Modern Small and Medium Enterprises (SMEs) represent a significant part of the global economy, accounting for nearly 90% of all modern businesses. Modern SMEs are large contributors to the creation of workplaces and economic growth, especially in developing countries. Although they’ve become a vital part of the financial ecosystem, these businesses are facing extreme difficulties […]
Modern Small and Medium Enterprises (SMEs) represent a significant part of the global economy, accounting for nearly 90% of all modern businesses. Modern SMEs are large contributors to the creation of workplaces and economic growth, especially in developing countries.
Although they’ve become a vital part of the financial ecosystem, these businesses are facing extreme difficulties in accessing finances. SMEs are often associated with higher risks, sizeable transaction costs, and a lack of collateral—about 50% of small business loans get rejected.
Many business owners cite this financial exclusion as a key obstacle to the growth of their venture. The common hurdles in obtaining a loan include burdensome processes, low level of transparency, and the high costs associated with searching for a loan. For instance, the research by the Federal Reserve indicates that small business borrowers spend nearly 24 hours on paperwork alone during the loan application process at a bank.
The problem is global: businesses from East Asia and Pacific regions represent the largest share (46%) of the total number of underbanked SMEs worldwide, followed by Latin America and the Caribbean (23%) and Europe and Central Asia (15%). In 2018, the finance gap between the needs of global SMEs and available funds reached $5.2 trillion, according to SME Finance Forum.
Following the financial crisis of 2008, with the idea of de-risking their balance sheets, large banks started to avoid lending to SMEs by introducing stricter requirements to receive funds. For instance, in the UK, where SMEs represent a tremendous 99.9% share of the 5.7 million businesses, the value of issued bank loans fell to £55.6 million in Q4 of 2018, a 78% drop from its maximum of £255 million in 2009.
The other reasons include the variety of regulations banks have to cope with, insufficient credit history, and the high transaction costs of underwriting and onboarding customers. All in all, providing loans to small businesses has become less of a priority for banks. “If you look at the great recession, what you’ve seen is a bounce-back of commercial lending, but lending to small businesses really hasn’t come back,” sums up Darrell Esch, Vice President of global credit at PayPal. The majority of banks are not interested in lending relatively small amounts of money on a frequent basis. Some banks have introduced a sort of a loan threshold (commonly around $100,000 to $250,000), and won’t engage in loans below this level. The others will not address requests from SMBs with less than $2 million in revenue.
But technology changed the scenery for many small and medium-sized enterprises. In comparison to traditional financial institutions, digital lending companies provide favorable terms on credits. With low-interest margins, faster approval, and without initial fees, they are scaling up quickly and already capitalizing on new scoring methods.
On the Path to Digitalization
Top decision-makers in the banking sphere are aware of the success of alternative lending companies. However, still slowed down by legacy systems, banks are only dipping their toes in digital lending. The outdated technology at banks isn’t the sole issue. At the recent Lending Fintech Europe in London, lga Zoutendijk, a career banker with several decades of experience, said that “legacy culture is a bigger problem at large banks than legacy tech and a much more difficult challenge to overcome.”
For traditional lenders, fintech is an opportunity to innovate and modernize. However, one can’t fight legacy culture alone: on their path to embrace digitalization, bank institutions need a fintech partner to bring technology, speed, and flexibility to the table.
Fintechs are looking for such partnerships as well. With all the improvements in customer experience, they predictably lack the expertise in areas such as risk management, loan monitoring, and servicing that banks have in spades. This mutual knowledge gap creates partnership opportunities. Denise Leonhard from Paypal is sure that “nobody is going to be able to do it alone. To get to the next evolution of payments, it’s going to be really partnership-driven.”
Addressing the Challenge
But what is the biggest challenge in initiating the loan process for banks? Moody’s Analytics, a financial intelligence provider, conducted a poll among bank institutions. The results revealed that 56% of bankers consider manual collection and data processing to be the greatest obstacle in the process of underwriting.
These outdated methods lack consistency, accuracy, and auditability, not to mention, they are time-consuming. This results in additional work for risk officers at a bank, and assessing an SME’s creditworthiness becomes a challenging and unprofitable task. Traditional players just can’t compete with agile, fast-moving alternative lenders and their “time-to-money” credit decisions which take less than a day.
Lending to SMEs is not profitable for banks unless they change their operational approach. The solution lies in the automation of manual processes. Banks have to adopt such solutions for enhanced data collection, scoring, and further rule-based decisions, and solve the problem of the data’s inconsistency and delay. Igor Pejic, the renowned author of Blockchain Babel, sums it up: “It is simply not possible to offer the customers the speed they need in today’s economy with manual processes.”
But what’s more important for banks, those changes mean investing in the future: alternative lending options make customer experience of SMEs convenient, transparent, and adapted to the way those businesses operate.
The Future of SME lending
Partnerships between banks and fintechs are one of the most-discussed topics in the industry as they have the immense potential to impact long-term growth, customer experience and client retention for both parties. Industry professionals agree that bank-fintech collaboration is evolving as a common industry practice that will shape the future of the lending domain.
By partnering with alternative lenders, traditional players fight the challenges associated with the process of credit risk assessment, increase the quality of the loan portfolio, and stay competitive in the SME lending sector. More importantly, they have the opportunity to offer small businesses a shortcut to finance with fast access to cash, less paperwork, and fewer rejected applications.
In return, alternative lenders benefit from partnerships by getting experience in handling a complex regulatory environment, reaching new markets, and scaling quickly. In regards to this, old-fashioned “collaboration” is the new industry trend, while “disruption” is regarded somewhat as a thing of the past. Effectively, change is almost impossible without industry-wide cooperation and consensus.
The question: is how will banks and fintechs manage their respective strengths to proceed with deeper integration in a newly-formed system? It’s important to note that these integrations shouldn’t be regarded as acquisitions by any means. In other words, the technological vision of fintechs shouldn’t be at odds with the slow processes within banking institutions: one needs to convince multiple stakeholders and departments that the partnership makes sense. Here’s Chris Skinner on the partnerships: “Banks are slow to move, particularly at the beginning. Realistically, you should consider allowing at least 12-months from the moment you engage to the moment you have a partnership agreement signed.”
However, the financial industry holds little pessimism about collaborations: 82% of top executives at banking institutions have plans to partner with a fintech within the next 5 years. That’s only a matter of time before both parties streamline their processes to completely change the dynamics of SME lending.
All in all, given the competitive advantages that come with strategic partnerships, banks and fintechs have better chances to achieve their scale ambitions and reinvent their business models.
According to the CGAP report, the global opportunity for SME credit is estimated to be around $8 trillion. At the same time, more than 50% of overall applications are being rejected regularly. If banks want to take their share of the lucrative market, they need to modernize, and that’s totally good news for small businesses, technological partners, and the whole fintech ecosystem.
Dmitri Koteshov is the digital content marketer at HES (HiEnd Systems), a fintech company behind comprehensive lending and credit scoring solutions. As a seasoned professional, Dmitri maintains a longstanding interest in providing insights on fintech software development and analyzing current technology trends.
News Comments Today’s main news: OnDeck tops $10B in small business lending. KBRA assigns preliminary ratings to Consumer Loan Underlying Bond Credit Trust 2018-P2. Robinhood looking to IPO. Faircent approved by Reserve Bank of India. Today’s main analysis: A credit card debt study from Wallet Hub. Today’s thought-provoking articles: Should the next billion dollar financial platform be for […]
Robinhood is targeting an IPO. This should be an interesting ride for Robinhood. The company is firmly entrenched in millennial culture, but can it move beyond that? Can it make a successful foray into crypto without sacrificing its core offering?
The next billion dollar financial platform. There hasn’t been a major financial platform for Baby Boomers yet. This article gives several reasons why there should be. But the question that any would-be takers has to ask is, would they use it? Is there any evidence that enough Boomers would use a financial services platform to justify the expense in building one?
Credit card debt study. Some interesting insights into recent credit card trends. I think the data still shows that Americans are addicted to debt. Charge offs increase immediately following more credit card usage. Perhaps that is telling us something.
OnDeck has achieved a milestone in the Financial Technology (FinTech) industry, becoming the first non-bank online lender to surpass $10 billion in total loans originated to small businesses. OnDeck, with operations in the United States, Canada and Australia, is the world’s largest non-bank online lender to small business by total loan volume.
The achievement by OnDeck, a pioneer of the FinTech lending industry, is the latest indication that small businesses increasingly prefer to seek financing online. According to the Small Business Credit Survey from the Federal Reserve, small business owners are turning to online lenders in record numbers. In 2017, 24 percent of small businesses seeking credit applied online, up from 21 percent the previous year.
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2018-P2 (“CLUB 2018-P2”). This is a $270.30 million consumer loan ABS transaction that is expected to close September 27, 2018.
Fintech unicorn Robinhood, which offers zero-fee stock, option, and crypto trading, has begun preparations to go public, Baiju Bhatt, the company’s chief executive, revealed at TechCrunch Disrupt SF last week. The US-based firm has raised $539 million in funding, and it’s currently valued at $5.6 billion.
In preparation for the initial public offering (IPO), the five-year-old company is in the process of hiring a chief financial officer (CFO), as well as undertaking audits from the Securities and Exchange Commission (SEC) and FINRA, a US securities markets watchdog.
If you’ve immersed yourself in the world of Silicon Valley and you keep up with current trends, then it comes as no surprise that ageism in the U.S. tech world is an ongoing debate. The job search engine Indeed reports that 43% of workers in the tech industry worry about losing their jobs due to their age. While the general population is aware of the issue, its resolution is slow-moving.
The characteristics of Generation Z – those born after 1996 – are still being discovered. We don’t know enough about them yet to understand what kind of impact they will have. The Millennial Generation and Gen X have arguably been the main sales focus during the rise of Silicon Valley. Millennials in particular have overtaken the market, with 83% of today’s managers belonging to that generation. Finally, we have the Baby Boomers. Whether it’s because Millennials believe that older generations can’t use new tech – or that they inherently cater to people their own age by nature – Boomers are falling by the wayside.
People aged 50+ are the largest demographic in the United States, encompassing one third of the total population at 110 million. This age group is responsible for spending 50% of the total disposable income in the country.
Americans repaid $40.6 billion in credit card debt during Q1 2018 – the second-largest quarterly payoff ever. But we added almost $30 billion back to our tab in Q2 2018. We also began the year owing more than $1 trillion in credit card debt for the first time ever, after adding a post-Great Recession record of $91.8 billion to our tab in 2017.
Only four times in the past three decades have we overspent so much in a year. And in each case, the charge-off rate – currently near historical lows – rose the following year. That’s true so far, as charge-offs are up nearly 3% from Q4 2017 to Q2 2018.
Student loan marketplace, College Ave Student Loans, announced on Tuesday it has completed a $199 million securitization of private student loans, its second successful securitization. According to the platform, the CASL 2018-A transaction completed over the summer, achieved higher ratings than College Ave’s inaugural securitization, receiving an ‘AA’ rating from DBRS and an ‘A’ rating from S&P for its senior notes.
According to College Ave, the transaction was heavily oversubscribed attracting a broad and diverse group of repeat investors and nine new participants. Barclays and Credit Suisse were joint lead underwriters on the transaction with Barclays serving as structuring agent and sole bookrunner.
White Oak Global Advisors, LLC (“White Oak”) is pleased to announce the close of the White Oak Yield Spectrum Fund (the “Fund”) to outside investors. The Fund and other associated vehicles raised concurrently approximately $2.1 billion of total commitments, exceeding the $1.75 billion fundraising target. White Oak’s previous flagship fund, the White Oak Summit Fund, closed with approximately $1.3 billion of commitments in March 2016.
The capital for the White Oak Yield Spectrum Fund was raised from a diversified group of institutional investors worldwide. In particular, the Fund attracted very strong support from public and private pension funds, insurance companies and global family offices. White Oak currently manages over $5.6 billion of committed assets.
The Fund will primarily invest in first-lien, directly originated lending strategies, including term loans, asset-based loans, and equipment financing.
A national banking regulator is offering cutting-edge financial firms a new pathway into the traditional banking system. So far, few of them are biting.
The lack of immediate interest from the likes of LendingClubCorp.LC +0.00%, Square Inc., and others comes in large part from uncertainty about what activities the Office of the Comptroller of the Currency’s so-called fintech charter will allow, what regulatory requirements it will carry, and whether it will hold up in court.
That uncertainty grew Wednesday when the Conference of State Bank Supervisors, a group of state regulators, said it intends to file a lawsuit challenging the OCC’s authority, renewing a previously unsuccessfully legal challenge.
Opendoor, the online real estate marketplace, announced on Tuesday (Sept. 11) that it has acquired Open Listings, a platform for homebuyers.
In a press release, Opendoor said the acquisition of Open Listings, which operates a platform that aims to make it easier and lower-cost to find, tour and buy any home on the market, will enable it to create an end-to-end marketplace for the buying, selling and trading of homes. According to the company, 71 percent of home sellers are also looking to purchase a home.
With the acquisition, Opendoor customers will be able to line up a purchase of any home on the market via a trade-in transaction. Buyers who use Open Listings will get a discount on the home purchased through a commission rebate of up to 50 percent, the company said in the press release.
Via mobile phone or computer, customers can tour and submit an offer on any home on the market, get an offer on their existing home and align the timing of both transactions. By integrating Open Listings with Opendoor‘s mortgage, title and homes services, the company said conducting a real estate transaction will be as easy as booking a flight or making an online purchase.
Varo Money in Salt Lake City is one step closer to becoming a national bank.
The fintech firm, which aims to lower the cost of banking through a mobile-only platform, recently received preliminary and conditional approval from the Office of the Comptroller of the Currency. Varo still needs to apply and receive approval from the Federal Deposit Insurance Corp. and the Federal Reserve.
Colin Walsh, Varo’s co-founder and CEO, is optimistic that the company will be operating as a bank within a year. He characterized the OCC’s decision as a pivotal moment for banking — one that shows regulators are more willing to consider nontraditional models.
State regulators said Wednesday they intend to refile a lawsuit against the Office of the Comptroller of the Currency in an effort to block it from offering a new federal bank charter for fintech firms.
The Conference of State Bank Supervisors said its board recently decided to proceed with another round of litigation against the national bank regulator now that the agency said July 31 it would offer a so-called special-purpose national bank charter to fintech firms.
This will be the state regulators’ second attempt at blocking the OCC in court.
New data from online loan marketplace LendingTree shows that San Antonio is the American city where Millennials have “the most debt,” with a median debt balance of $27,122 — not including mortgages.
Researchers took a look at “anonymized credit report data of My LendingTree users who live in the 50 biggest metro areas in the U.S.” to compile the data. They were born anywhere between the years 1981 and 1996.
The 10 cities where Millennials have the most debt
Here they are, plus the average percentages of what highly contributes to Millennials’ “total debt balances.” Again, these don’t include mortgages:
San Antonio: median balance of $27,122, with car loans making up 43.2% of “total debt balances”
Pittsburgh: median balance of $26,403, with student debt being 45.7% of all debt
Austin: median balance of $26,164, with 18.1% of all debt being from credit cards and 37.1% being from car loans
This means building a sustainable platform that allows investors to earn attractive and stable returns by lending to creditworthy businesses, during every stage of an economic cycle. Since 2010, globally we’ve improved access to affordable capital for more than 50,000 businesses, and opened up a new asset class for over 80,000 investors.
Peer-to-peer lender Funding Circle fired the starting gun on its much-anticipated plans to go public earlier this month. The company, which is only eight years old, is looking to attract a value of £1.7bn and raise £300m in the process.
Since its founding, Funding Circle has transformed the market for business financing, matching everyday investors who have money to spare with businesses looking for funding to expand. In total, the company has put together £5bn in loans for small businesses since 2010.
However, if you’re thinking of buying into the IPO, there are several issues you need to consider first.
Barclays has become the “first” UK bank to allow customers to bring their other current accounts into its mobile banking app.
Barclays says this new feature gives customers a way to get a clearer picture of their day-to-day finances within its app. It uses API technology – all powered by open banking.With competition in UK banking tougher than an East End gangster, banks are trying to stand out and play a game of constant one-upmanship.
It’s also a riposte to the many fintech start-ups offering a similar service. For example, last month London-based personal finance app Bippit launched with the offer of an account connecting and savings service.
Monzo is frequently hailed as one of the most exciting challenges the tech industry poses to high street banks.
Wikipedia calls it a “digital, mobile-only bank”. Mashable summed it up as the “bank that’s apparently so cool it’s become a chat up line in London’s bars”. Its own stated ambition is to “build a better bank”. In April 2017, it acquired a banking licence.
But does Monzo actually behave like a bank?
Banks, under one interpretation, are economic inventions which create liquidity from an array of otherwise illiquid assets. Douglas Diamond, the US economist, describes a bank as “a lender financed with demand deposits”. Depositors sacrifice higher returns for the privilege of immediately being able to withdraw their capital whenever they want.
Online lender iwoca says it is UK’s fastest growing SME finance provider. The claim comes following the publication of the Sunday Times Hiscox Tech Track 100 which ranked iwoca 30th on the list.
The Sunday Times Hiscox Tech Track 100, published last Sunday, 9th September 2018. Ranked No. 30 on the ilst – which ranks Britain’s tech firms in regards to the fastest-growing sales. iwoca joins a group of prominent UK Fintechs recognized by the Times.
China has become addicted to debt. Now, its tech industry is hooked too.
It started innocently enough. Back in 2008, when the fallout of America’s own debt binge was giving the whole world a hangover, China engaged in a decisive and robust economic stimulus, injecting RMB 4 trillion into key sectors of its economy. Banks, mostly state-owned in China, were directed to lend more, particularly to other state-owned firms. As a result, China recovered quickly from the global financial crisis, even as the US and Europe struggled to get back on their feet.
However, even as the Chinese economy recovered, the banks continued to lend, and Chinese companies continued to invest, most notably in infrastructure projects. Not only did they invest, they invested A LOT.
Global fintech lender Spotcap has issued more than EUR 250 million in credit lines since its launch in 2014.
The company combines robust credit assessment principles with innovative technology to offer a smooth and straightforward loan experience. The fintech undertakes cash flow based, rather than credit-score based underwriting, resulting in a fair assessment of the real-time performance of a business.
In the last 12 months, Spotcap experienced more than 100 percent year-on-year growth in the volume of credit lines it provided, growing at a faster pace than the alternative finance industry, which recently experienced 41 percent year-on-year growth in Europe.
The fund would be Ribbit’s fifth foray out with limited partners and its $420 million target is only a nominal increase from the $300 million it had set out to raise for its fourth fund last year.
Coinbase alone is now worth at least $8 billion on paper, and no one laughs when chief executive Brian Armstrong says that his company’s goal is to become the New York Stock Exchange of crypto securities.
After Peer-to-Peer (P2P) lending platform, Faircent, India’s second largest P2P Lending platform, i2ifunding.com also announced that they have received their Certificate of Registration (CoR) as NBFC-Peer to Peer Lending Platform (NBFC-P2P) from Reserve Bank of India (RBI).
According to RBI’s Master Directions issued in 2017, each player in P2P lending platforms are required to register as a Non-Banking Financial Company (NBFC-P2P). Backed by SucSEED Venture Partners and angel investors comprising industry veterans, i2iFunding is one of the top players in the P2P lending market sector with more than 80,000 registered users.
Micro-lending fintech firm Upwards has raised about Rs 32 crore (about $5 million) in funding led by Chinese venture capital firm Shunwei Capital. The series A investment also saw participation from Upwards’ existing investors Mayfield and India Quotient.
The company will use a large part of the capital raised on strengthening its technology and data science capabilities to help underwrite loans for a larger user base as it looks to significantly scale up its loan book over the next year. Upwards is targetting a monthly loan disbursal run rate of Rs 25-30 crore and looking to widen its net outstanding loan book to Rs 100-120 crore over the next year.
Peer-to-peer (P2P) lending platforms in China are shutting shop at a rapid pace. A P2P lending platform is a virtual marketplace where actual lenders meet actual borrowers. A Bloomberg report from July states that 4,500 P2P lending platforms in China have closed shop since 2013. The P2P lending industry in China has 50 million registered users and $192 billion of outstanding loans, according to the Bloomberg report. Other estimates put the size of outstanding loans through P2P lending platforms in China at $430 billion.
The crisis in China’s P2P lending market was a fallout of regulatory attempts to clean up the lending space of problems like high interest rates, misuse of funds and exaggerated return figures. Instead of complying with stricter regulations, some platforms chose to shut operations, which led to panic among investors who started placing withdrawal requests on other P2P lending platforms too, leading to further confusion.
While the P2P sector is still in its early stages in the country, regulatory bodies have started taking measures to put a proper check on them. The Reserve Bank of India (RBI) has made it clear that these platforms will be registered as non-banking financial companies (NBFCs) and provided guidelines for them.
Though currently only a handful of platforms are registered as P2P platforms under RBI, the emergence of several sites with the claim of being P2P platforms makes it necessary to put further control on them.
INDONESIAN cloud-based point-of-sale (POS) system startup Moka has raised US$24 million in a Series B funding round with EDBI, the investment arm of the Economic Development Board, among the investors.
The investment round, which was led by Sequoia India, also included SoftBank Ventures Korea, EV Growth, Mandiri Capital, Convergence, and Fenox.
Singapore-based alternative lending startup Helicap has raised US$5 million in a pre-series A round led by East Ventures and property firm Soilbuild Group Holdings.
The fresh funding comes just four months after the company closed a US$1.5 million seed round led by Singapore member of parliament and former manpower minister Teo Ser Luck.
Helicap said it will use the investment to hire tech and data talent and expand its presence in Indonesia, Vietnam, and the Philippines. Some of the capital will also go towards boosting its risk management abilities through improved credit scoring and due diligence tools.
News Comments Today’s main news: LendingClub spared from sharing underwriting docs with investors. Wealthsimple raises $65M. Zopa warns investors of increased defaults. Raisin now operates in UK. RaboDirect to bow out of Ireland. Today’s main analysis: LendingClub’s Q4 2017 results. Today’s thought-provoking articles: LendingClub’s CIO issues an update on Q4 results. LendingTree ranks best places for fresh start. Faster payments mean […]
A core strength of LendingClub’s marketplace model is the ability to incorporate data insights quickly in order to responsibly adapt for the benefit of borrowers and investors.
From 2009 to 2014, credit supply was tight, so consumer loans experienced better-than-average loss rates. Since then, credit supply has increased, and the industry has seen a return to long-term average delinquency rates and higher losses in higher risk populations.
As a result of cumulative actions taken, our loss forecast for newly originated loans remains unchanged in aggregate compared to last quarter.
U.S. economic growth remains slow but steady, with annual GDP growth rate increasing to 2.6% in the fourth quarter of 2017. A primary driver of GDP growth since the financial crisis has been a historically low unemployment rate, which is down to 4.1% from its peak of 10% in 2009.
Updated pricing and return forecast
We continuously refine our methodology and recalibrate interest rates based on shifts in risk across the portfolio. This quarter, interest rates are increasing for certain subgrades in grades D and E.
Loss forecasts are remaining stable in aggregate for the platform relative to last quarter.
Platform Summary and Projections as of February 20, 2018
Morgan Stanley, Goldman Sachs and the other underwriters of LendingClub Corp.’s $1 billion initial public offering for now don’t have to produce roughly a thousand documents sought by a class of investors suing the peer-to-peer lending company for alleged stock fraud, a California federal judge ruled Tuesday.
LendingTree, the nation’s leading online loan marketplace, today released the findings of its study on the best cities for those seeking a fresh start.
First, the study looked at eight elements to consider when going through a financial recovery, such as the local median income and rents, and if the state has laws to protect debtors from aggressive collections and penalties, in case methods like debt consolidation or refinancing to lower rates aren’t enough to manage liabilities.
Next, to determine what opportunities there might be for people seeking a solid job and income, the study looked at the percentage of people in these metros who are between the ages of 35 and 64, single, employed, have health insurance coverage and are currently enrolled in school.
Lastly, to get an idea of how well people in an area are recovering from financial calamity, LendingTree calculated how quickly credit scores are rising after a bankruptcy by using proprietary data on the average credit score, on a geographic basis, of LendingTree customers who declared bankruptcy between three to four years earlier.
1. Buffalo, N.Y. – 67.6 At $738, Buffalo has the lowest median rent among the 50 cities reviewed, and 94 percent of adults over the age of 35 are insured (second highest). Residents who declare bankruptcy have an average credit score of 664 three years on, tied for the second highest score for the cities reviewed, suggesting that conditions are favorable for financial recovery. However, Buffalo ranks poorly in two metrics: at $52,303, median income is the seventh lowest, and only one other city has fewer students over the age the 35.
2. Minneapolis – 62.9 At just 3.7 percent, the exceedingly low unemployment rate for citizens in Minneapolis between the ages of 35 and 64 helps push the city to the No. 2 spot. Not only are most over-35s employed, but they also earn a median salary of $70,915, the eighth highest in the cities reviewed, 94 percent have health insurance and median rents are relatively low at $963.
3. Salt Lake City – 62.6 Only two other cities have more over-35s enrolled in school (Virginia Beach and Washington), and only five have more unmarried over-35s (New Orleans has the most). That could be due to the lowest unemployment rate for over-35s of any city reviewed (3.6%), and higher-than-average median income of $64,564 for that same group. That combines nicely with a moderate median rent of $967.
Less than a month ago Early Warning Services, the network that powers peer-to-peer payments platform Zelle, touted $75 billion in funds moved through its bank-supported platform with plans to expand its member network. One member bank, however, also reported a fraud rate of 90 percent shortly after implementing Zelle last year, said someone familiar with the statistics who wished to remain anonymous.
Fraud detection in banks, however, is no longer just about building a wall to keep outsiders out; cybersecurity teams need to install a filter that can identify who can and should enter the system.
Bank of America will spend $600 million this year on cyber defense alone, its chief operations and technology officer Cathy Bessant recently told Tearsheet. In December Menlo Security, a company that provides malware isolation solutions, raised $40 million in Series C funding, bringing its total funding to $85 million. JPMorgan Chase, HSBC and American Express Ventures are among its investors.
Greenlight Financial Technology, the startup behind an app and debit card for kids and college students, has raised $16 million in a Series A funding round joined by SunTrust Bank, Ally Financial and the Amazon Alexa Fund.
Companies like Better Mortgage, Blend and LendingHome are reengineering the way mortgages are applied for and underwritten. While Cadre and Fundrise are moving real estate investments from Excel spreadsheets to the digital world.
GreenSky offers on-the-spot loans of up to $65,000 for home improvement projects with generous zero-interest promotional periods. Lemonade offers urban renters and homeowners insurance for as little as $5 and $25, respectively. LendingHome provides financing for house flippers, and more recently, homeowners.
With the Enodo platform investors can cut to the chase with a platform that supports their decision-making through acquisition all the way to renovation, with features including rent price forecasting. In other words, Enodo is a real estate investing platform that provides quantifiable data, meaning investors no longer have to rely on hunches alone.
Enodo allows investors to carefully analyze any property in the country using basic physical and investment parameters. Users can also identify comparable properties, predict operating expenses and more. Parameters include things such as the year the home was built, number of units, amenities, market demographics and more.
This thread called Cash Parking on the Lend Academy Forum was created back in December 2016 and since then, forum members have discussed opportunities at banks and credit unions.
The discussion caught my eye when one user posted a 3% 5 year CD which happened to be offered by my local credit union.
Signing Up for a Savings Account at Marcus
Marcus by Goldman Sachs has been near the top of the list since I began checking. We last did a piece on savings account rates back in June 2017 when Goldman Sachs’ deposit accounts were still branded under GS Bank. Rates are now 30 basis points higher at 1.5% on Marcus accounts.
Their investment has paid off and it was recently reported that they had $17 billion of deposits. Since Goldman Sachs acquired GE Capital’s retail deposits, deposits have grown a whopping 90%.
She’s been hailed by Forbes as one of the most powerful women in the world, and TechCrunch recognized her for “crushing it” last year. Both sources refer to her success as a leader at Kabbage, Inc. which has financed over $4 billion to more than 130,000 businesses to date.
Q: What sets Kabbage apart from other online small business lenders?
A:Our focus on real-time access to third-party data and our ability to stay connected to our customer’s data all the time. This technology allows us to provide an automated experience.
Q: So, user experience seems to be a big advantage for non-traditional lending sources. While that’s an advantage, what disadvantages does a lender like Kabbage have against a traditional lender?
A:There are lots of things. First, traditional lenders like banks have well-known brands; they have access to really cheap capital. They have a lot of customers already. They already have access to a framework which they operate with the ability to move funds.
The only thing they don’t have is the ability to serve the market, because it’s too expensive for them to serve our customers with the type of product they need.
Q: Was there a typical small business customer that you would lend to? Do you lend to certain business more often than others today?
A:Well, we got our start making loans to eBay sellers which you may or may not know. The reason we started there was because that’s where the first API was available, so we could get information on a business’ performance. Then as more APIs became available, we were able to expand our business. So for a long time, all of our customers were eCommerce businesses.
But about three years ago, we began expanding to service brick & mortar businesses, and today, about 85% of our customers are brick & mortar businesses.
Q: Over the last 5 years, fintech lending has grown to take up more of the small business lending market. Where do you see the market share in 5 years? Where’s Kabbage in this equation?
A:If you’re talking about businesses seeking less than half or a quarter million dollars, I think it’ll stay the way it is with largely non-traditional players, like Kabbage, filling that space. And I think banks could serve that market through partnerships, but overall, I think it’s going to look much the same as it is now.
The Military Lending Act’s (“MLA”) lending restrictions are expanded to apply to consumer credit card issuers and unsecured consumer lenders. Compliance in most areas was mandatory as of October 3, 2016, but as to credit cards the mandatory compliance date is October 3, 2017.
The MLA applies to active-duty military personnel, active Reserve and National Guard personnel serving on Title 10 orders, and their dependents with a valid military identification card.
We now live in a world where crowdfunding and P2P investment opportunities are everywhere. The student loan market is no different. Companies like Sofi are shaking up what it looks like for both students and investors alike.
Sofi (short for Social Finance) has funded over $25 billion in student loans, with over 437,000 members around the country.
European digital banks N26 and Revolut will launch in the U.S. later this year, and there are reports that U.K. challenger bank Monzo is mulling a move into the U.S. market. Meanwhile, three U.S. banking startups — Varo Money, Square and Moven — recently announced plans to apply for or acquire U.S. banking licenses.
For N26, winning means customers loving N26 like in Europe. U.K.-based Revolut, which plans to launch in the U.S. later this year with a multi-currency bank account, said winning means acquiring millions of customers, particularly those who travel often; and to San Francisco-based Chime, a win is to bring large numbers of customers away from traditional institutions.
Competition within the alternatives sector for family office investments is at an all-time high, as these investors get more comfortable with the range of assets available to them and their general understanding of alternatives rises. Fund managers want to win these wealthy investors over, but often find they are unsure of how best to pursue them. The family office client is increasingly demanding a more tailored approach to wooing them over. Managers who can adapt their prospecting tactics stand a better chance of winning a partnership with these prized investors.
A Q4 2017 research study, “Single-Family Offices and Alternative Investments,” by Institutional Capital Network, provides a framework for the changing dynamics in family office activity within the alternatives space. Some of the research findings that stand out in particular include:
First-generation founders have a “stay-rich” mentality, while second-generation are more likely to have a “get-richer” perspective.
About 40% of second generation single-family offices are investing 15% or more of their total portfolios into alternatives, compared to 20% of first generation single-family offices that are investing at similar levels. In 2017, 71% increased their direct allocations relative to 2016, and 82% intend to do so in the future.
In the latest survey by personal finance site Bankrate.com, 33% of Americans say they do not have more emergency savings than credit card debt. That includes 21% who say their credit card debt exceeds their emergency savings and 12% who indicate they have no savings or credit card debt.
While one in three Americans are financially ill-equipped for an emergency, that is down from 41% in 2017 and 43% in 2016 and is the lowest level in the eight years of the survey.
Fifty-eight percent say their emergency savings fund exceeds their credit card debt, which is up from 52% in the last two years and ties 2015 as the best seen in eight years.
A new Market Research Reports Search Engine report states the US mobile payments will grow from $550 billion in 2015 to reach $2.8 trillion by 2020, representing a compound annual growth rate (CAGR) of 39.1 percent over the course of that period.
LendIt Fintech, the world’s leading event in financial services innovation, announced today that they have selected the Best Egg Personal Loan Platform provided by Marlette Funding, LLC, as a finalist in the Top Consumer Lending Platform category for the LendIt Fintech Industry Awards. The Top Consumer Lending Platform finalists were selected from companies that demonstrate a combination of loan performance, volume, growth, product diversity and responsiveness to stakeholders.
Klarna North America to Highlight “Smoooth” Payment Products at eTail West 2018 (Klarna Email), Rated: B
Klarna, a global payments provider, is a sponsor of and will be exhibiting at next week’s eTail West 2018 in Palm Springs, Calif.
Mobile banking startup Varo Money, Inc. today announced the hire of Carl Gish as Chief Marketing Officer. Gish is a marketing and general management executive with more than 20 years of experience across well-known, high-growth consumer brands and e-commerce businesses, including Amazon, Unilever, Dyson, eBay and Affirm. He will lead all aspects of the company’s branding and marketing, and will work directly with CEO Colin Walsh to drive large growth in Varo’s customer base across multiple marketing channels and partnerships.
Over the past three years, and with the backing of Balderton Capital and Index Ventures, two European venture capital firms, Mr Storonsky’s company has raised about £60m and had a valuation of £300m last year.
The United Kingdom’s financial technology sector attracted a record £1.34bn in venture capital investment in 2017, with 90% of that money going to startup and early stage businesses based in London.
Those raising cash last year included peer2peer lending platform Funding Circle (£81.9m); payments company, Transferwise (£211m) and challenger bank, Monzo (£71m).
Last week I spoke to two fintech entrepreneurs – Ollie Purdue of online bank account provider, Loot and Jared Jesner, CEO of currency exchange, WeSwap – about their reasons for entering the fintech arena and how they hope to carve out a niche in a crowded market.
Lending to small- and medium-sized enterprises (SMEs) has soared in recent years. Members of the Peer-to-Peer Finance Association have cumulatively lent a total of £5bn to businesses versus £3bn to individuals, as of the end of 2017.
Loans to SMEs tend to produce a higher rate of return than loans to consumers, but they can also be riskier in some cases. The average size of loan is also much higher.
Today the brand eclipses its competition, with many of its 400 failing to survive in 2016 as fresh price caps on loan and repayment charges came into action.
With UK-domination taken care of, the lender has been expanding rapidly overseas, starting its journey by launching in Canada, South Africa and Poland, before going on to purchase and assimilate a number of foreign short term lenders as part of its global growth.
To launch Wonga Spain, the lender purchased Spanish credit agency Credito Pocket in 2013, going on to purchase German “pay later” payment firm BillPay (with two million users to its name) and a stake in Indian firm Nahar Credits Private in October of the same year.
RaboDirectIreland, an online savings bank owned by the Dutch lender Rabobank, will quit the Irish market in May. The bank has up to 90,000 Irish customer accounts with a total of €3 billion on deposit.
The bank says it has decided to withdraw from the Irish market after 13 years following “moves by our parent, the Rabobank Group, to simplify its business model across the world and reduce costs”.
In November, Swiss fintech company Temenos Group AG spent 150 million Swiss francs ($160 million) buying back its shares at an average price of 122 francs each. Weeks later, with the stock at 115 francs, it’s preparing to sell shares to fund a $1.9 billion takeover of British rival Fidessa Group Plc.
The return on invested capital looks set to be just over 6 percent in 2020, based on the stated cost synergies plus Fidessa’s forecast operating performance. That’s well below the target’s 9 percent cost of capital.
Anyfin, a Swedish startup that offers to refinance consumer loans and credit card debt using a combination of artificial intelligence and a photo of the current statement and repayment terms, has bagged €4.8 million in Series A funding led by Accel and Northzone.
The Ripio Credit Network wants to offer a real global credit ecosystem which is more suitable than traditional solutions and even than similar peer-to-peer lending services. While that sounds like a tall order, the RCN protocol will connect lenders and borrowers all over the world via the native RCN token.
As is the case with any blockchain ecosystem, the Ripio Credit Network has its own native RCN token. It is the network’s payment channel first and foremost. Although credit transactions can be settled in any local currency, one does need RCN tokens to access the network and facilitate transactions.
A new investment portal, Etherty, has launched offering a real estate linked-crypto currency that enables investors to seize property investment opportunities all over the world, primarily in key markets such as Dubai, Mexico, and Australia.
500 Startups, the Silicon Valley startup accelerator, announced Tuesday it is partnering with cryptocurrency exchange Huobi’s incubator wing, Huobi Labs.
The two companies will support startups in various areas, including developing business plans, focusing on elements such as white papers, marketing strategies, community engagement and fundraising efforts, the accelerator said in a press release.
Weizmann Forex Limited (WFL), a foreign exchange and inward remittances platform, has approved the acquisition of its unit Weizmann Impex Enterprises Ltd (WISE). The proposed deal is supposed to take place on April 1st and will be done through a Scheme of Amalgamation, the company said in a press release. WISE is authorized by the Reserve bank of India to issue and operate semi-closed prepaid payment systems in India. The company owns ‘JaldiCash’, a payments platform that claims to have a network of more than 18,000 channel partners across 29 Indian states and more than 520 districts through their B2B model. JaldiCash works on a P2P model lending model, enabling loans for retailers, hotels and other services
Canada’s digital investor has raised a $65 million investment from the Power Financial group of companies, bringing their total investment in Wealthsimple to $165 million. Wealthsimple manages approximately $1.9 billion for over 65,000 clients in Canada, the United States, and the United Kingdom. More than 80 per cent of people who use digital investing in Canada use Wealthsimple.
News Comments Today’s main news: Amazon partners with Bank of America on lending. Roostify raises $25M for expansion. Lendy’s pretax profits hit 3.3M GBP. Lendix to enter Dutch, German markets. Revolut to launch banking app in APAC. Vested backs Dojo. Today’s main analysis: Important barriers to alternative investing digitization. Today’s thought-provoking articles: Americans can’t get enough consumer debt. Who are Britain’s […]
Amazon partners with BofA on lending. AT: “Pundits spent all last year talking about Amazon dominating alternative lending. This scenario makes a lot more sense. Amazon partnering with a big bank to take on the disruptors in the lending space has the best chance at success, both for Amazon and for the bank. Goldman Sach’s Marcus has upped the game. Lending is not Amazon’s core business, but it can be a big part of the e-commerce giant’s business if it partners with a legacy financial institution with a strong capital position and a history of lending practices. This partnership could very well be a major player.”
Americans can’t get enough consumer debt. AT: “If consumer debt is on the rise, this spells opportunity for all consumer lenders. Perhaps the alternative lending industry will come out of its slump this year.”
CNBC has learned that Amazon Lending, which launched in 2011, ultimately found a partner in Bank of America Merrill Lynch, according to people familiar with the matter who asked not to be named because the alliance is confidential. Partnering with Bank of America allows Amazon to reduce its risk and access capital specifically to provide credit to more merchants so they can acquire inventory.
Amazon Lending is an invitation-only program that makes loans of $1,000 to $750,000, with terms of up to a year, for companies that may have difficulty landing traditional business loans. In June 2017, Amazon said it issued more than $1 billion in loans during the previous 12-month period, compared to $1.5 billion in combined loans for the four years prior to that.
But even with the Bank of America deal, Amazon Lending has been tapping the brakes on growth of late. After almost doubling to $661 million in 2016, outstanding loans just barely increased last year to $692 million, according to Amazon’s annual report earlier this month.
With Americans owing more than $1.48 trillion in student loan debt, (which is $620 billion more than the total U.S. credit card debt) knowing which schools are going to help you pay off your debt faster, is something you should consider if you are looking at business school programs.
Roostify, a digital lending platform provider, today announced the completion of a $25 million Series B round of financing. The round included new investments from Cota Capital, Point72 Ventures, and Santander Innoventures, the venture capital arm of Banco Santander, as well as additional funding from previous investors JPMorgan Chase, Colchis Capital, and a subsidiary of USAA. The new funds will power the company’s ambitious growth goals, including a deeper presence in the enterprise space, rich product enhancements, and expansion into new markets.
In 2016, Kyle Stoner and best friend Carson Junginger were both having a hard time navigating the home-buying process. Between finding a realtor, finding a property and securing a mortgage, the two tech entrepreneurs realized that buying a home was too cumbersome and fragmented. And when they couldn’t find a single platform where they could manage all these separate tasks, they teamed up to create one — Abode.
If anything, consumers are borrowing more on credit cards or through auto loans than they have in years, and lenders seeking growth are happy to oblige them.
In the fourth quarter, consumer debt, excluding mortgages and other home loans, rose 5.5% from a year earlier to $3.82 trillion. That is the highest amount since the Federal Reserve Bank of New York began tracking the data in 1999. Moreover, consumers’ non-housing debts accounted for just over 29% of their overall debt load, also the highest amount on record.
Overall, households are paying about 5.8% of their disposable personal income to stay current on their nonmortgage debts, according to third-quarter Federal Reserve data. This figure, which is at the highest level since the end of 2008, bottomed out at 4.9% in 2012.
KPMG International and CREATE-Research have jointly prepared a report about the digitization imperative for alternative investment management.
Early on, its authors list eight key digital innovations that are reconstructing the industry:
Application programming interfaces; cognitive technology and machine learning; Big Data; blockchain; new digital platforms; robo-advisors; robotic process automation; and social media.
To that end they have talked to 125 alternative managers located in 19 countries, with combined assets under management of $2.6 trillion.
A Need to Future Proof
They found that the scale of the ongoing shake-up is well understood. Only 2% of respondents saw a “business as usual” scenario playing out over the next 10 years. Roughly one-third (35%) expect marginal changes. But 53% anticipate “partial” disruption and the remaining 10% anticipate “total” disruption.
Is now the time when U.S. banks, credit unions and their regulators finally see eye to eye on small-dollar loans to consumers who have checkered credit histories?
A long-running stalemate between the industry and its overseers has ceded much of the subprime consumer market to payday lenders, pawn shops and other high-cost lenders. But in recent months, banks started to get some insight from Washington about what type of product would be deemed acceptable.
In the latest example, Citi Ventures and PNC on Wednesday announced a strategic investment in the fintech firm HighRadius, which makes business-to-business payments and receivables software. Terms of the investment were not disclosed. HighRadius has an existing partnership with Bank of America on an accounts receivables platform, and also counts as clients Fortune 500 companies such as Walmart, Johnson & Johnson, Procter & Gamble and Starbucks.
U.S. Bancorp, the parent of U.S. Bank, agreed to the criminal and civil penalties in settlements announced by the Manhattan U.S. Attorneys Office in New York, the Office of the Comptroller of the Currency, the Federal Reserve and the Financial Crimes Enforcement Network.
From 2009 until 2014, U.S.Bank set an artificial cap on the number of alerts generated by its customer transaction monitoring systems, authorities said. The Minneapolis-based bank based the number of alerts on low staffing levels, rather than on the level of risk in the transactions.
The lax oversight aided Tucker, a longtime U.S. Bank customer who was sentenced to more than 16 years in prison last month for running an illegal $3.5 billion Internet-based payday lending scheme that victimized thousands of consumers with loan interest rates as high as 1,000%.
Fluid Market, a neighborhood truck sharing application that allows people to rent trucks seamlessly from one another, today announced the nationwide launch of its truck-sharing marketplace, providing a seamless and on-demand utility vehicle rental experience to its peer-to-peer network of users and lenders across the country.
Macquarie Group is seeking to hire a US ABS director for its credit markets team as it looks to grow its presence in US esoteric ABS sectors, including whole business, marketplace lending and renewable energy finance.
Nonbank mortgage firms are seeking formal assurance from the Consumer Financial Protection Bureau that they will not become subject to surprise audits or enforcement without involvement of a state regulator.
In a joint letter to acting CFPB Director Mick Mulvaney, the Community Home Lenders Association and the Community Mortgage Lenders of America said the agency should practice “streamlined supervision” of smaller nonbanks, which is consistent with the Dodd-Frank Act.
Recent moves by the federal Consumer Financial Protection Bureau (CFPB) could signal a friendlier approach to businesses, according to Jay Spruill, a partner in LeClairRyan’s Richmond office and leader of the national law firm’s Marketplace Funding Team.
“The Payday Loan Rule has been heavily criticized by the small loan industry which says the rule will restrict consumers’ access to credit,” Spruill notes in the blog, CFPB Signals Retreat from Aggressive Regulation. The post appears in Marketplace Shift, which focuses on the impact of legal and regulatory developments on financial innovation.
Peer to peer lending platform Lendy has released its audited accounts for 2016, showing profits before tax rising to £3.3 million compared to £53,000 in 2015. The company reports that since launch in 2012, Lendy has originated over £376 million in secured loans generating £36 million in interest for investors. Approximately £141.5 million in principle has been repayed with current outstanding loans at £186.5 million.
For some British millennials, Monzo is as close to a cult as a bank can be. Its coral-pink cards are hard to miss. “People in bars will get very excited if they see you are a fellow Monzo user,” says Mr Matthews, who is 29.
Counting the British arm of Santander, Spain’s largest bank takes the share to over 80%. In 2015 Britons had 70m-odd active current accounts. They paid £500 ($750) or more into 70% of them every month.
Supervisors have licensed more than 30 entrants since 2013. But by no means are all the challengers young. One of them, CYBG, owns Clydesdale, a Scottish bank that turns 180 this year, and Yorkshire Bank, aged 159. It has about 1.8m personal current-account customers and assets of £43bn. Nor are all the infants purely digital. Metro Bank has since 2010 established 55 “stores” (ie, branches) and is spreading beyond south-east England.
Among digital purists, Monzo’s chief rival is Starling Bank—where Mr Blomfield used to work. It started current accounts last spring; around 100,000 have been opened. Tandem, which recently acquired Harrods Bank, the banking arm of a posh department store, is also open for business. Atom Bank, part-owned by Spain’s BBVA, focuses on mortgages funded by fixed-rate savings. N26, a German smartphone bank, is due to arrive this year. Another near-cult, Revolut, is seeking a European licence (valid, for now, in Britain).
To ginger up small-business banking, RBS, the market leader, must cede ground and money to competitors as part of the price, agreed on with the European Commission, of its rescue by the government in 2008. RBS will put up £425m, divided into sums from £5m to £120m, to build up rivals’ capabilities, plus £350m for incentives to customers to switch banks. Banks with assets of up to £350bn may bid. That excludes the big four but just lets in Santander (£315bn), to some challengers’ chagrin.
The Treasury’s inquiry will look at the extent of competition in the market, the various sources of funding available to SMEs – including P2P lending and crowdfunding – and whether the current regulatory framework provides enough protection to SMEs when they borrow money.
For example, unsecured lending to an SME borrower for the purposes of their business will only be regulated if the SME is unincorporated and the amount being borrowed is £25,000 or less.
The UK’s Financial Conduct Authority (FCA) on Monday published its report on the supervision of algorithmic trading, which is intended to illustrate best practices and give guidance to firms considering implementing AI to automate trading operations.
The focus areas of the report hint at concerns the FCA harbors about AI use in capital markets. The regulator placed particular emphasis on humans being able to intervene in an algorithm if something goes wrong, and ensuring the technology doesn’t start behaving in a way unintended by its creators.
Sales increased 575% to $43.31 million, driven by loan facilitation growth, which was $388 million – an increase of 187.1% over the prior year. The high sales growth rate contributed to a whopping 1,589% net income growth, which was $26.9 million for the quarter. Gross billing ratio contributed to overall growth with an increase from 7.4% in the previous year to 12.1% in the reported one as the company continues its shift to credit loans.
The company increased its guidance, bumping EPS estimates for the year from $0.74 (see linked article for full estimate calculations) to $1.30 per share, as sales are now expected at $108 million – up from previously expected $90 million. The company believes this will be driven by a bump in loan facilitation, which it expects to be $1.23 billion, up from previously expected $1 billion.
In my previous article I initiated the company with a price target range of $14.80 to $22.20 per share given a 20x to 30x forward earnings multiple, and given recent positive catalysts I believe fair value lies in the same multiple. As the company has hiked its sales and net income guidance, pushing EPS to $1.30 for fiscal 2018, I believe the company’s fair value now lies in the range of $26.00 to $39.00 per share. That represents almost 200% upside from the current share price.
Ascential announced in Hangzhou recently the launch of its trailblazing FinTech event Money20/20 at Hangzhou International Expo Center on 14-16 November 2018.
Guest speakers includedArthur Zhu, President of LianLian Pay; Raymond Qu, CEO of Geoswift; Jeff Parker, Managing Director of WorldFirst Asia-Pacific; Eric Gu, founder & CEO of Metaverse; and experts such as Dr. Ben Shenglin, Dean of Zhejiang University’s Academy of Internet Finance.
Coming in second and third place, China Rapid Finance Ltd. (NYSE: XRF) and JP Holdings Ltd. (NYSE: JP) both soared 8 percent to close at $5.17 and $19.85 per share, respectively, while Jianpu Technology Inc. (NYSE:JT) rose nearly 6 percent to $7.28 per share.
bitJob, the P2P marketplace that connects students and businesses, is announcing today its partnership with the Blockchain projects division inside the Dutch government, to deploy its pilot project in Holland. The marketplace, developed by bitJob, bridges the gap between businesses and students by enabling both sides to offer/look for employment with a technology that promotes honesty, immediacy, and robustness.
Opiria & PDATA token: peer reviewed token sale from Germany (Opiria email), Rated: B
Opiria allows consumers to sell their personal data and companies to buy personal data directly from consumers without a veiled middleman in a fully transparent and secure way.
The following quick-start guide will explain the 7 steps that you need to follow to launch your business venture.
Make Sure There Is a Market for Your Idea
The very first step you should take is to validate your idea or concept. You need to make sure that there is a market for your idea.
Create a Basic Business and Marketing Plan
If you are trying to launch your product or service as soon as possible, you will still need a solid business and marketing plan. You do not need to be completely detailed, but you should have a good plan in place.
Obtain Funding for Your Idea
Another way to get financing is to use P2P (peer to peer) lending. This is similar to crowdfunding, which is another option. With both P2P lending and crowdfunding, you will need to properly explain the value of your product or service. Also, it may take a while to obtain all the funding that you require.
Research Your Target Demographic
Once you get funding, you will need to start researching your target demographic. You need to know who you are marketing to before you start a marketing campaign.
Create a Website
You do not need to spend a lot to build a website. There are several affordable options with easy to use website builders. These website builders include drag and drop layouts, so anyone can build their own website. A few options include WordPress, Wix, and SquareSpace.
Decide on a Business Structure
The next step is to choose a business structure. This is essential and should be decided before you release your product or service.
Start Marketing Your Product or Service
The final step is to begin marketing your product or service.
Revolut will be using Global Processing Services (GPS) for the launch of its multi-currency FX app in the APAC region.
Revolut will unleash its app, starting with New Zealand, Singapore and Japan. GPS announced the deal during the Lord Mayor of the City of London’s UK Business delegation, which is currently in Australia this week.
She found Beehive, a Dubai-based peer-to-peer lending platform. Through Beehive, Lowmass borrowed $54,000 in late 2016 at an interest rate of 9.89%. Although it took about the same amount of time to get a loan from Beehive as it did through the bank, Lowmass says, “the funds were raised cleanly and extremely quickly and we were delighted with the resultinginterest rate we ended up paying.”
It has 6,000 registered investors—mostly from the U.A.E.—and has channeled a total of $40 million to borrowers.
Africa is now at the forefront of fintech with 57.6% of the world’s 174 million active registered mobile money accounts (100.1 million) in Sub-Saharan Africa. Fintech in Africa is predicted to grow from US$ 200 million to US$ 3 billion by 2020. As Ecobank works seamlessly across 36 countries in total, Ecobank is also the only bank that allows customers to transact more easily across borders.
Ecobank’s mobile app allows customers in any of the 33 African countries in which it operates to check balances, pay bills and merchants, and many other services. Rwanda, where the summit is taking place, has the second highest use of mobiles in Africa, with more than 50% of the population unique subscribers. Kenya has the highest penetration rate of almost 60% of the population.
Vested Ventures, the investment arm of the fastest growing public relations agency globally, Vested, announced it has successfully completed a seed round investment in Vancouver financial software company Dojo Technology Corp (“Dojo”).
Dojo’s iOS and Android-friendly mobile platform reimagines how families and young people interact with their banks and credit unions by providing reward-based gamification and nudging users towards positive financial habits.
News Comments Today’s main news: Banco BNI starts lending through Fellow Finance. eBay drops PayPal for Adyen. Aviva exec backs robos. OneConnect secures $650M funding. Stripe sets up engineering hub in Dublin. EBANX gets $30M in funding from FTV Capital. Today’s main analysis: FT Partners’ Alternative Lending Market Analysis for January, and an interview with Nav CEO. Today’s thought-provoking articles: […]
Open banking’s early adopters. AT: “BBVA Compass is one of only about five banks in the U.S. to adopt open banking so far. It will be interesting to see how it works for these banks as the rest of the industry will be watching.”
This month’s report features an exclusive interview with Levi King, Co-founder and CEO of Nav, which is a data aggregation platform and marketplace that bridges the gap between small businesses and financial institutions. In the interview, Levi discusses the motivation behind founding Nav and how the company solves the challenges small businesses face managing their credit and securing financing solutions, among other topics.
Only a few banks have embraced open banking and offer APIs to almost anyone. But they are betting on having a head start on competitors, as trends in the industry, such as increased bank-fintech partnership and evolving regulation, will push the banking-as-a-platform movement toward reality.
Operating as BBVA Compass in the U.S. in Birmingham, Ala., in 2016 it named a head of open APIs, and has engaged in several data-sharing agreements with fintechs. It is one of a handful of U.S. banks engaged in open banking — Capital One, Silicon Valley Bank, Citi and CBW Bank in Weir, Kan., also have such programs.
Last May, BBVA opened up its API Marketplace and made commercially available eight APIs so companies, startups and developers would be able to build new products and services by accessing and integrating customer’s banking data — with their permission — into their applications.
According to data gathered by FedFis.com, the top processor is Brookfield, Wis.-based Fiserv. With more than 37% of the market share, Fiserv is well ahead of its competitors. The second, Monett, Mo.-based Jack Henry & Associates, has just half Fiserv’s market share with 17.6%. Close behind JHA is Fidelity National Information Services Inc., better known as FIS.
Enova International (NYSE: ENVA), a financial technology company offering consumer and small business loans and financing, today announced financial results for the quarter and year ended December 31, 2017.
Fourth Quarter 2017 Summary
Total revenue of $243.7 million in the fourth quarter of 2017 increased 20.4% from $202.4 million in the fourth quarter of 2016.
Gross profit margin was 47.7% in the fourth quarter of 2017 compared to 51.8% in the fourth quarter of 2016, driven by growth in the installment loan and receivables purchase agreement segment as well as a higher mix of new customers, which requires higher loan loss provisions.
Net income was $6.9 million, or $0.20 per diluted share, in the fourth quarter of 2017 compared to net income of $8.7 million, or $0.26 per diluted share, in the fourth quarter of 2016.
Fourth quarter 2017 adjusted EBITDA of $38.1 million, a non-GAAP measure, increased from $35.1 million in the fourth quarter of 2016.
Adjusted net income of $8.9 million, or $0.26 per diluted share, a non-GAAP measure, in the fourth quarter of 2017 increased from adjusted net income of $8.5 million, or $0.25 per diluted share, in the fourth quarter of 2016.
Full Year 2017 Summary
Total revenue of $843.7 million in 2017 increased 13.2% from $745.6 million in 2016.
Gross profit margin was 53.0% in 2017 compared to 56.0% in 2016.
Net income was $29.2 million, or $0.86 per diluted share, in 2017 compared to net income of $34.6 million, or $1.03per diluted share, in 2016.
Full year 2017 adjusted EBITDA of $157.8 million, a non-GAAP measure, increased from $142.3 million in 2016.
Adjusted net income of $46.9 million, or $1.37 per diluted share, a non-GAAP measure, in 2017 increased from adjusted net income of $37.5 million, or $1.12 per diluted share in 2016.
Daniela Morales’s lender is demanding. Every Friday morning, at 9:45 sharp, she has to visit a small apartment in Woodside, Queens, to make her weekly payment—currently $293 plus $17 interest on a $6,900 balance.
Ms. Morales’s lender is Grameen America, a nonprofit microlender for women entrepreneurs. To get a Grameen loan, you don’t need any collateral or credit history, just the support of a small group of Grameen loan recipients who can vouch for you. It is, essentially, a reputation-based loan.
There are other nonprofit microlenders operating in the city, including Accion and BOC Capital Corp. But Grameen America, modeled on a Bangladeshi microlender, is unique in its peer support and loan-approval model.
The loans, which start at $500 and command an interest rate of 18% on a declining balance, must be repaid in six months. The interest rate falls as the loan is repaid. Members who establish a good track record qualify for larger sums.
Morty is an online mortgage broker. Our mission is to empower homebuyers to make smarter home financing decisions. With a modern tech stack and a marketplace of lenders, we offer customers the most options, great rates, and a transparent process.
What surprised you the most in the fintech industry in 2017?
That there wasn’t more innovation in the mortgage space. It’s the only lending vertical that hasn’t moved online- credit cards, student loans, small business loans, personal loans- all have a big online presence. There is still so much to be done in mortgage, it’s exciting.
In an article penned for JD Supra by law firm Ogletree, Deakins, Nash, Smoak & Stewart, P.C., experts warned of a type of payroll scam that sees fraudsters diverting direct deposits from employee accounts to criminal accounts.
According to the firm, fraudsters use a phishing scam by sending an email from an address similar to a legitimate company account.
Ogletree Deakins warned that not only does this scam result in lost funds, but it is ultimately a data breach, with scammers gaining access to corporate systems and data. The report also noted that scammers are targeting all types of businesses using all types of payroll providers.
The fintech industry is the powerhouse behind the meteoric rise of the peer-to-peer lending market. After several platforms launched online payments, it was only a matter of time before new ones emerged offering lending services that are offered by and to registered members.
LendingClub Corp (NYSE:LC) has been one of the most notable players in this space and its popularity pushed it public in 2014. However, since then, the company has struggled to live up to expectations, reflecting the actual picture of the status of the peer-to-peer lending.
According to critics, while peer-to-peer lending is an attractive option for borrowers looking for alternative financing solutions, it appears to have growth limitations due to lack of funding for new products. Peer-to-peer lending platforms do not take deposits and this is a limiting factor, but analysts suggest that if they are to grow to the point of rivaling the mainstream lending market, then they may have to start taking customer deposits.
TD Ameritrade put the competitive pressures tied to robo-advisors and other technology left, right and center at its LINC 2018 RIA conference this week in Orlando. Industry leaders highlighted the power and threat of technology and how to address these trends in the advice business.
It’s impossible to look at the landscape of modern adviser technology without seeing Steve Lockshin’s footprints.
As an early investor in Betterment, Mr. Lockshin, 41, was instrumental in encouraging the robo-adviser to pivot from competing against advisers to partnering with them.
Brad Bernstein could see the role of advisers was changing.
What was once an industry of investment managers and salespeople was shifting to financial planning. Driving the change was technology — automating and commoditizing many of the ways advisers traditionally added value for clients. Mr. Bernstein, 51, managing partner at growth equity firm FTV Capital, believed there was a demand for products that helped advisers better articulate their value to clients.
That’s what attracted Brooks Gibbins, 45, to the industry when he founded FinTech Collective with his partner, Gareth Jones, in 2012. The venture capital firm has been one of the most active early-stage fintech investors over the past five years, seeding some of the biggest names on the adviser fintech scene.
Seeing the opportunity for adviser fintech startups to get acquired by, or partner with, financial institutions, Ian Sheridan decided to draw on his more than 25 years of experience in the financial services industry — working in wealth, retirement and investing in startups — to identify which technology would be part of the next wave of innovation.
Fidelity rocked the adviser fintech world in 2015 when it acquired eMoney, one of the most popular financial planning and client portal tools among independent advisers. The reported $250 million price tag proved there was money to be made in adviser fintech.
“Prior to that, there was good technology out there, but there wasn’t this stream of new business models, this new equity flowing in,” said Mike Durbin, 50, the president of Fidelity Institutional who spearheaded the deal. “The pace has clearly quickened.”
After a career that took him from E.F. Hutton to founding the Lockwood family of companies, Len Reinhart turned toward private investing in retirement.
The Florida legislature kicked off its legislative session by introducing Florida Senate Bill 894 and House Bill 935, legislation that could cover private mortgage lenders. The bills, introduced by Sen. Rene Garcia (R-Miami) and Rep. Jeanette Nunes (R-Miami), would eliminate a longstanding business purpose exemption for loans secured by a Dwelling.
On January 18, the bill passed the House Insurance and Banking Subcommittee with a 13-1 vote. On January 24, the House Commerce Committee passed the bill on a unanimous vote. The Senate similarly passed the bill on a unanimous vote in the Senate Banking and Insurance committee on January 23.
American Association of Private Lenders’ (AAPL) position is that the proposed regulation would harm Florida residents, business and the state’s economic growth by consolidating power to a few licensed parties. Private lenders provide much needed capital to a marketplace which is underserved by large financial institutions. Professional business parties need to be able to work with each other without significant regulatory intervention. The proposed regulation would result in less market competition, translating to higher interest rates, a higher cost of credit and would force business out of Florida and into neighboring states including Alabama, Georgia, Tennessee, North and South Carolina, all of which exempt business purpose loans from licensing requirements.
dv01, the data management, reporting, and analytics platform that provides institutional investors insight into lending markets, today announced the appointment of Amy Johnson as Chief Operating Officer. Johnson will report to dv01 founder and CEO, Perry Rahbar.
As COO, Johnson will be responsible for dv01’s finance, legal, and sales efforts, including helping execute the company’s vision and scale its operations.
Reston, Va.-based online lender StreetShares closed $23 million in equity funding on Jan. 24. The lender focuses on veteran-owned small businesses and relies on a peer-to-peer lending model. About $20 million of the new round is from Bethesda, Md.-based firm Rotunda Capital Partners. Previously, StreetShares had raised $8.3 million between three rounds.
The Treasury committee has launched an inquiry into SME finance to look at the state of the market and the lessons to be learned from RBS’s Global Restructuring Group (GRG).
The Treasury’s inquiry will look at the extent of competition in the market, the various sources of funding available to SMEs – including P2P lending and crowdfunding – and whether the current regulatory framework provides enough protection to SMEs when they borrow money.
The committee will also consider the regulation of SME lending and whether banks should be bound by a broader set of duties when dealing with SMEs.
An Innovative Finance ISA (IFISA) is a peer-to-peer lending or crowdfunding product. In some instances, you can generate returns of around 8 – 9% by lending to private borrowers or by taking stakes in ‘crowdfunded’ investments. The IFISA is also subject to the same £20,000 annual ISA allowance so you can split your money between this ISA, as well as cash and stocks and shares.
While this is regulated by the FCA, peer-to-peer lending is not covered by the FSCS meaning your capital is at risk.
Easily available debt from banks, financial institutions, peer-to-peer lending and even crowdfunding, together with forecasts of revpar growth of 2.4% in London and 2.3% in the regions, will help drive investments. Strong leisure business enjoyed by hotels last year – up 20% – is expected to continue to grow, depending on a continued weak pound.
A UK start-up that is aiming to end the culture of late payment that plagues British business has recruited two FTSE 100 chairmen as investors and advisers.
David Tyler, chairman of supermarket chain J Sainsbury, and John Gildersleeve, chairman of property group British Land, have joined the advisory board of Previse.
The London-based business pays supplier invoices instantly and collects the money from customers later. By analysing years of payment data it uses artificial intelligence to calculate the likelihood it can collect from the big customer. It has pilots running with two large corporations and is in talks with dozens more, Mr Gildersleeve told the Financial Times.
OneConnect is the only one-stop FinTech-empowered solutions provider in China. Financing of the three subsidiaries received positive responses, particularly from international institutional investors, including the SoftBank Vision Fund (which invested in Ping An Good Doctor and Ping An Healthcare Technology), International Digital Group (IDG) and SBI Group etc., proving that the capital market fully recognizes Ping An’s technological innovation, the business model for its technology as well as the growth potential and business value of the Group.
Today Banco BNI Europe announced it will start lending on Fellow Finance.
‘Investing via Fellow Finance in consumer and SME loans offers us a great opportunity to easily expand our operations and we are very satisfied with the analytical and professional approach of Fellow Finance in credit intermediation’ echoes Pedro Pinto Coelho, Executive Chairman of Banco BNI Europa.
U.S. payments firm Stripe said on Monday it would place its first engineering center outside its home market in the Irish capital Dublin, attracted by the city’s growing technology workforce and global outlook.
Estimates differ, but according to TechFluence, a technology research firm with offices in Frankfurt and London, the European market had assets under management of about $3.5 billion at the end of 2017. That compares with an estimated $200 billion to $250 billion in the U.S., according to Burnmark, a fintech research firm. Estimates of the number of services range from 98 to 126 in Europe, compared with about 200 in the U.S.
The cost of entry is also much lower: generally €5,000 to €10,000 (about $6,200 to $12,400), versus hundreds of thousands at least for a discretionary service through a bank, says Timo Pfeiffer, head of research and business development at Solactive AG, an index provider that has researched the growth of robo advisers in Europe.
Popular with banks
This has led to a number of banking groups preparing robo-adviser offerings, Mr. Mellinghoff says. One example is Comdirect, a subsidiary of Commerzbank,CRZBY -3.17% which launched a robo-advisory platform in May. This service, called Cominvest, had gained assets of more than €200 million as of end of December and is expected to grow rapidly in the coming years, says Sabine Schoon, head of corporate strategy and consulting at Comdirect.
The European market has also attracted interest from major U.S. providers; BlackRockInc.BLK -2.98% announced in June 2017 that it was taking a minority stake in Scalable Capital, a robo-adviser specialist that operates mainly in the German and British markets.
Spanish bank BBVA’s dash to get customers to buy products digitally rather than in branches helped it report a 20 per cent rise in underlying full-year profits, with results boosted by lower costs as well as higher revenues.
Top P2P cryptocurrency startup Etherecash has announced that its ECH token will be listed on popular cryptocurrency exchange QRYPTOS on 6th of February 2018, following a successful crowdsale in which the company raised over 40 million USD. This news comes as The Estonian-based lending startup saw a very successful Q4 to 2017 as it gears up for its token distribution in early 2018.
GN Compass is the first peer-to- peer lending platform for Cryptocurrency-Backed Loans.
All transactions are verified and distributed on the Ethereum Blockchain. GN Compass is joining an expanding group of pioneering projects integrating the Bancor Protocol to maximize the trading liquidity of GN Compass tokens.
New business inflows almost doubled for Europe’s exchange traded fund industry in 2017, in the run-up to the EU’s introduction of rules designed to improve market transparency and strengthen investor protection.
Net inflows into European-listed ETFs reached a record $108bn last year, up from $55.7bn in 2016, according to ETFGI, a London-based consultancy.
IdentityMind Global, Digital Identities You Can Trust, an SaaS platform that builds, maintains and analyzes digital identities worldwide, allowing companies to perform identity proofing, risk-based authentication, regulatory identification, and to detect and prevent identity fraud, announced the immediate availability of its KYC Plug-in for ICOs which provides a turnkey solution for customer onboarding functionality and user experience to walk ICO participants through the know your customer (KYC) process to meet regulations worldwide.
Bahrain FinTech Bay (BFB) and the Fintech Consortium (FTC) have announced a strategic partnership with OffrBox, a New York City-based Fintech start-up that has developed an end-to-end real estate transaction platform on which one can buy and sell residential properties online.
The first ’round of funding’ Abhishek Latthe got when he was setting up his wearable device startup SenseGiz in 2013 was from his family and friends. The next year, he set up a crowdfunding page on Kickstarter and raised $47,000. Late in 2014, he took out a bank loan. It was only two years later in 2015, that he could convince Karnataka Semiconductor Venture Capital Fund to back him with Rs 3 crore.
Banks do not back companies without collateral and since the business model is unproven, other investors too hesitate. So, funding options include getting help from friends and family, crowdfunding, or dipping into one’s savings, but how do founders decide on the path to take?
Gadkari says peer-to-peer lending and bridge funding, which fulfil a company’s short-term working capital needs, have also become popular. Choosing the best funding option depends on the company’s need. The next step for an entrepreneur is to negotiate the company’s valuation.
Lending is one of the oldest professions in the world and is one of the pivotal reasons for the banking system to take shape.
There is evidence of lending activities dating back to 2,000 BC between merchants, farmers and traders.
However, up till now, lending as an activity has been largely limited to financial institutes such as banks and Non-banking Financial Companies (NBFCs).
For instance, lenders on Faircent.com usually avail average gross returns of 18% to 26% per annum. This makes online P2P loans a lucrative alternative investment avenue for them.
What makes online P2P lending even more lucrative as an asset class for potential investors is the fact that it offers lenders the opportunity to diversify their investments across multiple risk buckets and loan requirements.
Sapan Gupta a Practice-Head at Shardul Amarchand Mangaldas said, “capitalising on the blockchain technology could open new ways of securing peer-to-peer lending transactions, boosting trade finance, fintech and information repository sectors”.
Decentralized p2p lending platform Karma has just announced trading as well as access to its platform and blockchain solutions. The project has now been backed by Danish fintech startup OpenLedger. Karma’s p2p lending platform can be used on the OpenLedger DEX platform and the Korean exchange CoinLink.
According to a report released earlier this month by EY, 21 percent of people in the world — about 1.6 billion people — are underbanked. More than 200 million micro and SMBs fall into the underbanked category, too, with access to finance the largest hurdle for many of these firms.
EY pinpointed the APAC region as a particularly wide opportunity for financial services players to address this gap: Bank revenue in this market, researchers said, could reach $88 billion by 2020. If traditional banks don’t step in, alternative financial services firms will.
“A lot of smaller, private small businesses are under-funded,” Tran noted. “It’s not like here [in the U.S.], where we have an established financial and banking system. If you implement something like a decentralized blockchain, a P2P lending system, that would enable [SMBs] to get funded a lot easier than going through the normal banking system. With blockchain technology, you can put a platform together that is smart contract-based, allowing individual investors to participate in a growing economy. On the other hand, you allow [SMBs] to get funded very quickly.”
Innovation platform startAD will host a ten-day entrepreneurship programme, Venture Launchpad, at New York University Abu Dhabi (NYUAD), from February 18-27.
It will see ten fintech startups pitch their business ideas to investors. UAE-based early-stage startups are encouraged to apply by February 12, 2018, the application deadline.
The programme will equip them with the tools and knowledge to develop a scalable and capital efficient scheme. These include insights into crowdfunding, peer-to-peer lending, blockchain, algorithmic trading, credit scoring, cryptocurrency, payments, insurance tech and money transferrals.
Brazilian fintech EBANX announced on Wednesday it has secured a $30 million investment from FTV Capital.
EBANX also processes payments for major merchants from 50 different countries, including the U.S. and China. The company reported that just last year it processed $1.2 billion in cross-border transactions and achieved the milestone of helping more than 30 million users from the region gain full access to major international e-commerce merchants.
News Comments Today’s main news: SoFi CEO: why Etherium is worth more than Bitcoin. Affirm has 1,000 retail partners. Wells Fargo joins digital mortgage revolution. AutoGravity has half a million users. LendInvest launches retail bond offering. N26, Lydia support Apple Pay in France. Borrowell raises $57M in Canada. Today’s main analysis: RateSetter moves to protect users. Today’s thought-provoking articles: Takeaways from […]
SoFi CEO: why Etherium is worth more than Bitcoin. GP:”The Crypto and blockchain spaces have been on fire for the last few months. Like in many spaces and in p2p lending at first people first think it’s nothing new, then it is exuberant, and finally the space pops and it becomes reasonable. I think we are in the exuberant phase. I do find it very interesting how the CEO of a multi billion dollar company has clearly done his homework on ETH vs BTC and is very knowledgeable and interesting in using cryptos in their business.”AT: “An interview with SoFi’s Mike Cagney reveals why the company is betting on Ethereum instead of Bitcoin for minting its title insurance plans. I hope it catches on because I’d really like to see mass adoption of public ledger technology.”
Affirm now has 1,000 retail partners. GP:”Affirm raised in total $420mil and started in 2012. This means roughly $420k/retail partner. A great data point given the money they raised and the time in the market. “AT: “Congratulations. I’m looking forward to the day when they can say they have 10,000 partners.”
Affirm’s challenge to retailers. AT: “Max Levchin hits the proverbial nail on the head. Millennials aren’t the only ones who’d like to see financial services become more transparent. But they’re a powerful enough consumer bloc to make it happen.”
AutoGravity has more than 500,000 users. AT: “Congratulations. This is an incredible achievement. SoFi has only 250,000 members. These mobile auto lending pioneers expect to see 1 million downloads of their app by year’s end, and I’d like to see that happen.”
Unifund CEO cautions to stop getting lost in averages. AT: “The message is that consumers look at credit differently than they did 50 years ago. For that reason, subprime consumers shouldn’t be viewed as less than worthy of credit, or bad risks. I agree that judging credit risk should change along with consumer attitudes towards credit.”
LendInvest launches retail bond offering. GP:”I personally think that making investment simpe, a guaranteed 5.25% return, is the way to go. I think the US entities like Lending Club and Prosper should consider a similar product where they offer retail investors a bond at x% fixed that is in line with their existing returns and make it extremely simple to invest in what is now private debt and not p2p lending anymore.”
TransferWise cofounders swap CEO role again. GP:”CEOs burn out. It is wise to bring fresh blood, while there are obvious risks (how many companies fail because the new CEO drives them in the wrong decision). The calcualtion is: will the old experienced and proven CEO make the company fail because they burn out and run out of energy or is it riskier to try with somebody different?”
No existential crisis for banks says HSBC digital chief. GP:”New approaches and new technology are always a threat. Ignoring it is probably the biggest mistake somebody can do. Does anybody know what a Blackberry is? No, not the fruit.”
An upstart cryptocurrency, Ethereum’s price has surged so dramatically in recent months that it now commands nearly as much market share as Bitcoin itself. Driving that rise is excitement about the way Ethereum allows its blockchain technology to be used to develop myriad other projects, as Cagney described.
In particular, SoFi, which is valued at more than $4 billion, is exploring a way to use blockchain to revolutionize title insurance, a standard requirement for many home buyers.
SoFi has always been as much about culture and brand before product and tech. Now that it’s postponed its initial public offering in December (it raised $500 million in private funding shortly after) it has the luxury of time to develop its financial services offerings.
“While we run positive contribution margins around our credit products… it pales in comparison to what the lifetime value of that relationship is worth,” CEO Mike Cagney said at Fortune’s Brainstorm Tech conference in Aspen, Colorado Wednesday morning. “Not having that deposit product means that the bank, if it has that deposit product, is going to constantly try to cross sell [customers] and pull them back to the bank. That introduced this vulnerability in the business.”
There are also no branches planned for the non-bank financial services company, he confirmed, citing that in the 40 SoFi events he’s hosted and attended almost all other attendees have said they haven’t walked into a branch in the last five years, he claims.
SoFi is also in the exploratory stages of how to use alternative data like cell phone data for credit scoring as well as distributed ledger technology for title insurance.
U.S. banks are valued at between $2,000 and $100,000 per customer. SoFi currently has 250,000 members today and anticipates 500,000 by end of year. Cagney said it’s not unrealistic to get two million customers at “$25,000 to $50,000 per customer, which gets us in the $50 to $100 billion valuation range.”
Today Affirm has announced it has more than 1,000 merchants signed up to offer its financing options at checkout, helping to reduce the friction around making large purchases and, by extension, increasing sales for its partners.
While promoting its most recent milestone, Affirm is also trying to get across the message of how it’s different — and frankly, better — than point-of-sale financing options of the past. As a result, the company is pushing a marketing campaign around “honest finance” to enumerate the ways in which Affirm helps consumers by providing more access and better terms for big-ticket items.
So started Affirm’s Co-Founder and CEO Max Levchin’s remarks at his firm’s first-ever AFFIRMation conference for its retail partners in San Francisco yesterday.
He’s on a mission to fix a system that he believes doesn’t really serve anyone’s long-term interest nearly as well as it could or should. When it comes to the extension of credit, Levchin says that customers often lose out, retailers end up with angry customers who frequently feel ripped off and FI’s alienate their customer base.
Broken by the Numbers
“Sixty percent of Americans fear credit cards,” Levchin noted.
“[Most consumers] think getting involved with using a card will cost them a lot more than they bargain for. A third fear they will overspend. And they are right; that’s what happens, and the industry does very little to help them create necessary guardrails.”
In fact, Levchin noted, the industry doesn’t want to create guardrails, because a lot of players have literally built products that bet against the consumer.
Deferred interest — the “dirty little secret” of consumer credit that bears a retailer’s logo and accompanies those too good to be true offers — means that even one day late on a payment 59 months into a 60-month loan, means interest gets calculated back to day one.
Bad Long-Term Thinking
Last quarter, on the occasion of its one millionth consumer installment loan, Affirm reported a 75 percent increase in purchase value on purchases made using Affirm, a 20 percent lift in POS conversion and a repeat rate of 25 percent of borrowers returning.
And Affirm’s net promotor score: It’s 82, slightly trailing Starbuck’s 85, but not by much.
Affirm is looking to retailers across the country to join in pledging to abandon “predatory consumer credit practices” and has also challenged the nation’s financial institutions to do the same.
Wells Fargo CEO Tim Sloan said that the bank expects to launch a digital mortgage application tool by the end of next year, according to a report by the Charlotte Business Journal. Sloan made the announcement during an earnings call on Friday.
Sloan told investors that Wells Fargo doesn’t currently have as many online loan products as it would like, the Charlotte Business Journal reported. He said that employees are currently testing the online mortgage tool, and that the bank plans to run a test with customers this year before a full rollout in 2018.
AutoGravity says it has now surpassed 500,000 in just one year. AutoGravity is an App-based online lender targeting the auto financing space. Pick the car and request a loan all on your smartphone. It’s that simple.
Additionallly, AutoGravity shares that more than $500 million in financing has been requested through the AutoGravity platform.
PayPal Holdings, Inc. (NASDAQ:PYPL) and TIO Networks Corp. (TSXV:TNC) today announced that PayPal has completed its previously announced acquisition of TIO Networks. In accordance with the terms of the Arrangement announced on February 14, 2017, PayPal acquired all of the outstanding shares of TIO for $3.35 CDN ($2.64 USD) per share in cash or an approximate $302 million CDN ($238 million USD) equity value.
LendKey, the leading lending-as-a-service solution for banks and credit unions, today announced $13 million in Series C funding, $8 million in equity and $5 million in debt financing. North Atlantic Capital, based in Portland, ME, led the round with participation from each of LendKey’s existing investors including DFJ, Updata Partners, Gotham Ventures, and TTV Capital.
The Series C funding will enable the company to expand its services and staffing. LendKey plans to grow its regional office in Cincinnati, Ohio and expand its account development and sales teams.
The company now boasts more than 2 million investment accounts (with 600,000 opened in 2017 alone) and is on track to do 1 billion trades in 2017 through the proprietary broker-dealer that it created.
Still, the numbers were impressive enough to attract Bain Capital Ventures to commit another $35 million to the company, bringing Acorns total Series D financing to $70 million. Previous investors PayPal, Greycroft Growth Fund, e.Ventures Growth Fund, NYCA, Capital Group, Rakuten, Point72 and Ashton Kutcher’s Sound Ventures also participated in the round.
Fifty years ago, when customers thought about using credit, it was in the context of buying something expensive that they really needed — a refrigerator, a washer/dryer, a car — with the intention to pay off that loan balance quickly.
Credit as a Currency
For super-prime customers — those for whom credit cards are basically payment cards because those consumers pay them in full monthly and never accrue any interest — Rosenberg said that card “borrowing” is an incentive-driven system. The customer gets cash back, rewards points, airline miles, hotel stays — and those incentives have very successfully attracted consumers to use them to buy things. Rosenberg noted that for a large segment of consumers, buying something without using a credit card is almost a foreign concept because the card offers them access to a more valuable form of currency.
But a more artificial intelligence-driven, machine learning system, Rosenberg said, will allow those customers who are locked out of the credit market today to be seen more clearly by creditors, and to be given incentives that are more explicitly tailored to their wants.
A Better Subprime Experience
The problem with the categorizations of “prime” and “sub-prime” borrower is that they are somewhat less hard and fast than people like to think they are. Rosenberg explained that there aren’t simply two classes of buyers — those who pay their bills and those who don’t.
But, Rosenberg said, the truth is most people pay bills in the order of absolute necessity, and when things get bad financially because a job was lost or an economic catastrophe has happened, that order gets very utilitarian. Car payments get paid, because car companies have no sense of humor and will repossess a car. But eviction from a house takes longer, which means a person with a more pressing need would rather skip their mortgage for a few months than not buy medication they need. And credit card bills? Those quickly fall to the bottom of a pile.
Bank of America today announced enhancements to its mobile app experience that add on-the-go convenience to small business banking and lending. With the suite of updates, Bank of America small business clients can now apply for a Business Advantage Term Loan or Business Advantage Credit Line from any Bank of America digital platform – including the Bank of America mobile banking app, and bankofamerica.com.
TransUnion (NYSE:TRU) released an analysis today showing that most borrowers were able to absorb their increased monthly payment obligations after the Federal Reserve Board rate hike last December.
TransUnion’s study identified these 63 million consumers because they carried debts for which the minimum monthly payment due was tied to the market interest rate, such that a rise in rates from the December rate hike could cause an increase in payments required. TransUnion used its CreditVision® aggregate excess payment (“AEP”) algorithm, which incorporates monthly payments from mortgages, credit cards and other debt obligations, to identify 10.6 million of these consumers who were at elevated risk of not having the capacity to absorb a rate increase of 0.25%.
The researchers found that some banks find themselves trying to play catch-up to competitors that long ago allowed borrowers to apply for mortgages online. The institutions that have been slow to adopt online applications for mortgage lending are losing market share to their competitors. Meanwhile, non-bank lenders have grabbed a substantial piece of the market; so-called “shadow banks” lend money but don’t use bank deposits to finance the transactions. They now write 38% of all home loans — almost triple their share in 2007. Further, the shadow banks now originate three-fourths of all loans to low-income borrowers insured by the Federal Housing Administration (FHA).
As the president of a small community bank, I feel the need to respond to certain misleading comments that have been made by banking industry representatives and community activistsrecently in opposition to the Social Finance application to charter an industrial bank.
I feel the need in particular to respond to comments as reported in the press by a representative of the Independent Community Bankers of America, an industry trade association I support. In essence, this individual stated opposition to SoFi’s recent application based on his assertion that industrial banks don’t follow the same rules as other banks. This assertion is not accurate.
The banking industry is evolving. Doesn’t it make more sense to focus on how to evolve with it rather than how to reduce competition?
Across the nation, bank lending has slowed for most types of loans since the presidential election. Business lending declined in the first quarter and is still crawling at close to its slowest pace since 2011, according to Federal Reserve data.
Overall loan growth is a bit better, but across the board, lending has slowed for debt ranging from auto loans to credit cards to financing for factories, office buildings and small businesses, according to the Fed.
That has made for stiff competition for bankers hunting for loan customers, and because interest rates are still low, banks’ profit margins on their total loan portfolios remain tight.
Last week, Columbus-based Synovus Corp., the second largest bank headquartered in the state, with $31 billion in assets, said its total loans grew by $314 million in the second quarter, up 5.2 percent compared to the first quarter. Synovus banked a $73 million profit during the quarter, 27 percent higher than a year ago.
Synovus’ consumer loans grew at a 16 percent annual pace during the recent quarter, accounting for $2 out of $3 of Synovus’ new loans.
The Dreyfus study found that investors tend to take different approaches to investing based on age. Sixty-one percent of investors 55 years of age or older indicated they have not, or will not, reevaluate their investment approach in today’s existing investing environment. Meanwhile, 65% of Millennials, defined in the study as people between the ages of 21 and 34, had already evaluated their investment approach at the time of the survey. These actions are reflected among 51% of those between the ages of 35 and 54, as well as for 39% of those at least 55-years-old.
In his remarks to the Exchequer Club in Washington, D.C., President Trump’s Acting Comptroller of the Currency, Keith Noreika, came strong to the mic, roundly stating the charter is a “good idea” and flatly saying “yes”, the OCC has the authority to grant the FinTech charter in the face of legal challenges by the New York Department of Financial Services and the Conference of State Bank Supervisors.
Here are three other takeaways from the Acting Comptroller’s remarks:
The FinTech charter promotes the dual banking system.
The OCC is having informal meetings with interested FinTech companies.
That’s why we’re harnessing the power of technology to bring consumers closer to their loan officers (LOs) and launching Blend Mobile, the first native mobile application allowing LOs to manage their businesses, including borrower requests and applications, anytime and anywhere.
“SRI has been one of the most consistent personalization requests we’ve had,” said Dan Egan, Betterment’s director of behavioral finance and investments. “It allows people who want to buy a better world to put their money where their mouth is.”
The nation’s largest robo adviser, Vanguard Personal Advisor Services, which has $80 billion in assets, offers clients a proprietary fund on its digital platforms that tracks a benchmark that screens companies on social, human rights and environmental criteria. Schwab Intelligent Portfolios, which has $19.4 billion in AUM, does not offer an SRI option.
Mastercard (NYSE:MA) today announced it has entered into an agreement to acquire Brighterion, Inc., a leading software company specializing in artificial intelligence. This acquisition will further expand its suite of capabilities that deliver an enhanced customer experience and security.
Commentary on the Reintroduction of the Protecting Consumers’ Access to Credit Act (H.R. 3299) (Factory Email), Rated: B
Passing the Protecting Consumers’ Access to Credit Act into law is critical for the consumer lending industry. We are pleased that forward looking legislators aim to remove the regulatory and capital markets uncertainty caused by court cases such as Madden vs. Midland.
Lead by the Second Circuit Court’s decision, other state regulators are attempting to erode a core tenet of our federal banking system. “Both the ‘valid when made’ doctrine and the exportation of usury rate have facilitated nationwide lending for over a century by allowing the rate of interest on certain loans to remain unchanged after transfer of the loan,” said Gilles Gade, President and CEO of Cross River, an FDIC insured New Jersey State chartered bank and leader in marketplace leading origination. “The ability for banks to sell loans to non-banks is vital to the capital markets ecosystem in general, and to consumers in particular who are getting hurt as access to credit is made more difficult and more expensive. The perenniality of this tenet hinges on a healthy secondary market, increased liquidity, and the securitization of debts ranging from mortgages to credit cards, all of which help facilitate emerging innovations and provide capital that makes credit more accessible and affordable for millions of Americans. We applaud the bipartisan reintroduction of this bill and look forward to its expeditious review and passage.”
LendingTree® (NASDAQ: TREE), the nation’s leading online loan marketplace, today announced that Sam Mischner has been promoted to Chief Sales Officer and Head of Mortgage. Previously, Mischner served as SVP, Sales and GM, Mortgage.
LendInvest, a leading alternative lender in the property space, is launching a retail bond. The bond will offer investors a fixed rate of 5.25 per cent, due 2022.
It is expected to be listed on the London Stock Exchange once the subscription period closes. LendInvest is targeting an initial raise of £50m, and the company expects this to be the first of a number of bond issues over the coming years. The bond has a minimum investment amount of £2,000.
Interest from the bond will be paid semi-annually on 10 February and 10 August each year. The net proceeds will be used to fund the origination and/or purchase of loans which satisfy the company’s eligibility criteria.
UK marketplace lender RateSetter has given more details on a series of interventions it has made to protect the company’s 50,000 retail investors from adverse consequences related to its lending decisions in the last two years.
Here are the three measures RateSetter has now explained in greater detail:
Buying two subsidiaries in a motor finance company.
Wholly buying Adpod, an advertising company.
Ending its partnership with George Banco, a consumer lending platform. RateSetter is withdrawing from the partnership, remaining only as a passive investor, after reviewing the strategy more closely. RateSetter added that George Banco is still repaying its £32 million ($42 million) loan.
The bank, which received its full UK banking licence in April, says it’s been using the current account internally and today (17 July) is now inviting some of its customers to join and “help put it through its paces”.
Its aim is to offer a current account to all existing customers by the end of the year. Towards that goal, over the next three months it will roll out between 10,000 and 20,000 current accounts to existing customers. As you probably guessed, users can register their interest on its site. Investors get priority access.
Alternative lending has shifted from a competitor of traditional FIs to a collaborator, often lending a digital hand to banks in need of upgrading their systems to provide faster, more agile financing to SMEs. A new report from the state-backed British Business Bank (BBB), however, suggests alternative lenders are becoming an increasingly important part of its operations in a different way, highlighting how the lines between alternative finance (AltFin) and traditional finance continue to blur.
The annual report said the BBB facilitated more than $930 million in SME loans last year, and, according to the data, every year more of that money is landing at small businesses thanks to collaboration with alternative lenders like RateSetter and Funding Circle. According to reports, in 2014 the percentage of BBB funds that went through a P2P platform was 79 percent; in 2015, it was 90 percent.
The Bank of England has widened access to Britain’s interbank payments system to increase competition from new fintech firms in the financial system, where the “Big Four” high street banks have long dominated.
The changes, which in practice will come into effect in 2018 once legislative changes have been completed, will enable such non-bank payments services providers (PSPs) to compete better with banks, the BoE said.
Research conducted by Beauhurst on 2016 UK funding deals for non-listed high-growth businesses concluded that crowdfunding outperformed private equity and venture capital. Whilst 2016 saw a decline in the total number of deals financed by equity investors, activity on the leading crowdfunding platforms increased. Crowdcube (launched in 2011) and Seedrs (launched in 2012) accounted for 21% of such equity investment in the UK last year.
According to Beauhurst’s research, Q1 of 2017 has seen a small increase of 2.7% in equity funding in non-listed, high-growth companies. However deal numbers are still 6.72% lower than the same quarter in 2016. The growth has primarily been driven by crowdfunding platforms, with an 11% growth in deal numbers.
By 2018, loans from alternative finance schemes such as crowdfunding, peer-to-peer lending and private debt, will be as cost competitive as the retail banks, blowing the finance market wide open for loans in the £500,000 to £10 million range.
Naturally, because alternative lenders such as Funding Circle, The Route and Folk to Folk are settling loans for higher loan-to-value (LTV) ranges (between 60 and 75 per cent), they absorb the risk by charging higher interest on both short- and medium-term loans – currently between 6 and 12 per cent a year.
LTVs in retail banking property loans are settled at around 55 to 60 per cent, but they offer lower loan costs of between 2.5 and 5 per cent. This is all set to change in 2018 – with increased availability of finance for lenders, such as innovative finance ISAs (IFIsa), the cost of capital is set to fall and this will encourage alternative lenders to reduce their interest rates.
On Wednesday, peer-to-peer lender Zopa released its latest Home Improvement Index that indicated a quart of British homeowners looking to improve their homes this summer are choosing to renovate their kitchens and are seeing a 51% return on investment as a result. According to research, 25% of British homeowners undertaking a home improvement are opting for a new kitchen, with the renovation boosting the value of a home by an average of 10%.
Zopa noted that the research found that the average home improvement would increase the value of a home by 9% or nearly £24,000 (£23,837) – based on homeowner’s estimates. The average return on investment was 50%, based on the total amount spent by homeowners.
Property P2P platform Lendy has recently announced sponsorship of the Cowes Week sailing regatta, while business lender Ablrate has been announced as a sponsor of the PGA EuroPro Tour’s £100,000 Shoot-Out competition.
Other firms such as RateSetter have used adverts on the London Underground and Crowdstacker has run adverts in print publications, while Zopa and Funding Circle have used TV campaigns.
But Frazer Fernhead, founder and chief executive of The House Crowd, prefers to invest in digital marketing.
The ADR has returned a solid 250%+ in a year and a half since then. In comparison, Alibaba stock is up by 83% while NetEase is up by 16% and JD.com has risen just 27.5%. In other words, Yirendai has been the best performing Chinese stock/ADR ever since the company was listed in the US.
Yirendai reported quarterly revenue of $148.42 million for Q1 2017, which grew 75% year-on-year. On the earnings front, the company reported earnings per ADR (EPADR) of 84 cents, a 147% improvement over 34 cents EPADR in Q1 2016. On a trailing twelve month (NYSE:TTM) timeframe, the revenue has grown from $265.2 million in Q1 2016 to $544.6 million in Q1 2017, a 105% year-on-year growth.
We believe that, based on Yirendai’s earnings history and the historical valuation multiples, the stock should easily trade in the $43.4 – $57.7 range, which represents a 65% upside at the higher end.
Apple Pay hasn’t really been a major success in France so far. France’s biggest banks still don’t plan to support Apple’s payment service. But two companies announced today that they were going to add Apple Pay support before the end of the year — Lydia and N26. Crédit Mutuel Arkea’s banks also recently announced that they were working on that feature as well.
Get a unique insight into what crowdfunding and crowdlending are and find out how you can participate in it – either as an entrepreneur or as an investor. Responsible for crowdfunding in DNB, Lars Marthinsen, and CEO of Kameo, Sebastian Martens, are guests at #pengepodden .
Baloise is investing in the Californian insurtech company Trov. The start-up offers on-demand insurance for personal items and has already launched in the UK and Australia, and will roll out in the U.S. later this year. For Baloise, this is the first investment arising from its partnership with Anthemis.
Baloise’s investment is part of the Series D financing secured by Trov in April 2017.
The disruption is well under way in the US, where two giant companies – Betterment and Wealthfront – have emerged, each with a valuation of more than $5 billion. In recent months Betterment has seemed to outpace Wealthfront in terms of size and growth. Betterment, which has cheaper services, now boasts a client list of 188,000 while Wealthfront has 90,000.
ANZ has put its $4.5 billion wealth advice unit on the block, in a move that followed UBS’s decision to sell its wealth management arm in Australia a year ago. And Platinum Asset Management, the one-time king of specialist overseas fund managers in the local market, has announced a dramatic cut in its fee charges.
In Australia, the SMSF Industry Association tacked a robo-advice questionnaire onto one of its recent surveys and found that 18 per cent of its members – higher than in the general population (13 per cent) – would be willing to try robo services.
Currently, at a nascent stage, the P2P lending landscape in India is also poised to grow into a $4 Bn-$5 Bn industry by 2023. The domain’s origin actually dates back to 2012, when the first peer-to-peer lending company i-Lend was launched. At present, the P2P lending space is populated by more than 30 players including Faircent, LendBox, LenDenClub, IndiaMoneyMart, Monexo, Rupaiya Exchange, LoanBaba, CapZest, i2iFunding and many more.
One factor that has played an integral role in the rise of an alternative fintech industry is demonetisation, instated on November 8, 2016. Post the ban on INR 500 and INR 1,000 notes, bank deposits underwent a discernible slowdown. Loans to SMEs and MSMEs reached an abrupt halt, forcing many businesses to seek other methods of financing. Last year, for instance, around 34% of P2P borrowers were actually business owners looking to expand without having to rely on banks.
Bridge Data Centres is looking to invest $500 Mn in India over the next two years. As per reports, the investment will enable the Singapore-based data centre outsourcing (DCO) company to gain a stronghold of the country’s fast-growing market for data centres.
In June 2017, Alibaba revealed plans to set up two new cloud data centres in India and Indonesia, in an attempt to strengthen the company’s computing resources in Asia. Earlier in January 2017, US-based data storage and management firm NetApp launched its Global Centre of Excellence in Bengaluru, as part of a $155 Mn (INR 1,000 Cr) investment. In December last year, Amaravati-headquartered Pi DATACENTERS raised $23 Mn from Epsilon Venture Partners. It was reported that the funds would be used to roll out state-of-the-art data centres across India.
Multinational alternative investment firm Bain Capital recently infused $10 Mn in Bengaluru-based consumer leasing startup RentoMojo has raised $10 Mn in Series B funding round led by Renaud Laplanche. Existing investors Accel Partners and IDG Ventures also participated in the round.
Because the construction and maintenance of data centres is a capital-intensive activity, an increasing number of businesses in India are enlisting the help of data centre service providers.
Financial technology company Borrowell announced today it has secured $12 million (CAD) in equity funding and $45 million in new credit facilities. The Series A equity round is being led by Portag3 Ventures LP, Equitable Bank and White Star Capital, with participation by FirstOntario Credit Union and other new and existing investors, and brings the company’s total equity financing to $16.7 million. The credit facilities are being provided by Concentra and FirstOntario Credit Union for the purpose of funding ‘one click’ loans to prime consumers. This latest round of funding will allow Borrowell to provide free credit information and loans to more people.
More than 300,000 Canadians have a Borrowell account, with thousands more signing up each week.
News Comments Today’s main news: Ron Suber steps down as Prosper president. Pave stops originations and considers strategic options. Square to start lending money. LendInvest cancels P2P authorization application. LendInvest receives highest rating from European agency. Reserve Bank of India finalizes P2P rules. Alipay to enter African market. Today’s main analysis: Alternative data transforming SME finance. Today’s thought-provoking articles: SoFi to offer […]
Suber rewires: Steps down as Prosper president. GP:”A move that makes perfect sense. Under his guidance Prosper was recapitalized, originations grew from $9mil to $400mil per month. And after weathering 2016 Prosper secured a $5bil line of credit. Time to move on after 5 years to new adventures. Today’s fintech fashion is insure-tech.” AT: “The wise advise to make your exit when you’re on top. No one is on top of fintech more than Ron Suber. I can’t wait to see what he does next.”
Square to begin lending money to consumers. GP:”Note that Square was already lending money to businesses and it is one of their core revenue lines. “AT: “Jack Dorsey is one of the smartest Internet business entrepreneurs on the planet. It is evident that online consumer lending is where to be right now.”
Can you make payments on plane tickets? GP:”Financing plane tickets. How is this different then buying a plane ticket with a credit card or using point of sale financing? I am not convinced of the differentiation here. “AT: “Evidently you can.”
Affirm offers a way to buy pricey gadgets on credit. GP:”The interesting part here is the business model where Affirm will actually offer 0% APR for X months and the business will cover Affirm’s margin because the business will see an increase in revenue through this financing offer. “AT: “As soon as it became evident that middle-class America has money to spend on luxury items if they could get them on credit, an entire credit ecosystem developed around brick-and-mortar retail. Online retail has now reached the point where it can support a credit system of its own. There will be some stiff competition for consumer finance charges in the coming years, and Affirm is one of the company’s leading the charge.”
LendInvest cancels P2P authorization application. GP:”This is a strange move. I wonder what their plan is. One has to be FCA regulated to be credible. The only plan that makes sense to me is that they either want to be in “pending FCA authorization” status for long time or they are preparing a different application to replace the existing ones due to some fundamental changes.”
After nearly 5 years, Ron has decided it is time to move on from Prosper. He’s been part of two turnaround stories at the company – one in 2013, and more recently as we’ve seen Prosper grow its business following the challenging environment in 2016. It is great to see them back on track, and Ron told me that he is leaving Prosper in the hands of a great CEO and management team.
When Ron recently shared his plans with me he made it clear that he will still be involved with Prosper as a company advisor and “President Emeritus” but he will not be involved in the day-to-day activities.
Over the last several years, Ron has made 21 investments in various fintech companies and he is an advisor to several of these companies.
Personal note from Ron Suber:
This isn’t just another, “I changed jobs” announcement, it’s a next phase of life with eyes wide open called “rewirement” not retirement.
Rewirement will include doing even more of the things I have enjoyed in the past – travel, teaching, learning, coaching/cultivating young entrepreneurs, being the investor/advisor that I enjoyed working with as an entrepreneur, exploring and spending time with you.
Square Inc., the technology company best known for processing payments for small merchants across the U.S., is now angling to lend to consumers, too.
The initiative, which follows the launch of a consumer-oriented Square prepaid debit card, is part of a broader push from the company to branch out beyond its original products—small, white credit-card readers that merchants plug into a mobile phone or tablet.
Offering consumers financing options for their purchases brings Square into competition with financial-technology companies such as PayPal Holdings Inc., Affirm Inc. and GreenSky LLC, as well as consumer lenders like Synchrony Financial that offer credit cards tied to specific retailers.
It also means Square will be on the hook for consumer defaults, which have recently ticked up at some online lenders and credit-card companies.
Square plans to hold the consumer loans on its balance sheet, but as volume grows it could look to sell loans to outside money managers, as it does with its small-business credits unit.
For those who qualify, the avocado toast incentive program will be delivered in three shipments right to the recent homebuyers’s doorsteps. There is also an option between regular and gluten-free bread. (Of course, they will still have to toast the bread once it arrives.)
The marketing decision was ultimately in response to a now-viral interview in May that caused global uproar, in which Australian millionaire and property mogul Tim Gurner said millennials should refrain from buying the popular brunch dish if they didn’t want to quash their hopes of owning a home.
Did you know there are a few ways to make payments on plane tickets if you can’t afford the full price today?
A new startup that offers payment plans for plane tickets is Airfordable.
Airfordable charges a one-time fee of 10%-20% of the ticket price and a down deposit is required. Your credit score isn’t checked, which is a definite plus for several reasons. After that, you make bi-weekly payments. Once the ticket is paid for, your e-ticket and itinerary are released.
CheapAir.com offers monthly payment plans for flights that cost more than $100 by partnering with Affirm. After selecting the flight you want to buy on CheapAir, you will be taken to Affirm’s website to complete the financing request.
Affirm will offer you a 3-month, 6-month, or 12-month payment plan for the plane ticket(s). Your interest rate will range from 10% to 30% depending on your creditworthiness.
Expedia has also teamed up with Affirm to offer payments on plane tickets.
In America, it’s pretty common to take out a loan to buy a car, or a house, or college tuition. It’s less likely to take out a loan to buy gas for that car, paint for the house, or beer for the college tuition. But what about everything in between? What about $500 drones?
That’s where Affirm, a startup by one of the founders of PayPal, comes in. CEO Max Levchin thinks there’s a financial niche to fill for young people who want expensive things, but don’t have multiple Gs in the bank or on credit to drop on a luxury purchase. Affirm offers small, short-term loans that let customers spread out a big purchase, like a drone or $1,500 couch, over a short period of time. Affirm fronts customers the cash, then collects regular payments in more manageable chunks.
Right now, Affirm is slightly limited to an (albeit wide) selection of online retailers. The stuff you can buy is typical pricey-but-not-luxury products — Casper mattresses, Pottery Barn furniture, Newegg computer parts, clothes from online retailers, as well as drones, phones, and tech you would find in a Sharper Image catalog. In April, the company issued its one millionth loan, meaning that with at least a couple bucks in interest on even the smallest of loans, it’s probably bringing in quite a bit of cash.
Funding Circle, the world’s leading lending platform focused exclusively on small business, today announced two additions to its U.S. leadership team: Joanna Karger as U.S. Head of Capital Markets, and Richard Stephenson as U.S. Chief Compliance Officer.
Prior to Funding Circle, Stephenson served as chief compliance officer of Silicon Valley Bank. He has more than thirty years’ experience in various senior roles at U.S. financial institutions and law firms, serving as general counsel, chief compliance officer, chief risk officer, head of internal audit and interim chief executive officer at institutions such as Bank of America, Union Bank, Washington Mutual Bank and Mechanics Bank.
Credit unions have been playing a game of catch-up with banks for many years, and now the new kid on the block— Fintechs —are here to present even more of a headache. On December 31, 2016, Prosper Funding had approximately $22.3 million in unrestricted cash and cash equivalents and $32.8 million available for sale investments at fair value. Their marketplace facilitated $2.2 billion in Borrower Loan originations during 2016, and as of December 31, 2016, $8.3 billion in Borrower Loan originations since it first launched in 2006.
Lending Club ended the year with a servicing portfolio of $11.1 billion, up 24 percent from the same period last year, and delivered $1.8 billion of principal and interest payments to investors throughout the 4th quarter of 2016 with cash, cash equivalents, and securities available for sale totaling $803 million, with no outstanding debt. What’s even more worrisome is that Lending Club’s venture into auto lending is still young and has a lot of potential if it gains serious traction.
Allowing members to send money and receive money like popular online Venmo.
Stay updated across all devices with real-time push-notifications and transactions.
Credit unions will need to offer various software to their members to help them make better decisions and save massive amounts of time through analytics, accounting, budgeting, prediction, and decision- making software.
When trying to appeal to this younger generation, it is important to keep in mind that millennials have two main financial priorities; paying off their student loans, and saving for the future. On average, they spend 43 percent of their income to pay down their debts and put away 38 percent of their income as savings for the future. Three out of five millennials would like their bank to be a financial partner as opposed to just another business profiting off of their work. At the same time, only 32 percent of this generation feel their bank understands them. This is largely due to the fact that banks and other financial providers still offer solutions to meet the needs of baby boomers. This means tailoring products to meet millennial needs will create a more mutually beneficial relationship and help to attract younger customers.
FAQ 7: Is a fintech company arrangement considered a critical activity?
In its response to FAQ 7, the OCC clarified that a relationship between a national bank and a fintech may or may not involve a critical activity, depending on the nature of the specific services the bank or the fintech has agreed to perform. In giving this response, the OCC recognized that third-party relationships are not automatically “high risk” merely because a fintech is involved.
FAQ 10: What should a bank consider when entering a marketplace lending arrangement with nonbank entities?
Although some may read the OCC’s response to FAQ 10 as an endorsement of “bank partnership model” lending relationships between national banks and marketplace lenders, the response includes no explicit mention of these relationships. The response references “marketplace lending or servicing arrangements,” and states that “banks should not originate or support marketplace lenders that have inadequate compliance management processes . . .,” but does not speak to the respective obligations of the parties to these arrangements. Thus, it is conceivable that the bulletin only addresses other types of relationships, such as warehouse lines of credit or loan servicing arrangements. At a minimum, however, the response confirms that national banks should not hesitate to enter into relationships with marketplace lenders as long as appropriate oversight mechanisms are in place.
FAQ 11: Does OCC Bulletin 2013-29 apply when a bank engages a third party to provide bank customers the ability to make mobile payments using their bank accounts, including debit and credit cards?
Until now, a national bank could have taken the position that a third party that merely enabled mobile card payments was not subject to OCC Bulletin 2013-29. To this end, the presence of a third party’s mobile payments application has no effect on the underlying card transaction, and the bank’s involvement is likely confined to deciding whether to promote the availability of the application to its customers. In its response to FAQ 11, however, the OCC clarified that these relationships need to be managed “in a manner consistent with OCC Bulletin 2013-29,” and directed banks to “work with mobile payment providers to establish processes for authenticating enrollment of customers’ account information.”
Announced today, investment firm Pantera Capital is launching a new hedge fund focused on investments solely in tokens that power public blockchain protocols.
Called Pantera ICO Fund LP, the fund intends to raise $100m, with $35m already raised in support from the firm’s existing investor base, undisclosed new investors, and according to the company, unnamed venture capital firms.
Crestlight paid $35.3 million, or about $167 a foot, according to Fulton County records. It announced the acquisition last week, but had not released the price. Lincoln Property Company Southeast won the leasing and management assignments.
Prologis, Inc. (NYSE: PLD) today announced a strategic partnership with Plug and Play, a global startup ecosystem and venture fund specializing in the development of early-to-growth stage technology startups in the Supply Chain and Logistics vertical.Prologis will provide mentorship and space in its logistics real estate properties to a select group of startups in the Plug and Play accelerator program to pilot new technologies. Prologis joins DHL, Maersk, Panasonic, Hitachi, Mann+Hummel, CMA CGA, Daimler, Deutsche Bahn, Swiss Post, BASF, Union Pacific Railroad and Ericsson as partners with Plug and Play.
RealtyShares, a leading online marketplace for real estate investing, today announced Kristina Wallender has joined the pioneering startup as senior vice president of marketing, focused on helping the company reach more investors and sponsors.
Wallender joins RealtyShares with marketplace and marketing leadership experience spanning large enterprise businesses like Amazon and early stage companies like Ticketfly, where she was the head of marketing for the past four years. Over her tenure, Ticketfly grew from a small startup to a leading live entertainment brand serving over 1,800 venues and promoters across North America. Wallender also played a key role in Pandora’s acquisition of Ticketfly in 2015, earning her a spot on Billboard’s 40 Under 40: Top Young Power Players in music. As part of the RealtyShares team, she will be responsible for growing both sides of the marketplace.
Okta, the Silicon Valley firm behind one of the year’s top tech IPOs, has named a new chief security officer.
The maker of identity management software has appointed Yassir Abousselham, a former executive at Google(GOOG, -2.53%) and chief information security officer at financial tech startup SoFi, as head of security. Abousselham began in the role on June 5th.
Vela Trading Technologies LLC, a fintech company specializing in market data technology, recently announced its acquisition of OptionsCity Software, which offers futures and options trading with analytics solutions.
The deal is expected to close at the end of the second quarter.
We believe smart people can succeed at almost anything, so we encourage on-the-job learning (e.g. trying a new programming language) and real ownership over your work. Our fast paced environment necessitates a desire and willingness to grow both personally and professionally. We see value in effort and output, which is why we encourage all of our team members to take measured risks and never back away from a challenge.
LENDINVEST has confirmed that it has cancelled its application with the Financial Conduct Authority (FCA) to operate a peer-to-peer lending platform.
The online mortgage lender revealed in its annual report, released this week, that it had shelved several applications with the City watchdog, for permission to operate a P2P platform and for credit broking and consumer credit licences.
Flender, a Dublin-based, “friendly” peer-to-peer lending platform, is bringing its newly launched Innovative Finance ISA to the UK. The firm was fully authorised by the FCA in May.
RateSetter’s Paul Marston comments on Brexit (RateSetter email), Rated: A
Given the economic uncertainty created by Brexit, it is easy to understand why some small business owners have postponed important business decisions. However, SMEs have some important advantages which position them well to navigate through this period successfully. They can more easily adapt business models, diversify into new activities and implement new ideas. It will be the business owners who are forward-thinking and act positively and decisively who are most likely to use uncertainty to their advantage.
For SME businesses that see opportunities to invest for future growth, the good news is that there are now real alternatives to the banks in terms of access to finance that can be provided in a simple and straightforward manner. We stand ready to help these businesses realise their plans.
The door is open for business leaders to redefine Brexit so that it is seen as an opportunity, rather than a threat.
Financial technology (fintech) adoption has doubled in the past two years, with China leading fintech adoption globally.
The average percentage of digitally active consumers using fintech services is around 33% across 20 key markets – this represents a doubling over the past two years when fintech penetration was recorded to be around 16%. The findings are noted in the EY Fintech Adoption Index, which surveyed 22,000 people online in 20 countries.
The report further shows that China leads the world with 69% of consumers using some form of fintech service, which is unsurprising given the ubiquitous adoption of payment platforms WeChat Pay and Alipay in China. Alipay and TenPay (WeChat Pay) together make up for 92% of the mobile payment market, and mobile payment transactions increased 381% in 2016 to 58.8 trillion yuan, according to iResearch.
Nobo Education announced they have closed a new round of financing $6.4M. This round was led by National SME Development Fund (THG Ventures), with participation from The Chinese Education Industrial Fund, which is jointly managed by DT Capital and ChineseAll. Previously, Nobo Education was known to have raised pre-A round of $1.79M in June 2016.
Founded in March 2013, Nobo Education is a Beijing-based international preschool education institution as well as new high-tech enterprise. Their core product—— Nobo Education System, an O2O system solution efficiently in kindergarten management, is the only system of education that has independent intellectual property right in China.
According to Nobo Education, among the total raised funds, ￥10M will continue to be used in pre-school education software R&D and service.
Toumi RA, China‘s leading Robo-advisory platform built on 11-year expertise of CreditEase Wealth Management, has achieved outstanding performance since its launch on May 28, 2016, generating 2.55%-11.48% of cumulative return through May 31 2017, successfully bucking global capital market fluctuation, geopolitical risks and black swans.
In the past year, Toumi RA’s platinum/diamond members enjoyed an average cumulative return of nearly 7% for different portfolios, among which the risk-level-eight option produced the highest return of 11.48%. For gold members, Toumi RA boosted the level-eight portfolio’s cumulative return by 9.4% and the lowest-risk option by 4.23%.
An overwhelming majority of investors (99.6%) made profits during the first year, according to Toumi RA’s performance report, while only 0.4% of investors experienced lost either because of unfortunate investment timing during market highs or short-term investment during highly-volatile periods.
In April this year, Xiong took her own life in a hotel far from her hometown in Xiamen. Incapable of repaying a debt of 570,000 yuan (US$82,722), Xiong’s circumstances worsened as online loan sharks threatened to make her nude photos public. She took her own life a few days after her mother received her nude photos.
“Nude loans” involves offering one’s nude photos to secure credit. Nude loans first gained nationwide attention in December 2016. The China Youth Daily discovered 167 women’s nude photos and obscene videos online. These women, many of them in their early 20s and receiving college education, handed over their nude photos and videos as collateral for loans from peer-to-peer (P2P) lending platforms.
Online lenders’ choice to use nude selfies to enforce repayment reflects the country’s paternal society. Nude selfies are risky enough to prevent female student clients from defaulting because Chinese women are still valued for their chastity.
Specialist mortgage lender LendInvest has received the highest possible rating for the quality of its loan servicing from European ratings agency ARC Ratings.
For the third time in as many years the agency has awarded a SQ1 Servicer Quality Rating for LendInvest following a comprehensive annual review of the company, its performance, processes and infrastructure.
Tikehau Capital (Paris:TKO) today announced it has completed the acquisition of Credit.fr, the French specialist in crowdlending for small businesses financing, for an amount of €12 million. Incubated since March 2015 by Truffle Capital and under the leadership of Geoffroy Roux de Bézieux, its chairman since November 2015, Credit.fr has rapidly established itself as an essential player in the small and mid-sized companies (SMEs) alternative financing market.
This acquisition enables Tikehau Capital, a leading company active in the corporate lending and private debt market in France, to consolidate and expand its lending platform by bringing its corporate financing solutions to smaller businesses and SMEs. Through Credit.fr, Tikehau Capital will enable its wide network of investors and partners to broaden their investment policy, currently focused on medium-sized and larger companies, to include smaller businesses rigorously selected by Credit.fr teams.
The report titled “Alternative Data Transforming SME Finance” looked at 800+ innovative digital SME lenders and digital commerce, payments and service providers in more than 60 countries. Here are some of the key findings:
Banks have valuable data, but are often not using it: Banks have a highly valuable repository of SME data, including SME owners’ customers’ daily transaction data that provides reliable real-time visibility into SME cash flows and credit capacity. However, most banks lack the ability to create innovative SME lending models from it.
Digital SME lenders are developing new relationships with SME customers and their data: In some cases, non-bank digital SME lenders insert themselves between banks and their SME customers, and forge fundamental changes in SME customer expectations.
New SME digital data streams are becoming more readily available and accessible: Digital SME lenders leverage vast and expanding stores of data, including from electronically verifiable, real-time sales, bank account money flows and balances, payments, social media, trading, logistics, business accounting, and credit reporting service providers, as well as a wide range of other private and public data sources used in the SME credit assessment process.
There are a wide range of digital SME originator lending business models: The new digital SME lending originator business models that take advantage of the expanding universe of SME digital data vary widely. This report highlights these business models, selected players, and the digital SME data they use. It includes marketplace lenders, tech, e-commerce, and payment giants which are extending SME lending into their non-banking digital ecosystems where they are already dominant. It also includes supply chain financing firms, mobile micro-lenders graduating to SME lending, and innovative banks.
Digital SME lending is becoming more of a global trend:
Digital SME lender-bank collaboration is also a growing part of the future of SME finance: Banks may have been blind to digital SME lenders at first, and digital SME lenders may have said they would replace banks. However, both parties now have come to a simple conclusion: there are limits to what each player can do on their own and there is strength in collaborating.
Access to data is no longer the problem in SME lending: The digital economy has also given rise to an ever-evolving set of value-added cloud-based services to help SMEs with their finances, business planning, productivity, legal issues, data backup and security, file sharing, web conferencing, website builds, online marketing, business training, e-commerce, payments, loyalty programs, business intelligence, and more.
However, access to data for SME lending brings new challenges: With the abundance of alternative data, there are new issues of what to use, how to use it, and how to do this responsibly — while also respecting privacy and other important rights of SMEs.
Regulators in Singapore and Denmark are building bridges to assist Fintech companies expand abroad. The Singapore’s Monetary Authority of Singapore (MAS) and the Danish Financial Supervisory Authority (Danish FSA) yesterday have entered a cooperation agreement to promote innovation in financial services in their respective markets.
The agreement aims to help FinTech companies in both countries to expand into each other’s markets and also provides facilitated introductions when a fintech firm operating in one jurisdiction wants to better understand the rules in the other.
Midway through the month, on June 14, Misys and D+H merged to form a new company called Finastra.
Shortly after the merger, several institutions announced they were working with the newly formed fintech giant. Rabobank selected Finastra to centralize their cross-border payments; SIA, a European provider of payment infrastructure and services, partnered with Finastra to provide real-time instant payments capabilities; and Mexico’s central bank, Banco de Mexico, also selected Finastra to transform its legacy risk management platform.
London-based travel card specialist Revolut is close to landing a £50 million (US$65 million) funding round that will value the company at £300 million (US$390 million), according to a report from Sky News. The round will be led by Index Ventures, which acquired an interest in Revolut last year, the report said. Silicon Valley investor Ribbit Capital is also said to be taking part in the round.
Finally, Seattle-based Tango Card, a provider of digital rewards and incentives to 2,000 corporate enterprise customers, has secured a $10 million investment facility from Silicon Valley’s Western Technology Investment.
A new marketplace lender is hoping to turn traditional investing on its head with a pitch to wholesale and sophisticated investors.
Backed by an Australian Financial Services Licence and an Australian Credit Licence, Zagga hopes to differentiate itself from other marketplace lenders by providing a lending platform where all loans will be secured by a registered mortgage against real property.
To date, Zagga has helped facilitate a number of loans including a $7.15 million loan which was fully-funded within 17 days by 26 investors, and a $1.15 million loan to a husband and wife investor who wanted to top up their super fund before 30 June, funded in a few hours by six investors.
The Reserve Bank of India (RBI) has finalised norms for peer-to-peer (P2P) lending platforms and is expected to release final guidelines in 2-3 weeks, a top finance ministry official said.
According to the official, the P2P lending interface will come under the purview of RBI’s regulation by defining these platforms as NBFCs under the RBI Act by issuing a notification in consultation with the government.
You had also mentioned about raising Rs 500 crore in debt.
Apart from the first Rs 500-crore debt fundraising exercise, we will also look to raise another Rs 500 crore in debt. We have initiated talks for this, but the process will take some time.
So, eventually will you be looking to raise more funds from banks and less from NBFCs?
Banks offer us lower-cost loans, but the process is more time consuming. They also operate within certain limitations. NBFCs are quicker with their disbursals.
Do you have plans to increase the ticket size of your loans, which is capped at Rs 10 lakh?
About 93% of our loans are less than Rs 10 lakh, and the Rs 50,000-10 lakh range remains our sweet spot. But, sometimes we do disburse loans of Rs15-20 lakh if there is a strong reference or recommendation. Our USP will be to remain a sub-Rs 10-lakh lender.
Tech is a major component of your business operations. How much of your budget allocation goes towards it?
Almost 25-30% of our budget goes towards technology. The tech team accounts for around 35% of our total manpower while two-thirds of our resources work on the lending business.
Most players tend to be asset-light. What was the business logic and strategy behind going asset-heavy?
That experience led to the decision of Lendingkart having an NBFC of its own, which would allow us to design our own products.
Will you continue to operate the same business model?
Two years down, we will diversify as a marketplace model, and may even get into the peer-to-peer lending space.
In fact, we will start a pilot with one or two players within the next six months. However, this year, the lending will predominantly be from our books. These plans will take a larger form in 2018-19 and 2019-20.
When will you start making profits?
The lending arm of our business will turn profitable by March 2018.
Which are your top performing markets?
Bengaluru, Mumbai, Hyderabad, Pune and Surat have been our top five performing markets.When will you start making profits?
The lending arm of our business will turn profitable by March 2018.
Sharma is the CEO and cofounder of Extreme Venture Partners, a Canadian VC firm that recently assembled a fundfor paying startup founders and their families to relocate to Toronto.
Upon arrival, they’ll receive seed funding, guidance on beginning their new Canadian life, and the opportunity to get on the fast-track for citizenship. Sharma says EVP is prepared to welcome 30 companies over the next three years.
Upon arrival, they’ll receive seed funding, guidance on beginning their new Canadian life, and the opportunity to get on the fast-track for citizenship. Sharma says EVP is prepared to welcome 30 companies over the next three years.
The aim of this policy brief is to provide a general description of the fintech industry in Canada, and to describe and draw attention to two complementary aspects of developing a fintech strategy for Canada: first, encouraging domestic fintech innovation — through open data and payment systems — and second, encouraging international expansion — through international agreements among regulators and comprehensive intellectual property strategies.
Flexiti Financial, a provider of point-of-sale (POS) financing and payment technology for retailers, today announced that it has won a competitive bid to be the preferred POS financing partner in Canada for the dealers of outdoor maintenance and equipment manufacturers including Husqvarna, Briggs & Stratton, Ariens, Big Dog Mowers, Hustler, ECHO Power Equipment and ECHO Bear Cat. Flexiti Financial now has access to over 800 dealers that sell lawn and garden tools and outdoor power equipment.
Dealers will now have access to Flexiti Financial’s award-winning POS financing platform, which will allow them to provide instant financing on any device, anywhere, and instant credit approval in three minutes.
AmEx lending push goes beyond credit cards. GP:” I estimat that credit card lenders can enter the unsecured personal lending space more easily then the reverse.” AT: “Just as institutional investors have taken over markeplace lending and changed the industry, it’s inevitable that traditional financial institutions will do the same. First, Goldman Sachs, not AmEx. It’s just a matter of time before SoFi, Prosper, et. al. compete on even ground with traditional banks and finance companies in the MPL space.”
American Express Co. is pushing into the booming personal-loan business despite investor worries that an expanding roster of lenders may be getting into the game at too late a stage.
Such fears put AmEx executives on the defensive Wednesday at their annual investor day conference. Chief Executive Ken Chenault acknowledged the company has received questions about the timing of recent efforts to expand lending. These include through credit cards and expanding last year into personal loans—the first time the iconic card company has engaged in such lending.
But he said that AmEx is “very comfortable” because the initiative involves lending more to its existing card customers.
Online lenders have been using these loans to appeal to mostly creditworthy consumers who want to consolidate high-interest credit-card debt. Around three out of every five loans LendingClub has made since it began lending in 2007, for instance, went toward paying off higher-cost debt, according to data from the San Francisco-based company.
And there are plenty of credit-card customers to target. Total credit-card balances have grown to be just shy of $1 trillion, climbing steadily toward crisis-era levels. The Federal Reserve reported this week that balances in January were $995 billion.
Lender and student loan refinancing company SoFi this week conducted a rundown of which pharmacy schools provide students the best bang for their buck by comparing which schools have the highest average salaries relative to their student debt, on average. It also looked at the pharmacy schools’ graduates have the highest average salaries and schools whose graduates have the highest amount of debt relative to their income.
The pharmacy school with the highest average salary was the University of California, San Francisco, which had an average salary of $145,297, which was 1.3 times the average $109,394 in debt students depart with. The University of the Pacific’s pharmacy school came in second, with an average salary of $137,639 and salary-debt ratio of 0.8. It was followed by Midwestern University – Glendale, whose graduates earn $133,867 on average; University of Southern California, with its average graduate salary of $133,328; and Harding University, with its average salary of $132,748. However, all four schools that followed the top slot had students with debt higher than their average salary, and three were below the average of all pharmacy schools.
On the weighted-average adjusted basis, we observed flattening in the credit curve: the A tranche is 60 basis points tighter and the B tranche is 130 basis points wider than the corresponding tranches in non-prime deals (Exhibit 3). This flattening behavior is expected as the subordinate tranches on near-prime collaterals have heavier expected losses than that of prime collaterals. Comparing to the SCLP shelf, ARCT 2017-1 is priced about 40 basis points wider on the A tranche and 280 basis points wider on the B tranche. We believe that the “first-dollar” loss risk is relatively low for ARCT 2017-1 A class investors with a 0.83yr WAL.
On February 27, the U.S. District Court for the Southern District of New York issued a highly anticipated decision in Madden v. Midland Funding1 on remand from the U.S. Court of Appeals for the Second Circuit. The decision dashes industry hopes for a favorable ruling on the case’s choice of law issues that would blunt the impact of the Second Circuit’s 2015 conclusion that the National Bank Act (NBA) did not preempt plaintiff Madden’s state law usury claim. Just as importantly, however, the decision turns a spotlight on lenders’ ability to override state usury laws by relying on choice of law clauses in their loan agreements with consumers in certain states like New York.
In finding that New York’s criminal usury law constitutes a “fundamental public policy” of the state, the court cited the Eighth Circuit Court of Appeals’ decision in Electrical & Magneto Service Co. v. AMBAC International Corp. for the position that the “existence of a criminal provision ‘is significant because the legislature would not allow a criminal law to be bypassed by the mere existence a choice of law provision contained in a contract.’”
The district court’s opinion should raise concern for all non-bank lenders because choice of law clauses are often relied upon in the industry as a means of overcoming more rigorous state usury restrictions.
As noted throughout the opinion, interpretations of state law by federal courts carry little weight as precedent.14 A future court would be free to disregard the district court’s interpretations of New York law and might arrive at a different conclusion regarding the applicability of the criminal usury cap to defaulted debt.
If NBA federal preemption had applied based on the assignment of plaintiff Madden’s loan to the defendants from a national bank, the choice of law issue would have been moot.
A future case involving bank model lending would likely have a different outcome, even within the Second Circuit, because the arguments in favor of federal preemption would be stronger than what exists in a case involving the purchase and assignment of defaulted debt due to the bank’s greater degree of ongoing involvement.
The key trend likely to be adopted by leading players in the global peer-to-peer (P2P) lending market is to build strategic alliances to expand its small business loan divisions. For instance, Prosper Marketplace, Inc. joined hands with OnDeck and bought American Healthcare to improve its product portfolio. Similarly, LendingClub Corporation is also targeting startups by collaborating with trustworthy investors in the market.
Simplification of modes used for peer-to-peer lending such as improved online interfaces has augmented the peer-to-peer lending market in the recent years.
JPMorgan Chase (NYSE:JPM) has agreed to acquire MCXs payments technology to help expand Chase Pay, the mobile and digital wallet for Chase customers. MCX, a network of Americas largest merchants, was the premier launch partner for Chase Pay in October 2015. The transaction is expected to close in the coming weeks.
There’s still time to participate in The 2017 Americas Alternative Finance Industry Survey. The deadline is March, 15. Orchard believes that by participating in this high-profile and high-impact research, originators can help broaden and deepen coverage of our fast-changing industry and is supporting the survey as a key research partner for the second year.
Your platform will be prominently acknowledged and thanked in the report with logo displayed. Your data will only be analyzed and presented in aggregate format by country and model. No individual platform’s data is therefore divulged. After the survey is completed, data that you submit will be encrypted and stored safely to ensure continued anonymity and confidentiality.
What started as peer-to-peer has grown into a marketplace. The likes of JP Morgan and Citibank now account for over 65% of new capital.
Institutional involvement in the sector has made P2P investing highly competitive. Institutions use algorithms to select the best quality loans, snapping them up only seconds after being listed.
NSR Invest is a registered investment advisor that offers managed and self-directed accounts to P2P investors.
Investors can link their Lending Club, Prosper, and Funding Circle accounts to the website and have NSR invest for them. Depending on the NSR strategy chosen, users outperform the market by as much as 2.6% (average is 1.5%).
LendingRobot (LR) is another registered investment advisor offering fully automated P2P investing. Investors can link their Lending Club, Prosper, and Funding Circle accounts to LR. Like NSR, LR offers managed and self-directed accounts.
For managed accounts, investors can select their desired return levels that range from conservative to aggressive. Based on your selection, LR “cherry picks” suitable loans.
On average, LR users outperformed the market by 1.45% over the course of 2015–2016.
For self-directed accounts, users select loans based on criteria such as monthly income and loan purpose.
IHT Realty Crowdfunding announced on Thursday a new program that will offer investors a guaranteed six-month return regardless of how early the property sells.
Lenger Financial is offering a strong debt coverage ratio of 1.28 with an excellent after repair value (ARV) of 74 percent. The sponsor is projecting a gross annual income of $15,590 and a projected net operating income of $10,443.
Earlier this week, ProPublica published a list of more than 400 Trump administration officials working across the federal government’s major departments. The list includes a number of officials at the Department of Housing and Urban Development, such as its “Senior White House Advisor,” Maren Kasper. Kasper most recently served as a director at Roofstock, an Oakland-based investment platform for single-family rental homes.
The Securities and Exchange Commission denied approval of the Winklevoss Bitcoin Trust ETF, an exchange-traded fund that would track the value of digital currency bitcoin. Friday’s highly anticipated decision came nearly four years – and a dozen amendments – after the fund was first proposed and delayed indefinitely making gaining access to the currency as easy as logging into your online brokerage account.
LendingTree® (NASDAQ: TREE), the nation’s leading online loan marketplace, today announced that J.D. Moriarty will be joining the company as its Senior Vice President, Corporate Development, effective April, 2017.
In his new role, Moriarty will be responsible for business development and strategic acquisitions as the company continues to expand its footprint in the lending and financial technology industry.
P2P lender RateSetter announced on Friday it has updated its performance statistics. According to the lending platform, a new set of fields on the Performance by year means investors may now view the amount lent by year, which is broken down by lending type.
In a new report, ‘The start-up view: a year in FinTech’, Startupbootcamp and PwC analyse application data from Startupbootcamp’s FinTech accelerator programme as well as the volume of deals in the UK FinTech market in 2016.
Startups are putting more emphasis on solving real customer problems using AI and machine learning.
There remains, however, a disconnect in the interest shown in this area by startups and investors, with the report showing that for many investors it is still too soon to invest in smarter faster machines. There remains, however, a disconnect in the interest shown in this area by startups and investors, with the report showing that for many investors it is still too soon to invest in smarter faster machines.
Despite Brexit, the UK should remain a global FinTech centre
UK based startups made up 34% of all applications to Startupbootcamp in 2016, up from 22% the year before, demonstrating the constant growth of innovation and wealth of talent in the UK.
Cross border payments platform Currencycloud has completed a £20 million ($25M) Series D round. New investor GV (née Google Ventures) joined existing investors Notion Capital, Sapphire Ventures, Rakuten FinTech Fund and Anthemis. The money will fund a global expansion.
Funding Circle has successfully managed to lend over 2.5 billion pounds ($3.07mil) internationally in 2016. Currently, the company has offices located in San Francisco, Berlin, and the Netherlands. Moreover, the company has its largest market in the UK worth of $981mil.
There is no ignoring the record number of proptech M&As and fundraising events seen in 2016 and this looks set to continue in 2017. Already, proptech funding activity in the UK alone has been astounding this year, with Purplebricks’ £50m raise to drive their international expansion the latest example. This comes on the back of three strong fundraises by proptech finance companies: LendInvest, Habito and Trussle.
In order to support this burgeoning sector, we launched the UK PropTech Association (UKPA) this month.
Since 2007, peer-to-peer platforms (P2P) lending has mushroomed in China as a new source of fixed income for retail investors. Peer-to-peer lending is a new method of debt financing that allows people to borrow and lend money without a financial institution. Harnessing technology and big data, P2P platforms connect borrowers to investors faster and cheaper than any bank.
Last year, the country’s US$60 billion peer-to-peer lending sector was dogged by scandals and fraud due to loose oversight. This resulted in China’s authorities’ imposing new rules due to concerns about defaults and fraud among the nation’s 2,349 online lenders.
Right now, China is facing two extremes of P2P platforms going up and down: record-breaking funding rounds (Lufax US$10 billion) and record-breaking Ponzi schemes (Ezubao, US$7.6 billion).
The New York-listed firm, unlike its peers, has not only been expanding its business rapidly but also set its sights on disbursing loans worth 100 billion yuan (HK$ 112.8 billion) a year by 2020.
Just a few days ago, Dianrong made an official announcement that it is launching China’s first-ever blockchain platform, named ‘Chained Finance’ by joining efforts with FnConn, a subsidiary of Foxconn Technology Group.
Lufax (陆金所) is the largest player in China and the third largest in the world. It is important to note that Lufax, formally known as Shanghai Lujiazui International Financial Asset Exchange, is 44% owned by financial conglomerate Ping An Insurance Group.
Investree Radhika Jaya, a local startup providing a peer-to-peer lending marketplace, is looking to open representative offices in major Indonesian cities this year as part of a push to expand its lending by more than sixfold this year.
The company, which matches individual lenders with borrowers, expects to mediate Rp 400 billion ($30 million) in loans from lenders to borrowers this year, up from Rp 65 billion last year, Adrian A. Gunadi, Investree co-founder and chairman told the Jakarta Globe on Thursday (09/03).
One is a loan whose terms are custom fit for employees, who will pay it back using automatic deduction from their salary.
The other is for small and medium businesses, which supply listed companies, multinational firms, state-owned enterprises or government offices. This loan is given against these SMEs’ invoices to their clients, reducing risk revenue mismatch that could hamper the debt payment. “These way we do not directly compete with banks. We complement them,” he said.
As of Friday, Investree has processed Rp 86.7 billion in loans for 395 borrowers, most of them SMEs.
Korean financial services app developer Viva Republic announced last week the close of their Series C funding round, bringing home $48 million in new capital.
Launched in February 2015, the company’s app Toss now claims 6 million users in their native market, providing P2P transfers between friends and family. They have since added services such as loans, a financial dashboard that shows all of the user’s accounts (an important feature as Koreans have 5.4 accounts per person on average), and a credit monitoring service.
Viva Republica’s decision to look abroad for new backers should be taken as a sign that they understand that if they will want to continue to scale, they will need investors with a wider viewpoint on the potential of powerful fintech solutions than what is available to them in their home ecosystem.
Africa has caught the attention of those in the ever-evolving peer-to-peer (P2P) lending sector. A recent report published by the University of Cambridge Judge Business School analyses the current position of Africa on the world’s alternative finance stage.
The report explains that crowdfunding in Africa is just beginning to gain publicity and garner attention. As detailed in the document, the third-largest model in Africa is P2P business lending, which totalled $16 million in volume over a two-year period between 2014 and 2015.
Kenya and South Africa are the market leaders, raising $16.7 million and $15 million respectively from online channels in 2015. P2P business lending had a lower average deal size, of $41,000, with an average of 24 lenders each.
The make-up of the South African market differs markedly from the rest of Africa. In 2015, the vast majority of market activity – $13.8 million – came from P2P consumer and business lending, with the remaining $1.2 million spread across microfinance, donation-based and reward-based crowdfunding.
The lending landscape in South Africa is transitioning. Taking the lead from their global counterparts, there are a host of smaller FinTech lenders entering the market, bringing with them an opportunity for SMEs looking for growth funding. However, by year-end we could see yet another shift.
Back home, the growth in the alternative lending space has largely been in response to the increased demand from SMEs looking for smaller and more short-term loans. These smaller deals generally attract more interest and are often unattractive to the bigger, traditional lenders.
International uncertainty, especially around shifts in regulations under the Trump administration, could see shifts in how banks are able to lend. However, the South African Reserve Bank has traditionally erred on the side of caution and we can expect a steady hand in our regulatory outlook. Similarly, if the US interest rates tick upwards, additional risk will enter the market and lending will be affected.