Tuesday February 27 2018, Daily News Digest

LendingClub

News Comments Today’s main news: SoFi’s new CEO wants to get the company ready to go public. Revolut’s transaction volumes increased 700%. China to crackdown on non-bank lending. Blender raises $16M. Today’s main analysis: Stay away from LendingClub’s notes and shares. Today’s thought-provoking articles: Legacy banks, digital startups see opportunity to go beyond storing money. LendingBlock aims to mainstream […]

LendingClub

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United States

Anthony Noto’s Mission as SoFi CEO: Get the Startup Ready to Go Public (Bloomberg), Rated: AAA

Anthony Noto, the new chief executive officer of Social Finance Inc., is looking to steer the company out of crisis and get it in shape for a potential initial public offering.

The vision for SoFi outlined by Noto didn’t stray far from the one set by his predecessor Mike Cagney, who was ousted after accusations of sexual misconduct inside the company. Noto wants to create a broad online financial-service company, adding checking and savings accounts and wealth management to the main business of refinancing student loans.

SoFi’s new CEO says bank charter remains an option (American Banker), Rated: A

In an interview during his first day on the job, Anthony Noto did not promise any big course changes, though he did leave open the possibility that SoFi will revive its quest to get a banking license.

LendingClub’s Underwriting: Stay Away From The Notes And The Shares (Seeking Alpha), Rated: AAA

I bought my first batch of $25 notes on April 22, 2016. Now, it is important to note that LendingClub is very clear in its advertising that “99% of portfolios with 100+ Notes have seen positive returns.” So I suppose I added a level of risk by not having a portfolio worth at least $2500. But even still, returns can be .1% annualized and count as ‘positive’, but that is not an acceptable return by anyone’s standards given the risks involved in lending to strangers.

My Portfolio

To date, I have received $436 in payments, $96 of which is interest. I have lost $100 on notes that have charged-off, meaning that there is zero expectation of future payment and LendingClub collectors have stopped attempting to reach the borrower. I also have a note that is late, and based on how things have gone so far, I fully expect that to charge-off too and will lose the $11.50 still owed. In short, I have already lost almost 20% of my initial investment, crossing my fingers that none of the 14 notes I still have that are current don’t enter a late status with more than a year to go before the oldest reaches full term. My results have been dismal.

Source: Seeking Alpha

LendingClub’s ratings are A-G, with A being the safest. As you can see, the vast majority of my portfolio sits in A-C, with one E and one G note (LendingClub did away with F and G notes last year).

Source: Seeking Alpha

Legacy Banks and Digital Startups See a Big Opportunity to Move Beyond Simply Storing Money (AdWeek), Rated: AAA

Change can be hard for the financial industry, which is dominated by decades of processes and internal systems. But with a slew of upstarts making their way into the trillion-dollar industry, the old guard is finding innovative ways to beat these challenger brands at their own game.

“A lot of these companies have what we call ‘technical debt’—very expensive mainframe systems that are very difficult to change, run [and are] expensive and obviously that limits their ability to innovate,” said Oliwia Berdak, principal analyst at Forrester Research. “The biggest challenge is often culture … In banks the attitude has always been to perfect [products] before it’s unleashed on customers and [technology] is a big change where you’re working with a certain degree of uncertainty and risk.”

According to data collected by Accenture, 90 percent of banking executives said that their companies needed to “innovate at an increasingly rapid pace just to remain competitive,” but only 47.8 percent say that they are actually “investing comprehensively” in digital.

Another challenge: For all the talk about slick mobile banking apps and services, consumers—gasp—still like going to physical banks to manage financial decisions. Eighty-seven percent of customers enjoy going to a physical bank and prefer to interact with a human while there, per Accenture.

Source: AdWeek

Retail Banks Are Missing Opportunities to Give Digital Financial Advice (Wealth Management), Rated: A

Most customers who received face-to-face financial advice from their retail bank felt their needs were completely met (58 percent), but satisfaction drops when advice is delivered by other means, according to J.D. Power’s 2018 U.S. Retail Banking Sales Practices & Advice Study. Only 45 percent of customers who received digital advice through their bank’s website or mobile app felt their needs were met and only 33 percent felt their needs were met via email.
The majority of customers surveyed for the study (58 percent) said they want to receive advice through their bank’s website and mobile app, but only 12 percent said they received advice in that manner.

Why neobanks need to find a niche offering (Tearsheet), Rated: A

Customers still aren’t excited about digital-only banks. Less than 10 percent of Americans looking to open a checking account would consider doing so at a digital bank, according to a new report by Cornerstone Advisors.

For example, San Francisco-based neobank Chime’s customers are mostly middle-income millennials, with a median age of 29 and incomes between $45,000 to $65,000. Chime says it caters to a gap in the market for younger customers who felt larger institutions weren’t meeting their needs.

Neobanks should focus on a “clear, differentiated value proposition” for the customer, but too many of them are just adding a little technology to a customer experience that’s not terribly different from what the big banks offer, said Satya Patel, a partner at Homebrew, a seed-stage venture capital firm based in San Francisco and an investor in Chime.

How Capital One is rethinking its approach to products (Tearsheet), Rated: A

For the past year, Capital One has been rethinking how it can get out of the too-common approach of “innovating” by layering new technology on top of an old product — it’s realized it needs to entirely reconsider the customer’s interaction with it.

Are banks too blasé about mobile security? (American Banker), Rated: B

About a third of companies have knowingly sacrificed security for expediency or business performance, according to a newly published study, and researchers said that bankers’ responses were consistent with the group as a whole, which included health care and other sectors.

Bringing Credit Invisibles Into Focus with Alternative Financial Data (LendIt), Rated: A

Ten percent of the U.S. adult population do not have a credit score or history with any of the big three credit bureaus.

That’s 1 in 10, or roughly 26 million people who are considered “credit invisible.”

But the financial underserved market spends $173 billion in fees and interest to use $1.94 trillion in financial services, according to the 2017 Center for Financial services Innovation study.

There are four basic categories of people who fall under the credit invisibles umbrella:

  • Millennials: People between 18– 34 and have not yet borrowed money or gotten a credit card.
  • Low-Income: People who don’t make enough money to gain access to credit.
  • Recent immigrants: People who recently moved to the U.S. but haven’t established credit.
  • Mass-affluent: People who earn more than $100,000 per year and pay with cash instead of credit.

Mobile Payments In US To Reach $ 3 Trillion Within Two Years (Payment Week), Rated: A

in 2015, mobile payments in the US represented $550 billion. That’s good by most any standard, but the growth expected is staggering. By 2020, that number is projected to hit $2.8 trillion. That represents a compound annual growth rate (CAGR) of 39.1 percent, which is far beyond most any but the most unlikely investments.

China represents $5.5 trillion in mobile payments use as of right now, a combination of various societal factors like a comparative eschewing of the personal computer in favor of the mobile device, as well as a near-ubiquity of locations that accept the system.

BREAKFORM | RE Closes a Small Lot Subdivision Development in Record Time Via Crowdfunding (PRWeb), Rated: A

BREAKFORM | RE closed its latest small lot subdivision development project in the prime West Hollywood adjacent neighborhood in record time using Equity Multiple, one of the leading real estate crowdfunding platforms. The offering was 145% subscribed in 72 hours.

Credible Appoints Chris Bishko as Chief Financial Officer (BusinessWire), Rated: B

Credible, the consumer finance marketplace that helps consumers save money and make smarter financial decisions, today announced that it has appointed Chris Bishko as chief financial officer. Mr. Bishko will report to Credible’s founder and CEO Stephen Dash.

New York Lawmakers Open to Revisiting the BitLicense (CoinDesk), Rated: B

A bill to reform the regulation could be introduced “very soon,” State Senator David Carlucci told CoinDesk.

But what is likely to remain is the animosity toward the BitLicense, as evidenced by the small but dedicated protest gathering outside just before the roundtable began, not to mention the grievances aired by the two dozen or so attendees.

United Kingdom

Transaction volumes increase 700pc at fintech firm Revolut (Independent.ie), Rated: AAA

Fintech start-up Revolut has seen its monthly transaction volume increase by over 700pc in the last 12 months to $1.5bn (€1.2bn).

Lendingblock Aims to Popularize Crypto Lending in a Secure and Transparent Way (cryptovest), Rated: AAA

Lendingblock aims to become the first to build a marketplace where cryptocurrency lenders meet borrowers, and can exchange their assets across blockchains. The platform aims to bring securities lending to the crypto economy. The current estimates of the market paint a picture of enormous potential for development: in 2017, $2 trillion of assets on loan in traditional securities lending brought approximately $4 billion in revenue. Replicating this in crypto could generate up to $300 million within 3 years as the project notes in its white paper.

 

Britain’s big banks play catch up with fintech with new apps (Reuters), Rated: A

British retail banks are poised to introduce money management apps to compete with those already launched by financial technology start-ups, betting their trusted brands, broad client base and deep pockets will help them make up lost ground.

NatWest sets up network of fintech accelerator hubs (Finextra), Rated: B

The UK’s NatWest is launching four specialist fintech accelerators based in its Bristol, Edinburgh, London and Manchester sites.

China

Screws to tighten further on non-bank lending (The Standard), Rated: AAA

China will tighten its crackdown on illegal fundraising to fend off financial risks, according to an inter-agency meeting.

European Union

European Fintech Alliance raises bank API fears (Finextra), Rated: A

The European Fintech Alliance has fired another broadside in its tussle with the financial services establishment over PSD2, raising fears that banks will develop substandard APIs as a way to fend off competition.

Specifically, the alliance of 74 fintechs, challenger banks and fintech associations is unhappy that the Regulatory Technical Standards on strong customer authentication and common and secure communication under PSD2 allow banks the possibility to be exempted by their National Competent Authority from having to accommodate licensed Third Party Payment Services Providers (TPPs) to access accounts via the so called fallback option in case of malfunction of the API.

International

Marketplace lenders worldwide raised nearly bn last year (P2P Finance News), Rated: AAA

THE GLOBAL marketplace lending sector saw nearly $9bn (£6.45bn) invested across 233 deals last year, marking a new funding record for the industry.

Consultancy firm Fintech Global, who compiled the data, found that equity investment in the sector rebounded to $8.9bn last year after a slowdown in 2016. The total was boosted by the top 10 deals, which raised a combined $4.4bn.

The second half of the year was strongest for funding, with the largest deal of the year closing in the fourth quarter when Shanghai-based peer-to-peer lender Lufax raised $1.2bn.

Online lender ID Finance bolsters security with beahvioural biometrics (Finextra), Rated: A

ID Finance, the emerging markets fintech company, is incorporating behavioural biometrics into its AI-based fraud scoring engine to eliminate fraud, boost loan approvals and reduce the incidence of non-performing loans.

The behavioural biometrics system studies the unique typing and behavioural patterns users display during the loan application process to capture a range of patterns. These include mouse movements, to how fingers interact with a keyboard. The biometrics record patterns such typing speed, typos, flight time between keys, keystroke depressions, as well as the patterns from actual input.

Celsius: Get Dollars When You Need Them or Get Paid to HODL (cryptovest), Rated: A

The global financial system is wobbling. Banks and other traditional financial institutions have so far managed to survive the crisis resulting entirely from their errors, greed, and arrogance. Now, many believe, they won’t live through the crypto revolution unless they embrace it.

Meet the Celsius Wallet – a combination of a digital wallet and a peer-to-peer lending platform where members can earn passive interest on their crypto holdings and use them as collateral to get loans in fiat currencies.

Australia

‘Essential’ brokers advising Xinja on mortgage strategy (TheAdviser), Rated: A

The chief executive of banking disruptor Xinja has revealed that mortgage brokers have been involved in the group’s home loan plans and will be “essential” to its strategy.

The crowdfunded online lender recently received an Australian credit license (ACL) from the Australian Securities and Investments Commission (ASIC) and plans to utilise the broker channel to facilitate its digital home loan approval process.

Mortgage franchise sees decline in loan settlement (AustralianBroker), Rated: A

Mortgage franchise Yellow Brick Road posted a 2% decline to $7.74bn in loan settlement volume in the first half of FY18 over the previous period as it reduced its number of branches.

Overall, the company delivered 85% growth in profitability, with net profit before tax increasing to $0.53m in the first half of FY18 over the same period of FY17. It cited higher revenue – up by 5% – and lower costs – down by 4% – as drivers of its result.

The company also expects the addition of a small business lending product through its partner Prospa to provide additional revenue opportunities for its network and support growth in commercial lending.

India

P2P platforms as NBFCs gaining popularity in small cities, but there’s a catch (Financial Express), Rated: AAA

P Kanwal is from Punjab’s Bhatinda. He has a furniture business which mainly deals in cash, because of which it was difficult for him to get a secured loan from the formal banking system. For him, a Peer-to-peer (P2P) lending platform came as a rescue, which got him an unsecured loan for his kid’s education and expanding his business.

This not just the story of Mr Kanwal, but many more small entrepreneurs who are operating their businesses in Tier-1, Tier-2 cities and far-flung areas, some not even on Google map, who are getting financial support through P2P lending.

The pattern that emerges currently from the P2P lending is that borrowers from tier-2 and tier-3 cities comprised 20% and 17% of the total number of loans disbursed through the platform. The new-to-credit borrowers comprise 35% of fulfilled borrowers, while those with poor credit ratings accounted for 10% of the overall number.

MENA

Peer-to-Peer Lending Startup Blender Raises Million in Debt Financing and Equity (CTech), Rated: AAA

Israel-based peer-to-peer lending startup Blender P2P Israel Ltd. has raised $16 million in equity and debt financing, the company announced Monday.

Latin America

Airfox Launches Mobile App in Brazil, Giving Unbanked Access to Financial Services (PRWeb), Rated: A

Airfox, a mobile financial services company, today launched its free Android app in Brazil, giving millions of people unprecedented access to much-needed financing solutions.

More than 44 percent of Brazil’s population is unbanked, another 30-44 percent lack sufficient access to mainstream financial services, and those with credit cards face interest rates upwards of 200 percent (sources: World Bank, Bloomberg).

Canada

Big banks strive to give better digital financial advice (BNN), Rated: AAA

CTV’s Chief Financial Commentator Pattie Lovett-Reid discusses the Canadian banks’ quest to deliver quality online financial advice in an effort to catch up with the digital age.

Africa

PayJoy Partners With Vodacom & CBA to Bring Smartphone Financing to Tanzania (Crowdfund Insider), Rated: AAA

PayJoy, a San Francisco fintech startup, announced this week it has teamed up with Vodacom and CBA to bring smartphone financing to the country of Tanzania.

PayJoy Teams Up With Allied Mobile to Bring More Smartphones to Africans (Crowdfund Insider), Rated: A

PayJoy, a San Francisco fintech startup, announced on Friday it has teamed up with mobile distributor Allied Mobile to bring affordable smartphone payment plans to markets across the continent of Africa. According to the duo, Allied Mobile will use PayJoy Checkout, an instant paperless finance system for customers without access to formal credit, and the patented PayJoy Lock which enables “pay-as-you-go” access to the phone. 

Authors:

George Popescu
Allen Taylor

Thursday January 18 2018, Daily News Digest

mobile banking user growth

News Comments Today’s main news: Marcus passes the $2B loan origination mark. Varo Money secures $45M in Round B. Funding Circle’s fund announces Citibank deal. Qudian enters budget auto financing. PeerStreet intros 30-day notes. Today’s main analysis: Investing in Mintos’ secondary market. Today’s thought-provoking articles: Mobile banking is more important than ever. Credit score changes would force banks to help […]

mobile banking user growth

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United States

United Kingdom

China

International

India

APAC

News Summary

United States

Goldman Sachs’ Online Lending Platform Marcus Has Originated Over $ 2 Billion in Loans, Deposits Rise to Over $ 5 Billion (Crowdfund Insider), Rated: AAA

Meeting a prediction from this past June set by Goldman Sachs CEO Lloyd Blankfein, online lending platform Marcus topped $2 billion in loan originations. Additionally, Marcus reported online deposits of over $5 billion. Deposits and consumer lending have now been combined under a single brand, thus, in reality, creating a challenger bank for the future.

Overall, Goldman Sachs (NYSE:GS) reported net revenues of $32.07 billion and net earnings of $4.29 billion for the year ended December 31, 2017.

Diluted earnings per common share were $9.01 compared with $16.29 for the year ended December 31, 2016. Goldman reported a Q4 loss of $5.51 per share. The results were impacted by a tax related expense of $4.4 billion. Without this expense, Goldman said earnings per share would have been $5.68.

Varo Money Closes $ 45M Series B Financing Round (Varo Money Email), Rated: AAA

Mobile banking is more important than ever (Business Insider), Rated: AAA

As we’ve seen for the past few quarters, mobile banking is continuing to rise, but the rate of growth is decelerating as offerings mature.

  • JPMorgan Chase 

    How a 23-year-old Max Levchin got Peter Thiel to invest in PayPal in under 24 hours (Business Insider), Rated: A

    Levchin told Shontell, “I saw [Thiel’s] name on the pinboard, wandered into a class that was taught by him, which turned out to be more like seminar with six people in the room. So it was a very small group of people. One: I couldn’t sleep because it would be obvious, but two, he was actually pretty interesting. So I stayed awake and chatted him up afterwards.”

    That turned out to be a good move. Here’s Levchin:

    “In the inimitable Peter Thiel fashion, we basically spend about 20 minutes talking after his lecture, and he said, ‘Well, what are you doing in Silicon Valley?’ I said, ‘I just got here two weeks ago. Probably gonna start a company.’ He said, ‘Oh, great. We should meet for breakfast.’

    “We met the next day. He said, ‘All right, so what companies are you thinking of starting?’ I had two ideas that I was concurrently thinking about. I described No. 1., No. 2. He said, ‘No. 1 is better; you should do that.’ ‘OK.’ ‘I’d like to invest.’ It was less than 24 hours later. Peter was a committed investor in my new project.”

    Credit score changes would saddle banks with risk to help nonbanks (American Banker), Rated: AAA

    Recently, the Federal Housing Finance Agency has been evaluating whether to allow originators that sell loans to Fannie Mae and Freddie Mac to use something other than the currently mandated FICO model. Specifically, the FHFA is evaluating whether originators can also use the VantageScore model offered by a company owned by the three credit bureaus — Equifax, Experian and TransUnion.

    VantageScore contends that its model will provide credit scores on more than 30 million additional consumers and make 7.6 million of these scores eligible for a loan sold to Fannie or Freddie because of the model’s supposed ability to more accurately assess blemished and dormant credit histories and accommodate thin credit files that most often effect younger consumers. VantageScore also argues that, since the model consolidates data from all three credit bureaus, it eliminates scoring differences caused by data discrepancies. The result, the company maintains, will be expanded home ownership, a more vibrant housing market, more consistent underwriting and faster economic growth.

    The major proponents of the alternative credit scoring model are large nonbank originators and credit reporting firms — companies that make their living from the quantity of loans they originate, not the quality. Their business models shield them from ongoing credit risk and require ever-increasing volumes to achieve scale economies. In short, nonbank originators generally don’t eat their own cooking — either in the form of loans or in the form of securities backed by the loans they originate. Therefore, they have everything to gain from this FHFA change, and very little to lose.

    PeerStreet Announces New Investment Product “30-Day Notes” (Crowdfund Insider), Rated: AAA

    On Wednesday, PeerStreet announced the launch of its new investment product, 30-Day Note, to provide increased liquidity for accredited investors at 30-day terms. According to the online lender, the 30-Day Notes product was launched quietly in October as a pilot program, is now offered monthly.

    Axial Members Surpass $ 25 Billion in Closed Middle Market Deals (Axial Email), Rated: A

    Axial, the deal network for the middle market, today announced its members have closed more than $25 billion in deals on 2,000-plus M&A and growth capital transactions since Axial’s launch in 2010. To facilitate these closed transactions, Axial arranged more than 2.1 million private member-to-member deal connections. Nearly one-third (650) of the total transactions closed in 2017.

    In 2017, the revenues of businesses that privately transacted using the Axial deal network ranged from $2.9 million to $610 million, with EBITDA ranging from negative $19 million to $223 million. Top sectors of deal flow activity include Business Services, SaaS, Healthcare IT, Distribution & Logistics, and Manufacturing. Notably, 24% of all growth capital transactions attempted in 2017 were in the Technology sector, more than doubling year-over-year from 10% in 2016.

    Worthy Peer Capital Receives SEC Qualification for 5% Money Market Alternative (Worthy Financial Email), Rated: A

    Worthy Financial, Inc., a modern personal finance company that delivers alternative investment products and digital savings solutions to a wide-range of retail investors, is pleased to announce that its subsidiary Worthy Peer Capital, Inc. has been qualified by the U.S. Securities and Exchange Commission (SEC), under Regulation A+, to bring a new liquid peer-debt product to the entire investing ecosystem.

    The new Worthy Bond offers all investors – including non-accredited investors – a 5% fixed return. Although the bonds have a 36 month term, they can be cashed in at any time for those with imminent liquidity needs, thereby serving more as an alternative to traditional money market products. Bonds may be purchased at .

    Democrats Add Momentum to G.O.P. Push to Loosen Banking Rules (The New York Times), Rated: A

    But unlike the $1.5 trillion tax overhaul, which passed along party lines, the effort to loosen the post-crisis rules is somewhat bipartisan. A group of Senate Democrats has joined Republicans to support legislation that would mark the first major revision of the 2010 Dodd-Frank Act, a signature accomplishment of President Barack Obama that has been deemed “a disaster” by President Trump.

    The bill would allow hundreds of smaller banks to avoid certain elements of federal oversight, including stress tests, which measure a bank’s ability to withstand a severe economic downturn. Under current law, banks with assets of $50 billion or more are considered “systemically important financial institutions” and therefore governed by stricter rules. The bill would raise that threshold to institutions with assets of $250 billion or more, leaving fewer than 10 big banks in the United States subject to the stricter oversight.

    Banks with assets of $50 billion to $100 billion would be immediately freed from those requirements. Financial institutions with $100 billion to $250 billion in assets, such as BB&T and American Express, would no longer be subject to tougher rules after 18 months, although the Federal Reserve would retain the authority to periodically conduct stress tests on those firms.

     

    The One Big Reason It’s So Hard to Refinance Your Student Loans (Money), Rated: A

    More than half of borrowers who applied for refinancing in 2017 were turned down, according on a report released Wednesday by LendEDU, a student loan marketplace that tracked 32,000 applications to eight refinance companies.

    Using data from users of the LendEDU marketplace, the report found that 58% of 2017 refinance applicants were ultimately rejected. And those who passed muster had very high FICO credit scores—the average approved applicant had a score of 764. Nationally, the average credit scoreis 700 out of 850; anything above 720 qualifies as excellent.

    Refinancing companies are currently advertising fixed interest rates that start at about 3.5%. Yet the average on refinanced loans in 2017 was 5.56%, LendEDU found.

    Source: Money

    Bill Gates made these 15 predictions in 1999 — and it’s scary how accurate he was (Business Insider), Rated: A

    Gates’ prediction: “People will carry around small devices that allow them to constantly stay in touch and do electronic business from wherever they are. They will be able to check the news, see flights they have booked, get information from financial markets, and do just about anything else on these devices.”

    No. 3: Instant payments and financing online 

    Gates’ prediction: “Automated price comparison services will be developed, allowing people to see prices across multiple websites, making it effortless to find the cheapest product for all industries.”

    The Top Ten Fintech Predictions for 2018 (Crowdfund Insider), Rated: A

    10. Resurgence of Peer to Peer Lending and the Emergence of A New Asset Class

    We’ve seen coin-backed lending such as Salt Lending. There will be many more platforms that will attempt to solve solvency and liquidity issues with lending in fiat currency backed by coins.

    9. Alternative Internet

    The cost of a simple PayPal transaction might go up dramatically because it was routed through Comcast’s fiber. You may have to pay an additional $3.99 a month for an “Online Banking” package if you want to do online banking…

    8. Banks will rule again

    Most of the online platforms (payments or lending) plus secondary markets are at the mercy of banks. Without a bank charter, you are simply limited on growth.

    6. Baby Boomer Financial, Inc.

    The youngest baby boomers are approaching retirement age. The baby boomer generation is about 75 million people (on par with Millennials) in the US and represents a vast amount of wealth in this country. They want to transact, invest, bank and most importantly transfer their wealth in a responsible way. I predict that there will be Fintech startups specifically addressing the needs of this generation of folks.

    4. Mass Adoption of Zero Latency Payment Clearance/Credit.

    Over the past few decades, we went from a cash society and in-person / in-branch interviews to “same-day” ACH (direct deposit) and next day loan funding. I predict that in 2018, we will see instant credit approval and funding.

    3.  Social Networks Venture Into Credit.

    I am making another prediction that Facebook or Snapchat will venture into extending credit.

    2. Vertical Integration.

    WeWork will get into the Working Capital lending business. And dare I say Indeed, Monster, and LinkedIn, will start lending money based on your resume and activities within your professional connections?!

    BlackRock makes impact a necessity for companies (ImpactAlpha), Rated: A

    Larry Fink flips social impact from a luxury to a necessity for every company. The chief executive of BlackRock, the world’s largest asset manager with $6 trillion under management, served notice on corporate CEOs their companies “must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.” Fink made his point as clearly as possible: “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”

    Would a bank payday loan be any safer? (Daily Journal of Commerce), Rated: A

    Thanks to a recent regulatory change, it now may be possible for banks to offer small, short-term loans that could be a lot less dangerous for borrowers. Whether banks will actually do so remains to be seen.

    Standard Chartered creates fintech investment unit (Fintech Futures), Rated: B

    Standard Chartered has established a new business unit, SC Ventures, to invest in fintechs and other start-ups.

    Christopher Blake Joins Cross River Bank Loan Team (Long Island Press), Rated: B

    Veteran loan officer Christopher Blake joined Cross River Bank, where he’ll serve clients in Long Island, Queens and Brooklyn in the lender’s Commercial and Multi-Family Real Estate division, the company announced Tuesday.

    Freefly has teamed up with three fantastic financing partners (Freefly), Rated: B

    AFFIRM FINANCING

    Ideal for individuals looking to finance their Freefly purchases.

    SCL EQUIPMENT FINANCE

    A flexible lender designed for U.S. business, sole proprietors, and independent contractors.

    GLOBAL FINANCE

    A creative lender with options for businesses in the U.S. and many countries across the globe.

    United Kingdom

    Funding Circle’s fund unveils Citibank deal (P2P Finance News), Rated: AAA

    FUNDING Circle’s listed fund has inked a deal with Citibank, whereby the financial institution indirectly channels £50m to small businesses through the peer-to-peer lending platform.

    The transaction was announced by the Funding Circle SME Income Fund (FCIF) on Wednesday.

    Under a rather complicated structured finance deal, Citibank’s London branch will advance a senior, floating rate loan of £50m through two Irish special purpose vehicles. The facility matures in December 2026.

    Funding Circle SME Income Fund Limited (London South East), Rated: A

    The Board is pleased to announce that the Company has entered into a formal agreement with Citibank, N.A. London Branch (“Citibank London”) to establish a funding transaction to make loans to ?UK small businesses through the Funding Circle platform?. The transaction will serve to support the Company’s target dividend yield of 6-7% per annum.

    Under the terms of the agreement Citibank London will provide �50 million of funding into the transaction, by entering into a senior, floating rate loan. The Company will contribute a portfolio of existing UK small business loans at par, and in return shall receive ?approximately �50 million of cash to be deployed in accordance with its investment policy, and junior notes.

    Fintech firms struggling to get a foothold with established lenders (The Irish Times), Rated: A

    Banks and other financial institutions remain extremely wary of working with fintech firms, particularly in Ireland where few are willing to give start-ups the endorsement they need to help secure business elsewhere.

    Andrew Patrick White, founder and chief executive of FundApps, a regtech firm that provides compliance and regulation monitoring services to asset managers and hedge funds, said many financial institutions were afraid of fintech solutions because of a fear that they would be used to replace staff.

    “Your grandmother probably has more sophisticated apps on her iPad than many banks have inhouse,” Mr White added.

    Your morning briefing (PaymentsSource), Rated: A

    ‘All-in-one’ cards get another shotCurve has debuted a card in the U.K. that allows consumers to switch a card used to fund a payment after they have left the store. Through the card’s “back in time” feature, card preferences can be changed for up to two weeks, a system the company is selling as a financial management tool. Curve, which is being offered for free with a $60 premium option with more rewards, works like a regular card and is usable anyplace that accepts Mastercard. While all-in-one cards have struggled to gain traction over the years, more than 100,000 people signed up during the card’s testing phase and spent more than $120 million, according to a release.

    OnePlus’ fraud hit: Electronic equipment company OnePlus became the latest to get hit with card fraud, with consumers reporting unauthorized transactions and the company disabling credit card payments but still allowing PayPal transactions. The company is doing a complete audit of its systems and is looking for alternative payment options.

    When we asked, which, if any, Isas have you used over the 2017/18 tax year, nearly a third (32%) said they’d only used a Stocks and Shares Isa.

    This was followed by nearly a quarter (24%) who’ve only used a Cash Isa, and 17% who use a mixture of different Isas.

    This decline in Cash Isa savings is likely to be attributed to poor cash savings rates and the introduction of the personal savings allowance in April 2017.

    Interestingly, Innovative Finance Isas – used for peer-to-peer lending – don’t appear to have taken off, with just 3% of those who voted in our poll only using this savings vehicle.

    Source: Moneywise

    Name Change for Funding Knight as GLI Finance Updates to Sancus Funding (Crowdfund Insider), Rated: B

    As part of an ongoing strategic update, GLI Finance has renamed peer to peer lending platform FundingKnight to Sancus Funding Limited with immediate effect. GLI Finance, an AIM listed company, has also transferred ownership to Sancus BMS Group Limited.

    China

    Qudian is Moving into Budget Auto Financing (CapitalWatch), Rated: AAA

    The newly listed peer-to-peer lending company in China, Qudian (NYSE: QD), has moved into auto-purchase financing, a new business initiative called “Dabai Auto,” according to the company.

    Launched in late November 2017, Dabai Auto is currently targeting Qudian’s existing high quality users, who have been approved with credit lines, but have not actively transacted in small cash installments. The company also announced that it plans to spend around RMB 100 million ($15.5 million) to promote Dabai Auto through online and offline channels. The offline channels would include Qudian user engagement and delivery centers that are located in the shopping districts of over 100 cities across China.

    HNA-owned P2P lending platform doing business normally, executive says (Global Times), Rated: A

    Payments of investment products on jbh.com, an online peer-to-peer (P2P) platform owned by HNA Group, remain normal and there have not been any capital losses since the platform was set up three years ago, an executive of the company said on Wednesday.

    Payments for all maturing investment products on jbh.com are being made as normal, sina.com.cn reported Wednesday, citing Xia Aobi, president of jbh.com.

    International

    Funding Circle and Lufax: Two High Profile IPOs for 2018 (Lend Academy), Rated: AAA

    Neither IPO is a surprise as both companies have indicated their intentions before. But we now have a clearer indication on the timing. First off the rank will likely be Lufax. The South China Morning Post reported that Lufax is planning to do their IPO in Hong Kong in April at a possible valuation of US$60 billion. This would be more than three times the valuation of their previous funding round in 2016.

    The Funding Circle news actually broke just before the New Year with this article from Sky News. They reported that the company was preparing to hire advisors in the first steps towards an IPO. They are supposedly going to interview investment bankers this quarter with a possible listing in London in late fall which would put us in the latter part of the third quarter.

    A successful Funding Circle IPO, one where the valuation rises after it goes public will be very good for the marketplace lending industry in both the UK and the US. We have had little good news here in the last couple of years when it comes to the public markets and I would very much like to see a success story here.

    Investing on the Mintos Secondary Market – Hint One (P2P-Banking), Rated: AAA

    On the Mintos p2p lending marketplace the majority of investors invest on the primary market into loans, either manually or via autoinvest. But for the 29% of investors that do invest on the secondary market picking loans presents them with a huge choice of about 125,000 offers (no typo, really 125K loan parts on offer!).

    Source: P2P-Banking

    For the shown loans there is a very high probability that they will miss the payment and therefore run an additional 60 days until they are repaid under the buyback guarantee. If that happens the remaining actual loan duration would be 62 or 63 days and the impact of the 0.1% discount on the YTM would be much smaller. The resulting YTM would be somewhere around 11 to 13%. So they would not be a good buy and there are much better offers on the secondary market.

    Source: P2P-Banking

    With two weeks remaining the effective YTM for a buyer is not 36% but rather around 12%. Again there are offers with better YTMs on the secondary market.

    Chinese tech groups undermine banks’ dominance of finance (Financial Times), Rated: AAA

    The recent refusal by US regulators to sign off on Ant Financial’s $1.2bn acquisition of Dallas-based money transfer firm MoneyGram International does not signal the end of the Alibaba-affiliated payments group’s US financial ambitions.

    On one level, the scuppered deal suggests that Chinese companies, whether state-owned or otherwise, will have an ever harder time winning approval for US acquisitions. The move also confirms that the Americans now believe that the definition of national security — their basis for scrutinising overseas deals — embraces anything related to information and data.

    But Ant Financial’s attempted US play also shows how much technology is undermining the dominance of traditional global titans, especially in the financial sphere. It is especially noteworthy that many of the upstart challengers to banks and other legacy companies increasingly either have a Chinese face or Chinese capital behind them. That, in turn, underscores how some Chinese players have leapfrogged into prominence across the world.

    Blockchain is revolutionizing the loan industry – a look at Valorem… (Global Crypto Press), Rated: A

    Smart contracts are providing the solution to the trust issues that are usually the main concerns in the micro loan industry.  Whether it be student loans, cars, or any other kind of micro lending – blockchain technology provides what’s needed to move away from the banks, and towards a peer to peer lending model.

    Volerem Foundation is building the infrastructure to facilitate exactly this.

    India

    Govt should think of new ways to boost sectors like P2P lending: LenDenClub (India Info Online), Rated: A

    Additionally, we also expect the government should think of new ways to boost sectors like P2P lending. Eg.- Enable tax exemption for the lenders on P2P lending platforms, under section 80C. This will result in raising the trust bar and credibility, leading to more and more people investing in such platforms. It will also bring in a good enough capital infusion in the P2P lending space.

    Introducing Syndicates for India (Angel.co), Rated: A

    Today, we are announcing Syndicates for India, a new way for investors in India to invest alongside experienced angels and VC funds that invest in India’s vibrant tech ecosystem.

    To date, over 1,800 startups have raised more than $700M through Syndicates on the AngelList platform, receiving more than $6B in follow-on funding.

    APAC

    Gov’t urged to increase ceiling for individual investment in P2P lenders (Yonhap News Agency), Rated: AAA

    A business lobby of peer to peer (P2P) finance firms said Thursday it has asked financial regulators to raise the annual ceiling on individual investment in P2P lenders.

    The Korea P2P Finance Association has asked the Financial Services Commission (FSC) to increase the limit to 100 million won (US$93,632) per year from the current 10 million won, an association official said.

    ZorroSign Among Top 25 FinTech Companies (PR Newswire), Rated: B

    ZorroSign, Inc., today announced the company has been recognized among the top 25 FinTech companies in Asia-Pacific (APAC) by CIO Outlook. The honor spotlights organizations that are fundamentally disrupting the way companies in the global finance sector do business. ZorroSign offers unique secure eSignature, end-to-end Digital Transaction Management, and post-execution fraud protection solution. With security being on top of mind for financial services providers, ZorroSign Document 4n6 (Forensics) Token technology offers a major advantage to its customers.

    Authors:

    George Popescu
    Allen Taylor

Using Prepaid Cards to Pay for Telecom Services in MENA

prepaid financial services MENA

NymGo is a telecom company in the Middle East/North Africa (MENA) region that allows users to make phone calls to landlines and mobile phones to anywhere in the world using Voice Over Internet Protocol (VoIP) technology. To further the company goal of making telecom more accessible to more people in the region, they’ve introduced the […]

prepaid financial services MENA

NymGo is a telecom company in the Middle East/North Africa (MENA) region that allows users to make phone calls to landlines and mobile phones to anywhere in the world using Voice Over Internet Protocol (VoIP) technology. To further the company goal of making telecom more accessible to more people in the region, they’ve introduced the NymCard, an online payment card to help facilitate telecom transactions.

NymGo to NymCard

Founded in Beirut, Lebanon in 2009, NymGo built itself into the largest VoIP provider in the MENA region. Despite gaining more than three million customers in the region, growth was hampered because customers had problems downloading the app and signing up. They would drop off when having to deal with online payments because, as the company dealt largely with the underbanked who didn’t have a credit card or a way to make payments online.

The company first began to solve this problem by building a network of agents who serve as a physical place where these customers can use cash to pay for services, an idea that evolved when the company had grown to hundreds of thousands of customers in the MENA region.

NymCard was the next step, and the same agents who acted as banks for those customers now issue the cards.

Essentially, the NymCard is a prepaid Visa to be used in the digital communication world. Customers use the cards to buy games and apps online as well as Facebook ads, The average cost of a transaction is $17 as a majority of them are for low end items like $5 games. On the high end of that spectrum, you have freelancers who are buying Facebook ads, which run about $65 to $70.

The card can also be used to purchase 3G or 4G, wifi, and banking services at low cost. The first cards started at a $250 prepaid limit then was raised to $500 as users got more comfortable with it and started to use it more. Now that the company has its own service, it is looking at a tiered approach. This will allow them to issue cards starting at $250 and raising limits as high as $2k, $3k, or even as high as $10k.

The NymCard Today

For funding, the company recently closed a pre-Series A, in which it raised $3M U.S. A Series A is in the works for next year to help expand in the MENA region. NymCard is also in talks with Visa and MasterCard to apply for licenses around the region for further expansion.

Where the first generation of the company made money on an interchange fee and the small fees associated with prepaid cards, moving forward with the physical prepaid card, the company will be able to attach a subscriber fee.

NymGo and NymCard Founder and CEO Omar Onsi tells us that by having everything in house and cloud-based the company can scale quickly, which, of course, will help them capture as much of the accessible market as possible.

NymCard Tomorrow

Onsi and his team aren’t about to be satisfied with just that, however; they have plans to add more services to the product. He tells us that “very soon” they will have a “pay later card,” which will allow them to extend credit to users, underwrite them quickly, and send them by virtual card.

The company also plans to make great efforts to reach the underbanked in different parts of the world, but points out that every region has its challenges. What might work in the Middle East might not be as well-received in Africa, and vice-versa. As the company does its due diligence toward this expansion, Onsi tells us there is much happening to reach the underbanked in their home region of the Middle East.

Onsi sees banks with prepaid services as the only real competition for NymCard, but reminds us that typical banks offer nothing digital, and the ones that do tend to struggle with it. “We have a lot of potential to corner the market. We understand digital very well, and we know how to develop the products. We can have a new release two or three times a week, and banks can’t keep up; they struggle to update their websites,” he said.

The company works with “a bunch of different customer profiles,” but the biggest is easily the underbanked, Onsi says, telling of someone who gets on his pay card but has no further access to online credit.

Coming from the telecom world, Onsi knows that smartphones are one of the only ways to get the population into online banking services. He reminds us that the telecom world started to grow rapidly when they did prepaid lines and that 70% of the subscribers are on a prepaid plan. He says that it so follows that prepaid cards for financial services will help the underbanked to get up to speed with the economy.

Are there hurdles to overcome? Of course, and one of the biggest is regulation. Onsi says that, telecom being a highly-regulated industry, this type of venture doesn’t move as quickly as a typical tech startup.

As part of the regulations, NymCard was accepted into a regulatory sandbox, which helped to develop products and services; these helped the company launch what Onsi calls an “ideal digital experience.” Following the guidelines of the regulation, NymCard was tested to measure success. This, in turn, helped the company to become more regulated. Upon graduation from that sandbox, with a full license, they have that in a partner’s role.

Conclusion

If Onsi is correct in stating his company’s biggest hurdles lie in regulation, then you might have to like their chances for success; their competitors will be subject to the same regulations, and if those companies don’t have a man with the foresight and confidence Onsi seems to possess, they might find themselves playing for second place.

Authors:

Written with Paul Keenan.

Allen Taylor

How the Smartphone is the Key to Cracking Marketplace Lending in the Developing World

emerging world internet usage

Zopa, the first marketplace lender in the world, was born in the UK in 2005. In the next couple of years, two of the biggest economies in the world–United States (Prosper in 2006) and China (Paipaidai in 2007)–opened the gates to marketplace lending (MPL). However, it wasn’t until the 2008 financial crisis when alternate lending gained […]

emerging world internet usage

Zopa, the first marketplace lender in the world, was born in the UK in 2005. In the next couple of years, two of the biggest economies in the world–United States (Prosper in 2006) and China (Paipaidai in 2007)–opened the gates to marketplace lending (MPL). However, it wasn’t until the 2008 financial crisis when alternate lending gained real momentum.

MPL is expected to reach USD $350 billion by 2025, and the market is expected to grow at a prodigious CAGR of 48.2% between 2016 and 2024, but this amazing innovation has been concentrated in the developed world with its well-developed credit scoring system FICO. The developing world has not been able to participate due to lack of credit scores, minimal banking history, and small ticket loans, which made client acquisition tricky.

Pioneering fintech startups have been able to leverage your everyday smartphone to solve the developing market conundrum. Smartphones have taken over our lives and therefore data and information produced by each smartphone serves as an important piece of the jigsaw puzzle in understanding an individual’s habits. In the bigger scheme of things, MPL uses that information to develop products that help in addressing customers’ financial needs.

The expertise in using smartphones for generating credit data coupled with the ability to provide loans in the remotest location without requiring any physical banking infrastructure is changing the entire financial ecosystem in many developing countries. The ability of data scientists at these startups to utilize information from smartphones and other tech devices in a meaningful way has helped in halting the over reliance on FICO and similar credit scores.

Below are some indicators which can be collected from smartphones to analyze credit worthiness:

  1. Number of phone calls made.
  2. Internet Browsing
  3. Social media updates
  4. Prepaid top ups, mobile bill payments
  5. Location services to track a location of client
  6. Driving habits/gambling

How Smartphones Make the Lending Process Easy

Source: Pew Research Center

According to the World Bank, there are approximately 2 billion adults who do not have any account with any financial institution. Almost 73% of the Southeast Asian population do not have a bank account. Thus, these lending startups are unlocking vast untapped markets which have been completely neglected by the brick-and-mortar banks. Startups like Branch and InVentures provide loans, and in return, the prospective borrower will need to grant access to their smartphones.

These startups use innovative algorithms to understand the individual, and based on that, determine their risk profile. For instance, the InVentures algorithm says people who call after the rate drops during a certain time of the day are low-risk borrowers. Many other such start-ups like Affirm, LendUp, and Zest Finance are using algorithms based on social media usage and online behavior. According to a report by Omidyar Network, around 580 million people without credit scores will benefit from such app-based lending.

Source: Pew Research Center
Source: Pew Research Center

The above charts show that smartphone usage and internet penetration are exploding across the world. Case in point: In India, there were 220 million (18% of the population) smartphone users in 2016, and that is expected to reach 340 million (28%) in 2017. Focus on digitization as well as growing smartphone penetration offers a unique opportunity to lenders to tap into phone and other utility payments databases for disbursing loans and evaluating credit worthiness.

Features provided by smartphone lending apps these days, which are key for marketplace lending, include:

  • Optimized app for low-cost phones
  • Streamline and simplified registration process while completing KYC requirements
  • User-friendly user interface, which provides delightful customer experience
  • Provision to upload document via smartphone and checking eligibility of loan in a few clicks
  • Better rates and faster decisions on loans compared to banks
  • Secure and Confidential
  • Since companies use high-end predictive analysis tools to analyze data, need for credit bureau information is not necessary
  • Once approved, funds are issued immediately and user can track the status instantaneously

Impact and Security Threat of Smartphone Penetration

Privacy experts might be incensed with the ability of lenders to scroll through a person’s smartphone and social media feeds, but upliftment from poverty will always be more important for a family in Nigeria as compared to outrage over what a lender can access on a borrower through Facebook. Also, lenders only look at metadata and have obviously no interest in status updates.

Since companies have almost complete access to user data, this also poses a security threat. Many countries have passed regulations to protect consumer interest, but there is a long way to go. Some of the key regulations are:

  • Bringing all providers of digital credit under a regulatory framework thus creating a level playing field
  • Mandating that individual data collected by lenders are subject to privacy laws
  • Requesting that lenders institute measures to prevent customer over-indebtedness, be it through more flexible repayment terms or more extensive verification and credit checks
  • Requiring that T&C be simplified and better communicated; for example, using summary displays before customers accept the loan and after loan disbursement accessible within the app, rather than by following a link away from the session.

How the Smartphone is a Game Changer

In China, fintech companies serve the same number of clients as major banks, and much of the credit goes to smart phones. India is also experiencing a fintech boom and now is the world’s third largest market for smartphones, with more than 300 million people expected to access the Internet via smartphones by 2017.

Many new platforms like M-Pesa and PAYTM provide a way to load cash on smartphones, and can be used to transfer or make payments bypassing legacy banking infrastructure. Fintech lenders are thus entering a golden period where digital money is the norm, and even citizens of third-world countries will be able to access credit and other financial products through their smartphones.

Authors:

Written with Heena Dhir.

Allen Taylor

Wednesday August 9 2017, Daily News Digest

SoFi mortgages

News Comments Today’s main news: U.S. credit-card debt hits new record. LendingClub raises its outlook. OnDeck shares rise 17%. Zopa’s disappearing capital from IFISA. Ping An to invest in AI. Blackstone assumes majority stake in Banco Popular’s real estate portfolio. Securities and Exchange Board of India to study impact of fintech on financial markets. Today’s main analysis: SoFi bank charter could […]

SoFi mortgages

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

CARICOM

News Summary

United States

U.S. Credit-Card Debt Surpasses Record Set at Brink of Crisis (Bloomberg), Rated: AAA

U.S. consumer credit-card debt just passed an ominous milestone, beating a record set just before the global financial system almost collapsed in 2008.

Outstanding card loans reached $1.02 trillion in June, data from the Federal Reserve show, as lenders including Citigroup Inc. and JPMorgan Chase & Co. compete to sign up cardholders who may carry balances — a relatively lucrative business in a prolonged period of low interest rates.

 

The tide may be turning for LendingClub (LC) (Markets Insider), Rated: AAA

LendingClub on Monday posted its second highest quarterly revenues in its history. And Wall Street has responded.

Net revenue spiked 35% to $139.6 million in the second quarter, beating Wall Street’s average estimate of $136.4 million, according to Thomson Reuters.

Loan originations were up 10%.

Credit Suisse sent out a note to clients Tuesday morning outlining its case for a 25% boost in LendingClub’s stock price.

Lending Club Beats The Street And Raises Its Outlook (PYMNTS), Rated: AAA

By the numbers, the performance was also in line with what investors wanted to see — revenue was up 35 percent to $139.6 million during Q2, a solid beat on the analysts’ consensus estimate of $136.4 million. Originations returned to growth in the second quarter, up 10 percent to $2.15 billion. Meanwhile, operating expenses fell by 12.5 percent to $165.1 million in the quarter.

Revenue for the year — on the strength of that big performance — got an upward revision to the range of $585 million to $600 million, a reasonable pick-up on the previous forecast of $575 million to $595 million.

Has Lending Club Reached A Turning Point? (Benzinga), Rated: AAA

Following a beat-and-raise quarter from LendingClub Corp LC, analysts surmised the company may have reached an inflection point.

Credit Suisse analysts Stephen Ju and Christopher Ford noted this is the first quarter in about a year in which the company reported year-over-year growth in loan originations. The analysts expect ongoing acceleration throughout the next four quarters, as the company continues to recover.

Canaccord Genuity expects originations to grow sequentially in the third quarter or fourth quarter, aiding revenue growth acceleration in the second half of 2017 and notable sequential margin expansion.

The firm maintains its 2017 earnings per share estimate at 3 cents but nudged up its 2018 earnings per share estimate from 19 cents to 20 cents.

OnDeck shares rise on sunny outlook for loan growth, profitability (Reuters), Rated: AAA

Shares of OnDeck Capital Inc (ONDK.N) rose as much as 17 percent on Monday after the online lender said it had made progress on a plan to cut costs and improve the credit profile of its borrowers, and expects to reach double-digit loan growth again by next year.

SoFi Bank charter could test CRA status quo (Market Intelligence), Rated: AAA

Social Finance Inc., or SoFi, on June 6 applied for a bank charter with the Federal Deposit Insurance Corp.

S&P Global Market Intelligence research shows SoFi originated 1,160 mortgages in 2016, with only two of those mortgages, or 0.2%, made in distressed or underserved tracts, a CRA measure. Across the U.S., 2.0% of all mortgages were in underserved areas that year.

Of the $8 billion in total loans that SoFi said it originated in 2016, about $810 million were property loans, according to S&P Global Market Intelligence data. None of the mortgages issued by the parent company were in SoFi Bank’s proposed CRA assessment area of Salt Lake City and nearby areas.

Fewer than 1.00% of SoFi’s consumer loans are made to borrowers in Utah, according to reports for the company’s asset-backed securities issued in 2015, 2016 and 2017. The securitization documents cover $4.6 billion in principal loan balances.

SoFi’s CRA strategy will revolve around financial literacy, education and scholarships, according to its application. SoFi stated it will measure the success of its CRA plan in terms of employee hours devoted to community service, the number of scholarships awarded and the percent of its investment pool that goes into Utah Housing Bonds.

The 10 Biggest Fintech Companies In America (Forbes), Rated: AAA

Financial technology companies in the U.S. raised $3.5 billion in the first half of 2017, according to KPMG, as investors rushed to place bets in buzzy sectors like insurance and digital currencies.

The U.S. is now home to 13 fintech unicorns who have scored valuations of at least $1 billion.

  1. Stripe – Value: $9.2 billion
  2. SoFi – Value: $4.3 billion
  3. GreenSky  Value: $3.6 billion
  4. Credit Karma  Value: $3.5 billion
  5. Oscar  Value: $2.7 billion
  6. Avant  Value: $2 billion
  7. Zenefits Value: $2 billion
  8. Prosper  Value: $1.9 billion
  9. AvidXchange  Value: $1.4 billion
  10. Robinhood  Value: $1.3 billion

Betterment Introduces New Features And Pricing Plans (Forbes), Rated: A

Betterment’s three new features went live in late July. The features are:

  • Financial Advice Via App: Through Betterment’s mobile app, clients can now message a licensed financial expert. Experts can answer questions like how to set goals, which tax features to use, and how much risk to take in investing.
  • Socially Responsible Investing (SRI) Portfolio Options: These options give customers a way to invest in a globally diversified portfolio of companies considered socially responsible.
  • Combining Plus and Premium Plans: Betterment is now combining its Plus and Premium plans, which allow customers to now make unlimited phone calls to certified financial professionals. The new, combined plan charges a .4% annual fee.

The first feature, the ability to get financial advice through an app, attempts to address a big issue with robo advisors. Many investors want a human touch. They want to talk to an advisor from time to time. This will no doubt be true during the next bear market. Betterment’s new feature attempts to address this need.

The new pricing plan will benefit investors who were already using the higher-level Betterment plans. Those who were Plus customers can now get more personalized advice for the same fee and those who were Premium customers are paying less for the same service–always a good thing.

The Premium plan now gives customers access to more holistic investing advice. This advice can run the full scope of your investments, from your 401(k) to real estate to individual stocks to your Betterment portfolio.

Fed study finds expanded credit access resulting from fintech lending (Ballard Spahr), Rated: A

The study’s key findings include:

  • The fintech lender’s consumer lending activities penetrated into areas that could benefit from additional credit supply, such as areas that have lost a disproportionate number of bank branches and highly concentrated banking markets.
  • Consumers presenting the same credit risk could obtain credit at lower rates through the fintech lender than through traditional credit cards offered by banks.
  • The lender’s use of alternative credit data allowed consumers with few or inaccurate credit records (based on FICO scores) to access credit at lower prices, thereby resulting in enhanced financial inclusion.

SMARTPHONES MAY BECOME SMART ATM’S WITH NEAR FIELD COMMUNICATION (Fintech Today), Rated: A

You may no longer need to worry about carrying your ATM card with you everywhere as long as your bank’s ATM and smartphone are equipped with near field communication technology (NFC). NFC, a method of wireless data transfer that detects and enables technology to communicate, is reportedly being rolled out at banks across the country. Financial institutions believe that cardless or “Smart ATM’s” are the wave of the future and they are enabled as long as ATM’s and customers have a smartphone or mobile device equipped with NFC.

It’s been estimated that 2.2 billion smartphones will be equipped with NFC by 2020.

Robos, digital platforms and human financial advice: What investors really want (Investment News), Rated: A

The emergence of robo-advice and robo-investing platforms in recent years has led many traditional advisory firms to place a greater emphasis on their digital footprints. A growing number, in fact, are moving to offer digital versions of their “human” services. The 2017 InvestmentNews Adviser Technology Study, for example, showed that 7% of independent advisory firms offered a robo-advice option at the end of 2016, compared with just 3% two years earlier. At the same time, 19% of the firms that do not offer a robo-advice option intend to introduce one in 2017—nearly double the number that indicated that intention in 2015.

Only about 4% of the mass affluent and high-net-worth individuals in our survey reported that they use an automated investing or robo-advice tool.

Source: Investment News

For context, some 49% of individuals in our study currently use a financial adviser; the balance are self-directed investors.

Online Lender Better Mortgage Now Available in 13 States as it Expands into Florida (Crowdfund Insider), Rated: A

Better Mortgage is now available in 13 different states as it has received a license to lend to house hunters in Florida.  The Sunshine state is an important addition to the online lenders services as Florida is a popular vacation home state.

Better Mortgage says it is continuing to expand its footprint in the US. The lender is now available and improving access to homeownership in 13 markets including; Arizona, California, Colorado, Connecticut, Washington, DC, Florida, Georgia, Illinois, New Jersey, North Carolina, Oregon, Pennsylvania and Washington. Better Mortgage says that it is seeing particularly strong uptake in Seattle, Washington, San Francisco, California, and Washington, D.C.

Real Estate Crowdfunding Platforms: What to Look For (Equities.com), Rated: A

While each offers a unique focus and value proposition to investors, platforms have now consolidated into several main categories of business model:

  • eREITs: Fundrise and RealtyMogul, two of the original players the real estate crowdfunding space, have pivoted to offering semi-blind funds that aggregate properties throughout the country.
  • Commercial equity investing: probably the closest to the original ideal of real estate crowdfunding, these platforms offer CRE equity opportunities to accredited investors, allowing them to participate in high-upside, larger commercial projects. While the return potential is often great, these tend to be the longer term and riskier than other RECF investments.
  • Debt investing: Some platforms take some or all of an existing real estate loan, secured by a deed on the underlying property, and syndicate it out to a network of individual investors at a fixed rate of return.

Some platforms (like EquityMultiple, see below) perform their own diligence on investments, which should give you some comfort as an investor. Even so, you’ll want to understand some key components of any deal you consider, and be sure it aligns with your investing objectives before pulling the trigger. Here are some of the main things to consider:

  • Risk Factors – Examples of risk factors are tight construction timelines, a precarious labor market in the area, an unsubstantial track record or aggressive leverage on the part of the Sponsor who originated the deal.
  • Payout Structure – Be sure to understand where your investments fits in the capital stack, and what order you will be repaid principal and profits relative to the Sponsor and other LP investors.
  • Cash Flow and Liquidity – Simply looking at how many dollars you’re expected to receive over the lifetime of a deal (the simple return) or even a time-weighted return (IRR – internal rate of return), won’t give a complete picture of the timing and magnitude of returns.

Developer of Vacant Lots in New Orleans Has Crowdfunding Success (Next City), Rated: A

Small Change, a real estate crowdfunding portal, recently completed the sale of its first-ever offering open to all investors — and raised $95,000. Thirty-nine investors put in an average of $2,435. The minimum investment was $500. The money will help OJT (Office of Jonathan Tate), a New Orleans-based developer, finance the construction of two affordable single-family homes, on vacant lots.

The homes will be in New Orleans’ Milan neighborhood, which is two-thirds black and one-third white, and has a median income around $33,000.

Mixing technology and old fashioned salesmanship, Voya expands (Financial-Planning.com), Rated: A

So it has to move beyond the perception that it is a singular service provider, says Voya Financial Advisors’s Tom Halloran, president of its broker-dealer. One way the firm is doing that is by tying together its institutional businesses with retail, mixing technological innovation with old fashioned salesmanship, even considering the deployment of a robo advice platform.

A former Microsoft and Yahoo exec explains how treating your job like a report card can help you get a raise (Business Insider), Rated: B

In fact, it’s up to you to track your performance and ensure that your compensation reflects it, said Joanne Bradford, chief marketing officer of online lender SoFi, on a recent episode of the “So Money” podcast.

Clark County Common Pleas Court cases (Springfield News-Sun), Rated: B

Velocity Investments, LLC, assignee of Lending Club Corp., v. Joshua R. Hawk, judgment for $17,947.

United Kingdom

Investors remark on “disappearing capital” from Zopa IFISA due to IT glitch (P2P Finance News), Rated: AAA

SEVERAL lenders who invested through Zopa’s Innovative Finance ISA (IFISA) have complained that small amounts of money were disappearing from their account.

The issue occurred when funds were invested in the ISA Plus product and appeared to be missing capital rather than negative interest, investors on the P2P Independent Forum said.

Zopa is understood to be rectifying the technical issue.

Report proposes new ways to get people investing (AltFi), Rated: AAA

A new report on savings and investment suggests that savers are missing out on billions of pounds by spurning investment opportunities, including peer-to-peer lending. The report is supported by RateSetter, one of the UK’s largest P2P operators, and was produced by the Social Market Foundation think tank.

The report found that savers are holding more than £200bn in cash above and beyond what is referred to as the “rainy day” level. “Rainy day” funds – which are held in cash in case of emergency – are defined by the report as three months’ worth of income. The Social Market Foundation says that this idle pot of £200bn could have generated returns of £94bn over the past five years, had it been invested in the FTSE 100, or £40bn, if invested via P2P lending.

Ranger Direct Lending fund’s woes continue (AltFi), Rated: A

The £240m Ranger Direct Lending fund was announced its latest dividend of 24.26 pence per ordinary share for the 3-month period to 30 June 2017, its lowest in more than a year.

Its latest numbers show returns were again comparable to the last few months. This was due to a combination of expenses such as legal fees and higher than expected cash levels. In 2017, excluding the estimated dividend mentioned above, a total of 55.44 pence per share has been paid in dividends to ordinary shareholders. In 2016, a total of 89.61 pence per share was paid in dividends to ordinary shareholders.

 

Octopus the latest firm to offer the peer-to-peer Innovative Finance Isa, promises investors interest before Octopus (City A.M.), Rated: A

Investment firm Octopus seems to have its tentacles in all the pies, as it has today become the latest business to offer an Innovative Finance Isa.

Octopus is also aiming to dismiss the risks associated with peer-to-peer lending by contributing five per cent of every loan from its own pocket. Any losses suffered will come out of this sum first, meaning investors can get their initial investment back plus any interest due to them before Octopus earns anything.

Investors will be able to put as little as £10 in the tax-free product, and up to their annual Isa allowance which currently stands at £20,000.

ThinCats Receives Full Authorization By the Financial Conduct Authority (Crowdfund Insider), Rated: A

ThinCats, an alternative lending industry leader, announced on Tuesday it has received full authorization by the Financial Conduct Authority (FCA). According to the online lender, the approval highlights its commitment to protecting consumers and also developing the alternative finance industry as a vital source of capital for businesses and income for investors.

China

With $ 1b war chest, Ping An set to become AI innovation giant (China Daily), Rated: AAA

Chinese financial giant Ping An Insurance (Group) Co will spend more than 7.77 billion yuan ($1.16 billion) on technology research and development this year, and artificial intelligence will be the focus of that R&D, according to a senior executive of the company.

Established in 2008, Ping An Technology has about 4,000 technology workers and has paid attention to R&D in cognition, robot advisory and cloud businesses. Their applications are mainly used in finance and healthcare industries; up to now, there have been more than 200 application scenarios.

Micro-bank micro-credit balance of over 100 billion, has launched the enterprise loan products “micro-credit” (01Caijing), Rated: A

On the evening of August 7, the public bankers issued a friend said that the balance of micro-loan loans over 100 billion. According to the public bank in 2016 annual report, the balance of micro-loan loans 7 months increase of nearly 300%.

In addition, July 16, the public bank retail credit director Fang Zhenyu Lundi summit speech revealed that the balance of microfinance loans 76 billion yuan, which means that the balance of 72 days of microfluice increased by 24 billion yuan. At the same time, he also revealed that the daily loan loans to 150,000 pen, up to 20 to 300,000 pen, the daily repayment of the number of 200,000 pen, a single loan approval time is 0.3 seconds, almost real-time approval. In the allocation of talent, the public bank IT department staff accounted for 57%, background managers accounted for 6%, business and support staff accounted for 37%.

LangDi FinTech Conference in Shanghai. The Biggest Fintech Meetup In The World! (Crowdfund Insider), Rated: A

Last year, the conference had a massive showing of over 1,300 attendees. This year, the conference nearly doubled to 2,400 attendees. There was hardly any place to stand when Soul Htite of DianRong and Renaud Laplache of Upgrade took the main stage to talk about Fintech entrepreneurship.

Gopher Asset Management had investment associates in just about every session at the conference looking for the next investment opportunity. Gopher is a subsidiary of Noah Holding Limited (NOAH:NYSE), one of the biggest wealth management companies in China with a current market cap of USD $1.7 billion.

Galaxy Internet, another Chinese venture capital firm is actively seeking investment opportunities in the area of finance, ecommerce, payments and big data. 

Borrowell is owning the Canadian market in a big way. They just raised a $12 million round. Borrowell is helping Canadian’s to build credit starting with affordable loans. In a short amount of time, Borrowell has amassed over 300,000 borrowers and is looking to expand into other markets.

Jack Quigley, Founder and CEO of CrowdFundUp. He’s probably the hardest working man in Fintech. He’s constantly making deals and connecting dots. He’s 100% committed to China and recently moved to Shanghai and I think he’s not leaving until he brings home the trophy. I visited his office in Shanghai, overlooking a bustling city. CrowdFundUp will be China’s gateway into commercial real estate in Australia.

European Union

Blackstone to take majority stake in Banco Popular’s real estate portfolio (PE Hub Network), Rated: AAA

Banco Popular S.A. (‘Popular’) has today approved the sale of a majority stake in its real estate portfolio to Blackstone Real Estate Partners Europe V (‘Blackstone’). The agreement has been reached following a competitive process in which three international companies with long track records in the management of real estate assets presented offers. Blackstone was selected as the successful bidder after submitting the best offer in terms of both its value and management plan.

The agreement was confirmed after the European Union Directorate General for Competition today approved the acquisition of Popular by Banco Santander S.A. (‘Santander’) with no restrictions.

The transaction will involve the creation of a company to which Banco Popular will transfer assets with an aggregate gross book value of approximately €30 billion, as well as 100% of the share capital of Banco Popular’s real estate management company, Aliseda.

The valuation attributed to the Spanish assets of the business (e.g. properties, loans and tax assets, not including Aliseda) is approximately €10 billion. This is consistent with the valuation and provisions made by Santander during the acquisition of Popular and does not, therefore, result in any material capital gain or loss for Santander or Popular. The final valuation is subject to change depending on the assets remaining within the business at closure and following the integration of Aliseda.

Blackstone will own a majority 51% stake in the new company while also assuming management responsibilities, while Banco Popular will own the remaining 49% stake. As a result, the aforementioned assets will no longer be consolidated on Banco Popular’s balance sheet.

VC’s behind Zopa, Revolut, Transferwise & Clear Score confirmed for judging panel for PitchIt event (London Loves Business), Rated: A

Representatives from Venture Capitalists: Seedcamp, Blenheim Chalcot, CommerzVentures, and Balderton Capital will form the judging panel of experienced VCs from and around Europe.

Collectively, these four firms are some of the most active investors in the European fintech category and have played key roles in the success of several of the largest fintech successes in Europe.

Lithuania Seeks to Become Fintech Center as Bank of Lithuania Looks to Launch Regulatory Sandbox (Crowdfund Insider), Rated: B

Lithuania is the latest country joining the Fintech revolution by recognizing the importance of fostering a regulatory environment that is conducive to change and challenges established norms. The Bank of Lithuania is out with a statement regarding the launch of a sponsored Fintech Sandbox.

The following measures are will apply:

  • Relatively easy and low-cost authorization process: following submission of all necessary documents, it takes only 3 months for the Bank of Lithuania to take a decision on the issuance of an electronic money or payment institution license. In other EU countries, the process may take 12 months and more.
  • Access to the Bank of Lithuania payment infrastructure for non-banking sector companies planning to provide payment services, thus avoiding a middleman.
  • Newcomer program. The Bank of Lithuania applies a one-stop shop principle for meetings and consultations with potential financial market participants.
  • Specialized banking license. In order to establish a bank in Lithuania that would provide usual banking services, the lowest initial capital requirement in the entire euro area – EUR 1 million – is applied. This is five times less than the requirement applied to banks that provide the full range of services, including investment ones.
International

The Russian Connection (To Alt Lending Globally) (PYMNTS), Rated: AAA

ID Finance Co-Founders Boris Batine and Alexander Dunaev were far from newcomers to the world of finance when they started up their business in 2012. Long before founding a data science, credit scoring and digital finance company, the Russian-born and U.K.-educated entrepreneurs met while working abroad at Renaissance Capital and Deutsche Bank.

And so, in 2012, with only a few hundred thousand of their own dollars to get up and running, ID Finance launched in one of those underserved markets — their home market of Russia.

By 2015, the firm was profitable, and in 2016, it officially relocated it headquarters to Barcelona, Spain, one of three nations outside Russia ID Finance has expanded its efforts into — Belarus and Brazil being the other two.

These days, the firm originates 50,000 new loans a month — loans that it mostly finances off its own balance sheet, as opposed to selling them off on a marketplace. As of February of this year, the firm raised $50 million in debt from a consortium of banks to fund further expansion in South America.

A New $200 Million Fund

As ID Finance has expanded around the world — and partnered with various FIs — its founders realized that there are a host of small businesses that are simply being underdeveloped because they are almost invisible to investors.

Working with Elbrus Capital Fund Manager Yury Popov and asset management company Da Vinci Capital, the FinTech Credit Fund is being jointly offered as a $200 million debt finance fund aimed at FinTech companies focused on alt lending innovation. The funding from the credit fund, according to Batine, is aimed at helping up-and-coming FinTech lenders fund their own loans — and finance their loan portfolios.

“The alternative lending market is worth a potential $2 trillion, and we see a huge opportunity to back the billion dollar companies of tomorrow focused on digital lending,” Dunaev said.

How this social entrepreneur is bringing banks to the fingertips of the unbanked (Huffington Post), Rated: A

Humaniq was launched in 2016 with a vision to build a world where the unbanked and underbanked around the world also have access to the banking and financial transactions. An estimated 2 billion people can be brought under the umbrella of financial inclusion with Humaniq’s services.

Tell us more about Humaniq and the problem you solve?

Humaniq is on a mission to bring new mobile digital services and financial inclusion solutions to the 3.5 billion unbanked / under banked globally who have no access to the digital economy.

How does Humaniq work, especially with respect to privacy and security?

Humaniq offers a biometric blockchain app that can be used in any simple smartphone device.

The Humaniq LITE app is part of a broader humanitarian capitalism venture. Humaniq has a digital currency tied to it, known as HMQ.

Who’s your target audience and how exactly do you help?

We are working with emergent economies – where people live on USD$2.50 a day. Many of them do not have documentation and have had little or no education.

Our first big pilot will be in Ghana with local and international organisations, targeting 18 to 40-year-old low-income smartphone users and merchants in suburban areas including the capital city of Accra.

How did you acquire your first customer and how long did that take?

We did various test in India and Africa with previous test versions of our app. We are also working with Brazilian organizations.

With regards to funding, how did you fund your business? How hard was it and how much time did it take to acquire those funds?

Our business model has thrived on the P2P innovation and blockchain driven crypto economics. We built our model on the back of a crypto, Ethereum driven smart contract Initial Coin Offering(ICO).

Australia/New Zealand

New Zealand advice industry to be overhauled (Financial Standard), Rated: AAA

The New Zealand government is looking to remove the distinction between class and personal advice, as well as allow the provision of digital advice as it seeks to overhaul the country’s regulatory regime for financial advisers.

Unlike the FA Act, the new Bill enables the provision of more types of advice by being technology-neutral, lifting the existing restrictions around advice needing to be provided by a human adviser.

In turn, this allows for the provision of robo-advice and works to future-proof the legislation for technological developments. It also serves to increase the New Zealand population’s access to quality financial advice.

‘Non-bank’ status drives IOOF results (IFA.com.au), Rated: A

IOOF has credited the structure of its “non-bank-aligned” dealer groups and “open architecture” culture with a dramatic increase in revenue inflows from its financial advice business.

The results reflect a 131 per cent year-on-year increase in advice net inflows, according to a statement from IOOF, with $3.0 billion in total advice net inflows for the 2017 year.

India

SEBI Constitutes CFRT Committee To Study Impact Of Fintech On Financial Markets (Inc42), Rated: AAA

The Securities and Exchange Board of India (SEBI) has formed a Committee on Financial and Regulatory Technologies (CFRT) to examine ongoing and medium-term trends related to fintech in the securities and financial markets worldwide.

Thus, regulators are faced with the challenges as well as opportunities to evolve their functioning more effectively through the adoption of new technology solutions. It is in this context that the CFRT committee will help the SEBI deal with relevant risks and challenges.

The Committee would examine, deliberate and advise the SEBI on an ongoing basis on the following issues:

  • Recent and medium term trends (within next 5 years) in fintech developments in securities market worldwide.
  • Opportunities and challenges from new fintech solutions and its impact on Indian Securities Market.
  • Fintech solutions for further widening and deepening of Indian securities market.
  • Approach and framework for the regulatory sandbox in Indian market conditions to facilitate the adoption of fintech and promote financial innovations.
  • Preparing the Indian securities market and regulatory framework to adapt to new fintech solutions while promoting market integrity, market development, consumer protection and managing change, business models and market disruptions.
  • Assessing technological solutions for SEBI regulatory functions viz. information management and data mining, risk management including cyber security, intermediary supervision, consumer protection, etc., through the application of new technological solutions like applying distributed ledger technology, Big Data, data analytics, Artificial Intelligence, machine learning etc.
  • Technology capacity building by Indian securities market in general and SEBI in particular.

Start-up funding may come under SEBI lens (The Hindu), Rated: A

The Committee on Financial and Regulatory Technologies will, among other things, deliberate on financial technology solutions for “further widening and deepening of the Indian securities market” through traditional and alternative platforms, including peer to peer lending and equity crowd-funding.

While questioning the manner in which these entities help start-ups raise funds, the regulator has said that any violation would be “construed as organising an unrecognised stock exchange” and that SEBI would be “constrained to initiate action.”

Under the current legal framework, issue of shares to more than 200 persons constitutes a public issue and needs SEBI approval.

Rubique Appoints Vodafone Ex- M-Pesa CEO Suresh Sethi & Alexia Yannopoulos of Apis Partners as Directors (PR Newswire), Rated: A

Rubique, the one-stop online marketplace providing technology-enabled end-to-end solutions to financing needs of individuals & SMEs has announced the appointment of two directors- Suresh Sethi, EX-CEO & Managing Director of Vodafone M-Pesa and Alexia Yannopoulos Director at Apis Partners LLP.

Asia

CFTE is Helping MAS Assist ASEAN Finance Professionals Gain FinTech Skills (Cryptocoins News), Rated: AAA

The Centre for Finance, Technology and Entrepreneurship (CFTE) has revealed that it is setting up an international hub in Singapore designed to aid finance professionals gain the necessary skills in FinTech.

Working closely with the Monetary Authority of Singapore (MAS), CFTE has been formalizing plans to expand its education platform to the Association of Southeast Asian Nations (ASEAN), according to a report from FinTech Finance.

CFTE is to deliver courses that cover a range of areas in the finance industry. These include artificial intelligence, application programming interfaces (APIs), coding, blockchain, and RegTech. They will either be delivered online or via in-class training.

P2P lending growth slows in July (Yonhap News), Rated: AAA

South Korea’s peer-to-peer lending growth slowed in July after financial regulators asked lenders to tighten guidelines for individual investors, industry data showed Tuesday.

According to data compiled by the Korea P2P Financial Association, lending between peers grew by 104.7 billion won (US$93.1 million) in July to a cumulative 1.2 trillion won.

In comparison, P2P lending grew by 172.8 billion won in June.

P2P financing industry to absorb investors’ demands (Korea Herald), Rated: A

It is especially likely to absorb the investor cluster who, under the government’s new restrictive measures on real estate transactions, are swiftly turning away from banks and seeking for an alternative source of investment income, according to industry watchers.

In late May, the association enforced a set of guidelines, setting a 10 million won ceiling on the investment per business unit, responding to the government’s gesture to protect investors from potential dangers of the new investment platform.

INDONESIAN peer-to-peer (P2P) lending marketplace PT Amartha Mikro Fintek (Amartha) encourages and targets “millenials” to invest in micro-businesses and SMEs through the Amartha Short Movie Festival.

The Amartha Short Movie Festival is a competition divided into two categories which are short documentaries with the theme empowering micro-businesses and short fiction movies with online peer-to-peer lending as the theme. Applications are open from August 8 to October 9, 2017.

CARICOM

Vincentian Set to Launch the Region’s First Equity Crowdfuning Startup Company (St. Lucia Times), Rated: AAA

Global Domination Capital is set to be the regions’ first fintech startup company, offering equity crowdfunding and peer-to-peer lending solutions to the OECS countries and  the CARICOM member states. This includes Barbados, Jamaica, The Bahamas, Trinidad and Tobago and The Turks and Caicos Islands.

Global Domination Capital is expected go live and accept both new investors and borrowers to the platform by late September.

Authors:

George Popescu
Allen Taylor

Online Lending SaaS: Small Business Lending Keeping Up With the Times

online lending technology

D+H is a global payments and lending technology provider based out of Toronto serving nearly 8,000 financial institutions. With revenues of over $1.5 billion and 5,500 employees, it’s a bona fide giant in the financial technology industry. The company has realized the shift towards digital lending and mobile-first experience, recently launching Total Lending Small Business, […]

online lending technology

D+H is a global payments and lending technology provider based out of Toronto serving nearly 8,000 financial institutions. With revenues of over $1.5 billion and 5,500 employees, it’s a bona fide giant in the financial technology industry. The company has realized the shift towards digital lending and mobile-first experience, recently launching Total Lending Small Business, a mobile-first lending solution designed to boost traction for traditional lenders and improve the lending experience for small business owners across the United States.

Product Development

D+H hired David Boswell as head of its new lending products division. Under his supervision, they researched the banking sector for a year-and-a-half to spot opportunities for a new product. Before launching the solution, it was put through rigorous testing and, in March 2017, Total Lending Small Business kicked off. A cloud-based SaaS solution developed to target the small business space, banks and other lenders can use it to deploy an online loan application for small business owners in record time.

The solution is a lot quicker and more efficient than paper-based branch models and processes more loan applications with the same amount of resources. It is a pure win-win as there is revenue augmentation without additional costs.

Rather than try to find something new and exotic, D+H went back to the basics and tried to tackle the problem of borrower experience in the loan application process. Even though the solution is primarily all about elevating lender efficiency and borrower experience, the product offers much more. Since it is cloud-based, it will help lenders reduce overhead expenses such as office space and manpower while reducing the chance of human error. That will improve processing speed and customer satisfaction.

Features of Total Lending Small Business

Total Lending Small Business is an entirely online-based application available in both mobile and desktop versions. The USP is its interactive interface. Borrowers can have virtual conversations that develop questions, and answers, on the go. This allows for a hassle-free experience compared to other platforms that use a preset form for all borrowers.

The platform is particularly beneficial as small business owners sometimes don’t really understand the technical details associated with loan applications. Through live interaction, the platform is able to intuitively interact with each borrower. For now, D+H is sticking to the application process, but the company is expected to add other features to the platform that include uploading documents, upselling, and underwriting.

Buy or Build

Some banks are not large enough to develop their own platform or technology solution. Therefore, it makes sense for them to buy a specialist solution. D+H aims to target about 100 banks up to $20-30 billion in revenue.

Small business lending has proven to be an Achilles heel for banks. The financial crisis led banks to vacate this space as the risk was not consummate to returns. But with growing competition in other lending segments, banks have finally started taking the SMB lending space seriously again. They are either developing their own SMB lending solutions or are partnering with alternative lenders with a proven track record.

One association that has made waves in the lending space is the Chase/On-Deck partnership. On-Deck has turned into a tech provider while Chase Bank is leveraging its existing client base and balance sheet to penetrate the SMB lending market.

Over the years, SMB lending has evolved manifold, and a lot of non-traditional lenders are beginning to enter the space. This makes it pertinent for brick-and-mortar lenders to shore up their SMB customer bases by introducing lending systems commensurate with the technology currently prevalent in the market.

Mortgage Lending Solution

Mortgage lending solution is the principal business of D+H. The company got its start in the early 2000s when the internet gaining popular traction. The premier software is available as an SaaS deployed in the cloud or an on-premise platform. Its main targets are online mortgage businesses.

Solutions range from POS origination, processing, and compliance documentation. All these solutions are highly customized for the customer experience. Earlier, only 2% of mortgage applications were completed on mobile devices, but in last 2-3 years, that number has jumped to 20%. This significant increase in number is due to busy lifestyles and smartphones increasingly replacing desktops and laptops for private browsing.

While developing its SMB lending platform, D+H placed specific emphasis on this shifting trend.

Responding to the trend, D+H launched its second Mortgagebot solution. Mortgagebot LOS, a total lending mortgage solution, has signed over 200 customers in two months since its launch. Company executives believe the growing interest in a mobile-optimized experience will lead to greater demand for the product.

Next big thing: Smartphones

These days, more people rely heavily on their smartphones, yet lending companies don’t develop or design software tailor-made for them. D+H believes the introduction of smartphone solutions into the technology mix will completely change how lenders and borrowers interact. The company has been getting feedback from testing its solution on a real user base to ensure an intuitive customer experience.

Making a difference

Many players have entered the market with their white-label online lending platforms. TransUnion recently launched Find My Offer – “a set of configurable white-label web screens that support a lender’s consumer prequalification and digital prescreen initiatives.”

All of these online lending platforms have a similar set of features, and lenders depending on such platforms to boost growth will find themselves behind the curve. Such platforms are a commodity now, and compulsory for operating a lending business.

Author:

Written by Heena Dhir

Thursday March 20 2017, Daily News Digest

China mobile payments

News Comments Today’s main news: New York investigates online lenders. Elevate’s roadshow. AltFi adds Lendix to Data Analytics Platform. Kreditech Russia achieves MFC status. Today’s main analysis: Age of advice manufacturing has arrived. Today’s thought-provoking articles: How fraudsters are gaming online lenders. Framing the debate around disclosure standards in Europe. Chinese smartphone users flock to risky investments. United States New […]

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United States

New York Regulators Investigating Online Platform Lenders (BNA), Rated: AAA

New York state regulators will continue investigating online platform lenders to see if they have violated state lending laws or if their activities require licensing, regardless of how the Legislature handles a proposal to broaden regulation of the industry by statute, an official with the state Department of Financial Services (DFS) said March 27.

The proposal would extend state licensing requirements to all lenders making loans of $25,000 or less for personal uses and of $50,000 or less for business uses. The requirements now apply to those loans only if the interest rate exceeds the state’s 16 percent usury cap.

The proposal also specifies that the licensing requirement applies to any company that solicits loans and buys loans. That apparently would cover online lenders that partner with banks in some standard industry set-ups, such as one in which the online platform originates the loan and a bank partner issues the loan and then sells it within days to the online lender, which then both securitizes and services the loan.

Elevate Performs a Roadshow (Retail Roadshow), Rated: AAA

Download the documentation here.

The age of advice manufacturing is here (Financial-Planning), Rated: AAA

The new DoL fiduciary rule is about fully aligning the interests of the individual investor and the investment management industry. While the original lobbying efforts against the new fiduciary rule argued that it would drive up costs and reduce access to investment advice for regular Americans — we are witnessing the exact opposite in the marketplace.

The current administration has moved to delay the rule’s applicability and could repeal the new rule entirely. However, the financial services industry has already moved to comply with the rule and smaller investors who did not have access to financial advice previously will benefit from a best interest standard as well as digital advice technology.

However, even without the fiduciary rule in place, technology is the other disruptive force, which will move us towards new standards. Personalized digital advice solutions are helping advisers take into account more than just financial products. As a result, investors have more awareness of their entire financial picture. Advisers would be smart to embrace change, whether from regulations or technology, because the industry is quickly moving in a new direction.

ADVICE MANUFACTURING RISES

The new DoL rule, coupled with the rise of technology-driven TAMPs, managed account platforms, and now more holistic digital advice platforms, is fundamentally shifting the entire industry from product manufacturing to “advice manufacturing.” The investment management business, while perhaps not yet a fully formed concept yet in the minds of all industry executives, is now in a race to manufacture scalable personal advice solutions. Digital advice platforms will be utilized to fulfill both the near term regulatory requirements of the fiduciary rule, but perhaps more importantly, to ensure long-term offensive competitiveness.

How fraudsters are gaming online lenders (American Banker), Rated: AAA

Online lenders’ advantage in speed has exposed them to a growing problem: a type of fraud called loan stacking.

People are taking advantage of the quick loan approval times online lenders offer to game the system by applying for multiple online loans in a short time before credit files update to reflect the increased debt load. By doing so, they are able to get more money than they would typically qualify for in any one loan.

One surprise in investigators’ early findings is that online lending fraudsters tend to hit phone companies first.

According to TransUnion data, stacked loans in the superprime segment are 10.5% more likely to default than loans without stacking, whereas stacked prime loans are only 3.2% more likely than non-stacked loans to go bust.

ID Analytics buckets loan stackers in three categories: fraudsters, shoppers, and the over-leveraged. Fraudsters deliberately apply for loans they have no intention of repaying. Loan shoppers are financially savvy consumers who apply for several loans because they’re smart enough to know they can shop around and get the best rate. The third category is consumers with financial problems who need more than one loan to make ends meet.

Second-Quarter 2017 Corporate Credit Market Insights (Morningstar), Rated: A

Key Takeaways

  • Rising federal-funds rate did not preclude fixed-income indexes from rising in the first quarter.
  • Corporate credit spreads remain near the tightest quartile they have registered over the long term.
  • Corporate credit rating upgrades continue to outpace downgrades.

Chinese Lender Says It Didn’t Gloss Over Regulation Risks (Law360), Rated: A

Peer-to-peer lender Yirendai Ltd. urged a California federal court on Tuesday to toss a shareholder suit alleging it glossed over risks from the Chinese government’s crackdown on online lending fraud, saying investors’ “dire predictions” of revenue loss from the new regulations were never actualized.

The China Banking Regulatory Commission’s new peer-to-peer lending regulations have not caused revenue losses by limiting offline customer sourcing, Yirendai said, arguing the stock-drop suit fails because securities fraud claims cannot rely on false premises.

Online Lenders: The ‘Modern Day Loan Sharks’ (The Epoch Times), Rated: A

Jamar White had no idea what he was getting into when he took out a nearly $50,000 loan with an online lender in 2013 for his New York-based restaurant Buffalo Boss. “Like a lot of small businesses, we made a bad decision by getting into high-interest loans,” he said.

He later realized that the annual interest rate on his loan was in fact between 40 and 50 percent.

White is just one of the small-business owners around the country who, having failed to secure a traditional loan from a bank, turned to online-based alternative lenders to stay open. What they encounter are loans without clearly stipulated terms and a dearth of regulation and oversight.

According to Doxford, many of the predatory lenders approve loans based on the average daily bank balance of the company they’re lending to.

California-based Opportunity Fund, the nation’s largest nonprofit microlender, has formed a dataset about the conditions provided by these alternative lenders. They gained the data through their own clients who they refinanced.

They found that the APR was 94 percent. One loan was for 358 percent, which Opportunity Fund called “shocking.”

Proliferating AI-backed tools remake wealth management (Financial-Planning), Rated: A

It’s a piece of the continued creep of AI into financial advice — a recent study by Bloomberg determined that 58% of an adviser’s work can now be digitized and done by computers.

Like IBM’s Watson, Salesforce says its Einstein can analyze client sentiment based on data profiling and content analysis to provide insight. The suite of tools combines with aggregation to allow advisers to scan across a client’s wealth holdings.

That’s the name financial services consultancy Synechron chose for its matrix of 14 financial management tools, from robos to chatbots, all powered by proprietary AI as well.

How states can still outmatch OCC over fintech (American Banker), Rated: A

The OCC’s draft charter requirements, while well-meaning, appear too cumbersome to help the firms most likely to benefit from more consistent regulations. The agency’s misfire presents the states with an opening to come back, but they will need to change their playbook — and will likely need to ask Congress for a little help.

So far states have objected to the OCC’s fintech charter on technical and substantive grounds. The states’ primary technical argument is that the OCC lacks the authority to offer charters to fintech firms, an assertion the OCC disputes.

The “dangerous” argument holds that a federal charter will preempt state consumer protection laws and replace them with inferior federal laws or the more lenient laws of the bank’s home state. The “unnecessary” argument holds that states are better positioned to facilitate innovation and growth by fintech firms and the OCC would muck things up. The “state sovereignty” argument holds that the OCC charter represents an inappropriate intrusion by the federal government into state jurisdiction.

Further, our current system already allows some states the de facto authority to regulate the entire country. Large states or states uniquely important to the financial system, such as New York, have outsize influence on what products and services can be provided. Companies need to build their product to meet bigger states’ regulations to remain competitive — effectively allowing large states to limit the options of the citizens of smaller states.

Open Source Data:The Last Frontier of the Fintech Revolution (Crowdfund Insider), Rated: A

In today’s Fintech ecosystem and the larger consumer privacy concerns, there are questions regarding the regulatory oversight looming over issues like the United States’ Office of Currency and Comptroller’s newly proposed Fintech charter.

Should we take a lesson from the open source movement of the 1980’s and 1990’s and rise to the occasion as an industry to embrace the ability to make our data and information transparent? To enable the inner workings of how we approve transactions, issue credit and making investments available for consumers, regulators, and competitors?

In particular, they point out the following value propositions over proprietary formats:

  • Security
  • Affordability
  • Transparency
  • Perpetuity
  • Interoperability
  • Flexibility
  • Localization
United Kingdom

P2P fund manager cuts regular fixed income exposure as inflation worry kicks in (AltFi), Rated: A

Thesis Asset Management is slashing its exposure to fixed income across its range of seven model portfolios as uncertainty has increased over the outlook for inflation and interest rates.

He says the firm had briefly considered adding a little to fixed income exposure, but with the election of Donald Trump to the Whitehouse and the subsequent trend of rising inflation, they reversed course.

How to lend your money (PC Advisor), Rated: B

With savings accounts offering increasingly poor interest rates, what else can you do to boost your finances. Aside from stocks and shares, buying property or even selling your unwanted stuff online, you could try peer-to-peer lending.

Funding Circle

This is a well established peer-to-peer lender that specialises in loans to small businesses. So far the company has lent over £2.5bn, with 25,0000 businesses on its books. The UK government even granted Funding Circle £40m so it could help small companies with loans.

Zopa

The loans offered by Zopa are to a mixture of individuals and organisations, which provides a wide range of risk and rewards to choose from.

Ratesetter

Financial advice site moneyexpert.com says Ratesetter is a good place for beginners, mainly due to the layout and style of accounts.

European Union

Disclosure standards: framing the debate (AltFi), Rated: AAA

And while regulation is beginning to catch up with the burgeoning industry, disclosure standards and levels of transparency still vary massively amongst the myriad of marketplace lenders.

The European alternative finance sector is estimated to have grown 92 per cent to €5.4 billion last year. It continues to experience substantive growth. The players are diverse and the stakes are high.

At present both regulation and disclosure standards vary widely across Europe. In the UK the big four (MarketInvoice, Zopa, RateSetter and Funding Circle) are providing sufficient disclosure to allow third-party validation of their lending data. The consistency and proactive approach is positive – a good start that benefits investors as well as the wider industry. The Dutch are also starting to move towards jointly agreed upon standards. The ongoing debate is centered on the who, how and when.

Perhaps one of the most interesting initiatives in Europe is that of the crowdfunding sector in Germany. The German Crowdfunding Association (Bundesverband Crowdfunding) recently announced that its twenty-one members have adopted common rather stringent standards for reporting to investors.

AltFi Data Announces the Addition of Lendix to the AltFi Data Analytics Platform (AltFi Email), Rated: AAA

AltFi Data has today announced that the historic origination data of Lendix, the leading European SME lending platform, has been added to the AltFi Data Analytics platform. This allows all the information relating to loans originated by Lendix to be represented into AltFi Data’s established standards. Investors can now review a track record of net return, together with all supporting metrics, and perform like-for-like analysis against the other marketplace lending platforms that make up AltFi Data Analytics – including Zopa, Funding Circle, Ratesetter and MarketInvoice in the UK, and Prosper Marketplace in the USA. This represents the first time that standardised comparison has been made available outside of the UK and USA.

Kreditech Russia achieves Microfinance Company (MFC) status (Finextra), Rated: AAA

A new federal law in Russia aims to make the microfinance market transparent and understandable. It therefore requires the MFC status for all alternative lending companies operating in the country. As a Microfinance Company, Kreditech Russia is going to offer both consumer credit and deposit products.

Marketplace and P2P Lending: Viable or Not? (AltFi), Rated: A

Conceptually, the beauty of the matching nature of marketplace and peer-to-peer lending is that it is a perfect solution for matching supply and demand of capital and risks. Finding the right risk profile for the investor and matching maturity, currency, and tenor would eliminate a lot of regulatory hassle and burdens.

How do we get conventional fixed-income investors (pension funds, insurance funds, large asset managers) to properly engage with marketplace lending as an asset class?

Despite these obvious advantages, institutional investors have not yet fully embraced marketplace lending. Why?

Standardisation of data: How important is it for investors to be able to accurately compare risk and reward across the asset class?

At present, the lack of a uniform set of standards places severe obstacles for investors willing to invest across multiple marketplace lenders.

China

Swipe by Swipe, Chinese Smartphone Users Flock to Risky Investments (WSJ), Rated: AAA

In China, about 700 million people carry a smartphone, and many of them are comfortable sending money from their screens through the world’s busiest mobile-payment networks. That has created a crowdfunding wave bigger than anywhere else, a real-time experiment in a type of online investing proponents have long pushed in the U.S.

Swipe by swipe, the online money supply is helping to democratize investing and loosen capital markets. It also is propping up indebted Chinese companies and inflating bubbles in asset types from bonds to plastic pellets. And it is shifting more of the risks from China’s corporate debt load onto consumers.

Last April, crying investors flocked to Shanghai Kuailu Investment Group to demand their money back after its 13 fundraising platforms halted redemptions for about 38,000 customers who invested more than $2 billion, according to company documents reviewed by The Wall Street Journal. It had invested in at least 20 feature films, one starring former boxer Mike Tyson.

In a recent survey, about 70% of Chinese internet users said carrying cash is no longer a daily necessity. It is common for consumers to swipe from deal to deal on apps that advertise investment opportunities. The apps usually are connected to online payment services that supply the customer’s personal details and link to bank accounts.

Online finance is part of China’s wider shadow-credit system, where borrowings totaled $9.22 trillion in 2016, equivalent to 90% of gross domestic product, according to UBS Securities. The term shadow credit refers to lending outside the formal banking system and its regulations.

 

Chinese P2P Lenders Are Still Having Trouble Finding Bank Custodians (Crowdfund Insider), Rated: A

In the face of numerous scandals plaguing P2P lenders, commercial banks in China have been reluctant to take up custodial duties.

Even though the CBRA clarified that banks would not be responsible for P2P defaults, banks clearly only want to act as custodians to P2P lenders with a reputable track record.

Canada

A 5-year look at fintech in Canada (MaRS), Rated: A

The data demonstrates that over the last five years both highs and lows were evident in Canadian investment activity from angel investors, VCs and corporate VCs. Growth was marked, with a rise from US$87.21 million in investments in 2012 to US$367.51 million in 2016.

RBC introduces MyAdvisor to digitally connect clients with advisors for real-time advice (Newswire), Rated: A

A new digital experience for clients, using live video to connect them in real time with advisors, has been introduced by RBC.

MyAdvisor uses an online advice platform to digitally connect a client to an advisor, where both can view and adjust a dynamic “dashboard” showing the client’s savings and investment goals and establish actions to achieve those goals – all in real time.

Now being piloted in Ontario, MyAdvisor is using feedback from pilot participants to further shape the final product ahead of full national launch, to ensure it meets the financial needs of Canadians.

Authors:

George Popescu
Allen Taylor

Thanks to technology innovation- Payjoy raises $17.5 mil for mixed use

PayJoy installs on Android smartphones a bios-level in-house developed solution which allows to completely disable phone functioning remotely. Through this method, PayJoy is able to reduce payment delinquency by an order of magnitude in comparison with existing smartphone device financing solutions. PayJoy has announced on Monday, July 11th the close of a Round A for […]

PayJoy installs on Android smartphones a bios-level in-house developed solution which allows to completely disable phone functioning remotely. Through this method, PayJoy is able to reduce payment delinquency by an order of magnitude in comparison with existing smartphone device financing solutions.

PayJoy has announced on Monday, July 11th the close of a Round A for a total of $17,650,000 . The round was composed of $8mil in equity led by Union Sq Ventures; $4mil in venture debt lead by WTI which can be used for either corporate expenses as lending capital; and an additional $5.65 mil in debt capital. The valuation, which should be expected to be in a 3 to 6 the invested amount ($50mil to $100mil) was not disclosed. This round follows a previous seed round in October 2015 under the same structure with a $4mil equity, $1mil venture debt and $1mil in lending capital.

The founders expect this investment to finance the company until the end of 2017. However if lending volume grows faster than expected the company may need additional lending capital earlier.

The cost of defaults

The greatest headache for unsecured consumer lending has always been recovering from delinquents. Once a consumer defaults it is usually uneconomical for the lender to pursue the borrower for recovering the pending principal and accrued interest. This is because of the high litigation costs associated with pursuing the customer (versus the lending amount in consumer finance which is usually in thousands of dollars). This has resulted in an artificial increase in APRs for especially the sub-prime category, penalizing the good borrowers because of the few defaulters. Payjoy has been able to create a technological solution for this consumer finance problem.

The remote-phone disabling technology makes Payjoy special in the already crowded smartphone financing market as it allows a markup  in the range of 15-45% as compared to 200 to 500% for other financing companies.  The start-up has 3 patents filed on its unique locking technology and this technology can be extended from smartphone to any other electronic product as well.

Company history

San Mateo-based Payjoy was founded in February 2015 and has 22 people in the firm. The founders are Doug Ricket(CEO), Gib Lopez(COO), Mark Heynen(CBO) and Tom Ricket. It was launched at Stanford University’s StartX Accelerator and was subsequently selected for the Draper University FinTech Connection Forum and Village Capital’s 2015 FinTech program. Doug has a Masters from MIT and an MBA from Stanford. He has worked at Google and spent 2 years in Africa as a teacher which gave him the horizon to understand the credit and technology needs of the next billion consumers in the developing world. Gib has also received his MBA from Stanford. The company has raised $4.3 mil in capital, with equal proportions of debt and equity. Red Swan Ventures and Metamorphic Ventures were the lead for equity investors.

The startup was inspired by a friend of co-founder Doug, who launched an installment plan for solar kits in India. To improve the default rates, the company would switch off the solar systems when customers missed a payment. This gave Doug the motivation to create “kill-switch” technology which will remotely lock any electronic device by shutting off a microchip. The founders have classified their tech as “Hardware-as-a-service” with unique applications in consumer finance. The Fintech startup is currently active in California, Florida, and Texas and looking to roll out in the entire country in the coming year. It is acquiring customers by partnering with mobile stores, who are able to offer higher end smartphones via Payjoy to customers who do not usually qualify for buying a phone through contract services from any carrier. The company is looking to partner with carriers as well and has a pilot starting with a national carrier.

Product

Enabled by the new funds raised PayJoy will start offering an indefinite cell phone rental program which, to date, has been a great product for prime clients but does not exist for underbanked clients. In this program, each client will decide how much they are willing to pay monthly which will translate on how often they can upgrade their device. By paying more per month and by choosing a cheaper or a more expensive handset customers can have a new phone model as often as every 12 months or as infrequent as every 16 months.

Thorugh this indefinite rental program, PayJoy hopes to increase the customer life time value. This program is also psychologically positive for clients as it is not a debt product : customers can terminate at any time the program, and stop making payments if they return the device.

No credit history needed

The company has achieved great reception among immigrants as they have thin credit histories, thus historically condemning them to prepaid phones. Also according to the founder, over 25% of the United States is under-banked and Payjoy gives them an opportunity to own a great smartphone which they can pay over 3, 6, 9 or 12 months. This flexibility allows them to use all the apps and their complete features which are usually not available in cheaper smartphones. With the freelancing economy booming thanks to the likes of Uber, TaskRabbit, Instacart etc, it is vital that workers have the technology to access such apps 24/7. Therefore, a great smartphone is not a splurge but a necessary investment.

The company would look to expand to Mexico, Brazil, India and other developing countries were credit is not well developed, and will essentially allow Payjoy to lend by using the smartphone as collateral. The lender will expand its association with customers by offering them further credit depending upon their payment history and by re-collateralizing their smartphones. The company has also included a damage protection plan so that the borrower is incentivized to keep paying his debt even if the phone were to break down.

Default rates and numbers

To date, PayJoy has financed 1000s of phones in partnership with 100s of retail locations. All these strategies, according to the founder, have led to a default rate in just single digits versus the 30-40% default rates for similar unsecured lenders. The company has completed originations of over $1 mil to a couple of thousand borrowers. The products financed range from $150 to $700 and the average transaction size is $500.

Next steps

The company is currently only focused on Android as it fits with its target demographics and Apple is famously obsessed with centralized control of its iPhones. The start-up would have to scale the model before it can think of convincing Apple to allow it to have a “kill-switch” for the iPhones.   The company is expanding aggressively to that end, with volume in February 2016 surpassing the entire Q4 for 2015.

On the debt side, the company has structured an off-balance sheet funding structure. It is not taking a direct loan; they have created an external fund which purchases all the loan contracts originated by Payjoy and holds them to maturity. Debt investors put money in the fund and will directly not be lending to Payjoy.

Prepaid handset market in the United States is estimated to be over $15 bil annually. Payjoy’s competitors have not been able to penetrate more than 2-3% of the market. The low default rates because of its proprietary technology have allowed the startup to offer the lowest lending rates in the market. This, in turn, will allow it to capture significant market share. The application of its technology are not limited to smartphones or America, and it can revolutionize how we create feasible credit for third world countries without charging exorbitant rates.

For readers who are familiar with Pokemon Go, and the need of high end with long battery phones, it should not be a surprise that PayJoy is even planning a promotional campaign around Pokemon Go.

Author:

George Popescu
George Popescu