would weigh you down with unmanageable debt.
Let’s consider two restaurant owners with different business needs. The first needs to replace an oven that broke down while the second is looking to expand to a new location.
A new oven is a major expense, but the first restaurant owner makes a smart move by taking up a credit line with repayments that are well within their profit margins.
On the other hand, the second restaurant owner applies for a credit line with a high credit limit for a plan that was clearly over ambitious. To make payments on the credit line, the second restaurant owner’s new location would have to be up and running within two months. A very aggressive timeline.
It would also need to generate four times as much profit as their current location is making.
Most lenders will try to help you figure out if your plan makes sense. But you should have a clear and detailed sense of your business needs and finances even before applying for financing.
2. Know your legal standing
Having a clear idea of your legal standing as a business tells a would-be lender that you have a solid grasp of your business affairs. And this is fairly easy and quick to do.
For most business owners, it involves checking with the Secretary of State’s office in your area to see whether there are business liens or tax liens on you or your business. In most cases, you can do this online.
If there are liens that are not valid, you could take the necessary steps to have them removed.
In my career, I’ve encountered clients who were able to increase their credit lines by as much as $50,000 in under 48 hours just by removing a couple of old irrelevant liens from their business.
If your business is incorporated, this would also be a good opportunity to check if you are properly registered and in good standing with the Secretary of State. If your business isn’t incorporated, you should consider doing so before applying for financing.
Remember, lenders often view incorporated businesses as more stable and creditworthy.
3. Google yourself
Googling yourself is important for getting a business loan? Yep, that’s right.
Your online identity, including the information you have on your business website, and even the comments and complaints your customers post on review sites, could become critical factors in your quest for funding.
Many financing companies will check your company on the web as a way of gaining more insight into you and your business.
They’ll likely check your LinkedIn and other social media profiles. They’ll probably even read what customers say about your business on such sites as Yelp. Negative customer reviews could reflect poorly on your business. You could take steps to mitigate the impact of these reviews by responding to the comments.
It’s also smart to be aware of these comments and be prepared to explain the negative reviews in case they come up in the application process.
4. Check your credit
Your credit will, of course, be critical in your bid to get a loan or a business line of credit.
Most lenders will check your personal credit report in evaluating your loan application. While it is often overlooked, your business credit report is also important. It can have a big impact on your application, especially if your personal credit report isn’t stellar.
Checking your credit also gives you the opportunity to identify issues that you may be able to resolve easily, such as settling old debts or correcting false information.
5. Have your documents ready
If you’ve secured financing for your business in the past, you know a critical part of that process: you will be asked to provide documents. Sometimes lots of them.
This is also true with online business lenders. In fact, you may even be asked to provide additional documents as your application is being processed.
That’s why it’s important to make sure you have key documents ready and in digital form when you’re applying for a loan or a business line of credit. This would speed up the application process and prevent delays.
That was the experience of a consulting company in search of financing. The firm had just gone through a significant downturn, which could have led to the rejection of the company’s application. But the consulting company ended up being funded on the same day. The reason: the business owner had all the necessary documentation that painted a clear picture of the business. The documents showed that the downturn was the result of normal seasonality and that the business was about to bounce back.
Here’s a list of documents worth keeping handy when applying for a loan:
Recent bank statements (last 3 to 12 months)
Recent tax filings (1 to 3 years)
Updated balance sheet
Profit and loss report
6. Find the right lending partner
The quest for business financing is, in many ways, also a search for the right lender or financing partner. This is particularly important now that you have so many online financing options.
The right lender and credit line can build a business up, help them grow and achieve tremendous success. The wrong one could cripple a business with poor financing decisions.
What’s an ideal lending partner?
First off, the lender must have the type of financing you need. There are many choices, and picking a lender depends on what your business needs.
The ideal lender also must be transparent about how their products work and their financing terms, including interest rates and fees.
Written by Gil Rosenthal.
Gil Rosenthal is director of risk operations at BlueVine. A native of Israel, Gil comes from a family of small business owners who offer consulting services to other business owners. He has been in the FinTech industry for over a decade, including the past two years with BlueVine. He commutes to work 90 minutes in each way, but feels it is worth it since he’s helping small businesses create sustainable growth.
Nicki Minaj starting a charity to pay off student loans. GP:”The fact that non finance celebrities are doing PR in the student loan direction , especially with this kind of message, to me signal an image change about student loans. Thsi is not unlike the change in how banks were perceived past 2008. I would be concerned that student loan lenders may one day be seen in the same way as banks by the majority of the public if not worse.”
DBRS, Inc. (DBRS) has today reviewed and confirmed the four outstanding publicly rated classes from SoFi Professional Loan Program 2016-B LLC. All four classes were confirmed because performance trends are such that credit enhancement levels are sufficient to cover DBRS’s expected losses at their current respective rating levels.
Prosper priced its first unsecured consumer deal of 2017 on May 19th, representing the sixth deal consisting of Prosper collateral, and the first deal backed by Prosper’s consortium of institutional investors. The deal was structured by Credit Suisse and co-led by Jefferies.
The Consortium appears on track to deliver the $5 Bn loan purchasing commitment to Prosper as evidenced by i) size of the deal size ($470.8 Mn), ii) average age of the portfolio (two months), and speed to marketing th deal. The deal generates incremental revenue for Prosper which holds unrestricted cash and cash equivalents of $22.3 MM.
We note that Kroll has added 4.5% points for base case loss range reflecting the somewhat higher path of losses on CHAI 2016-PM1 than initially expected. (CHAI 2016 PM-1 has a revised base case loss range of 12 to 14% from 10.61% initially).
The deal’s excess spread is substantially tighter, reflecting higher coupons, improved market conditions, and stronger investor appetite for MPL ABS bonds. The attractive excess spread of ~10% implies a significant return for residual tranche investors assuming base case loss estimates are borne out.
Improved Predictive Risk Model PMI-7
Prosper made a significant change in the in the credit underwriting by switching from Experian to TransUnion, the dominant credit bureau in the FinTech sector. The switch to TransUnion affords Prosper access to trended bureau data, more diverse credit attributes, and alternative data. Trended data provides lenders with a longitudinal view rather than merely a snapshot into a borrower’s credit behavior.
Prosper rolled out a new proprietary credit risk model PMI-7 on December 20th based on the TransUnion dataset. Although the trended bureau data is a significant long-term enhancement, it will take some time for Prosper to re-calibrate models based on new performance data. Investors and Prosper will be monitoring the vintage performance from PMI-7 closely to assess the smoothness of the transition.
Bond investors in the deal benefit from credit enhancement consisting of over-collateralization, subordination, reserve accounts, and excess spread. For PMIT 2017-1, the A, B, and C tranche has a total credit enhancement of 43.9%, 31.1%, and 10.4%.
The Prosper deal priced tighter than a recent LendingClub prime deal ARCT 2017-1, in part due to the much higher initial credit enhancement in PMIT as compared to other recent deals.
We observe a parallel shift in the credit curve: For instance, PMIT 2017-1 A (A-rated) has about 44% credit enhancement and 0.8 year WAL; ARCT 2017-1 A (BBB-rated) has about 29% credit enhancement with a similar WAL. PMIT 2017-1 A was priced 95 basis points tighter than the senior class in ARCT 2017-A.
Walking down to lower junior tranches, PMIT 2017-1 C (B-rated) was priced about 40 basis points wider than ARCT 2017-1 B (BB- -rated). The steepening in the pricing curve again reflects demand for senior rather than equity-like risk profile.
We continue to observe a pattern of higher CNL triggers in recent deals, reflecting conservative outlook from market participants. Exhibit 4 shows several cumulative net loss (CNL) trigger profiles in recent personal loan ABS deals. Here, we summarize the cumulative loss trigger profiles from recent deals and contextualize the CNL triggers of the new Prosper deal with those of CHAI 2015-PM1.
After the rather spectacular fireworks display that Lending Club had going on this time last year, it was not great surprise when the bond buyers who had been snapping up P2P marketplace debt suddenly got a case of cold feet and starting fleeing those marketplace lending platforms.
Since April of this year, over $2 billion in securities backed by loans have either been sold or are being prepared for an imminent sale, according to credit-rating firms and people familiar with the matter.
That is some much needed good news for the segment, as it represents more than was issued in the entire second quarter of 2016, according to data tracker PeerIQ.
And it seems to be a continuation of recent activity that saw $3 billion in bonds backed by online loans that were issued in the first quarter of 2017, double the amount from the same period a year earlier.
Bonds backed by online loans is a small part of the securitization market — as of 2016, $7.8 billion of bonds backed by online loans were issued, compared with $191 billion in total issuance of asset-backed securities, according to S&P Global Ratings.
NewFed Mortgage Corp., a multi-state residential mortgage lender is excited to announce their “Fast Track Mortgage” loan origination technology integration with BeSmartee, an online mortgage automation company based in Huntington Beach, California. This smart technology platform utilizes intuitive artificial intelligence targeting the specific needs and qualification of borrowers.
Fast Track is an online self- serve platform offering mortgage shoppers the convenience of 24/7 access to obtain a personalized rate and cost quote with the option to continue to apply and obtain a conditional loan approval in less than 15 minutes. Fast Track streamlines the application process by allowing the borrower online to pull their own credit report, calculate costs, obtain loan disclosures on the spot and receive an automated loan approval and along with the option to order their home appraisal. The ease of Fast Track Technology allows borrower to send documents right through their specially created account.
Nuance Communications, Inc. (NASDAQ:NUAN) today took a major step towards reducing the risk of consumer fraud by announcing a new suite of biometric security solutions, driven by the latest in artificial intelligence (AI) innovations. The new Nuance Security Suite includes not only the company’s award-winning voice biometrics technology, but also new advances in facial and behavioral biometrics that combine to provide advanced protection against fraud, across customer service channels.
Applying deep neural networks (DNN) as well as advanced algorithms to detect synthetic speech attacks, and integrating facial and behavioral biometrics means the Nuance Security Suite takes fraud prevention to new levels. By combining a range of physical, behavioral, and digital characteristics to provide secure authentication and more accurately detect fraud across multiple channels – from the phone to the Web, mobile apps and more – Nuance’s new Security Suite allows enterprises to attack fraud head-on, while at the same time offering an improved customer experience.
With its latest Security Suite, Nuance can equip an organization with one or more of the following options to fight fraud, improve security and boost the customer experience:
Voice biometrics – authenticates the customer when they say a predetermined phrase like “My voice is my password,” or during the course of normal conversation with an agent to determine if the customer is indeed who they say they are.
Facial biometrics – utilizes the camera on a smart phone to verify the person in real time.
Behavioral biometrics – tracks how users interact with Web and mobile applications, (e.g. scrolling, mousing, or tapping), creating a pattern against which to compare.
Additional biometric modalities – In addition to offering support for voice, facial, and behavioral biometrics, the Nuance Security Suite can also accept plug-ins for other emerging authentication technologies such as retinal scans.
Interest rates on the rise and a lower inventory of homes on the market are tightening access to the housing market. At the same time, nonbank, online-only lenders have boomed, accounting for 73% of loans originated, according to the Federal Housing Authority.
This trend is likely to continue in the coming years. And members of the digital-native Millennial generation, who rely on online search to find home loans–and everything else–are taking over as the primary home-purchasing segment of the population–Millennials accounted for 84% of closed home loans in January 2017, according to the Ellie Mae Millennial Tracker™ report. In this environment, an effective organic local search strategy is no longer just beneficial for traditional mortgage lenders; it’s existential.
Of 5,849 loan officers whose online presence Yext studied across the online ecosystem (including sites like Google, Facebook, Bing, Yelp, and many others), 64% of their business listings contained incorrect addresses, 42% had phone number errors, and 46% had errors in business names. 9.25% of loan officer listings were duplicates, and 57.8% of loan officers studied had no online presence at all.
The Consumer Financial Protection Bureau today launched an inquiry into ways to gather and use new and existing information to identify the financing needs of small businesses, especially those owned by women and minorities. Small businesses typically need access to credit to take advantage of growth opportunities, yet public information on this lending market is inconsistent and incomplete. The Request for Information asks for public feedback to help the Bureau better understand how to bridge this information gap. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the CFPB to collect data about small business lending to help identify needs and opportunities in the market and to facilitate enforcement of fair lending laws.
500 Startups has filed a Form D 506(c) for a pooled investment fund targeting Fintech. The 500 Fintech LP is seeking $25 million according to a filing with the Securities and Exchange Commission.
The Silicon Valley based operation has committed over $350 million in early stage investments. Over 1,800 companies have benefited from both funding and support around the world since the global seed fund was launched in 2010. Some of the better known investments include Twilio, Credit Karma, Maker Bot and more.
PIGEON FORGE — Tennessee State Bank is excited to announce online consumer lending, powered by Lending Club, the world’s largest online credit marketplace, is now available.
These loans range from $1,000 to $40,000, are unsecured (which means no collateral is required), and can be used to eliminate high interest debt, kick-off a home improvement project, or make a major purchase.
Not subscribing to a consortium like R3 is not the same as banks not leveraging blockchain/DL. Here is a link to an excerpt from a report we did on a bankers perspective (former head of digital banking at Deutsche Bank) on blockchain which may provide some insights:
The mutual bank, with $1.6 billion in assets, has announced an investment partnership with Boston’s Numerated Growth Technologies Inc., a fintech (the term ascribed to programs and technology that support financial services) startup spun out of Boston-based mutual Eastern Bank own in-house fintech accelerator, Eastern Labs.
Numerated’s platform focuses on small-dollar loans, allowing the loan process to be managed in real-time — reportedly conducting the process in as quick as five minutes, according to the firm — in addition to automating marketing to existing and prospective bank customers, which helps feed the loan pipeline as fewer consumers visit brick-and-mortar bank branches.
Last weekend, hip-hop living legend Nicki Minaj made waveswhen she decided ― seemingly spontaneously ― to start making tuition and student payments for straight-A students who reached out to her via Twitter.
Most notably, Minaj announced that she was in the process of launching an “official charity for Student Loans/Tuition Payments,” meaning kids who are having trouble paying their way through school could soon get some much-needed help.
One of HSBC’s most senior technology executives says that the big bank is not far behind digital-only challenger banks when it comes to consumers offerings.
Raman Bhatia, HSBC’s head of digital for retail banking and wealth management in the UK and Europe, told Business Insider that while startups enjoy a technological advantage, HSBC is working hard to catch up.
Bhatia pointed to HSBC’s SmartSave app as an example of how the bank is keeping pace with digital rivals. The app helps people automatically put money into savings based on pre-set rules. It evolved from Nudge, an internally developed and trialled savings app HSBC worked on last year. SmartSave was trialled with around 2,000 HSBC customers in December.
Deloitte today announced the launch of its enhanced Digital Bank offering to further accelerate a bank’s digital transformation. Based on the Salesforce Intelligent Customer Success Platform and utilizing the Salesforce Financial Services Cloud, Digital Bank helps banks create exceptional experiences by providing tailored banking capabilities with accelerated implementation and realization of value.
Digital Bank’s capabilities and potential benefits include:
Augmented Salesforce Platform with many technologies, fintech solutions and AppExchange partners, as well as personalized channel engagement through automated marketing using Salesforce Marketing Cloud
Ability to expand relationships by having full visibility into bank relationships across business units
Established customer trust through multifactor secured cloud banking platforms and improved onboarding for customers through a fully mobile process enabled by many technologies
Increased speed and agility to meet customer needs, as well as the regulatory needs of the banking industry, using predictive analytics based on account behavior to recommend next best offers and next best actions
Accelerated implementation allowing banks to generate ROI faster, including linking newly created accounts in Salesforce to a blockchain secured digital identity
It got me thinking about the broader impact of fintech lenders in the UK, especially those built to fund businesses. Companies like Funding Circle – the country’s largest marketplace lender for SMEs – regularly reference their impact on job creation in corporate updates. The logic is that the loans that Funding Circle and other platforms like it facilitate help small businesses to grow, and so too to hire more staff.
Leading US firm OnDeck released a report in late 2015 analysing the economic impact of the first $3bn lent through the platform. The report found that OnDeck loans had powered $11bn in business activity, creating 74,000 jobs across the country. Similarly, Funding Circle published findings last summer suggesting that its lending had supported the creation of 40,000 jobs in the UK since 2010, boosting the economy by £2.7bn.
In this way, they are unquestionably killing jobs, as well as creating them – but nobody ever talks about that.
Barely a month goes by without news of a fresh round of bank branch closures. In March, for example, we learnt that RBS and NatWest would be cutting 158 branches and 400 jobs across the country.
As a result, Improbable has become one of the few UK start-ups to achieve the so-called ‘unicorn’ status, namely having a valuation of over $1bn.
Since then, their numbers have grown to nearly 200 firms globally and that are collectively valued at £523bn. The most valuable is Uber, the online taxi company that, in only four years, has reached a valuation of over £50bn.
A recent article in Forbes Magazine suggested that investors, with few places to put their money during an era of near zero interest rates, are fuelling the growth in unicorns as they look for better returns.
According to research from peer-to-peer lending platform Kuflink, conducted in the first week of May, nearly a third of UK investors are planning to direct their attention to traditional asset classes such as property over the course of the financial year.
This comes after some of the largest property funds in the UK temporarily stopped investors from cashing-in their money last summer when thousands of people panicked after the European Union referendum and pulled out of the asset class.
The Kuflink survey, which questioned 1,100 investors across the UK, also found that Brexit and the snap election have impacted UK investment decisions more than any other political event in their lifetime.
Almost 40 per cent of investors are taking a more cautious approach by favouring ‘safe-haven’ asset classes, while 38 per cent are waiting until after the 8 June election to make any further investment decisions.
On May 12, the State Council Information Office of China announced that China has reached a series of agreements with U.S. related to agriculture, investment, energy and especially in financial service area.
Key points of the Initial Agreements of the China – US Economic Cooperation 100-Day Plan in financial service area:
By July 16, 2017, China is to allow wholly foreign-owned financial services firms to provide credit rating services in China, and to begin the licensing process for credit investigation.
The People’s Bank of China and The U.S. Commodity Futures Trading Commission (CFTC) are to work towards a Memorandum of Understanding (MOU) concerning the cooperation and the exchange of information related to the oversight of cross-border clearing organizations.
By July 16, 2017, China is to issue further necessary guidelines and allow wholly U.S.-owned suppliers of electronic payment services (EPS) to begin the licensing process.
The hotly anticipated initial public offering of Alibaba’s finance arm, Ant Financial, has reportedly been delayed until at least the end of 2018 because of the need to secure regulatory approval and to focus on building the business.
E-commerce giant Alibaba Group and affiliated online payment service Alipay are aiming to use facial recognition technology to help retirees simplify pension authentication. Shenzhen is chosen to be the first pilot city.
The Peoples Bank of China (PBOC), the country’s central bank, announced that it has set up a Fintech committee to enhance research, planning and coordination of work on financial technology.
Happigo Home Shopping Co. Ltd., a leading Chinese multichannel e-retailer, announced that the company had the local government approval to build a small loan company.
The new micro-credit company will be named “Happy Tongbao”, which has about RMB 300 million in registered capital. It will focus on online micro-credit and expects to start its business in Hunan Province, lending to merchants in desperate need of a loan, then gradually expand to the entire Chinese market. Entrusted loans, bill business, financial advisory and other online business models is said to be covered in its future development.
To reduce lending risks, Happigo said it had developed a cloud system for tracking merchants on its online shopping platform to help it keep a record of the business of would-be borrowers’ cash flow.
IFRM: A Risk Control Model keeping No Bad Debt! (Xing Ping She Email), Rated: A
IFRM ( Internal Financal Risk Management) is a unique method created by Xeenho, focusing on the operation modes of platforms. In the IFRM Solution, the risks of P2P lenders are evaluated through three indicators: FOW (qualitative indication system), TOS (quantitative indication system) ,O2O Due Diligence, and Big Data Supervision. By using the model, Xeenho has been keeping the Zero Bad Debt since 2014 with a business volume up to $400M.
FOW ——qualitative indication system
FOW means Forbidden, Observation and Warning. FOW detects and prevents P2P fraud, if a platform is categorized as Forbidden, Observation or Warning then it won’t proceed to the next step.
TOS ——quantitative indication system
TOS means Transparency, Operation and Safety. TOS thoroughly evaluates a platform, from its basic information to its UX, and the risk is ranked thereafter.
O2O ——due diligence from online to offline
O2O means making due diligence from online to offline, in order to ensure a platform that passed FOW and TOS is as good as it seemed to be.
Big Data——Analytics & Observation System
This dynamic surveillance system continuously over watches the performance of a platform, and adjusts the rating accordingly.
Twino, one of the leading Baltic lending marketplace, has produced in conjunction with KPMG Baltics a report called Alternative Lending Index which assesses the potential of alternative finance in 23 European countries based on a set of economic credit data. While the report does not pretend to exhaust the analysis of the drivers and hurdles of alternative finance across Europe, it presents a very useful snapshot of the Pan-European credit landscape that should help support international strategies.
The first platform to tackle cross-border lending was Estonian pioneer Bondora in 2009. Since then, and particularly in the past two years, international lending marketplaces have mushroomed in the Baltics. There are now more than a dozen of them, with a strong dominance of consumer lending platforms. Leaders such as Mintos and Twino have long passed the €100 million mark in cumulated loan funding. They currently grow at a rate of between €10 to €20 million worth of new loans funded a month. If you operate a lending marketplace in the UK, France or Germany you should know these platforms because they are targeting your smartest investors:
Together, these platforms have funded over €500 million in cumulated loan volume – which would make the Baltics, if it were a single country, the 4th largest online alternative lending market in Europe after the UK, France, and Germany.
Together, these platforms have funded over €500 million in cumulated loan volume – which would make the Baltics, if it were a single country, the 4th largest online alternative lending market in Europe after the UK, France, and Germany.
The ALI ranks 23 European countries. It concludes that countries with the highest gaps and inefficiencies in traditional lending, hence the highest potential for alternative lending in Europe are, in that order:
Hungary, Slovenia, Latvia, Poland, Romania, Greece and Ireland.
Conversely, the countries where the existing sources of financing available to households and corporate borrowers are sufficient and the potential for the development of alternative lending is therefore considered low, leaving little room for alternative lenders are:
France, Germany, Netherlands, Austria, Finland and Sweden.
The European Union’s financial services chief said on Friday he will ask the bloc’s banking watchdog to rethink its proposed ban on “screen scraping” or financial technology firms directly accessing bank accounts.
It marks a reprieve for fintech firms trying to wrestle market share from long established banks in the fast growing payments and apps sector.
The US has just celebrated the first anniversary of its regulated crowdfunding regime, known as “Regulation Crowdfunding”. It was by all accounts a very happy anniversary for many US start-ups, as Regulation Crowdfunding reportedly raised $40 million in its first year. US advisory and education firm, Crowdfund Capital Advisors report that the average successful crowdfunding campaign raised around $282,000 from around 312 investors. Regulation Crowdfunding allows companies to raise up to $1,070,000 over a 12-month period.
An unregulated environment brings with it its own set of benefits and drawbacks:
On the positive side, the absence of a regulatory framework means there are no restrictions on who can invest, or on the amounts that can be raised or invested. In contrast, the Regulation Crowdfunding regime in the US has strict limits on the amount which a person may invest through crowdfunding each year. These limits are determined by an individual’s annual income and net worth.
On the negative side, the lack of regulation means that many investor-protection mechanisms are simply not available. For example, the Central Bank’s codes of conduct and client asset rules do not apply to crowdfunding platforms.
The Department of Finance (the “Department”) and the SME State Bodies Group have issued a public consultation paper on the possible ‘Regulation of Crowdfunding in Ireland’. They are considering how to facilitate the development of crowdfunding in Ireland for the benefit of the economy while also ensuring adequate protection for small investors and consumers.
The objective of this consultation is to invite the views of interested parties on whether a regulatory regime would be appropriate for the crowdfunding sector.
How do we get money to small businesses that make the economy work for most people around the world? What kind of systems do we need to create? And how do we make them flexible so multiple cultures can utilize them?
Before online lending, long before Credit Karma, and way before machine learning powered by cloud-based applications, if a person or business needed to clean up their credit in order to apply for and be approved for a loan, perhaps even getting a loan on better terms, they had to write letters to each credit bureau […]
Before online lending, long before Credit Karma, and way before machine learning powered by cloud-based applications, if a person or business needed to clean up their credit in order to apply for and be approved for a loan, perhaps even getting a loan on better terms, they had to write letters to each credit bureau where bad actions were recorded and ask to have those actions removed. That may have also entailed working out a payment plan with creditors who reported those actions in order to get in their good graces. Levi King understands that process well.
He also understands the challenges of being a small business owner. Having owned a hotel, a management company, a retail financial services company, and several franchises–all before co-founding Lendio and Nav–he’s seen countless small business owners with low credit problems.
“I’ve applied for financing about 30 different times,” he said, “and learned the hard way how it all works.”
King and Caton Hanson, a lawyer specializing in business credit, opened the doors to Nav in 2012. The lifelong friends saw a need for small business owners to manage their business credit and streamline access to financing. They each contributed half a million dollars out of pocket and raised another $40 million from venture capitalists. Last August, Experian, one of the tree major credit bureaus in the U.S., put in another $15 million. Tencent Holdings and Kleiner Perkins are both notable investors.
The Platform That Monitors Small Business Credit
Nav.com and its mobile app provide tools integrating and improving credit data so owners can get reporting, dispute errors, set goals, and keep track of where they are in relation to those goals.
“We start with where lenders say the credit box is,” King said. “We use machine learning and a match factor to unveil what’s keeping you from getting approved so you can work on that.”
The direct integration with various credit bureaus and customized alerts let small business owners see something wrong and act immediately by clicking to dispute those actions. The app redirects to the credit bureau websites where errors can be disputed online.
“We can predict errors, and the bureaus agree most of the time,” King said. “We like to measure engagement. How often do users log in? Is data improving? We’ve seen gains in both of those, and in credit approval. We’d like to remove the friction of applying for loans by getting people approved before they ever apply.”
Customer numbers have gone from 5,000 to 200,000 in two years as small business owners discover this alternative to dealing with each bureau separately. Unlike Credit Karma, they serve only the small business market. Nav hopes to continue adding data so customers can see information that lenders can use against them or that would help in making financial decisions. Their core product–business credit report scores–is free. For less than $30/month, users can get an additional dataset or credit check.
King said Nav hopes to incorporate PayPal and other data to the platform so that customers can focus on removing the friction of applying for loans and get approved before they ever apply.
Nav is bringing transparency to credit for the small business owner and solving the credit dilemma.
News Comments Today’s main news: BlueVine secures $75M financing from Fortress. FCA tells P2P lenders to stop lending to each other. Australian FinTech investments hit $656M in 2016. Today’s main analysis: U.S. small business credit outlook. Today’s thought-provoking articles: The rise of the cross-country landlord. Australian FinTech investments hit $656M in 2016. Trends that can put Indian crowdfunding […]
Silver Lake’s SoFi deal shows appeal of upscale online lending. AT: “Some people might say the rise of the institutional investor in marketplace lending has killed the concept. Others might say it’s a natural evolution, or even that it should be that way. I think it’s a good thing with some drawbacks. Institutional lenders bring big money to the platforms, but it also often means they are first in line for the cup of ice cream. Still, the big money allows platforms like SoFi to expand faster and reach more of the mass market. That’s assuming they want to stick with the mass market.”
Lending Club, OnDeck. GP:” I disagree that 4Q16 was dismal for Lending Club. On the contrary I believe they showed the banks are back as investors and the company stabilized. The LC stock was only hurt by OnDeck’s underwriting issues.” AT: “There are upsides and downsides to everything.”
Ghostbed offers Klarna financing option. AT: “I can see a day when Klarna will be a household name. More and more U.S. companies are starting to use the service. It could give rise to a true Amazon competitor, or it could become that competitor.”
Private equity firm Silver Lake and Japanese asset manager SoftBank Group were part of a group that this month agreed to invest $500 million in Social Finance, or SoFi, an online lender that started as a refinancer for student loans and is rapidly morphing into a private bank for Silicon Valley’s newest recruits. The latest round of funding created a $4 billion valuation for the company, according to the Wall Street Journal.
SoFi’s model diverges from other online lenders in a few significant ways. Rather than ignoring traditional financing structures entirely, SoFi melds them with technology to create a high-tech private bank for borrowers with Silicon Valley sensibilities and high salaries. Borrowers who work with SoFi to refinance student debt are offered career counseling, mortgages, and wealth management services as a way to keep them with the company.
“SoFi&’s issuance in 2016 had an average FICO of 777, so that tends to equate to good performance,” said Roelof Slump, a New York-based managing director at Fitch.
It’s no surprise then, that high-profile private equity names are lining up as investors. But it’s also different from the egalitarian hymnal that fintech largely sings from.
Mass market lending platforms tend to bring in borrowers through a somewhat generalist approach: They rely on direct mail, web site ads, and other forms of advertising to get applicants. SoFi, by contrast, is crafting a proprietary deal flow network from its affluent user base.
A dismal fourth quarter at Lending Club (LC) and On Deck Capital (ONDK) highlights the risks for publicly traded companies that make high-interest loans to riskier borrowers.
Regulatory scrutiny, delinquent customers and investor satisfaction pose conflicting challenges for such companies, which are part of the so-called fintech industry that encompasses more than 4,000 firms in the U.S. and the U.K. Investment in such businesses has climbed to $24 billion from $1.8 billion over the past five years, according to the Office of the Comptroller of the Currency, a U.S. regulator.
While Laplanche’s successor is leading a recovery effort that includes stricter internal controls, Lending Club’s loan originations dropped 23% to $1.99 billion during the fourth quarter. The company reported an adjusted loss of 2 cents a share for the period, its third straight quarterly loss.
As investors return to Lending Club’s platform, many want “higher credit quality grades” and are shifting away from the riskier grades that typically have higher margins.
On Deck, meanwhile, reported its fifth consecutive quarterly loss, of an adjusted 44 cents a share, after the firm added additional reserves for potential loan losses of $19 million. That brought total reserves to $55.7 million, up 53%, the company said.
Still, fourth-quarter loan originations climbed 21% year-over-year to $81.8 million.
Both San Fransisco-based Lending Club and New York-based On Deck had initial public offerings in 2014. Lending Club’s shares fell 4.3% to $5.34 on Tuesday, while On Deck dropped 7.3% to $5.34.
U.S. Small Business Credit Outlook (PayNet Email), Rated: AAA
While the mood among the nation’s entrepreneurs has generally brightened since the November election, many uncertainties remain about what lies behind the next door in the form of policies. Our impression is that, before small businesses celebrate, they want to see the substance and the fine print on initiatives such as tax reform, infrastructure spending, foreign trade and government regulation.
Our latest data confirms this uncertainty. A combination of slightly rising delinquencies, developments in higher-risk sectors, and a more robust macro-economic climate suggest that small-business defaults are set to rise from the all-time lows posted in 2015-16. The good news is that we expect defaults to remain within the range associated with the expansionary phase of the business cycle.
Download a copy today of the most recent quarterly
Klarna ( www.klarna.com ), one of the world’s most innovative payment providers, is partnering with GhostBed ( www.ghostbed.com ), a leading online mattress e-tailer, to provide an instant financing solution for GhostBed customers.
Made in America and purchased via the website, GhostBed prices are among the most competitive in the mattress in a box space, starting at $495 . The full product line features complimentary items that complete the sleep experience, including an all-wood foundation and the popular real-time cooling GhostPillow.
At checkout, GhostBed customers now have additional options which have been seamlessly integrated into the e-tailer’s checkout system. In addition to using a credit or debit card, they can choose from two Klarna financing options—planned payments over six to 36 month periods with a special promotional rate, or flexible month-to-month payments.
Marcus by Goldman Sachs is slated to be a formidable opponent to major online marketplace lenders for a variety of reasons. First and foremost, Marcus loans are funded out of the coffers of Goldman Sachs’ reserves; as a bank, the firm has a substantial amount held in deposit accounts from its customers which it will use to fund its new personal loan offerings. The majority of marketplace lenders currently available to consumers fund loans through the crowd – outside investors who use personal money to fund individual loan requests. Since Marcus loans are funded through Goldman’s deposit accounts, individual borrowers have a great chance of being approved for a loan so long as other underwriting criteria, like credit score and income, are met.
Another differentiating factor of Marcus loans is the fee structure for borrowers. Unlike alternative lenders, Marcus loans tout no hidden or glaring charges for origination or funding, late payments, or prepayment of a loan. A number of marketplace lenders assess fees for each of these activities, making the total cost of borrowing more involved than the cost of interest alone. Marcus loans also allow for tailored due dates and, like most other personal loan solutions, a fixed repayment amount due each month.
Next week, more than 5,000 attendees, 350 thought leaders and more than 2,400 companies will participate in the fourth annual NYC conference.
Jones: Our strength is in our community, and the education. We are operators in our industry and we do what we can to help our community network and learn.
The first year the focus was online lending, the second year we added real estate, the third year digital wealth, and this year we now have tracks focused on insurtech, financial inclusion and banking technology.
Jones: Payments is the area we need to grow in the most, but in the future we will add speakers from payments companies and develop specific tracks into the program.
Jones: We don’t have Hackathons at LendIt, but we have a great startup competition: PitchIt, which we co-host with 500 Startups. This year we had 260 companies apply. Out of the 260 applications, we will choose eight startup finalists that will pitch themselves on stage at the conference to a team of investor judges.
Jones: Personal Financial Management + Messaging is a killer combination. We like the customer engagement on the front end combined with distribution on the back end – it is the Trojan horse of financial services.
Blockchain smart contracts used in the enterprise for things like trade finance and marketplaces will be a game changer. This will be a big area of focus at LendIt this year.
Our conference this year is going to be dominated by artificial intelligence. Computing is extending beyond the desktop and natural language processing is finally taking center stage.
Jones: In the past, real estate was the least attended – this year it’s totally going to flip. Companies like Point, Unison, Opendoor, Offerpad,and Knock are rethinking home ownership financing in new ways.
Jones: We have many early stage companies at LendIt including a startup competition. Axoni in the blockchain space is rebuilding credit derivatives and T0 (Overstock spinout) is actively launching new capital markets products on the blockchain. Knock is a new online real estate startup that will sell your home in within 6 weeks. AutoFi and AutoGravity are creating a new software layer in car financing. Juvo is focused on financial wellness and financial inclusion through mobile operators.
Jones: The future of traditional banking is about knowing your client in new ways and finding ways to de-risk those clients. Education, community, and communication are not commonly associated with banking, but expect these trends to play an increasingly important role in the future of banking.
Financial technology (or “fintech”) has become an extremely trendy industry for startupsbecause of its high growth potential and opportunity for nearly endless disruptive innovation. In fact, these scrappy companies have the potential to take away $4.7 worth of revenue from traditional financial services, according to Goldman Sachs.
Stripe recently raised $150 million in November of 2016 in a deal co-led by General Catalyst Partners and CapitalG, which valued the startup at $9.2 billion. This almost double the $5 billion valuation it had achieved in 2015.
YapStone, founded in 1999, has focused on providing end-to-end payment solutions to multi-billion dollar sharing economy marketplaces and vertical markets, such apartment and vacation rentals.
Adyen is a technology company based in Amsterdam that provides businesses with a single solution to accept payments anywhere in the world. Adyen serves more than 4,500 businesses including Facebook, Uber, Airbnb, Netflix, L’Oreal, Spotify, Dropbox, Evernote, Booking.com, Vodafone, Mango, Crocs, O’Neill, SoundCloud, KLM, and JustFab.
5. Lending Club
Lending Club has gone from birth to IPO while arranging $7.6 billion in financing, and now lending to small businesses. Lending Club stated that $15.98 billion in loans had been originated through its platform in 2015.
With student loan debt being a real issue, Commonbond is a marketplace lender that lowers the cost of student loans for borrowers and provides financial returns to investors. The company refinances graduate and undergraduate student loans for graduates, saving the average borrower over $14,000 over the life of the loan.
In 2016, Kabbage raised $135 million, giving it a valuation of $1 billion. In 2016, Kabbage was named to CNBC’s annual Disruptor 50 List and was named to the Inc. 500 list for the second year in a row.
The company started 2013 with $97 million in assets under management and grew by 450% in one year. As of December 2016, Wealthfront had more than $4 billion of assets under management. The company has a valuation of $700 million.
The firm’s lending algorithms ignore strict credit scores used by banks in favor of practical indicators of ability to pay. As of 2016, SoFi has funded more than $12 billion in total loan volume and has 175,000 members. The company now plans to compete directly with traditional banks.
BlueVine, the leading provider of online working capital financing to small and medium-sized businesses, announced today that it has secured a warehouse credit line of up to $75 million from Fortress Credit Corp. and/or funds managed by affiliates of Fortress Investment Group LLC.
The financing will allow BlueVine to expand its fast-growing line of credit financing solution called Flex Credit and enhance the FinTech pioneer’s ability to help business owners meet their working capital needs.
Founded in 2013, BlueVine offers business owners convenient access to capital for their everyday funding needs through a sophisticated online financing platform.
BlueVine expanded its reach last year with the introduction of Flex Credit, an on-demand revolving business credit line of up to $100,000. Flex Credit has become an exceptionally popular BlueVine financing option and is expected to grow more than four times in 2017.
BlueVine is best known as the pioneer of online invoice factoring, which allows businesses to turn their unpaid invoices into working capital. BlueVine offers a factoring credit line of $20,000 to $2 million and is the only company providing a completely online, cloud-based invoice factoring service.
Microsoft, JPMorgan Chase and other corporate giants are joining forces to create a new kind of computing system based on the virtual currency network Ethereum.
The new organization, a nonprofit, is part of a broader movement to harness the technological concept known as the blockchain, which was introduced to the world by Bitcoin.
Accenture released a report last month arguing that blockchain technology could save the 10 largest banks $8 billion to $12 billion a year in infrastructure costs — or 30 percent of their total costs in that area. Accenture is one of 11 companies on the governing board of the Ethereum alliance.
The current Ethereum network has an internal virtual currency known as Ether, the value of which has risen and fallen over the last two years. On Monday, a single Ether was worth around $15, and all the outstanding Ether were worth around $1.3 billion.
Ethereum, however, is much more than just a system for tracking currency. It also allows people to write what are known as smart contracts into the Ethereum blockchain. Two companies could, for instance, create a contract that would automatically send money to one of them if a particular news authority reported that the Chicago Cubs won the World Series or that “La La Land” won the Oscar for best picture. (As the latter example shows, what would happen if the authority was wrong is a more difficult question.)
The companies working on the Enterprise Ethereum Alliance want to create a private version of Ethereum that can be rolled out for specific purposes and be open only to certified participants. Banks could create one blockchain for themselves, and shipping companies could create another for their own purposes.
The future of financial planning — including investing for Millennials and digital financial advice — will be some highlight topics addressed by leaders in the industry at the third annual LIFT2 Symposium hosted by Wright State University.
LIFT2 (Leading Innovation in Finance Today and Tomorrow) will be held Friday, March 24, in the Student Union from 8 a.m. to 6 p.m.
It is expected to attract hundreds of financial planning professionals from as far away as Columbus, Cincinnati and Indianapolis.
The City watchdog has written to chief executives of peer-to-peer loan companies to warn them against lending to other lenders.
In the latest sign of the growing complexity of the sector, the Financial Conduct Authority said businesses borrowing money and lending it out must have permission to “accept deposits” — which is a feature of the banking sector.
The letter on Tuesday will fuel further debate about what P2P lenders should be allowed to do without seeking full banking permissions. The FCA recently signalled plans to impose tougher rules on the sector, warning that it was “testing the boundaries” of what crowdfunding regulations allowed.
In its letter to chief executives on Tuesday, the FCA’s director of supervision Jonathan Davidson told lenders that any company borrowing and lending onwards without correct regulatory permission may be committing a criminal offence.
RateSetter, one of the three largest UK P2P lenders, has engaged in the practice of lending to lenders — known as wholesale lending — since 2013.
RateSetter said it stopped writing wholesale loans in mid-December, shortly before being asked to do so by the FCA.
The South East continues to offer eye-catching returns for property investors, as revealed by this month’s LendInvest Buy-to-Let Index.
Only one postcode from outside the South East – Northampton – managed to sneak into the top 10, but it could not compete with the likes of Romford, Luton and Dartford that dominate the top of the table.
In contrast, Liverpool still represents a great option. As the index reveals, it enjoys one of the highest rental yields in the country at 5.5%. Even with the harsher stress tests employed by buy-to-let lenders as a result of the new rules, securing a 75% mortgage is relatively straightforward.
For some time now, we have suggested that the UK is likely to see a growth in the ‘cross-country landlord’ – those who own investment properties across the UK, in some cases a significant distance from where they themselves are based. The new lay of the land in the buy-to-let world is only likely to encourage more investors to adopt that cross-country approach.
Even if Said So has more in common with traditional advice services than it has with fully automated robo-advice, there is more to it than creating a website and expecting clients to flock there.
Interestingly, more people in the 55-64 age bracket (16 per cent) are using the site than those aged 18-24 (11.7 per cent). The remaining 10.5 per cent of users are 65 and over.
Said So is working hard to build trust in online advice and ensuring people do not confuse its services with algorithm-based ones. The security of data is another important issue that has been addressed.
Last year, Said So launched a wealth dashbord app, which has been shortlisted in the Surrey Digital Awards 2017. The app is a projection tool, allowing people to input a range of factors to get an idea of how much money they will have in the future; for example, when they retire.
France Fintech, the French Fintech association, announced it is set to host its second annual Fintech Revolution on March 28th. The event will be held at the la Gaîté Lyrique in Paris and will reportedly have over 1,000 participants.
Investment in Australian fintech reached a record $656 million in 2016, more than triple the $185 million invested in 2015, according to a report by professional services firm KPMG.
This equates to an annual average growth rate of around 90 percent over the four years leading to 2016.
The growth was driven by large mergers and acquisitions, and venture capital transactions, including CHAMP Private Equity’s acquisition of Pepperstone, Stirling Products’ acquisition of Mx360 Group, and large funding rounds from Tyro and Prospa, according to KPMG’s The Pulse of Fintechreport.
The report shows venture capital investment in fintech reached $71 million in 2016, a substantial drop from 2015’s $175 million total, though on a similar level to 2014’s $88 million total.
However, this growth rate cannot yet be applied to the Indian crowdfunding scene. By simply adding the funds raised by various crowdfunding platforms, it will be fair to estimate that the Indian crowdfunding industry stands at approximately Rs 300 crore. Considering that it is just a miniscule part of the global value, this leaves the crowdfunding industry in India with enormous space before it hits a plateau in its growth curve.
We have shortlisted three trends which have been game-changers for the crowdfunding industry in countries such as the US and UK. These trends can help India inch closer towards having a significant presence in the global crowdfunding scenario.
There is no shortage of crowdfunding platforms in India, and their success has shown us that we do not lack motivated funders to support innovators. However, India still has miles to go in order to match up to the scale of innovation taking place in a country like the US.
Globally, the P2P lending model holds the highest share of the $34 billion pie. with $25 billion. Recent statistics value this model at Rs 20 crore, with leading platform Faircent.com lending about Rs 1.25 crore every month.
However, in India, it still remains unregulated by the RBI, restricting it from reaching a larger audience. There are guidelines which have been proposed by the premier banking body last year to regulate P2P lending. Regulation of this model will make it a lot more credible, resulting in a massive boost in its acceptance amongst a wider consumer base.
Patreon has been the flag bearer for this model globally, raising over $50 million for the creators. In India, award-winning singer-songwriter and composer Suraj Mani adopted this model last year, providing subscribers with exclusive access to the recording of performances by indie artists at his venue OO Heaven.