Thursday August 15 2019, Weekly News Digest

Germany yield curve

News Comments Today’s main news: Prosper reports Q2 results. Figure to raise $1B. Funding Circle shares rise. RateSetter to stress test provision fund. LendInvest raises 200M GBP. Two more Chinese P2P firms shut down. N26 eyes IPO. Today’s main analysis: Gen Z’s credit market activity. Today’s thought-provoking articles: Radius Bank’s rebranding to banking as a […]

The post Thursday August 15 2019, Weekly News Digest appeared first on Lending Times.

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United States

Prosper Reports Second Quarter 2019 Financial Results (Business Wire), Rated: AAA

Prosper, a peer-to-peer lending platform connecting borrowers and investors, today reported financial results for the second quarter of 2019. Personal loan originations increased 27% compared to the first quarter of 2019, and the company has now generated positive adjusted EBITDA in eight out of the last nine quarters.

Financial summary:

  • Total Net Revenue, which includes the non-cash impact related to warrants to purchase preferred stock, increased to $42.9 million in Q2 2019 compared to $31.7 million in Q2 2018.
  • Core Revenue(1), which excludes the non-cash impact related to warrants to purchase preferred stock, decreased to $50.7 million in Q2 2019 compared to $52.3 million in Q2 2018.
  • Net Loss decreased to ($0.6) million in Q2 2019 compared to a Net Loss of ($12.6) million in Q2 2018.
  • Adjusted EBITDA(1) decreased to $5.3 million in Q2 2019 compared to $8.8 million in Q2 2018.

Key Operating and Financial Metrics (Unaudited) (in thousands)

SoFi Co-Founder’s New Startup Aims to Raise Funds at $ 1 Billion (Bloomberg), Rated: AAA

Mike Cagney, the former embattled chief executive officer of Social Finance Inc., is raising more than $100 million for his new startup Figure Technologies Inc. at a $1 billion valuation just less than two years after its founding, according to people familiar with the matter.

San Francisco-based Figure uses blockchain technology to provide home equity loans online in just a few days, with approval happening in minutes. The company made its first loan in 2018, and is on pace to provide more than $80 million in loans this month alone, according to one of these people, who asked not to be named because the details are private.

As Gen Z Comes of Age, Credit Market Activity Shows Significant Growth (TransUnion), Rated: AAA

Gen Z, those individuals born in 1995 or after, increasingly took part in the consumer credit market during the first half of 2019. The newly released Q2 2019 Industry Insights Report from TransUnion (NYSE: TRU) found that growth is coming from the entire Gen Z demographic who are 18 years or older – not just those who became credit eligible for the first time.

Approximately 14 million Gen Z consumers (44% of this group) were carrying a balance as of Q2 2019, up from 11 million in Q2 2018, according to the report. The number of Gen Z consumers who were credit eligible (18 years or older) increased by 4.5 million in the last year, rising to 31.5 million in Q2 2019. Over the next three years, it is anticipated that another 13 million Gen Z consumers will become credit eligible.

Gen Z Consumers Carrying a Balance Rising at High Rates

Credit Product Q2 2019 Q2 2018 YOY Growth %
Auto 4,376,000 3,072,000 42%
Credit Card 7,746,000 5,483,000 41%
Mortgage 319,000 150,000 112%
Personal Loan 746,000 534,000 45%

Credit cards are the most popular product among Gen Z consumers, with 55% carrying a balance—though they still only constitute 5% of the U.S. population carrying card debt. Mortgages had the largest year-over-year growth rate spike with Gen Z consumers (112%), but from a low base. Mortgages are still the credit product Gen Z consumers are least likely to have, with only 0.5% of mortgages held by members of this generation.

The Percentage of Gen Z Consumers Carrying a Credit Balance is Growing (Data as of Q2 2019)

Credit Product Gen Z
(carrying a balance)
All Generations
(carrying a balance)
Gen Z
Percentage
Auto 4,376,000 86,064,000 5.1%
Credit Card 7,746,000 148,141,000 5.2%
Mortgage 319,000 68,368,000 0.5%
Personal Loan 746,000 19,556,000 3.8%

Q2 2019 Credit Card Trends

 Credit Card Lending Metric Q2 2019 Q2 2018 Q2 2017 Q2 2016
 Number of Credit Cards 437.1 million 420.0 million 409.8 million 391.0 million
Borrower-Level Delinquency Rate (90+ DPD) 1.71% 1.53% 1.46% 1.29%
Average Debt Per Borrower $5,645 $5,543 $5,422 $5,247
Prior Quarter Originations* 15.3 million 14.5 million 15.0 million 15.3 million
Average New Account Credit Lines* $5,773 $5,649 $5,817 $5,466

See TransUnions infographic here.

Atlanta-Based LendingPoint #17 on Inc. 500 List of Fastest Growing Private Companies in the USA (The Daily Times), Rated: A

Inc. Magazine today ranked commerce platform LendingPoint No. 17 on its 37th annual Inc. 5000, the most prestigious ranking of the nation’s fastest-growing private companies. LendingPoint joins companies such as Microsoft, Dell, Pandora, Timberland, LinkedIn, Yelp, Zillow, and many other well-known names who gained their first national exposure as honorees on the Inc. 5000. LendingPoint has hit successive funding records year-over-year and is on pace to reach $100 million per month in loan originations by the end of 2019.

Fintech Firm OppLoans Named to Inc. 500 for Fourth Consecutive Year (Globe Newswire), Rated: A

OppLoans has been named to Inc. magazine’s prestigious 2019 Inc. 500 list for the fourth year in a row. Only four companies on this year’s list, including OppLoans, have placed on the Inc. 500 at least four or more times. With a three-year annual revenue growth of 1,435%, OppLoans placed #321 on the annual ranking of the fastest-growing companies in the U.S., 19 spots higher than the firm placed in 2018. OppLoans has achieved rankings of #340 (2018), #219 (2017) and #445 (2016).

FINICITY TO POWER DIGITAL SOLUTIONS FOR EMPLOYER STUDENT LOAN CONTRIBUTIONS (Finicity), Rated: A

Finicity, a provider of real-time financial data access and insights, announced today the rollout of its Student Loan Account Verification product, which will simplify employer benefit repayment programs, where employers are looking to contribute to or help repay employee’s student loans.

Fannie, Freddie to Consider Alternatives to FICO Scores (WSJ), Rated: A

One firm’s dominance over the credit scores used to vet many U.S. mortgages is getting a shake-up.

Fannie Mae and Freddie Mac, two mortgage-finance firms that back nearly half of U.S. mortgages, will have to consider credit-score alternatives to Fair Isaac Corp.’s FICO score when determining a mortgage applicant’s creditworthiness, under a new rule issued on Tuesday by the mortgage-finance giants’ federal overseer.

Zoca Loans Review: Installment Loans for Bad Credit Borrowers (Moneycheck), Rated: A

By going through a simple online application process, you have the chance to obtain between $300 and $1,000 – all of which can be funded the very same day.

HSBC launched a digital lending platform for online personal loans (Business Insider), Rated: A

HSBC USA partnered with Amount, a tech provider for financial institutions, to launch a digital lending platform that streamlines online personal loan applications. Consumers can evaluate loan options, submit applications online, and receive a credit decision within minutes.

HSBC will initially lend up to $30,000 with terms ranging from two to five years and it says funds will be available as quickly as the next day. The bank will charge fixed monthly payments starting 50 days after customers receive the loan. Amount’s platform — which has cumulatively originated $6 billion in loans to 800,000 customers — has been customized to HSBC’s preferences, including its proprietary risk models.

Source: Business Insider Intelligence

Virtual Bank Aims to be Primary Account Engine Behind Fintech Brands (The Financial Brand), Rated: AAA

It’s Time For Regulators To Expand Opportunities For Smaller Investors (Forbes), Rated: A

In the past decade we’ve seen a new financial movement take shape: a focus on giving more investors a seat at the table. More and more people and organizations are realizing that investors of all income levels and backgrounds could (and should) have the opportunity to access more asset classes. In this technology-enabled age of access, data and transparency in investing, there is an opportunity to update our laws to ensure that smaller investors are not excluded from the opportunity to create wealth — opportunities that have emerged under the financial ethos of fintech: crowdfunding, peer-to-peer, financial literacy and inclusion.

Former Coinbase CTO Balaji Srinivasan Joins DeFi Blockchain Project Findora (Yahoo! Finance), Rated: B

Balaji Srinivasan, the former CTO of Coinbase, has just joined decentralized finance blockchain project Findora.

Tricolor Launches New, Affordable Auto Insurance for Low Income, Credit Invisible Consumers (Globe Newswire), Rated: B

Tricolor, the used vehicle retailer focusing on the sale and financing of vehicles to the Hispanic consumer, today unveiled a groundbreaking new affordable auto insurance option for low-income and credit invisible customers through its affiliate company Tricolor Insurance. After testing the product earlier this year, Tricolor will begin rolling out the new insurance offering throughout all of its markets in Texas and California.

Artivest Achieves Critical Platform Momentum, Announces Executive Leadership Appointment (Yahoo! Finance), Rated: B

To date in 2019, Artivest, a multi-billion-dollar alternative investment platform, has achieved exponential organic growth across nearly every aspect of the business, greater than any previous full calendar year in the company’s history. The firm has attracted more new investors, allocations, investment managers, and—most importantly, in regard to how the wealth management industry gauges the success of digital platforms—has surpassed $1 billion in new investments transacted online by high-net-worth investors into private funds, at low minimums.

Netflix alum Steve Swasey to lead communications at Healthline Media (MMM-Online), Rated: B

Healthline Media has hired Steve Swasey as VP of communications, a newly created role at the health-focused publishing company.

In the first half of 2016, he worked at online lending marketplace Lending Club as SVP of corporate communications.

United Kingdom

Funding Circle Shares Rise on Positive Report (Crowdfund Insider), Rated: AAA

Last week, online lender Funding Circle (LSE:FCH) released its 6-month report and the shares have responded positively to the numbers. Six-month Revenue was reported at £81.4 million versus H1 2018 at £63.0 million – up 29%. Loans under management rose 37% to £3.54 billion and originations jumped 14% to £1.19 billion.

Funding Circle went public in 2018 priced at 440 pence per share. Funding Circle raised a gross amount of £300 million garnering a market cap of around £1.5 billion.

RateSetter to introduce stress testing to provision fund (P2P Finance News), Rated: AAA

RATESETTER is planning to introduce stress testing to its provision fund over the next financial year.

The ‘big three’ peer-to-peer lender’s provision fund is a buffer that protects investors against losses should any of its loans default. Borrowers pay cash into the provision fund in accordance with RateSetter’s assessment of their creditworthiness.

LendInvest Secures £200 Million Investment from the National Australia Bank to Expand Reach in Buy-to-Let Market (The Fintech Times), Rated: AAA

LendInvest has now raised over £1.8 billion of debt and equity from investors, making LendInvest one of the largest non-bank mortgage lenders in the country.

This new funding expands LendInvest’s capacity to lend in the UK Buy-to-Let market. LendInvest launched its first Buy-to-Let mortgage product in late 2017 after agreeing a substantial funding line with Citigroup. LendInvest has already lent more than £370 million in Buy-to-Let loans and is taking market share in the bank dominated market. In June this year, LendInvest also become the UK’s first Fintech business to securitise its own portfolio of assets worth £259 million, which received a AAA rating from Moody’s and Fitch.

SME online fashion retailers face barriers to innovation, Klarna (Retail Tech Innovation Hub), Rated: A

Small online fashion retailers in the UK are open to embracing innovative technologies, but various challenges are preventing widespread adoption, according to research by Klarna.

In terms of challenges, 53% said the cost of introducing flexible payment options was the biggest barrier to adoption.

Source: Klarna

SME online retailers look to overcome barriers to realise innovation ambitions (Retail Times), Rated: A

The research  conducted across 100 UK SME decision makers at online retailers in 2019 — shows the UK’s SMEs understand the need to embrace flexibility and innovation. Over the next 12 months they plan to prioritise investing in flexible payment options (49%) and e-commerce capabilities (48%) to meet consumer demand for a frictionless shopping experience.

Tandem Bank leverages Open Banking to offer competitive mortgages (Finextra), Rated: A

Ex-RateSetter business finance head launches new P2P platform (P2P Finance News), Rated: A

RATESETTER alumni Brian Cartwright has launched new alternative property lender Nexa Finance, with a focus on the East Midlands.

Cartwright (pictured), managing director at Nexa, previously worked as head of business finance at ‘big three’ peer-to-peer lender RateSetter.

His new venture, which bills itself as a regionally-focused business lender, aims to connect East Midlands-based small- and medium-sized enterprise (SME) property developers and house builders with funders.

Personal Finance Society publishes P2P guide following uptick in queries (P2P Finance News), Rated: A

MEMBERS of the Personal Finance Society (PFS) have been showing an increased interest in peer-to-peer lending, leading the PFS to produce its own ‘good practice’ guide to P2P.

The financial planning trade body has partnered with Octopus Investments to create the guide, which tells advisers that recommending P2P products could help them to increase their own assets under management, adding that “for suitable clients, it could prove a useful vehicle for excess cash holdings which may currently fall outside of the adviser’s view.”

Atom Bank, iwoca, Modulr Finance, & Currencycloud, All Benefit from BCR Grant (Crowdfund Insider), Rated: A

The BCR has awarded £10 million each to the following platforms:

I Never Got Paid From Winning Wonga Fantasy League in 2010 (TechRound), Rated: A

I worked for Wonga.com in 2010, back when you couldn’t even go to the bathroom without hearing their jingle on the radio. Like most offices today, everyone put in £10 to play in the office fantasy league and with Van Persie and Rooney in their prime, this was my year.

After doing some calculations, my £160 owed to me in 2010 would now be worth £2,752. (based on £24 per month for 9 years)

Without the price cap, you have 4 of those years at £30 per month. Making the total figure £3,040.

But again, I am being kind. This does not include default charges of £25 per month for every missed payment.

China

Shanghai-based Zendai closes two P2P units worth US$ 1.4 billion as Beijing intensifies crackdown (SCMP), Rated: AAA

Zendai Group, a closely held private investment company in Shanghai, abruptly shut down two peer-to-peer lending units valued at 10 billion yuan (US$1.4 billion), as Chinese financial regulators ratchet up measures to clean an industry fraught with frauds and defaults.

Another Peer-to-Peer Lending Platform Stumbles (Caixin Global), Rated: A

Laocaibao, a peer-to-peer (P2P) lending platform ultimately owned by private conglomerate Zendai Group, is the latest casualty of the troubles that have engulfed the scandal-hit industry over the past three years.

Laocaibao has stopped providing loans and Zendai’s investment and consulting arm, which directed clients to the platform, has fired employees, according to statements from the companies and investigations by Caixin.

Peer to Peer Lender Fincera Targeted by Local Chinese Government in Demand to Cease Lending Operations (Crowdfund Insider), Rated: A

Fincera Inc. (OTCQB: YUANF), a China-based peer to peer lending platform providing access to capital for SMEs, has become the target of a local government attempt to shut down P2P lenders.

According to a note from Fincera, the Hebei provincial government, where Fincera is based, has requested that Fincera “cease P2P business operations.”

Fincera Announces Intention to Sell Kaiyuan Finance Center (Benzinga), Rated: A

To protect the interests of all its stakeholders-investors, borrowers, brokers, and employees, Fincera has announced its intent to sell the Kaiyuan Finance Center, which has an estimated valued of over RMB4.0 billion.

Fincera is the largest Hebei-based company operating in the peer-to-peer lending industry, comprising over 90% of the province’s market with approximately RMB9.0 billion in unpaid principal balance.

Fincera Inc. (“Fincera” or the “Company”) (OTCQB:YUANF), a provider of internet-based financing and ecommerce services for small and medium-sized businesses (“SMBs”) and individuals in China, today announced that businesses operating within the P2P (peer-to-peer) lending industry in Hebei province, including the Company, have received requests by the Hebei provincial government to cease P2P business operations. The Company vehemently disagrees with the request and is taking steps to protect its many stakeholders, including initiating the process of moving its business registration to Beijing where local regulators are supportive of the P2P industry.

Senmiao Technology Announces Unaudited Financial Results for First Quarter of Fiscal Year 2020 (Yahoo! Finance), Rated: A

Senmiao Technology Limited  (AIHS) (“Senmiao”), a provider of automobile transaction and related services and an operator of an online lending marketplace connecting Chinese investors with individual and small-to-medium-sized enterprise borrowers in China, today announced its unaudited financial results for the quarter ended June 30, 2019.

First Quarter of Fiscal 2020 Highlights

  • Total revenues increased by 3,975% year-over-year to $5,094,440 from $125,026
  • Gross profit increased by 758% year-over-year to $1,072,128 from $125,026
  • Loss per share decreased by 50% year-over -year to $0.02 from $0.04
European Union

German mobile bank N26 eyes eventual IPO, CEO tells newspaper (Reuters), Rated: AAA

Berlin-based digital bank N26 is planning an eventual stock exchange listing, its chief executive has told a German newspaper.

Google exec joins N26 as chief banking officer (Finextra), Rated: B

N26 today announced the appointment of Thomas Grosse as Chief Banking Officer. The newly introduced role is yet another step towards realizing N26’s ambition to become the first truly global and fully digital retail bank. As Chief Banking Officer, Thomas will oversee the set-up of regulated N26 banks and bank partnerships within the N26 Group, thus ensuring the highest standards in product, processes and customer experience across all markets.

Thomas will begin his new role at N26 this October, reporting directly to N26’s co-founder and CFO, Maximilian Tayenthal.

European Fintechs Escape Troubles Afflicting Established Banks (Bloomberg), Rated: AAA

Its latest fundraising gave Klarna, which facilitates online installment payments, a $5.5 billion valuation. European fintech companies raised $3.3 billion in venture capital in the first half of 2019, up from $1.9 billion in the same period last year, according to data compiled by CB Insights. In contrast, an index of European Union banks has dropped 39% the past 18 months.

FlixMobility and Klarna raise a lot of money (Tech.eu), Rated: A

Tech.eu Podcast hosted by Natalie Novick and Andrii Degeler is a show in which we discuss some of the most interesting stories from the European technology scene and interview leading entrepreneurs and investors from across the region.

EstateGuru Seeks to Carve Out €5 Billion of European Real Estate Financing Market (Crowdfund Insider), Rated: A

EstateGuru, a crowdfunding platform based in Estonia, is out with a release predicting it will claim €3-5 billion of the European real estate financing by 2025

EstateGuru adds that approximately 70% of SMEs lack access to credit and this is a major constraint to their growth. The company claims that 12% of all loans are set to be financed by alternative providers, including crowdfunding platforms, by 2025 as it appears to be interested in expanding into other financing verticals.

Barclays releases £100,000 for unsecured SME lending through app and online banking (Finextra), Rated: A

New research released by Barclays has revealed that over half of the UK’s small and medium enterprises (SMEs) have woken up at night with a new business idea (57 per cent), while the most popular time for an idea to be dreamt up is between 2-3 am (28 per cent).

Analysis revealed that almost half (48 per cent) of SMEs said that they are more creative at night, with over two fifths saying they are more productive outside of 9 – 5 working hours and keep a note pad and pen by their bed so they can jot down ideas. Half attributed this to having extra time to think away from daytime pressures.

In a High Street banking first, Barclays has launched £100,000 unsecured lending for SMEs on its award winning app and online banking platform, with thousands of SMEs set to benefit from access to faster finance.

German Fintech Finleap Announces New Business Unit “Finleap Connect” (Crowdfund Insider), Rated: B

FinLeap, the fintech start-up platform behind Germany’s SolarisBank, announced on Wednesday the launch of its new business unit, FinLeap Connect. According to FinLeap, the fintech platforms finreach solutions and infinitec solutions will become part of this business unit.

International

Global Yields Crash, GSKY for sale, LC earnings (PeerIQ), Rated: AAA

Today, more than $15 Tn in sovereign debt trades at a negative yield. In Germany, for instance, bond investors have moved from charging 75 bps last year to a willingness to pay for the privilege of providing < 0% money for 10 years.

Source: PeerIQ

GreenSky shares sank ~37% after a strong earnings report was paired with news that the marketplace was exploring a potential sale or merger.

Alternative Data: The Great Equalizer To Lending Inequalities? (Forbes), Rated: AAA

Alternative data has come into the spotlight in financial services, and it presages a significant shift in credit availability for unbanked and underbanked consumers. There are about 

Celsius Network Announces Increased Accessibility To Crypto-Backed Loans with Updated Terms for Borrowers (Business Wire), Rated: A

Celsius Network (work/), the industry-leading cryptocurrency platform, announces updated terms for borrowers aiming to provide millions of users with increased accessibility to low-interest crypto-backed loans. In addition, Celsius has reduced its minimum requirement for loan requests to $1,500. Recently Celsius announced it will expand its lending operations throughout Europe.

The latest updates to Celsius Networks lending service include:

  • Lowered minimum requirement for loan requests from $3,000 to $1,500
  • Up to 30% discount for CEL token holders paying loan interest in CEL with yearly rates as low as 3.47%
  • Borrowers can request a loan in USD or supported stablecoins
  • Loans are issued the same day
  • Members can apply through the Celsius mobile app or on the Celsius Network website

ONTOLOGY BLOCKCHAIN HIGH FIVES WITH DEFI (ICO Examiner), Rated: B

Ontology (ONT), a project offering linking and bridging solutions for multiple blockchains, has announced five new partnerships with companies operating in various geographical locations within the decentralised finance (DeFi) arena.

The latest handful of businesses to be attracted to Ontology’s framework of compatibility are Hong Kong registered Babel Finance, USA-focused crypto loan specialists SALT Lending, cryptocurrency services provider LendChain, Hong Kong-based Fountain Financial, and Chinese trading platform HOX.

Australia

CBA FY19 results a mixed bag, digital metrics positive and Klarna will be a hit (Verdict), Rated: AAA

CBA FY19 underlying net profit for the year to end June falls by 5% to A$8.49bn ($5.75bn). The bank’s overall results do not quite match analyst forecasts.  But there is a strong argument that in all the circumstances the results represent a resilient full fiscal.

Release of the CBA FY19 earnings also serve to highlight the bank’s success in upping its digital strategy.

Operating income is 2% lower on margin pressure.

Net interest income is down by 1.2% on lower retail mortgages margins and higher funding costs.

Business lending increases by 4% while retail mortgage growth is also strong delivering 4% volume growth for the year.

India

Faircent raises fresh funding from investors led by Das Capital & Gunosy Capital (India Times), Rated: AAA

Faircent.com, a P2P lending company, has recently raised capital in a funding round. The latest funding, led by Singapore-based Das Capital and Gunosy Capital, also saw participation by existing investors Starharbor Asia Pte Ltd, and M&S Partners Pte Ltd (Sin Growth Partner Pte Ltd).

Keep retail indulgence in check (livemint), Rated: A

Overspending is a big problem for many. “They buy things they don’t need with money they don’t have to impress people they don’t like. Not passing a judgement here, but money does buy some kind of happiness for many,” said Rachit Chawla, chief executive officer, Finway, a registered non-banking financial company (NBFC). 

Payday loans, digital lending platforms, and P2P lending have evolved, so has the penetration of credit card, personal loans, and the like. At a behavioural level, de-linking debt with shame has also made it easy for people to borrow.

Asia

Hexindai-backed Musketeer Completes Registration for Its P2P Platform in Indonesia (Yahoo! Finance), Rated: AAA

Hexindai Inc. (HX) (“Hexindai” or the “Company”), a fast-growing consumer lending marketplace in China, today announced that its invested Indonesian online lending platform, Musketeer Group Inc. (“Musketeer”), has completed registration for its peer-to-peer (P2P) lending platform with the Indonesian Financial Services Authority (OJK).

Musketeer’s P2P platform, PT Technology Indonesia Sentosa, is among the early batch of lending companies in Indonesia that have registered with OJK.

Philippines to Relaunch OF Bank to Create Digital-only Bank (Regulation Asia), Rated: A

The Overseas Filipino Bank was launched in January to cater to overseas Filipino workers, who will more easily be able to access digital-only services.

Latin America

Fintech Debt Investors Follow Equity Dollars Into Latin America (Forbes), Rated: AAA

Venture capital investments in LatAm startups quadrupled to a record $2 billion in 2018 from $500 million in 2016, according to an annual review by the 

Financial report for the second quarter and six months period 2019 (Yahoo! Finance), Rated: B

  • VEF made a follow-on investment in FinanZero, a Brazilian online consumer loan marketplace, who closed a Series B investment round of SEK 100 mln (USD 10.5 mln).

Authors:

George Popescu
Allen Taylor

The post Thursday August 15 2019, Weekly News Digest appeared first on Lending Times.

Thursday May 2 2019, Weekly News Digest

fintech deals india china

News Comments Today’s main news: OnDeck publishes Q1 financial results. LendingClub to move 350 jobs out of San Francisco to Utah. Salary Finance picks SoFi co-founder Dan Macklin as CEO. Klarna rolls out payment plans for physical stores in UK. HeZhong International sets terms for IPO. India tops China as Asia’s top fintech funding source. Today’s […]

The post Thursday May 2 2019, Weekly News Digest appeared first on Lending Times.

fintech deals india china

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United States

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United States

OnDeck Reports First Quarter 2019 Financial Results (PR Newswire), Rated: AAA

OnDeck today announced first quarter 2019 net income of $5.9 million, Adjusted Net Income of $8.3 million and gross revenue of $110.2 million.

Net income was $5.9 million, or $0.07 per diluted share, and decreased from the prior quarter’s net income of $14.0 million, 0.18 per diluted share, primarily due to higher loan loss provision, higher operating expenses and an accrual for income taxes.  Net income significantly improved from a loss of $1.9 million, or $0.03 per diluted share, in the year-ago period reflecting higher interest income from asset growth.

Adjusted Net Income was $8.3 million, or $0.10 per diluted share, and decreased from $15.9 million, or $0.20 per diluted share, in the prior quarter and increased from $6.4 million, or $0.08 per diluted share, in the year-ago period, reflecting the  aforementioned drivers.

Loans grew 3% sequentially and 19% from a year ago to $1.2 billion. Originations were $636 million, down from $658 million in the fourth quarter and up 8% from $591 million in the year-ago quarter.  The annual growth was broad-based with increases from both domestic and international operations as well as in both term loan and line of credit offerings. The average term loan size was unchanged sequentially at $53 thousand and was down from $58 thousand a year ago. Unit volume decreased 5% sequentially and increased 15% from the year-ago quarter.

Gross revenue was $110.2 million, essentially unchanged from the prior quarter, and up 22% from the year-ago quarter driven by higher interest income. Loan Yield of 35.6% decreased from 36.6% in the prior quarter reflecting a decline in portfolio performance while pricing was generally stable, and was unchanged from the year-ago quarter.

Interest expense of $11.3 million was essentially unchanged sequentially and decreased from a year ago despite a higher debt balance as borrowing rates improved. The Cost of Funds Rate continued to improve to 5.4%, a 20 basis point sequential improvement and a 140 basis point improvement from the year-ago quarter, as we refinanced debt at lower costs. First quarter financing activity included the extension and upsizing of four debt facilities aggregating to $595 million with improved terms.

Net Interest Margin was 29.5%, down from 30.0% the prior quarter as lower asset yields more than offset the impact from improved borrowing costs.  The increase in Net Interest Margin from 27.8% in the year-ago quarter was driven by improved borrowing costs.

Provision for loan losses increased to $43.3 million and the Provision Rate increased to 6.8%. The 15+ Day Delinquency Ratio increased 120 basis points sequentially to 8.7%.  Approximately half of the increase was in loans 15-89 days delinquent reflecting credit testing and economic trends, and the balance was in loans 90-days or more delinquent reflecting the change in our collection strategy for late-stage delinquencies. The Net Charge-off Rate increased to 12.2% and remains near the low end of our 12%-14% target range. The Reserve Ratio increased 30 basis points sequentially and 50 basis points from a year ago to 12.5%, reflecting portfolio quality trends and a higher proportion of 90-day plus delinquent loans, which have higher reserves.

Operating expenses increased from the comparable periods to $48.3 million, reflecting growth in the business and investments in our strategic initiatives, primarily technology and analytics. The Efficiency Ratio was 43.8%, up from 41.1% the prior quarter but improved from 49.3% in the year-ago quarter, while our Adjusted Efficiency Ratio* of 41.0% increased from 39.4% in the prior quarter and 40.1% in the year-ago quarter.

Provision for income taxes was $1.7 million compared to zero in 2018 when taxable income was completely offset by operating loss carryforwards. The effective tax rate was 24% and reflected a 21% U.S. federal rate, local and state income taxes, and losses in international subsidiaries.

Total assets increased 5% sequentially and 18% from a year ago to $1.2 billion primarily reflecting loan growth. Cash and cash equivalents was unchanged from year end at $60 million and decreased from $70 million a year ago. Other assets and other liabilities increased over the comparable periods as we recorded a net $28 million right-of-use asset in other assets and an equivalent increase in other liabilities stemming from the adoption of a new lease accounting standard. The 3% sequential increase in debt to $842 million was consistent with the growth in loans.

Total OnDeck stockholders’ equity of $309 million increased $10 million, or 3%, from year end and $45 million, or 17%, from a year ago.  Book value per diluted common share outstanding of $3.89 increased from $3.77 at year end and $3.40 a year ago.

Food Truck Satisfies as OnDeck Small Business of the Month (Yahoo! Finance), Rated: B

OnDeck today announced that Me So Hungry, a food truck business based in California, is its Small Business of the Month for April 2019. Owned by brothers Cory and Mike Ewing, Me So Hungry is the first food truck business to receive the OnDeck recognition.

LendingClub to slash San Francisco office, move 350 jobs to Utah (Mercury News), Rated: AAA

LendingClub, the online-loan marketplace, plans to wind down customer support operations in its home city of San Francisco and shift staff to Utah as it seeks to trim costs.

In an internal memo to staff reviewed by Bloomberg, Chief Executive Officer Scott Sanborn said LendingClub aims to have its teams completely out of San Francisco by December.

About 350 jobs will shift to Lehi, Utah, where LendingClub recently opened a new office.

SoFi Co-Founder Steps Back Onstage with Salary Finance (newKerala), Rated: AAA

Salary Finance announces SoFi co-founder Dan Macklin will be joining as CEO, Salary Finance Inc. (the US arm of the group).

Strong GDP Growth Continues (PeerIQ), Rated: AAA

Source: Bloomberg, PeerIQ

LendingTree Study Finds Tesla Drivers Have Highest Average Credit Scores (Yahoo! Finance), Rated: AAA

LendingTree today released its study ranking car brands by their buyers’ average credit score. Tesla buyers have the highest with a score of 740. Chrysler buyers have the lowest scores, with an average score of 656.

Key findings

  • Luxury brand buyers occupied the top spots. TeslaPorsche and Lexus lead with average credit scores of 740, 727 and 699 respectively.
  • Chrysler buyers had the lowest average credit score at 656, but it’s worth noting that this still falls in the “fair” range. It’s also right around the average credit score for all used car purchases.
  • For most auto makes, a credit score in the good range (670-739) was enough to be approved for an auto loan. Of the 30 different makes analyzed, 22 had an average approved credit score fall into that range

Read the full report here.

Understanding Sequential Pay Structures (DBRS), Rated: AAA

In a January 2019 newsletter, DBRS discussed the Evolution of the Shifting Interest Structure in residential mortgage-backed security (RMBS) transactions. Another common structure in RMBS transactions is the sequential pay structure.

The sequential pay structure is one of the most elementary and straight-forward structures in RMBS. Post-crisis, the sequential pay structure and its variations have been widely used in seasoned re-performing loan (RPL) and non-Qualified Mortgage (QM) transactions. Such structure largely benefits the senior classes in payment priorities over the subordinates.

Source: DBRS

Read the full report here.

Finitive Raises $ 6 Million Series Seed Round Led By Atomic Labs (PR Newswire), Rated: A

Finitive (www.finitive.com), a financial technology platform providing institutional investors with direct access to alternative lending investments, announced today that the firm raised approximately $6 million in a series seed financing. The round was led by Atomic Labs with participation from Ninepoint Partners – one of Canada’s leading private credit fund managers – as well as other investors and members of the management team.

Goldman Sachs, Regions help raise $ 55M for construction-lending fintech (American Banker), Rated: A

Built Technologies, a construction lending fintech platform, has raised $55 million in funding through Goldman Sachs and a handful of investors including Regions Financial, the company said Monday.

The Nashville, Tenn., company finished $31 million in series B funding through Goldman Sachs with the remainder amount raised by venture capitalists and Regions. The funding will help the 5-year-old fintech invest in research and development while building out its national client base, according to the firm’s CEO and co-founder, Chase Gilbert.

A busy month for fintech funding (American Banker), Rated: A

Novo, a challenger institution in the field of small-business banking, and the no-code platform provider Unqork held Series A funding rounds.

The online lender Upstart, which raised $50 million in a Series D round, says it can both lower loan loss rate and increase the number of customers underwritten.

Extend is building a platform to distribute digital cards by partnering with payment networks and card issuers. Another startup, MotoRefi, claims it can save consumers an average of $100 a month on vehicle refinancing by connecting them to trusted credit unions and community banks.

Moving Beyond Financial Literacy to Financial Empowerment (Lend Academy), Rated: A

Some of my thinking was prompted by this recent column in American Banker by Jennifer Tescher, the CEO of the Center for Financial Services Innovation (CFSI).

There are several companies in this space doing great work in creating high quality products: EvenPayActivTrueConnect and HoneyBee all offer options to employers that help their employees who need access to quick financing. Even has a groundbreaking deal with Walmart that has resulted in 300,000 employees using their pay advance app.

MoneyLion has four million users and they are focused on ending financial stress for all Americans by taking a holistic approach and being proactive in providing help. Dave helps the 30 million people who are hit by overdraft fees each year by advancing $75 from their next paycheck. Tally is a fully automated debt manager to help consumers get out of credit card debt.

Inside Varo Money’s three-year quest for a bank charter (American Banker), Rated: A

Just ask Colin Walsh, the co-founder and CEO of Varo Money, who began discussions with regulators three years ago to charter a national bank. Though the fintech won approval from the Office of the Comptroller of the Currency last year to move forward, it is still waiting on an answer from the Federal Deposit Insurance Corp.

Cross River Teams Up With RS2 To Offer New Digital Banking Experience (Crowdfund Insider), Rated: B

Cross River, a bank that delivers advanced financial and compliance products/services to the fintech industry, announced on Monday it has teamed up with RS2 to offer a new digital banking experience. Through the collaboration, Cross River and RS2 will provide merchants with a global payment experience for processing credit and debit card transactions, as well as digital banking for their workers and consumers.

Blend’s Erin Collard: Mortgages are the data superset of every other financial product (Tearsheet), Rated: A

Financial technology company Blend began building its platform by helping traditional institutions digitize mortgages, working with firms like Wells Fargo, US Bank and some regional banks and credit unions.

New York launches its own ‘mini CFPB’ (American Banker), Rated: A

New York has created a statewide financial protection division that will focus solely on corporate compliance and consumer issues, following similar efforts by New Jersey and Pennsylvania.

The New York State Department of Financial Services on Monday named Katherine A. Lemire, a former assistant U.S. attorney, to be executive deputy superintendent of the agency’s newly created Consumer Protection and Financial Enforcement division.

Think Finance to Pay CFPB $ 7 for Loan Violations (Bloomberg Law), Rated: A

A bankrupt payday lender will have to pay a $7 civil penalty to the Consumer Financial Protection Bureau over nearly $50 million in loans it issued in states where they were not legal, according to bankruptcy court filings.

Judge Brian Morris of the U.S. District Court for the District of Montana granted a stay in the CFPB’s litigation against Think Finance LLC on April 30, pending activity in the bankruptcy court.

Capital One drives auto finance deal with CarGurus (Finextra), Rated: A

CarGurus today announced a partnership with Capital One Auto Finance that will benefit both consumers and dealers.

The Most Powerful Women in Banking (American Banker), Rated: A

Camille Burckhart, Popular Inc.

Chief information and digital officer

Jacqueline Howard, Ally Financial

Senior director, corporate citizenship

Carrie Lichter, Fifth Third

Chief operational risk officer

Now you can pay for your flights in instalments with these booking companies (Lonely Planet), Rated: A

Online travel apps CheapOair and OneTravel will soon operate a new feature that allows customers to pay for their airfare in instalments. It means that customers don’t have to pay for the full cost of their flight upfront and can instead spread the cost out into more manageable payments that suit individual budgets, choosing between three-, six- or 12-month instalments. Fareportal, the company that operates CheapOair and OneTravel, said its partnering with online lender Affirm to introduce the new feature.

For example, a $300 (£230) purchase at 10% APR spread out over three months would cost $101.69 (£78) per month.

A recent study by the U.S. Chamber of Commerce revealed that Mississippi, Nebraska and Maine are the three states where small to medium businesses have grown the most year over year. This is according to sales in Amazon stores, specifically. More than half of the items sold in Amazon stores are from small to medium businesses.

The top 10 fastest-growing states breaks down as follows:

  1. Mississippi
  2. Nebraska
  3. Maine
  4. Texas
  5. Indiana
  6. Colorado
  7. North Dakota
  8. Vermont
  9. Wisconsin
  10. Missouri

The third-party physical product sales, which is what gets sold on Amazon stores primarily, passed $160 billion in 2018. Nearly 20% of rural small businesses generate 80% of their revenue by selling products online.

Unlocking the Digital Potential of Rural America (American Innovators), Rated: AAA

Unlocking the digital potential for rural small businesses across the country could add $47 billion to the U.S. GDP per year.

Increased adoption could grow annual revenues of rural small businesses by more than 21% over the next three years – the equivalent of $84.5 billion per year – with states in the South seeing the greatest benefit

Online tools and technology have the highest potential impact on rural small businesses with revenue under $100,000

Read the full report here.

Proof of Work: the slow but steady process of institutional adoption (The Block), Rated: A

Antonio from dYdX

dYdX is a decentralized exchange for margin trading, borrowing, lending, and eventually derivatives. dYdX allows traders to trustlessly short and get leverage on crypto assets.

  • DAI lending rate has been high due to strong demand to go leveraged long on ETH, peaking at over 77% APR returns for lenders over the weekend

Brendan from Dharma

Dharma is the easiest place to borrow and lend cryptocurrencies. It enables non-custodial peer-to-peer lending through smart contracts on Ethereum.

  • #ReFi with #DeFi continued in full force, leading to over 1.7m in borrow volume (nearly all Dai-denominated)

Lendio Franchise Opens in Erie to Expand Access to Capital for Local Businesses (Lendio), Rated: B

Lendio has announced the opening of a new Lendio franchise in Erie. Through the Lendio franchise program, John Fee, a local business owner himself, will help other entrepreneurs in the community apply for loans, review their options and secure funding, easing their financial hurdles.

Fundbox Selected By Brandwise To Power Net Terms For Suppliers, Agencies, And Retailers (Yahoo! Finance), Rated: B

Today Fundbox announced that the sales technology leader Brandwise and Fundbox have entered into an exclusive agreement whereas Fundbox will be Brandwise’s business-to-business (B2B) trade financing partner.  Brandwise will leverage Fundbox’s business capital platform to power financing terms within the Brandwise ecosystem of 250,000 retailers.

White Oak Commercial Finance Adds to its ABL Originations Team (Yahoo! Finance), Rated: B

White Oak Commercial Finance, LLC (“White Oak”), an affiliate of White Oak Global Advisors, LLC, announced today the appointment of Michael Goletz to Director of ABL Originations, covering the Midwest U.S. region. Mr. Goletz joins from WNB Specialty Finance, a division of Woodforest National Bank, where he was responsible for sourcing and structuring asset-based lending debt facilities ranging from $5 million to $25 million.

Urjanet Announces 2019 SPARK Award Winners (PR Web), Rated: B

Urjanet, the global leader in utility data aggregation, today announced the winners of its 2019 SPARK Awards: AvidXchange, Bright Power, SimpleBills and Guppy – four companies at the forefront of using utility bill data to better serve their customers, community partners, and the environment.

  • Most Innovative Use of Utility Data: SimpleBills. In addition to utility bill management, residents can use SimpleBills to report their utility bill payment history to credit bureaus through a unique opt-in service.
  • Leader in Financial Inclusion: Guppy. Through its partnership with Urjanet to acquire user-permissioned utility data, Guppy enables greater access to financial services for consumers, as well as background and ID checks for businesses, all while keeping the end user in control of their own data.
United Kingdom

Klarna gets physical: All UK payment methods now available in-store (Fintech Finance), Rated: AAA

Global payments provider Klarna has today announced that all its alternative payment options are available both in-store as well as online.

Klarna’s alternative payment options include:

  • Shoppers can pay later, up to 30 days after delivery of goods
  • Shoppers can pay for purchases in 3 equal instalments collected monthly
  • For higher-ticket items, consumers can use Klarna’s consumer finance in 6-36 month payment plans

£1bn debt fund launched for UK non-bank lenders (P2P Finance News), Rated: A

EUROPEAN Risk Capital (ERG) has launched a £1bn multi-client debt programme for UK-based, mid-market non-bank lenders.

The programme – titled ‘CreditStream’ – has a minimum deal target size of £10m, making it primarily suited to mid-sized lenders including bridging and development lenders, second charge mortgagees, consumer and SME funders, auto/equipment finance companies, and fintech lenders. The maximum deal size can be in excess of £100m.

Lendy execs launch wage advance firm (P2P Finance News), Rated: A

Companies House documents show Brooke and Kelly, whosecurrent role at Lendy remains a mystery, set up a firm called Copious Capital in July 2018.

Copious Capital’s launch product is Pay Me Today, described as an “antidote to payday lending,” which lets companies approve and arrange salary advances for staff who need access to money before payday.

Lendy’s operations manager Pamela Guillamón owns between 25 per cent and 50 per cent of Pay Me Today, according to Companies House documents.

Woodford’s peer-to-peer exodus continues with VPC sale (Citywire), Rated: A

Fund manager Neil Woodford has followed his £88 million sale of his stake in peer-to-peer lending trust P2P Global Investments (P2P) by offloading his entire £40 million stake in rival VPC Specialty Lending (VSLV).

Relendex ‘very keen’ to get behind modular housing (Development Finance Today), Rated: A

Relendex is “very keen” to get behind modular housing, according to its chief operating officer Max Lehrain.
Development Finance Today recently reported on the difficulties lenders faced when funding modular builds, however Fintan explained some ways Relendex was able to feel comfortable with supporting such schemes.

OakNorth continues supporting British SMEs with senior lending hires (Fintech Finance), Rated: B

OakNorth – the bank for entrepreneurs, by entrepreneurs – is bolstering its regional presence with the appointment of four senior team members in Manchester, the Midlands and the South West.

Christopher Swarbrick, who has 18 years’ banking experience, joins as a Senior Director, Debt Finance. 

Christopher Richards joins from RBS where he spent 11 years and most recently held the role of Senior Relationship Manager, managing a portfolio of 40 complex banking relationships.

Mother tells of ‘devastating’ impact caused by collapse of Eridge firm London Capital & Finance (Times Local News), Rated: B

THE mother of two sons, one of whom is autistic, has told of the impact on their lives brought about by the collapse of a Tunbridge Wells based investment firm.

Around 11,500 people are set to lose a total £237million following the demise of the company based at Eridge Park.

LCF were selling unregulated mini-bonds, offering investors an eight per cent return for money that was purportedly being lent to a range of businesses.

China

HeZhong International sets terms for $ 5 million US IPO (Nasdaq), Rated: AAA

HeZhong International Holding, which operates a peer-to-peer lending marketplace in China, announced terms for its US IPO on Wednesday.

The Shenzhen, China-based company plans to raise $5 million by offering 1.3 million shares at a price of $4. At $4, HeZhong International Holding would command a market value of $55 million.

European Union

Which digital banks have the best overdrafts? (AltFi), Rated: AAA

Starling Bank

The London-based challenger bank charges 15 per cent equivalent annual rate for arranged overdrafts.

Charges £2 a month for unarranged overdrafts as well as the standard rate of interest. Will waive charges if your monthly overdraft interest comes to less than 10p for the month. Operates a monthly fee cap of £2.

Runner up

Monzo

Customers with arranged overdrafts are charges a 50p charge every day your account is overdrawn by more than £20, up to a maximum charge of £15.50 a month.

The Rest

B

The digital lender, launched by Clydesdale and Yorkshire Banks in 2016, charges a 12.5 per cent equivalent annual rate on arranged overdrafts. On top of this it charges a fee of £6 a month. The bank charges £6 a day for unarranged overdrafts.

N26

The Berlin-based app-only bank, with more than 2 million customers in 24 countries, said it will launch an overdraft facility for its 200,000 UK account holders “soon.”

55 Investors Become the Co-Owners of a Building in Western Switzerland (Yahoo! Finance), Rated: A

Foxstone (www.foxstone.ch) announces the acquisition, in crowdinvestment, of a residential building in Concise (VD) by 55 investors, of all ages and all backgrounds. They acquired a share of the building in co-ownership with a minimum amount of CHF 50’000.-

The total amount raised in co-ownership was CHF 3,250,000 for an acquisition price of the building of CHF 6,800,000, the remaining balance being financed by a mortgage. The net return on equity is 6.53%, which represents an annual return of CHF 3,265 for a CHF 50’000 investment. The Régie du Rhône takes care of the day-to-day management of the building.

How BBVA overhauled its mobile banking app (American Banker), Rated: A


International

Global fintech investment doubled in 2018 (HousingWire), Rated: AAA

Total global fintech investment increased from $50.8 billion in 2017 to a full $111.8 billion in 2018, according to KPMG’s The Pulse of Fintech, a biannual report that highlights key trends in fintech across the globe.

But the report showed something interesting when it comes to fintech – payments and lending continued to attract the most significant investment dollars globally.

China’s fintech funding dipped significantly in Q1 2019 (Business Insider), Rated: AAA

Global fintech funding was down 13% from $7.3 billion in Q4 2018 to $6.3 billion in Q1 2019, according to a new report from CB Insights.

However, deal numbers increased from 427 in Q4 2018 to 445 in Q1 2019, despite early stage funding dipping, while mid- and late-stage funding increased. Moreover, funding actually ticked up 1.5% year-over-year (YoY) from $6.2 billion in Q1 2018.

P2P Industry is Likely to Shine Despite Troubles in China (Learn Bonds), Rated: A

According to a PWC report, the U.S. P2P market is likely to reach $150 billion by 2025. Another report from Allied Market Research indicates that Peer to Peer (P2P) market could grow at a CAGR of 51.5% from 2016 to 2022.

Efma White Paper Covers Potential of SME Ecosystem (Monitor Daily), Rated: A

Drawing insight from recent research, case studies and observations from bankers working closely with SMEs, this digest outlines the main challenges facing banks today when trying to attract SME customers, such as intense competition from new entrants like Alibaba-backed online lender MYbank and Tencent-backed WeBank in China. In other markets, like the UK, 63% of financial services players in 2018 didn’t exist a decade before.

Authors of the 2019 Geneva Report on the World Economy seek market participant input (Fintech Policy), Rated: B

The topic of this year’s Geneva Report on the World Economy will be “the future of banking.”

The authors of the report (Kathryn Petralia, Kabbage; Thomas Philippon, NYU Stern School of Business; Tara Rice, Bank for International Settlements and Nicolas Veron, Peterson Institute for International Economics and Bruegel) are asking for input from market participants.

Asia

India unseats China as Asia’s top fintech funding source (TechCrunch), Rated: AAA

China’s massive fintech industry took a beating in recent months as the government continued to wind down online lending nationwide, rattling investor confidence.

Funding for fintech startups shrank 87.6 percent year-over-year to $192.1 million during the first quarter of 2019, a new reportfrom data provider CB Insights shows. India, which recorded $285.6 million raised for fintech startups in the period, overtook China to be Asia’s top fundraising hub for financial technology. Both countries clocked in 29 fintech deals, suggesting a cooling investor sentiment in China which saw its height of 76 deals just three quarters ago.

Source: CB Insights
India

Coming Together of Traditional Lenders and Fintech Players, Creating Better Opportunities (Entrepreneur), Rated: AAA

Fintech driven alternative lending is the second most funded and one of the fastest growing segments in the Indian fintech space. At last count, there were over 20 plus digital, alternative lending companies, each with their version of the truth, and probably another twenty in the stealth mode.

One thing common with most new age lending companies is that they rightly understand that they have a better chance of succeeding by collaborating with the existing lenders like Banks and NBFCs.

Canada

MOGO: A Rapidly Growing Canadian Fintech Provider (Yahoo! Finance), Rated: AAA

Mogo (MOGO) is a rapidly growing Canadian fintech company with over 800K members that generates revenues from a series of innovative products to help consumers manage & control their financial health.

  • Mogo is a high growth disruptor. Was the company not fighting the headwinds of strategically exiting the short-term loan business that it phased out throughout 2018, it would have shown 71% revenue growth on what it calls “core revenues” or revenues of continuing operations. Core revenue, excludes the company’s legacy short term lending revenue which Mogo fully exited at the end of Q3 2018. In 2018, the company generated $61 million in total revenues representing 26% growth, spurred by a doubling of its subscription and services business to $27 million. In the most recently reported quarter, Q4 2018, Mogo’s core revenue increased 75% versus the same period in 2017 with Subscription & Services revenue having its fourth consecutive quarter of at least 100% year over year growth. In 2018, it added more than 210,000 new members to reach 756,000 members on December 31, 2018 (up 39%), and on March 21st it announced it has surpassed 800,000 members.
  • Based on a combined value of the company’s lending business and its subscription services and fee generation business we believe the company is worth $7.67 per share when compared with other companies in these spaces.
Africa

The Legal and Regulatory Framework Governing Financial Technology (Fintech) in Nigeria (Lexology), Rated: AAA

FinTech is also gaining traction in the areas of lending and alternative financing (such as peer-to-peer lending, business-to-consumer lending, and so on), as well as financial and insurance products.

Pursuant to the Banks and Other Financial Institutions Act, Chapter B3 LFN 2004, an entity that wishes to provide marketplace lending may do so by registering as a bank or Other Financial Institution (“OFI”).

The use of airtime for the repayment of loans to a mobile lender could constitute a premium rated service, the provision of which requires the approval of the NCC.

Authors:

George Popescu
Allen Taylor

The post Thursday May 2 2019, Weekly News Digest appeared first on Lending Times.

Wednesday August 22 2018, Daily News Digest

Elevate Credit

News Comments Today’s main news: Elevate Credit expected to announce $203.49M in sales. Ant Financial delays IPO again. SocietyOne getting close to $500M in total lending, six years in. ClearScore to offer credit scores in India. Capital Float buys Sequoia and Walnut. Today’s main analysis: 10 years after financial crisis, credit market on upward curve. Today’s thought-provoking articles: New […]

Elevate Credit

News Comments

United States

China

International

India

Other

News Summary

United States

Brokerages Anticipate Elevate Credit Inc (ELVT) Will Announce Quarterly Sales of $ 203.49 Million (Baseball Daily Digest) Rated: AAA

Equities research analysts forecast that Elevate Credit Inc (NYSE:ELVT) will post $203.49 million in sales for the current fiscal quarter, Zacks reports. Two analysts have issued estimates for Elevate Credit’s earnings, with estimates ranging from $201.00 million to $205.97 million. Elevate Credit reported sales of $172.85 million during the same quarter last year, which indicates a positive year-over-year growth rate of 17.7%. The firm is expected to report its next quarterly earnings report on Monday, October 29th.

According to Zacks, analysts expect that Elevate Credit will report full-year sales of $803.23 million for the current financial year, with estimates ranging from $801.00 million to $805.45 million. For the next financial year, analysts expect that the company will report sales of $927.09 million per share, with estimates ranging from $926.97 million to $927.20 million. Zacks’ sales calculations are a mean average based on a survey of research firms that follow Elevate Credit.

Financial Crisis – 10 Years Later: Consumer Credit Market on an Upward Curve (Nasdaq) Rated: AAA

Ten years after the biggest financial crisis to hit the United States since the Great Depression, much has changed in the consumer credit marketplace. Serious delinquency rates have recovered since that period, and the credit quality of consumers has broadly improved. Yet the crisis has had a profound effect on consumer access to credit and the relationship they have with it.

TransUnion’s (NYSE:TRU) just-released Q2 2018 Industry Insights Report allows for comparisons between Americans’ credit preferences today versus 2008, specifically in the auto finance, credit card, mortgage and unsecured personal loan markets.

Source: TransUnion

Lawmaker Questions FinTech Industry Over Lending Practices (Govtech) Rated:A

Rep. Emanuel Cleaver (D-Mo.) released a report Friday detailing the lending practices of some prominent fintech companies, finding that some companies could be discriminating against minorities and calling for more transparency from the fintech sector.

Fintech companies are somewhat controversial because many engage in traditional banking practices, and some consumers and regulators are calling for them to be regulated like traditional banks.

Small banks need big data to maintain customer service edge (American Banker) Rated: A

Big data isn’t just for big banks.

The modern banking customer wants advanced online and mobile banking options, and delivering such services requires even the smallest community bank to get a handle on customer data, said Corey LeBlanc, chief technology officer and vice president at Origin Bank.

Blockchain Meets REIT – A New Era in Real Estate Investing (Market Insider) Rated: A

Building Block, Inc. announced today it is the first North American REIT (Real Estate Investment Trust) to embrace the emerging efficiencies of blockchain technology and provide a new way to invest in one of the world’s most well-known and trusted assets, real estate.   Blockchain technology will enable Building Block REIT to virtually eliminate friction in REIT shareholder communication by allowing direct dividend disbursement, secure user voting, and smart contract functions that execute automatically when pre-set parameters are met.

Building Block REIT plans to raise funds in the form of a digital initial public offering (Digital IPO) accepting payments via U.S. Dollars or fractional Ethereum cryptocurrency.  Investors worldwide will be able to purchase shares in Building Block REIT on SEC compliant alternative trading systems (ATS) or peer-to-peer exchanges with whitelisted parties to invest in US commercial office, multi-family and mixed-use real estate.

JPMorgan launching Roar platform for crowdsourced data (Business Insider) Rated: A

JPMorgan’s corporate and investment bank is best known for advising businesses on billion-dollar acquisitions, helping private unicorns tap into the public markets, and managing the cash of Fortune 500 companies.

But now it is quietly working on a new platform that would go far beyond anything the firm has previously done, using crowdsourcing to accumulate massive amounts of data intended to one day help its clients make complex decisions about how to run their businesses, according to people familiar with the project.

The platform, called Roar by JPMorgan, would store sensitive private data, such as hospital records or satellite imagery, that’s not in the public domain. Typically, this type of information is exchanged between firms on a bilateral arrangement so it is not improperly used. But Roar would allow clients to tap into this data, which they could then use in a secure fashion to make forecasts and gain business insights.

New Report Shows Identity Verification a Priority for eCommerce and Online Lending Businesses (Global News) Rated: A

A new report from Whitepages Pro shows that an overwhelming majority of North American companies in ecommerce and financial services surveyed consider identity verification to be a top business priority but many still don’t believe they do it well or have all the data and tools they need to be successful. For the report, “The State of Identity Verification Maturity in North America,” businesses were asked, among other things, to rank themselves on a 4-stage scale of identity verification maturity for how they use identity data to combat fraud and improve the customer experience.

Among the report’s key findings:

  • Driven by the belief that fraud attempts are increasing in frequency and sophistication, identity verification is a priority for most organizations (93 percent). While they vary in the degree to which they use advanced techniques, most organizations want to improve their identity verification methods and outcomes. Just 2 percent believe they are completely successful at identity verification.
  • Organizations want access to more data points (just 13 percent say they have all the data they need) and see data linkages (the relationships between data elements) as a way to improve their identity verification processes. While access to traditional data (like a street address) is common, many still don’t have or use digital data (like an IP address). Most of the survey respondents believe linking data reduces fraud with 77 percent believing it increases confidence in a customer’s identity.
  • Organizations want more and improved identity verification automation. However they often rely on in-house (such as historical data and white/black lists) that make it difficult to expand the use of automation, resulting in an over reliance on costly and time consuming manual reviews. A large majority (71 percent) believe machine learning can play a role in reducing manual reviews and making identity verification more effective.

Bank of the West exec bolts for startup, sees chance ‘to redefine retail banking’ (American Banker) Rated: A

Thibault Fulconis, who until recently was chief operating officer of Bank of the West, has joined the fintech digital banking startup Varo Money as its chief financial officer.

Varo Money is a mobile-first challenger bank that aims to help Americans achieve financial health. It is in the same league as Chime, Digit, Moven, MoneyLion, Qapital and N26.

White Oak Healthcare Finance Closes $ 40 Million Financing for LifeCare Holdings, Inc. (Business Wire) Rated: A

White Oak Healthcare Finance, LLC (“White Oak”), today announced it acted as lead lender and administrative agent on the funding of a $40 million asset based senior credit facility for LifeCare Holdings, Inc. (“LifeCare”). The funds were primarily used to refinance existing indebtedness. White Oak previously announced the financing of LifeCare Home Health LLC, the home health entity owned by LifeCare.

TradeStation Launches New Fully Paid Lending Program (GlobeNewswire), Rated: A

TradeStation, a Monex Group company and award-winning online broker-dealer and futures commission merchant, today announced the launch of its Fully Paid Lending Program. This program allows qualified equities account holders the opportunity to earn interest income on lendable securities in their accounts.

Under the Fully Paid Lending Program, TradeStation identifies stocks in qualified accounts that are eligible for lending. Based on market demand, some or all of a qualified client’s fully paid positions or excess-margin securities may be lent out to other financial institutions to satisfy their customers’ position requirements. While their stocks are on loan, clients automatically receive 50% of the net proceeds earned by TradeStation for lending out the shares, which is accrued daily and automatically posted monthly to their accounts. Daily income ceases to accrue when the client sells a lendable stock or the stock is no longer on loan.

US wakes up to SME cybersecurity needs (Fintech Futures) Rated: B

US President Donald Trump has signed the National Institute of Standards and Technology (NIST) Small Business Cybersecurity Act, a bill which will provide a set of resources for small businesses to best protect their digital assets from cybersecurity threats.

United Kingdom

Private credit offers an escape from miserly bond yields (Citywire) Rated: AAA

For reasons that are quite clear if you follow my writings on a regular basis, equities and bonds will most likely deliver disappointing returns for many years to come.

My central forecast is an annual average inflation-adjusted return of 0-2% on a global portfolio consisting of 40% bonds and 60% equities between now and 2050.

The good news next.  Fortunately, there are many things you can do to improve on those lacklustre numbers. Those returns are for the lazy investor; someone who invests passively.

China

Ant Financial IPO plans pushed back again (Financial Times) Rated: AAA

A blockbuster listing of Ant Financial, the fast-growing electronic payment affiliate of China’s leading tech group Alibaba, has again been delayed as it continues to burn through cash and come under pressure from Beijing’s crackdown on non-traditional financial institutions.

Ant was valued at $150bn in its last private fundraising in June, a round that bankers said paved the way for an initial public offering as early as this year.

Moody’s: China’s new measures on P2P lending are credit positive (ECNS) Rated: AAA

The global credit rating agency Moody’s called China’s newly-issued regulations on peer-to-peer lending platforms are “credit positive”, because they will strengthen protections to individual lenders and prevent risk spilling over to the broader financial system.

Moody’s commentary came after Chinese regulators announced 10 measures to address risks related to P2P lending platforms on August 12. The P2P platforms enable individuals to lend directly to borrowers through the Internet.

The new regulations clarified responsibilities of P2P platforms and their shareholders, stipulated conditions for orderly liquidation of failed platforms, outlined penalties for borrowers that escape their debt obligations and prohibited registration of new platforms.

Next Step to Regulating P2P Lending Platforms — Figuring Out Who Owns Them (Caixin Global) Rated: A

Months into the crisis in China’s online lending industry, regulators want to know who actually owns the country’s peer-to-peer (P2P) lending platforms.

The National Internet Finance Association of China (NIFA) issued a notice on Monday designed to help it keep tabs on key stakeholders in China’s online P2P lending platforms as financial and legal difficulties continue to engulf the business.

The effort to bring greater clarity to the workings of P2P platforms comes after hundreds of online platforms have encountered financial and legal troubles in the last few months. In July, at least 165 P2P platforms had difficulties meeting cash-withdrawal demands, saw their owners abscond with investor funds, or were investigated by police, according to a report by internet lending research firm Wangdaizhijia. The number was nearly triple that in June, Wangdaizhijia said.

In-Depth: Police Launch Global Hunt for ‘Solar King’ Caught Up in P2P Bust (Caixin Global) Rated: AAA

Peng Xiaofeng was once China’s youngest billionaire and a rising star in the solar industry. But the founder of now-bankrupt LDK Solar has been put on China’s most-wanted list, hunted by law enforcement agencies for illegal fund-raising by his peer-to-peer (P2P) lending platform Solarbao.com.

Police in the city of Suzhou, where Solarbao.com is registered, want Interpol to issue a Red Notice against 43-year-old Peng, who is accused of swindling more than 5,000 investors and leaving a trail of debt amounting to 220 million yuan ($32.1 million). They have also branded the platform, a subsidiary of Nasdaq-listed SPI Energy Co. Ltd., a fraud.

HuaAn Finds Itself Target of Investor Ire After P2P Company Accused of Fraud (Caixin Global) Rated: A

The Shanghai office of fund manager HuaAn Future Asset Management Co. Ltd.was surrounded on Monday by throngs of angry investors who blame the company for what they perceive to be its role in an online-lending fraud. HuaAn denies any involvement.

Monday’s protest centered on P2P site PPMiao.com, which was accused of illegal fundraising by police in the eastern city of Hangzhou, where PPMiao.com operator Guangxi PPMiao Internet Technology Co. Ltd. is registered. HuaAn held a 37.5% stake on behalf of an asset management plan in PPMiao.com’s former operator, Hangzhou Fuqian Network Technology Co. Ltd., as of June 30, making HuaAn the target of investor ire when PPMiao.com’s financial problems surfaced.

International

Many countries don’t use credit scores like the US — here’s how they determine your worth (Business Insider) Rated: AAA

In the US, a good credit score can feel like a key determinant of success. It defines how good an interest rate you can get on a car loan or mortgage, the quality of credit card you can get approved for, or if you’ll get approved for any credit at all.

The better your score, the better the perks. A bad score can become a black mark that leads to missing out on the home you want (credit checks are a common aspect of apartment applications), higher car insurance rates, or even difficulty getting a cell phone, according to Nerdwallet.

But as monolithic as the credit score seems, many countries in the world handle credit very differently — with many having no credit score system at all.

Blockchain Can Help Peer-To-Peer Car Lending Schemes Gain Traction (Market News) Rated: A

Blockchain technology can help car-sharing companies to track a person using the car any time. According to industry analysts, the car sharing economy is expected to hit $335 billion by the year 2025.

The car sharing idea has been gaining a lot of interest among car drivers over the recent years. According to estimates by Global Market Insight, the peer-to-peer car sharing sector will amount to $11 billion. The growth has largely been attributed to raising cost of owning a car.

The biggest challenge with the Peer-to-peer lending system is trust. The car owner has to have total trust in the person hiring the car. Additionally, the car owner has to be sure that the hirer has enough money to cover the period the car is hired. The owner of the vehicle would also like to track where the car is as well as the condition in which it is being driven. On the side of the hirer, they would love to know if they are hiring the car from the original owner and that the data exchanged between the two parties is secure.

Australia

SocietyOne Celebrates Sixth Anniversary; Total Lending Now Approaching $ 500 Million (Crowdfund Insider) Rated: AAA

Australia-based marketplace lender SocietyOne announced celebrated its sixth anniversary of operations as total lending since inception approaches $500 million.

SocietyOne also reported it has more than 20,000 customers and since the beginning of 2016, total lending has grown nearly 6 times and the lender’s loan book now totals over $220 million, up from $41 million at the start of 2016.

India

UK’s fintech startup ClearScore set to offer credit scores in India (Economic Times) Rated: AAA

UK-headquartered fintech startup ClearScore is all set to start its business in India offering credit scores to Indian consumers in partnership with Experian, free of cost, to improve the awareness levels of the consumers regarding credit. India is their second international market after the company started operations in South Africa last year.

ClearScore will be available on Google Play Store and will provide details of the credit score, giving alerts about changes in the score and provide details about how consumers can improve the score.

Capital Float buys Sequoia & SAIF-backed Walnut for $ 30 mn (VC Circle) Rated: AAA

Bengaluru-based digital lending platform Capital Float has acquired personal finance management app-maker Walnut for $30 million (Rs 209 crore) in a cash and stock deal, a company statement said. Both the companies count Sequoia Capital and SAIF Partners as common venture capital investors.

Walnut allows users to track spends, check on credit and bank balance, bill payments and split expenses within a group. In July 2017, it launched a small ticket credit line for its users called Walnut Prime based on user data and consumer behaviour. The platform has so far disbursed Rs 100 crore in consumer loans.

OfBusiness Raises INR 200 Crore in Series C Financing (FinSMEs) Rated: A

OfBusiness, a Gurgaon, India – based technology enabled SME financing platform, raised INR 200 crore (approx $29m) in Series C financing.

The round was led by Creation Investments and Falcon Edge with participation from existing investors Matrix Partners India and Zodius Capital. With this new round of funding, the company has raised a total of INR 500 crore of equity and debt funding to date. It has also raised debt lines from Kotak, Tata Capital, RBL Bank and Northern Arc amongst other lending partners.

The capital will be used for continued rapid growth and model scaling.

Five Star Business Finance Raises USD$ 100M in Funding (FinSMEs) Rated: A

Five Star Business Finance Limited, a Chennai, India–based fully-secured small business financing company focused on South India, raises USD$100M in funding.

The round was led by alternative asset firm TPG, with participation from existing investors Norwest Venture Partners, an investment fund managed by Morgan Stanley, and Sequoia Capital. The company’s first investor, Matrix Partners India, continues to stay invested in the company.

Led by D. Lakshmipathy, Chairman and Managing Director, Five Star is a non-bank finance company providing loans to nearly 40,000 customers.

P2P Online Lending Startup Finzy Completes $ 2.3 Mn Pre-Series A Fund Raise (Indian Web) Rated: A

Bangalore-based peer to peer (P2P) lending platform Finzy on Monday announced raising funds worth USD 2.3 million in Pre-Series A round, including USD 1.3 million raised in the first tranche in March 2018.

This funding round has been funded by senior professionals from BFSI industry and successful entrepreneurs. The startup plans to use the freshly raised capital for geographical expansion, technology investment and stronger distribution networks.

Founded in 2016, by Abhinandan Sangam, Amit More and Vishwas Dixit, Finzy is a premier P2P lending solution in India that connect borrowers with investors and make the entire process simple and easy so that one can get a loan in as little as 48 hours.

Five things you should know before lending on P2P platform (Economic Times) Rated: A

Don’t let greed cloud your judgment. If you are in a tearing hurry to pocket double-digit returns, you are likely to overlook many warnings signs. That is why it is always better to start with a small amount, learn the ropes, before going for the kill.

Different platforms have different ticket size for lending. With companies like Faircent offering as low as Rs 750 per loan. The ROI would vary as per the borrower profile and loan tenure. The total amount invested by a lender across all P2P-NBFCs is capped at Rs 10 lakh, as per the existing RBI norms.

The RBI came out with regulations for P2P companies in October. There are around 30 online P2P companies in India, of which only eight have received a certificate of registration (CoR) from the RBI to carry out P2P lending activities.

Asia

Singapore police recover S$ 27 million linked to China Ponzi scheme (Channel News Asia) Rated: AAA

Singapore police said on Tuesday (Aug 21) they have recovered more than S$27 million linked to one of the biggest Ponzi schemes in China, which saw 1.15 million investors cheated out of 38 billion yuan (S$7 billion).

Ezubao, once China’s biggest peer-to-peer lending platform, folded in 2016 after it turned out to be an online scam that concocted fake projects to attract investment and pocketed funds instead of passing them to borrowers to generate returns.

Latin American

Mexico’s new government wants fintech, banks to help financial inclusion (Channel News Asia) Rated: AAA

Mexico’s next government will look to fintech companies and large corporate banks to increase financial inclusion in the country, where only one-third of adults have a bank account, senior officials said on Tuesday.

Arturo Herrera, one of two future deputy finance ministers, said in an interview that the lack of financial inclusion was one of the biggest obstacles in the new government’s fight against poverty, inequality and slow economic growth.

Authors:

George Popescu
Allen Taylor

Monday January 9 2017, Daily News Digest

mobile payments FinTech

News Comments Today’s main news: MPL securitization tracker Q4 2016. Today’s main analysis: Mobile payments patent landscape. Today’s thought-provoking articles: Orchard updates online lending infographic. China Rapid Finance vows to triple number of users. 2016 breakout year for Canadian MPL. United States MPL securitization tracker Q4 2016. AT: “Securitization continues to grow. This is a trend that […]

mobile payments FinTech

News Comments

United States

International

United Kingdom

European Union

China

India

Canada

News Summary

United States

Marketplace Lending Securitization Tracker Q4 2016 (PeerIQ), Rated: AAA

We encourage readers to take a look at our Outlook section highlighting challenges and opportunities for investors in the year ahead.

Here are some highlights:

  • Marketplace lending securitization remains a bright spot in the ABS market. Total issuance topped $2.4 Bn this quarter with cumulative issuance now totaling $15.1 Bn. Total issuance for 2016 came in at $7.8 Bn, as compared to $4.9 Bn in 2015, a 59% increase.
  • Although MPL origination volumes have declined at some platforms, the percentage of loans funded through ABS is at a record high of 70%.
  • The movement towards rated securitizations at larger transaction sizes continues. Further, the growth in average deal size continued, growing to $252 Mn in 2016 as compared to $35 Mn in 2013.
  • New issuance spreads continued to tighten in — a credit friendly environment for securitization. In 2016 we saw moderate spread compression across senior classes, indicating stable investor appetite for MPL ABS paper in the market.
  • We estimate $6.3 Bn to $11.2 Bn MPL ABS issuance for 2017. Goldman Sachs, Morgan Stanley, and Citi take top positions on the league tables.
  • Ratings Agencies grow increasingly comfortable with assessing MPL risk. Kroll provided the first rating for a securitization of Madden-Midland loans. DBRS tops the league tables in ratings activity.
  • We expect higher volatility from rising rates, regulatory uncertainty, and an exit from a period of unusually benign credit conditions. Platforms that have sustained low-cost capital access, can build investor confidence via 3rd party tools, and have strong risk management frameworks will grow and take share.

Lendscape: Orchard Updates Online Lending Infographic as 2016 Comes to a Close (Crowdfund Insider), Rated: AAA

Orchard Platform, the nexus of institutional money flowing into online lending platforms, has updated their Lendscape: a visual presentation of the online lending ecosystem.

Reflecting the shifting sands of online lending, Orchard has added “two new key buckets” to Lendscape.

First, they have added the legal sector (probably the only part of the industry happy to see more regulation).  These firms include Manatt, Pepper Hamilton, Winston & Strawn, and Kaye Scholer.

The other bucket is called ‘Verification’ that includes eOriginal, Global Debt Registry, and VeriComply.

Orchard has also doubled the size of the ‘Loan Servicer’ bucket by adding PFSC, Scratch, and Orion First.

New Data on Online Lending Industry in 2016 (Even Financial), Rated: A

The following data includes borrower behavior on choosing a loan, average loan size by credit score, conversion rates, average time to fund, top platforms and loan performance. Some key data points include:

  • Over ⅓ of borrowers choose the originator with the fastest funding times, not the originator with the lowest APR
  • The top 4 originators with the fastest funding times also have the highest take rates (percentage of borrowers who ultimately accept the loan offer once the borrower is approved), which is between 20-30%
  • Average time to fund a loan is 4.55 days
  • The average loan size is:
    • Excellent Credit – $15,684
    • Good – $10,928
    • Fair – $9,765
  • Borrowers sourced via “inorganic channels” (display ads, performance marketers, etc.) have a 30% higher default rate within the first 3 months

Real Estate Crowdfunding Platform EquityMultiple Expects Investment Volume to Grow by an Order of Magnitude (Crowdfund Insider), Rated: A

Inman, in their 2017 Real Estate Industry Outlook, says there is solid optimism for 2017.

EquityMultiple, a real estate crowdfunding platform, describes itself as the only online investing platform backed by an established real estate company – Mission Capital. This relationship provides a solid backstop that can help with access to deals and institutional horsepower. While Mission Capital does big deals, EquityMultiple sees itself as a perfect fit in matching accredited investors to opportunity in the $2 million to $30 million range.

Charles Clinton: To date, EquityMultiple investors have invested in 18 offerings (16 closed, two still live). Total investment for Q4 looks like it will more than double Q3 and, overall, total investment on the platform has tripled since the end of Q2 of this year.

Charles Clinton: For deals that are already cash-flowing, annualized cash returns are over 10%. This includes fixed-rate investments in senior loans, fixed rate preferred equity investments and distributions from cash-flowing equity deals.

Charles Clinton: Nearly 100% of our investors are individuals and non-institutional entities and trusts.

Charles Clinton: Investors have the added comfort of knowing that the Mission Capital senior leadership in involved in the sourcing and vetting of our deals.

Why Some Lenders Won’t Work With Certain Industries (The Huffington Post), Rated: A

“Lenders don’t want to support industries that they feel are in nefarious markets,” says Ryan Conti, the Customer Success Director at Fundera who manages the team advocating on behalf of small business owners who need funding. “Even though alternative lenders are more open to different businesses and models than banks are, there are certain industries that no one will touch.”

The next most common reason for being blacklisted is operating in some sort of speculative industry.

Since many lenders haven’t been around for an especially long time, their data is often contained within the last 10 to 15 years—sometimes as few as 5 years—and the housing market is one of several that did exceptionally poorly during the recent economic downturn. The decisions created by these lenders’ algorithms reflect that.

This is where things get more nebulous. Those algorithms we mentioned are unique to each lender, so their decisions about whether to lend to your business can differ depending on which lender you go to. The same business might get different answers from different lenders because each one has their own preferences—influencing the industries and locations they finance, and the rates they give these businesses.

One preference for many lenders that often doesn’t require their algorithm: any sort of other lending service, like check cashing or bail bonds. If you do lending, lenders would rather lend directly to your customers instead of starting a chain with you as a middle link.

This is why many enter the alternative lending space, where thousands of non-bank lenders—like peer-to-peer lending sites or companies that have secured their capital through wealthy individuals—can provide a lifeline.

Crowdfunding: Can It Work for Brick & Mortar? (CrowdFundBeat), Rated: A

A great example of restaurant crowdfunding comes from Manu Alfau, chef and owner of La Bodega in Seattle, Washington. Manu used his existing customer base to raise $9,000 to build an outdoor patio. For gifts, he offered parties and food from La Bodega — things that he already knew his supporters would love.

For startups, one advantage of crowdfunding is the opportunity to make people feel like they are truly invested in the success of your business. Simply put, crowdfunding is a way to create a sense of community ownership, which is incredibly important when it comes to sustaining a small business.

THREE STEPS TO AVOIDING CROWDFUNDING PAIN POINTS (Virgin Startup), Rated: B

It’s great to have a bold plan when you are crowdfunding but you’ll need to understand how much you can raise from your crowd. Think carefully about what funds you need for your idea and how you can create a network of people who’ll be interested in supporting your idea.

When you are crowdfunding you need to know if you have access to email databases – and don’t forget social media.

Some of the best crowdfunding campaigns in the world have had a solid timeline and plan behind them. This means you know exactly what is going to happen at each of the stages of your crowdfunding campaign. Break it up into segments, give yourself targets and milestones, set reminders to update your backers, know when you’ll be emailing your database, sharing great social media updates and images.

International

Mobile Payments: FinTech vs. Non-FinTech Patent Landscape (IP Watchdog), Rated: AAA

According to a report by market intelligence firm International Data Corporation, the worldwide annual transactions volume of mobile payments is expected to cross US$ 1 trillion in 2020 from US$ 500 billion in 2015.

The patent landscape of mobile based payments should help in putting things into perspective. Fintech companies are ruling the patent realm. Visa and Mastercard dominate with over 300 worldwide patented inventions each. PayPal is expanding its digital presence by investing huge in acquiring promising startups. In 2015 alone, it bought four startups including Xoom Corp., a digital money transfer company for US$ 890 million and Paydiant, a mobile wallet company for US$ 280 million. With such acquisitions and strategic partnership with Mastercard since 2007, PayPal is clearly one of the strongest mobile payments contender.

Apple is placed at 13th position with respect to number of inventions but 2ndwhen it comes to the total number of patent publications (issued patents and pending publications). Samsung appears as the strongest competitor with 86 inventions and is placed ahead of all tech players. It acquired LoopPay, a mobile payments startup in 2015 for US$ 250 million and immediately rolled out tap-n-pay feature with its Galaxy S6. With this, Samsung is taking on potential market capturers like Apple Pay, Google Pay and PayPal-Mastercard partnership.

Alternative, Traditional SME Finance Spheres See Growth (PYMNTS.com), Rated: A

$50 million in financing from the British Business Bank landed at Funding Circle, on the condition that the funds be used to finance SMEs, reports said this week. The investment by the BBB in the alternative lender signals support from the state-run bank for the industry overall, though the BBB is also working to introduce stricter requirements for firms like Funding Circle to protect both investors and borrowers. The latest investment round brings the total funds the BBB has provided to Funding Circle up to more than $122 million, reports said.

$4.7 million has been financed to startups via a new venture fromInnoVen Capital, an India-based venture capital company that formed its Credit Assistance Program.

60 minutes is all it takes for Barclays to approve of an SME loan, thanks to the launch of its newest small business lending service on the mobile app.

60% of SME invoices are paid late in the U.K., a statistic that Amicus Commercial Finance said reveals the need for small businesses not only to diligently manage cash but to access external financing when clients don’t pay up.

1.67% fewer SME loans slid into delinquency last November, according to the most recent Thomson Reuters/PayNet Small Business Lending Index. The data revealed the first increase in SME lending in the U.S. in six months, with the change in delinquency rates marking the first decline in a year or so, reports said.

1 new SME lender enters China, thanks to certification from the China Banking Regulatory Commission. Reports this week said the CBRC has allowed Yilian Bank to begin lending to small and micro-sized companies.

Top Ten Fintech Predictions for 2017 (Crowdfund Insider), Rated: A

Internet of Things (IoT), Wearables, Smart Home and Connected Car will bring massive change to the Fintech industry forever.

The death of privacy is upon us – sorry for the news flash. We don’t need to look too far to get a glimpse of the future. To receive a microloan in China, you need your photo, personal email credentials and your last 60 days of mobile call logs.

The mobile device will be required as the basis for Continuous-Authentication-As-A-Service for all forms of financial transaction.

The rebirth of trust is upon us with the advent of distributed ledger. For my marketplace lending friends… can we not solve the “Stacking” issues now with distributed databases?

As the genre of Insurtech grows, there will be an explosion of shared risk platforms where people find likeminded folks to insurance each other in the forms of Micro Insurance. A dollar a day could provide coverage for many of life’s little inconveniences.

Marketplace Lending, Insurance Platforms, Payment Systems are not going to gobble up smaller competitors. Instead, these firms will be looking for opportunities for vertical integration.

LendingClub and Facebook are definitely competition for the same eyeballs. Creditors should turn themselves into “APIs” and vertically integrate themselves into every social media platform to extend credit.

Generation Z is now the biggest population cohort in the United States (70 Million+). Generation Alphas are getting their first with the iPad, iPhone, and Apple Watches as we speak. Their concept of credit, wealth management, and living habits will be dramatically different than how we look at currency and leverage today.

It is increasingly difficult for a Wealth Manager, Investment Advisor to steer consumers into ill-fitting products. The platforms with the most transparent set of insight for their consumers will win in FinTech.

It is increasingly difficult for a Wealth Manager, Investment Advisor to steer consumers into ill-fitting products. The platforms with the most transparent set of insight for their consumers will win in FinTech.

Top 4 Alternative Investment Opportunities of 2017 (The Merkle), Rated: B

Although real estate markets have seen quite a bit of negative attention throughout 2016, it is still one of the most profitable alternative investment markets.

One of the most obvious choices for alternative financing is gold.

An emerging trend in the financial sector is peer-to-peer lending, also referred to as social lending. At its core, a borrower gets loans at far better rates than what banks can offer. Lenders will earn higher returns compared to storing funds in bank accounts. But without an authorized body to oversee this activity, a lot of people tend to overlook these opportunities.

Bitcoin was the best performing currency in recent years. Interested parties can opt for centralized or peer-to-peer exchanges to buy and sell cryptocurrency without friction.

United Kingdom

Zopa’s 2016 Recap: We Lent Over £680 Million (Crowdfund Insider), Rated: AAA

The lending platform revealed it lent over £680 million to help 20,000 customers improve their home and 29,000 buy a car.

  • Receiving awards: Named Moneywise ‘Most Trusted Loan Provider’ for the seventh year in a row, the Moneyfacts ‘Best Personal Loan Provider’ for the second year in a row, the MoneySuperMarket’s ‘Best Personal Loan Provider of 2016,’ AltFi’s Editor Choice Award and F5 Awards’ Best P2P Lending Platform.
  • New Partnerships: Became partners with Airbnb, Unshackled, and Partiti.
  • New Products: Launched Zopa Access, Zopa Classic, and Zopa Plus.

Crowdstacker’s Karteek Patel Reports: IFISA Secures £1 Million A Month (Crowdfund Insider), Rated: A

This week, co-founder and chief executive of Crowdstacker, Karteek Patel, revealed the lender’s Innovative Finance ISA (IFISA) has attracted £1 million from investors each month.

During a recent interviewPatel stated three out of four Crowdstacker’s investors have now lent through the IFISA. He noted that 50% of the lender’s investment came through the IFISa and he expects more take up as the ISA season approaches this April.

Could an Innovative Finance ISA be the right option for your savings in 2017? (The Investment Observer), Rated: A

According to recently released figures from the Bank of England, savers are missing out on up to £21 billion of interest by using cash ISA deposits.

As at 31 October 2016, the value of all cash ISAs held in banks and building societies was £271 billion. The interest rate drop in October to 0.25 percent, now means that the highest return on easy access cash ISAs is around 1 percent, resulting in a cumulative annual yield of £2.71 billion.

Crowd2Fund, a directly regulated FCA peer-to-peer lending platform, is one of just a handful of platforms to have been given full approval, and have rolled out their IFISA. Within its first six months of operation the number of registrations on the platform increased by 500 percent, when compared with the six months prior to launch.

Three out of 10 IFISA investors on Crowd2Fund have transferred an existing ISA to the IFISA. Transferring is done by filling in a short form from IFISA providers and once this is completed, existing ISAs should be transferred by your old ISA provider in around 10 days.

Offshore company backs crowdfunding firm run by minister’s brother (The Guardian), Rated: A

Balshore Investments, based in Gibraltar, owns a £20m stake in YouGov, co-founded in 2000 by Nadhim Zahawi, the Tory MP for Stratford-on-Avon. It has invested in Crowd2Fund, founded by Chris Hancock, the brother of the culture minister, Matt Hancock.

As minister of state for skills and enterprise in 2013, Matt Hancock worked in the government department responsible for setting up the regulatory framework for crowdfunding.

Zahawi has praised peer-to-peer lending. In one parliamentary debate, he intended to call on businesses to look “beyond the monopoly of the high street banks, at equity options and at some of the innovative new online platforms, [such as] crowdfunding and peer to peer”.

Gwynne said the issue raised concerns about the government’s commitment to cracking down on offshore tax havens.

Scottish University Launches UK’s First Fintech Course (Cryptocoins News), Rated: B

Scotland’s University of Strathclyde has announced the launching of its new FinTech masters course, making it a first in the U.K. in an announcement on the university’s website.

The Master of Science (MSc) in Financial Technology will provide students the financial, programming and analytical skills needed to help companies accelerate and enhance their security.

An economic modelling study found last year that Scotland could lose more than 14,000 jobs in its financial sector over the next ten years if it fails to embrace the FinTech wave.

European Union

Country spotlight: Lithuania – the young ones (Banking Technology), Rated: A

The P2P lending legislation was about six months in the making. Mitkus says that the team drew upon the expertise of other European jurisdictions, particularly London. He adds that Lithuania is the first country in the Baltics to introduce the national P2P lending regulation, and it will also be among the first ten countries in the EU to regulate crowdfunding on a national level.”

Marius Jurgilas, board member of Bank of Lithuania (the country’s central bank and regulator), points out that the government and the central bank are under a lot of pressure to improve the competitiveness of the financial services market, especially post-financial crisis. At present, 90% of the retail banking market share belongs to three international banks – SEB, DNB and Swedbank. The fintech industry is hoped to diversify the banking sector and boost competition, Jurgilas says.

To this effect, Bank of Lithuania has recently signed a memorandum of understanding with UK-based payments and fintech start-up Revolut.

Revolut, which offers e-transfers, currency exchange, card payments and cash withdrawal across Europe, intends to set up a financial institution in Lithuania and obtain a banking licence. Bank of Lithuania will provide Revolut with access to its managed payment systems enabling cross-border payments in euro.

China

China Rapid Finance to triple number of users on its consumer lending platform (SCMP), Rated: AAA

China Rapid Finance (CRF), the mainland’s largest online consumer lending platform in terms of the number of loans transacted, is looking to triple the number of users this year as it looks to create a business on par with a major commercial bank’s credit-card division.

Zane Wang Zhengyu, founder and chief executive of CRF, told the South China Morning Post that the company would be impervious to the challenges facing other peer-to-peer (P2P) operators on the mainland, and would continue to bolster its online consumer lending businesses in accordance with Beijing’s financial reforms.

CRF, founded in 2010, has 1.2 million borrowers on its platform at present. Wang , however, has set his sights high and wants the firm to have about 3 million borrowers.

India

Loany to introduce new products (Deccan Herald), Rated: A

Loany, which acts as a bridge between the lender and the borrower by connecting them, plans to launch more FinTech tools.

Canada

2016: A BREAK-OUT YEAR FOR ON-LINE AND MARKETPLACE LENDING IN CANADA (Aspire FinTech), Rated: AAA

One group of companies that represents a significant sub-sector of FinTech in Canada, is the on-line, or Marketplace Lending (MPL) sector.

Financeit purchased over $400mm of Home Improvement assets from TD Bank this fall, after completing 2 equity financing rounds during the year, led by Goldman Sachs and the Prisker Family.

Borrowell partnered with CIBC, Thinking Capital with BNS, Lendful with Alterna Bank, Grow with several BC and other western Canadian credit unions, and US SME lender Kabbage partnered with BNS.

SME lender Lendified became the first Canadian Marketplace Lender since CommunityLend (now Financeit) to apply for and receive an Exempt Market Dealer license to sell debt securities backed by Lendified SME loans to Accredited Investors, under the new OSC Launchpad initiative.

Elsewhere, we saw equity financing rounds for Progressa, Fundthrough and Healthsmart, IOU Financial launched in Canada, Wellspring was re-born as Flexiti, and First Access, a non-prime auto lender based in Alberta, expanded their funding base with credit facilities provided by ATB and Ares Management.

Based on what we saw in 2016, and on-going dialogue and interaction we have with the vast majority of participants in the Canadian on-line and MPL lending sectors, we have a few predictions for 2017:

  1. More bank partnerships.
  2. Increased institutional participation.
  3. One (or two) IPOs?
  4. Asset performance will be tested in the US.
  5. Consolidation in the US; not in Canada.
  6. A Canadian pension fund invests strategically.
  7. Regulation.

Authors:

George Popescu
Allen Taylor

Monday November 28 2016, Daily News Digest

orchard quarterly originations report

News Comments Today’s main news: Orchard’s quarterly consumer lending report. Today’s main analysis : Why Lending Club should become a bank sooner rather than later. Are there any good reasons to invest in FinTech? Today’s thought-provoking articles: China recovers $ 1.5 billion in online lending fraud case. Why some SMEs are not happy in Hong Kong. United States […]

orchard quarterly originations report

News Comments

United States

United Kingdom

European Union

Australia

  • Why invest in Fintech? AT: “This is an interesting analysis and shows that P2P lending is the top sector within FinTech. While still swaying toward pessimism, it brings out some of the positives in the industry. There is still growth in the sector despite some of the recent fallbacks. FinTech operators should not lose hope because of one bad year.”

China

Canada

MENA

United States

Consumer Unsecured Q32016 (Orchard Platform Email), Rated: AAA

Key Insights

  • Origination volumes continued to fall in Q3, down approximately 21% from Q2 origination volume and down just over 50% from peak originations in Q4 2015. Following years of consistent quarter-over-quarter increases in originations, we hav eseen 3 consecutive quarters of declines in 2016. The Q3 change represents a smaller drop than the one experienced in Q2, and may indicate that these declines are beginning to taper off. We’re not ruling out an uptick in originations next quarter as confidence and capital returns to the origination platforms.
  • 2014 vintage charge offs have increased more steeply than in recent years, aligning closely with rates we saw in 2011 and 2012. While some of this trend can be attributed to deteriorating loan performance, most of it is due to the continued growth of subprime loan origination platforms. These platforms charge off at higher rates but offer investors increased interest rates as compensation for this additional risk. Early indications show 2015 vintage performance on the same track as the 2014 vintage.
  • After increasing 96 bps in Q2, borrower rates fell 79 bps in Q3, primarily driven by decreases in origination volumes for subprime originators in this period.

Lending Club should become a bank as fast as it can (FT Alphaville), Rated: AAA

The fragility of “true” marketplace lenders like Lending Club was displayed for all to see earlier this year when market conditions suddenly shifted, originations plummeted and a scandalinvolving Lending Club’s CEO hit the papers. Marketplace lenders (sometimes referred to as P2P or online lenders) transfer loan revenue and credit risk to loan investors at origination, so they earn nothing from loans held on balance sheet.

The takeaway? Lending Club should become a bank as fast as it can in order to reap the economic benefits of its loans and secure a more stable funding base. And, in the meantime, there are changes it can and should be making to increase resiliency and create the foundation for a sustainable and profitable business.

According to my simplified view, Lending Club would need an annualised net income run rate of $329m (at a 7x P/E) by Q3 2018 to justify its current $2.3bn valuation.

If Lending Club were able to quadruple originations to $8bn a quarter by Q3 2016, with the same aggressive assumptions, quarterly net income would be $93m. That would translate into a market cap of $2.6bn at a 7x P/E, which is around 13 per cent above the company’s current market cap, although the difference amounts to nothing for shareholders absent dividends in the interim.

If Lending Club were able to quadruple originations to $8bn a quarter by Q3 2016, with the same aggressive assumptions, quarterly net income would be $93m. That would translate into a market cap of $2.6bn at a 7x P/E, which is around 13 per cent above the company’s current market cap, although the difference amounts to nothing for shareholders absent dividends in the interim.

Online lending platforms yet to prove their worth (Financial Times), Rated: A

It has not quite turned out like that. After years of rapid growth, the industry in the US has gone into reverse, as concerns over the quality of the assets pumped out by the likes of Lending Club, Prosper and Avant have spread a chill across the sector.

New data from Orchard, a technology and data provider based in New York, shows that volumes across US consumer-loan platforms slipped for a third successive quarter between July and September, dropping 21 per cent to $1.86bn. That was less than half of the peak in the fourth quarter last year.

Through measures such as these, Lending Club says it has lured back almost all of the banks and hedge funds that were active earlier in the year.

But buyers, rather than sellers, still have the whip hand, says Matt Burton, chief executive of Orchard. He notes that platforms have been offering discounts for volume, and sometimes sweetening deals with warrants and preferential servicing fees.

Lending Robot Files to Form Pooled Investment Fund (Crowdfund Insider), Rated: A

Lending Robot, the robo-advisor geared towards marketplace lending assets, has filed a Form D 506cwith the SEC indicating its intent to create a pooled investment fund. According to the filing, the minimum investment accepted will be $100,000.00 with no targeted max size of the fund.

United Kingdom

17 firms authorised to manage Innovative Finance Isas (Bridging&Commercial), Rated: AAA

A total of 17 firms have been authorised to manage Innovative Finance Isas (IFIsa) by HM Revenue and Customs as of 26th October 2016.

     Company name                                                                        Types of business

  • Abundance Investmnt Ltd                                                       Peer-to-peer
  • British Pearl Ltd                                                                        Property crowdfunding platform
  • Crowd2Fund                                                                              Crowdfunding platform
  • Crowdcube Capital Ltd.                                                           Crowdfunding platform
  • Crowd for Angels UK                                                                Crowdfunding platform
  • Crowdstacker Limited                                                              Peer-to-peer
  • London House Exchange (Property Partner)                       Property crowdfunder

Crowd2Fund was one of the first firms to offer the IFIsa and revealed that it had seen a growth of investors in the past six months.

(NOTE: This list represents only crowdfunding and P2P firms on the list. For the complete list, click the link.)

UK Government Commits To Invest £500,000 A Year In FinTech (PYMNTS), Rated: A

The U.K. is already a hotbed of FinTech startups, but the government is getting behind it in a bigger way, committing to invest £500,000 a year into financial technology companies.

According to a report, the U.K. government is also gearing up to launch a network of regional FinTech envoys as an effort to enhance the country’s status as a leader in FinTech. The funds, noted the report, will come out of the Department of International Trade.

European Union

ECrowd! raises more than €300K in second round of funding (Finextra), Rated: A

The debt crowdfunding – also known as crowdlending- platform ECrowd!, specializing in sustainable investments, has closed an investment round of € 307,900 through the online investment platform Crowdcube (equity crowdfunding).

This is the second round of funding which ECrowd! has closed in just over a year. In all, 135 private investors have participated in the round in exchange for 10.24% of the capital of the company. The largest investment was € 76,000, coming from a private professional investor.

Australia

LONGREAD: Why would you invest in fintech? (Bluenotes), Rated: AAA

As it stands today, fintech to date is not innovative or transformative enough and investment dollars are not sufficient to build a world-leading financial-services breakthrough.So let’s analyse the decimators. The World Economic Forum’s Cluster of Innovation Model provides one view of fintech and breaks the market into 11 major sectors and 33 market segments as shown below.

Total Fintech investment from 2009 to 2015 totalled $US43.9 Billion, including Venture Capital(VCs) and other investors such as private equity and crowd funding.

So let’s analyse the decimators. The World Economic Forum’s Cluster of Innovation Model provides one view of fintech and breaks the market into 11 major sectors and 33 market segments as shown below.

The key question is whether this level of investment is sufficient for major disruption. Uber, for example, has raised $US11.45 billion in funding and debt in 14 funding rounds since March 2009 and has had some success in some taxi markets – markets much smaller than financial services.

Total fintech investment by VCs from 2009 to 2015 is $US31.3 billion while total VC investments over same period is $US476.4 billion. Therefore, fintech is only 7 per cent of all VC investments – it is not a dominant category.

The major fintech angel-investing and start-up categories are:

Peer to Peer Lending: Lending to consumers using online, mobile and social media that matches lenders directly with borrowers.

SME and business lending: Mobile, online and social media lending services targeted at small-to-medium businesses.

Student loans: Direct lending to students using mobile, online and social-media channels.

Point of sale/online payments: Tech services targeting online payments, point of sale payments and related services .

Crypto currencies: Cyber or digital asset designed to work as a currency or a value exchange.

Digital banking: Retail banking using social media, mobile and web based services often supported by tools and rewards e.g. budget tools.

Local and international remittances: Remittances services for local person-to-person payments and international transfers using social media, mobile and the web

Wealth/investment and related tech: Investment and pension products using mobile, social media and the web.

Insurances and tech: Insurance and tech services using web, mobile and social media.

The leading segment is P2P Lending with $US5.2 billion followed by three segments – SME lending, POS/online payments and digital banking.

It is significant these nine segments total 67 per cent of fintech investment. It is likely therefore any major disruptor will emerge from these segments.

Fintech’s first decade is high on hype and spin but very low on delivering its ‘vision’ of a total disruption of financial services.

The modest level of investment to date – $US43.9 billion – is not enough to create the next financial service giant.The P2P example is salient. Launched when money was cheap, the sector has realised it is not quite easy to build a billion-dollar business.

China

China recovers over $ 1.5 billion of assets in online lending fraud case (Reuters), Rated: AAA

China has recovered more than 10 billion yuan ($1.5 billion) of illegal assets since launching a fraud investigation into an online lending platform, the official Xinhua news agency quoted the Beijing public security bureau as saying on Wednesday.

China’s police have seized nearly 300 million yuan in cash, 187,000 grams of gold, as well as real estate, jewelry, stock equities, luxury cars, and helicopters from online peer-to-peer (P2P) platform Ezubao, Xinhua said.

Why many SMEs are unhappy in Hong Kong (The Asset), Rated: AAA

One-in-five small and medium-sized businesses (SMEs) in Hong Kong are dissatisfied with the availability of finance and 57% of SMEs rate highly the importance of their main financial services provider in understanding how theirbusiness works.

Overall, only 20% of SMEs are using external financing sources such as bank loans, leasing, private equity and crowd funding. The bulk of funding for most Hong Kong SMEs are from the companies’ retained profits, which account for 53%, followed by savings (10%) and bank loans (8%). Bibby Financial analysts say that the most common avenue for SMEs to get bank loans is to pledge property or cash deposits as collateral. This explains why only a small proportion of SMEs get financed by banks or externally, as most of them lack excess assets for collateral purposes. Moreover,the research found thatreceivables financing accounts for just 2% of funding in Hong Kong, compared with 13% in the US. Bibby Financial analysts believe the significant gap may stem from Hong Kong SMEs’ lower awareness of factoring and similar trade financing tools, which are not yet common in the market where there is considerable room for growth.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On November 15th, JD.COM announced it would transfer/sell all the shares it held in JD Finance.

On November 17th, Yonyou Network Co., Ltd announced it was jointly launching Zhongguancun Bank, which is the first private and digital-centered bank in Beijing, with ten other companies.

However, Gregory D. Gibb, co-chairman of Lufax said in a recent interview that robo-advisors in Chinese financial service market had yet matured.

The year of 2015 is regarded as a milestone of China’s equity crowdfunding industry—Internet giant Alibaba, JD.COM and 360 were all targeting this emerging market. In spite of the thriving prospect, the industry is still faced up with a number of problems:

  1. No special laws for industry regulation;
  2. Constrained by only two main profit models: commission fees and service fees;
  3. Filled with fund-raisers with high project risk;
  4. Non-professional or non-accredited investors with high possibility of blind investment;
  5. No general standard for funding project valuation;
  6. High level of information asymmetry;
  7. Difficulties in equity exits;
  8. Not sufficient attention attached on fund custody.

The P2P lending industry has experienced tremendous growth in the past years, yet only a few managed to be profitable. This is the same situation with China, which is now the largest P2P lending market in the world. Xue Hongyan, senior analyst at Suning Institute of Finance, said:

”According to public information, only 1% of the 2154 Chinese P2P lending platforms have managed to be profitable.”

Making P2P firm globally respected (China Daily), Rated: A

At the time of this interview, Tang Ning, founder and CEO of CreditEase Corp, one of China’s leading peer-to-peer or P2P lending and wealth management firms, was busy with his preparations to attend the Asia-Pacific Economic Cooperation or APEC Economic Leaders’ Meeting in Lima, Peru, this month.

He became the pioneer of P2P lending in China when he founded CreditEast in 2006. Under his stewardship, CreditEase has grown rapidly and has 100 billion yuan ($14.7 billion) in assets under management now.

Ten years on, CreditEase has four branches in the United States, Israel, Singapore and China’s Hong Kong. Tang visits the US up to three times a year to teach at Harvard University and Stanford University as well as interact with financial services industry leaders and venture capital institutions.

CreditEase Corp has set up the Fintech Investment Fund totaling $1 billion, half of which will be invested abroad.

QuantGroup closes $ 73m Series C led by Sunshine Insurance (Deal Street Asia), Rated: A

Fintech startup QuantGroup has closed a RMB500 million $73 million) Series C financing round led by Sunshine Insurance Group Corporation, Fosun Capital, Guosen Hongsheng Investment Co., Ltd., and other undisclosed investors.

QuantGroup, which operates via QuantGroup.cn, provides online financial services including credit-based consumption and IOUs. It previously raised an undisclosed series A funding round from Fosun Kinzon Capital, Banyan Capital and China Grow Capital and a series B round from Zhixin Capital, Star VC, Oriental Fortune Capital and others.

Canada

First Digital Lending Platform To Be Granted Exempt Market Dealer Licence By OSC (Mondaq), Rated: AAA

On September 28, 2016, Vault Circle Inc. (Vault Circle) announced that it had received approval by the Ontario Securities Commission (OSC) to operate as an exempt market dealer in Ontario.

The proceeds raised by Vault Circle from accredited investors will be used by Lendified Inc. (Lendified), an affiliate of Vault Circle, to provide alternative financing options to small and medium sized businesses (SMEs) in Canada.

The OSC initially set out its expectations for businesses planning to operate “peer-to-peer” lending websites on June 19, 2015, by highlighting the concern that such online platforms and their related activities may trigger the application of dealer registration and prospectus requirements under the relevant provisions of the Securities Act (Ontario).

MENA

2016/17 TRN Report: Top Exit Strategies of Real Estate Crowdfunding Platforms (MENAFN.com), Rated: A

Real estate crowdfunding (RECF) landscape has transformed rapidly over the past four years. It is much easier to become a real estate investor or developer today, than it was a few years ago. Also, the industry is now open to everyone wherever they are. The developments are making the industry more accessible, transparent, attractive and rewarding.

Most crowdfunding legislations passed and enacted so far have diminished the requirements for real estate investing.

Exit strategies make it easier for investors to leave a deal without necessarily having to pull out their money. One exit strategy is allowing investors to sell their property shares to willing buyers on a secondary market. These strategies made it easier for RECF investors to liquidate their investments.

Authors:

George Popescu
Allen Taylor

Before Avant, there was Enova

Before Avant, there was Enova

( Interview taken at LEND360 on October 6th 2016) Enova International was founded in 2004 by Al Goldstein and is headquartered in Chicago. Enova is now a public company. Al Goldstein, who is also the founder of Avant, was an investment banker with Deutsche Bank. He founded the company under the name of CashNet USA […]

Before Avant, there was Enova

( Interview taken at LEND360 on October 6th 2016)

Enova International was founded in 2004 by Al Goldstein and is headquartered in Chicago. Enova is now a public company. Al Goldstein, who is also the founder of Avant, was an investment banker with Deutsche Bank. He founded the company under the name of CashNet USA and grew it to $200 million in revenue. It was bought by Cash America for $250 million in 2006 and was renamed Enova International. In 2014, Cash America decided to spin off Enova via an IPO.

Balance Sheet Lender

Enova has been a balance sheet lender ever since its inception, but now in its effort to diversify and grow it has struck a deal worth $175 million with Jefferies LLC. The deal will provide financing facility for its NetCredit installment loan portfolio. This is Enova’s first asset- backed securitization and is a big milestone for the lender. It has its foothold in 6 different countries and provides services via 11 different brands. Most of the products and services are directed towards consumers but it also has 2 brands that focus on SME and 1 is focussed on analytics side of the business. Numbers posted by the company is a testimony of its growing stature in the fintech industry. It lent $500 million in the second quarter alone across all the brands and generated $700 million in revenues and $150 million in EBITDA in 2015.

35% APR +

Enova offers a wide range of products, ranging from 35% APR loans to high-interest rate payday loans and that’s what give Enova a competitive advantage over its rivals. Al Goldstein after selling his first venture has started Avant, another fintech company that offers some products which are in direct competition with Enova International. But its real competitor is Elevate which offers many products in the 35% -400% APR bracket.

Selling analytics models

Sean Rahilly has joined as CCO. Sean is an expert in regulatory compliance and legal framework. He also helps in developing and deploying new models for data science and analytics team. The latest model he deployed was Colossus host model. Under his supervision, the company has launched an analytics brand late last year, which provides analytics service for the lender and its verticals. It will also help in decision management, prediction analytics, business rules, and optimization. Direct competition for this brand is GDS link, a decision management solution provider. Enova’s bouquet of services is much more comprehensive than GDS which is a niche player in verification and fraud services.

The company’s services platform division is supported by the fact that the parent company has lent $2 billion on the same infrastructure. Enova does not charge any minimum for its platform services, it charges per transaction or based on business KPI or stats performance indicator of the model. This helps young companies and corporate to try out its services before committing to a huge fixed cost.  Each model is built according to the needs of the customer, no two models are similar. It is essential that the company avoid any conflict of interest and so doesn’t offer its services to close competitors.

CFPB

Marketplace lending has been hobbled by regulators in markets like Canada. CFPB regulations will surely have a huge impact on Enova and the entire industry ecosystem. The company was fully prepared when FCA(the UK regulator) released its rules. All of its 3 brands in the UK have FCA authorization and result is those individual brands have dominated their category in the UK market. In its pursuit to diversify and expand, it has launched new products in Brazil, has acquired an SME lender in Cincinnati. It already had one SME brand and now it has launched another one, it is expecting big things from all the brands as all of them are out of the pilot stage. Enova Decision is looking to be a big player in decision management space. Decision management solution is still at nascent stage across all the industries and that includes fintech as well. Being a pioneer in Fintech and online lending, the platform offered by Enova should be a unique value proposition for its clients.

A group of companies and brands

The marketplace lending ecosystem has evolved to include multiple start-ups in sub-segments like analytics, platform-as-a-service, securitization, marketing, verification, fraud detection and other allied verticals. Enova has also metamorphosed from a vanilla balance sheet lender to a group of firms focussing on different regions and myriad services. Its continuous growth in non-legacy businesses indicates that it has been able to overcome the inherent conflicts of interest to become a partner of choice for start-ups and corporate. The company has invested in and launched new verticals which can be future unicorns on their own. It’s listed status and balance sheet size give it a massive opportunity to dominate the fintech category for years to come.

Author: Heena Dhir and George Popescu

George Popescu