Thursday February 7 2019, Weekly News Digest

origination costs

News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2019-1 Trust. LendingPoint increases mezzanine financing. UK publishes Open Banking operational guidelines. Raisin raises $114M. Today’s main analysis: International P2P lending volumes for January 2019. Today’s thought-provoking articles: Where are we in the credit cycle? Marketplace lending associations respond to FDIC small dollar lending rule request. […]

The post Thursday February 7 2019, Weekly News Digest appeared first on Lending Times.

origination costs

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2019-1 Trust (Business Wire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2019-1 (“SCLP 2019-1”). This is a $480.7 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2019-1

Class Preliminary Rating Class Principal
A AAA (sf) $351,800,000
B AA+ (sf) $39,400,000
C A+ (sf) $51,500,000
D BBB (sf) $38,000,000

Where Are We in the Credit Cycle? (PeerIQ), Rated: AAA

This week’s big funding news was that digital savings and investing platform Acorns raised $105 million in its Series E round, bringing its total valuation to $860 million.

The US economy generated 304 k jobs in January, marking a record 100 months of job growth. Average hourly earnings rose by 3.2% and the unemployment rate rose slightly to 4%.

Marlette CEO Jeff Meiler discussed profitability and loan performance with Peter Renton (transcript and podcast here).  Marlette announced another year of profitability in 2018.

Prosper’s December Performance Update showed that Prosper is focusing on making higher grade loans with 62% of December originations rated AA-B.

Overall, lenders view the US consumer as healthy and the US economic growth as solid.

The Industry Responds to FDIC Small Dollar Lending Rule Request (Lend Academy), Rated: AAA

So, back in November the FDIC issued a Request for Information on Small Dollar Lending. They received more than 60 responses from banks, industry associations, non-profit groups, fintech companies and individuals. While the FDIC did not define exactly what they meant by a small dollar loan the respondents, for the most part, took it to mean loans of less than $5,000.

There are many mainstream online lenders offering personal loans down to $1,000 and there are also many fintech companies offering loans under $1,000. Companies like Oportun, Insikt, LendUp, Elevate, Opploans and many others offer these sub-$1,000 loans using the latest technology tools to make this process more efficient.

The Marketplace Lending Association (MLA) provided a detailed 10-page response where they urged the FDIC (and other regulators) to do more to support banks and foster closer working relationships with fintech providers:

The Online Lenders Alliance is a trade group that contains many small dollar lenders who operate online. Not surprisingly they are against the 36% rate cap but they also have a lot in common with their sub-36% brethren such as promoting partnerships between banks and fintech companies.

Source: Online Lenders Alliance

The Center for Responsible Lending gave one of the most detailed responses to the RFI, a full 38 pages.

Read the full Online Lenders Alliance response here.

LendingPoint Again Upsizes Its Mezzanine Financing, Bringing It to More Than $ 67.5 Million (Business Wire), Rated: AAA

LendingPoint, the consumer lending platform, announced it closed an increase of its mezzanine financing, bringing the total of the facility to $67.5 million. A Paragon co-investor joined the facility as a lender.

Today’s announcement is the latest in a string of financing transactions LendingPoint has closed in the past 15 months. The company secured an up to $500 million Senior Credit Facility in August 2017 and an up to $600 million Senior Credit Facilityin May 2018, both arranged by Guggenheim Securities.

Eight Challenger Banks Traditional Institutions Should Worry About (The Financial Brand), Rated: AAA

1. BankMobile — Hooked Up With T-Mobile

Parent Company: Customers Bank
Websitewww.bankmobile.com
Launched: 2015
Category: Mobile bank

The creation of father-daughter team of Jay and Luvleen Sidhu (CEO and President respectively), BankMobile is an evolving banking-as-a-service platform.

2. Chime — Super Slick App

Websitewww.chimebank.com
Launched: 2013
Category: Mobile banking and money management app (in partnership with the The Bancorp Bank)
Notable Milestone: 2 million account relationships

3. Finn — Chase Bank’s Millennial Play

Parent Company: JPMorgan Chase
Websitewww.chase.com/personal/finnbank
Launched: 2017
Category: Mobile bank

Chase is offering a $100 for opening a new Finn account (as long as you make ten qualifying transactions in the first 60 days).

4. Marcus — Sucking Up Your Customers

Parent Company: Goldman Sachs
Websitewww.marcus.com
Launched: 2016
Category: Online bank
Notable Milestones: 2+ million customers and $35 billion in deposits.

Marcus’ loans range from $3,500 to $40,000 at rates of 6.99% to 25%. The average loan in 2018 was $15,000 over four years with a 12% interest rate, according to Bloomberg BusinessWeek. That leaves plenty of margin room even with its online savings rate up at 2.25% (as of January 2019).

5. N26 — Platform Maestro

Websiten26.com
Launched: 2015
Category: Mobile bank
Notable Milestones: 2.3 million users and $1 billion in deposits.

6. Revolut — The Amazon of Banking

Website:www.revolut.com:
Launched: 2015
Category: Mobile financial provider

Notable Milestones: 3 million customers — both consumers and businesses. Opening about 8,000 accounts per day. 1.2 million monthly active users. Monthly transaction volume $3 billion. Received European banking license in December 2018. More than 60,000 U.S. customers on Revolut’s waiting list.

7. SoFi Money — Join The ‘Waitlist’

Parent Company: Social Finance, Inc.
Websitewww.sofi.com
Founded: 2011 (Sofi Money Beta Launch, June 2018)
Category: No-fee Mobile banking account

8. Varo Money — Almost OCC Approved

Websitewww.varomoney.com
Founded: 2015
Category: Mobile banking/money management app in partnership with the The Bancorp Bank.
Notable Milestones: First mobile-only bank to get preliminary approval for a national bank charter.

Walsh feels Varo Money is particularly suitable for the 70% of the people they initially surveyed who are “hands-off creditworthy Millennials.”

P2P Global sells US loans and chases ‘less volatile returns’ (AltFi), Rated: A

It said its net asset value (NAV) rose by 0.78 per cent in the final month of the year, amounting to a total 5.2 per cent return in 2018, as the fund sold off a number of poorly performing loans, according to its December newsletter published today.

15 Minute Mortgages? Meet Molo – The New Fintech Aiming To Shake Up The Market (Forbes), Rated: A

Francesca Carlesi is the Co-Founder and CEO of Molo, a new, super exciting fintech start-up, aiming to reimagine how people get mortgages forever. She was originally a University professor, envisioning pursuing an academic career, before quickly joining McKinsey & Co., immediately after finishing her Ph.D. Molo is her first experience as a start-up entrepreneur after a long career in the finance and banking world. Here she discusses how she made the transition and found the journey so far.

Building a bank designed for freelancers and solopreneurs with Joust’s George Kurtyka (Tearsheet), Rated: A

57 million people in the US freelance and 30 million or so of those are micro and small businesses. Small businesses use approximately a dozen apps and pieces of software to manage their finances. From a bank account to payments to QuickBooks to factoring, microbusinesses spend 365 hours a year reconciling the data between all their financial tools.

1 IN 4 SAYS MONEY IS THE BIGGEST HURDLE TO RUNNING A BUSINESS (Valpak), Rated: A

Key Findings

  • 1 in 4 Americans considers funding to be the biggest obstacle.
  • More women say not knowing how to run a business is a challenge than men.
  • Millennials ages 25 to 34 are the most afraid of failure.
  • 1 in 3 Americans lacks a strong business idea to begin with.
Source: Valpak

Plaid And Quovo Just Scratching The Surface With Data Aggregation (Forbes), Rated: A

The fintech consolidation is starting, at least in the financial data side of the business, with Plaid recently announcing an 

Meet the start-up bank with millions of customers trying to disrupt the ‘adversarial’ American banking system (Business Insider), Rated: A

United Kingdom

Due diligence on P2P platforms (FT Adviser), Rated: AAA

In the immediate aftermath of the credit crunch, politicians enthused about the new crop of peer-to-peer providers and even created the Innovative Finance Isa.

UK financial institutions will receive more clarity on Open Banking (Business Insider), Rated: AAA

The Open Banking Implementation Entity (OBIE) has published its Operational Guidelines and accompanying checklist to help financial institutions (FIs) better navigate Open Banking, per a press release.

With the guidelines, the OBIE aims to clarify the regulatory requirements for a dedicated interface, as set out in the revised Payment Services Directive (PSD2), RTS, EBA Guidelines, and Financial Conduct Authority (FCA) Approach documents.

Source: Business Insider Intelligence

Read the full report here.

Starling launches euro account as UK prepares for Brexit (AltFi), Rated: A

The digital-only bank, which expects to top one million customers this year, said the new account is a simple was to ‘send and receive euros for free’.

Alt Credit Scorer Aire Scoops Up $ 11 Million in Growth Funding (Finovate), Rated: A

Alternative credit assessment innovator Aire has picked up $11 million in new funding. The London-based company, which demonstrated its Aire Credit API at FinovateEurope 2015, said the new capital will support the continued development of its credit insight engine, as well as support expansion in the U.S.

AccountScore uses Open Banking to offer real-time debt advice with Insolvency Panel (AltFi), Rated: A

A new service has been set up for people in debt, giving them the power to let advisors see their bank accounts in order to offer quick and accurate advice.

The service is a tie-up between fintech bank transactions firm AccountScore and The Insolvency Panel launched this month.

Why are SMEs declining external investment, and is it a barrier to scale? (Vox Markets), Rated: A

Small businesses accounted for 22 per cent of the UK’s economic growth in 2017 according to Octopus Investments High Growth Small Business Report. These SMEs, which comprise less than one per cent of UK companies, created one in five jobs in 2017 and hold a wealth of potential for our economy. When it comes to the future of the UK business landscape, it seems that the best things do come in smaller packages.

SME finance app ANNA gets £8.5m funding (Fintech Futures), Rated: A

SME business account Anna has received an investment of £8.5 million from Kinetik as it prepares to launch new tools and products.

What Winter? Crypto Lending Firm Has Issued over $ 630M in Just Six Months (NullTx), Rated: A

The cryptocurrency winter has been one of many contrasts. While some firms have gone out of business and shut down, some have thrived. Celsius Networks belongs to the latter.

Based in London, the firm launched just six months ago, but it has grown by leaps and bounds. It has lent over $630 million in loans, predominantly in cryptocurrencies.

Aave Launches Bitcoin on Its Ethereum-based Crypto Lending Marketplace ETHLend (PR Newswire), Rated: A

AAVE, a UK-based FinTech Startup, today announced a new release for its crypto lending marketplace ETHLend. The release introduces the capability for the ETHLend users to use their Bitcoin holdings as a collateral to borrow funds for spending.

Exclusive: P2P firm shuts platform (AltFi), Rated: B

The UK Bond Network, a p2p platform for corporate bonds, is closing as of today Monday 4 February 2019, according to the firm.

China

From private bank client to farmer: a Chinese model of social lending (Euromoney), Rated: AAA

Financial services group CreditEase runs an app through which its private banking clients can be connected to needy women farmers in China’s rural interior. It’s a remarkable initiative taken up by 200,000 farmers and shows what can be done with low-level credit. But how does the risk management work?

European Union

PayPal backed fintech Raisin raises $ 114m (Financial Times), Rated: AAA

German financial technology group Raisin has raised $114m in new funding from high-profile backers including Index Ventures and PayPal, in one of the largest fundraisings to date in Europe’s emerging “wealth tech” space.

ING Bridges Dutch SMBs To Funding Options (PYMNTS), Rated: A

Dutch bank ING is linking its small business (SMB) customers to alternative lending marketplace Funding Options, the firms said on Monday (Feb. 4).

The partnership means Funding Options has launched services in the Netherlands, expanding beyond the U.K. for the first time, said reports in Crowdfund Insider. Approximately 1.8 million SMBs in the Netherlands will gain access to Funding Options via ING Bank.

The Irish fintech startups disrupting their industries (Irish Times), Rated: A

Also based at NOVA is Initiative Ireland which aims to give cautious investors lower-risk access to the Irish property market. With poor interest rates, investors face the perennial problem of what to do with their money. Risk takers will always have options, cautious investors less so, and this is Initiative Ireland’s sweet spot. It is offering returns in the order of six to eight per cent to those investing in its novel peer-to-peer lending platform for developers building social and affordable housing.

Banco BNI Europa, NDGIT accelerate PSD2 and Open Banking in Europe (The Paypers), Rated: A

The European challenger bank in Portugal, Banco BNI Europa, has become a customer of NDGIT, provider of the API platform for banking and insurance in Europe.

BNI Europa implements “PSD2 Ready”, NDGIT’s smart standardized software solution following the Berlin Group RTS standard, to fulfil all PSD2 requirements. This cooperation is a milestone for the future development of Open Banking in Europe and for BNI Europa the next step in their company’s development.

International

International P2P Lending Volumes January 2019 (P2P-Banking), Rated: AAA

Milestones achieved this month (total volume since launch):

Source: P2P-Banking

Global regulators are struggling to define fintech credit (Business Insider), Rated: AAA

While many jurisdictions have highlighted fintech credit as a key development in the nonbank financial space over the last year, they struggle to define exactly what fintech credit is, per findings of the Financial Stability Board’s (FSB’s) Global Monitoring Report on Non-Bank Financial Intermediation 2018.

Source: Business Insider Intelligence

Why VC Is The Answer To Falling Returns (Forbes), Rated: A

In uncertain times, VC offers the advantage that its performance is completely uncorrelated with public equity markets. Last year, both the US and Europe saw record VC investment, reaching over 

Technology has opened up access to banking but can it stop the unbanked from falling through the cracks? (Tearsheet), Rated: A

Those of us who work in finance can’t imagine life without a bank account. But for the world’s 1.7 billion unbanked adults, this is a reality. In the U.S., 33.5 million households are either unbanked or underbanked and lack the ability, criteria, or financial literacy to access banking services. Without access to savings and credit, these people often live — and remain — in a cycle of poverty.

In the U.S., nearly 95 percent of adults have a mobile phone and 80 percent of those are smartphones. And since they’re not tied to traditional banking norms such as branches, ATMs, and credit cards, the unbanked are more likely to adopt digital banking via their phones.

TymeBank in South Africa uses AI to help people learn about their money and how to save. It teaches people about credit scores and rewards them for good financial behavior — TymeBank offers an amazing 10 percent interest rate on savings accounts for customers who can define specific financial goals they want to hit, and then contribute to them.

Sancus to start accepting euros and dollars to fund loans (P2P Finance News), Rated: A

SANCUS will start accepting euro-denominated loans within the next few months, to help it expand its investor base.

The alternative business finance provider is also planning to establish a new base in the Cayman Islands by the end of 2019, a move which would allow it to accept dollar-denominated investments as well.

Revolut team ups with WeWork (AltFi), Rated: B

The new partnership will provide Revolut for Business customers with 3 months free of hot-desk space at a WeWork co-working space.

Australia

Australia’s getting wiser says Wisr in new campaign targeting disillusioned big bank customers (Mumbrella), Rated: A

Peer to peer lending service provider Wisr has targeted disillusioned big bank customers in its new ad campaign.

APAC

Diversify investments in P2P lending, youths urged (The Star), Rated: AAA

Technology-driven peer-to-peer (P2P) lending is becoming a popular investment choice among young investors, but the anticipated slowdown in the economy this year also raises the risk of losing money.

To protect their investment, a P2P financing platform operator said that investors should spread their investment into as many deals as possible.

Africa

DexAge – A Versatile Crypto-Trading Solution (Blockmanity), Rated: AAA

The P2P Crypto loan services allow users to retain their assets in case they predict the concerned cryptocurrency value might appreciate in the future. DexAge enables users to stake their crypto assets as collateral and acquire a loan of the same value to expand their investment profile.

Canada

Vancouver’s First P2P OTC Digital Trading Platform Officially Launched and Supported by Huobi Cloud Technology (Digital Journal), Rated: AAA

iBank Digital Asset L.P. (“iBank Digital”, “iBankEx” or the “Company”) has officially launched Vancouver’s first peer-to-peer (P2P) OTC digital currency trading platform on iBankEx. (www.ibankex.io) This launch is supported by Huobi Cloud (“Huobi Cloud”) technology, which has officially entered the Canadian market in 2019 with 120 exchanges around the world.

iBank Products & Services:

Fiat Lending – A decentralized global lending network connecting financial institutions worldwide by offering crypto backed loan business.

Crypto Lending – iBank provides crypto loans collateralized by your crypto assets in BTC/USDT with security and confidentiality.

Authors:

George Popescu
Allen Taylor

The post Thursday February 7 2019, Weekly News Digest appeared first on Lending Times.

Wednesday January 11 2017, Daily News Digest

payday lenders and French crowdfunders

News Comments Today’s main news: French crowdfunding leaders make 2017 wish list. Today’s main analysis: California Supreme Court says payday lending businesses are not arms of the tribes. Today’s thought-provoking articles: UangTeman adopts P2P, OJK bars balance-sheet lending. United States California Supreme Court denies tribal sovereignty immunity for payday lenders. GP:” The tribal structure is […]

payday lenders and French crowdfunders

News Comments

United States

  • California Supreme Court denies tribal sovereignty immunity for payday lenders. GP:” The tribal structure is not very popular in the marketplace lending space. Therefore I don’t think this is a big deal.” AT: “The important sticking point here is structure. If tribes want sovereignty immunity, then they must act sovereignly. That means no partnerships with non-tribal entities, evidently. More interestingly, there could be stark implications for marketplace lenders across the board: Pay attention to structure.”
  • Why the unbanked are unbanked, and what can be done about it. AT: “Smartphones. Interestingly, Jaimie Anzelone points out that the unbanked are not necessarily unbanked out of necessity. It’s a choice. She encourages FinTech leaders to meet them where they play–on their phones. I can’t disagree, but it does involve winning their trust.”
  • How will marketplace lenders fare in an economic downturn? GP:” I believe it’s all about underwriting quality and sticky funding.” AT: “Quite a legitimate question. My guess is, some will thrive and others dive.”
  • Will banking disappear? GP:  ” Banking will not dissapear. The tools we use for banking will change.” AT: “A bit of hyperbole. In reality, banking will have to change, and we see it happening now as we speak. The question is, will banks go completely digital?”
  • Capital One encourages SME FinTech adoption.

European Union

India

Canada

Asia

United States

California Supreme Court Declines to Extend Tribal Sovereign Immunity to Payday Lending Businesses (JD Supra), Rated: AAA

On December 22, 2016, the California Supreme Court issued People ex rel. Owen v. Miami Nation Enterprises. The decision found that certain tribal business entities that provided loans in California are not “arms of the tribe” entitled to immunity from California state law regulating payday loans.

In 2005, two federally recognized tribes, the Miami Tribe of Oklahoma and the Santee Sioux Nation, created business entities under tribal law for the purpose of offering online payday loans throughout the country. These tribal entities hired a series of management companies to operate their payday lending businesses.

In 2007, the State of California sued the tribal entities for violating state law by providing payday loans without a license and exceeding statutory limits on the size of the loans and related fees. A state Court of Appeal sided with the tribal entities, concluding that they shared the tribes’ immunity because of several formal ties.

The California Supreme Court reversed. The court first announced a five-factor test for determining whether a tribal business entity is entitled to sovereign immunity as an “arm of the tribe.” California courts must consider “(1) the entity’s method of creation, (2) whether the tribe intended the entity to share in its immunity, (3) the entity’s purpose, (4) the tribe’s control over the entity, and (5) the financial relationship between the tribe and the entity.”

The California Supreme Court’s decision is notable for its potential impact on the marketplace lending industry and the body of law that governs the applicability of state usury and consumer protection law to marketplace lending models.

  • Moreover, it may be more difficult for a tribal entity to establish immunity under this test than it is for a marketplace lender to demonstrate entitlement to federal preemption under the National Bank Act or Depository Institutions Deregulation and Monetary Control Act. If so, this could influence marketplace lenders either to pursue a special purpose national bank charter or to coalesce around a bank partnership model instead of a tribal lending model.
  • The payday lending arrangements, by contrast, eliminated part of that risk by guaranteeing a minimum monthly payment to the tribal entities. This suggests that an important touchstone in the tribal immunity analysis will continue to be the exposure to business-related risk the various parties bear in a lending arrangement.
  • The California Supreme Court’s approach to tribal immunity arguably mirrors recent decisions applying the so-called “true lender” doctrine to analyze not just formal, but also functional aspects of a marketplace lending arrangement in determining the applicability of state law. Relevant to the court’s decision in this case were the tribe’s limited ongoing financial stake and limited actual control over lending decisions. This substance-over-form approach parallels the analysis in cases like Consumer Financial Protection Bureau v. CashCall (covered here) and diverges from the focus on the formal nature of the lending partnership in Beechum v. Navient Solutions, Inc. (covered here).

Using FinTech to Level the Financial Playing Field (Finextra), Rated: A

Individuals without bank accounts, or the “unbanked” as they’ve been unceremoniously dubbed, account for 7% of all Americans. Without a bank account, they are disconnected from the financial ecosystem, making it hard to become financially stable, save, build credit history, safely transfer money, take out a loan or seek financial advice.  Dangerous stereotypes lead us to believe that the unbanked are poor, uneducated and trapped in a cycle of living paycheck to paycheck. The truth is, this overlooked demographic remains unbanked for practical reasons:

  • It’s Expensive to Maintain a Bank Account – Average fees to maintain a checking account have tripled in the last four years. Today, most banks require a minimum balance or direct deposit to keep an account open or these fees from being waived.
  • Lack of Trust in Banks – Straight forward pricing is important to a consumer, but banks lack transparency and uniformity, especially when it comes to fees.
  • Check Cashing Services = Convenient & Easy – While they do charge a service fee at a high rate, the fees are clearly listed and visible for the consumer to see. This builds the trust and familiarity with consumers that has proven difficult for banks to achieve.
  • They Just Don’t Want a Bank Account – Enough said.

A 2015 study conducted by the Federal Reserve System found that 40% of unbanked Americans have access to a smartphone. This high rate of mobile penetration presents a huge opportunity for FinTech to revolutionize the position of the unbanked in the financial ecosystem.

How will fintech lenders cope with an economic downturn? (Econsultancy), Rated: A

Today, non-bank lenders, many of them generating leads and conducting business primarily or exclusively online, are big players in the lending markets, in many cases having taken market share from banks.

These include direct lenders like Sofi, Avant and OnDeck Capital, as well as marketplace lenders like LendingClub and Prosper.

Not only have fintech lenders brought much if not all of the loan application process online, they created user experiences that made it easy for consumers and business owners to complete that loan application process quickly and without hassle.

Many fintech lenders have developed their own proprietary lending models, which are often different than those traditionally used by bank lenders. Some boast of using thousands of data points to evaluate borrowers and even relying very little on credit scores from the major credit bureaus.

But there’s a problem: the vast bulk of the loans fintech lenders have issued were issued after the Great Recession, and thus, the underwriting models they have been using haven’t been battle tested against an economic downturn.

According to Bloomberg, several bonds issued by Avant, an online lender that offers personal loans, have breached or are expected to soon breach delinquency or default triggers for the first time ever.

But given that non-bank lenders have been among the most willing to lend to borrowers that wouldn’t pass muster with banks, it’s entirely possible that they could be at greater risk for loss than most have anticipated when the next recession hits.

If that happens, it could offer bank lenders an opportunity to win back business they have ceded in the past eight years by applying some of the fintech lenders’ innovations around user experience.

Banking ‘Disappears,’ and Other Fintech Predictions for ’17 (American Banker), Rated: A

Whether it’s through IoT devices, fintech platforms, virtual assistants or chatbots, people will likely spend more time connecting to their money through such channels and less time directly interacting with their banks.

APIs “will serve as the keystone joining fintech companies and financial institutions to accelerate banking’s digital transformation and better meet the shifting demands of consumers,” Suresh Ramamurthi, chairman and chief technology officer of CBW Bank in Weir, Kan., said in an email. “2017 will also see open APIs support a ‘marketplace approach’ to banking that will empower financial institutions to develop services that better anticipate emerging market needs across multiple business verticals, delivering tangible value to both businesses and consumers.”

In its predictions for 2017, the core systems provider Jack Henry noted that the adoption of digital channels for small-business banking presents “a way to drive revenue from the self-service revolution.” In other words, the more digital a banks can make its small-business banking unit, the more it can fatten a thin-margin business. Digital services bring efficiency to the business, but digital platforms also allow banks to incorporate other fee-based services to their lineup.

One of the reasons banks are looking to improve their digital products for business is to bring them to parity with consumer products. Entrepreneurs and business leaders often complain that the digital products they use in their business life pale in comparison to those they use in their personal life.

Capital One Collaborates To Encourage SME FinTech Adoption (PYMNTS.com), Rated: B

Capital One Spark Business is today announcing a new effort to push SMEs over the edge from being interested in FinTech to actually adopting it. The unit is now looking to establish an ecosystem of SME FinTech partners — the first of which, announced today (Jan. 10), are business payments firm Bill.com and SME HR company Gusto.

European Union

French Crowdfunding Leaders Predict Strong Market Growth, Call for Better Investor Tax Incentives in 2017 (Crowdfund Insider), Rated: AAA

France is the second largest European crowdfunding market after the UK. We asked the CEOs of France’s leading crowdlending and crowdinvesting platforms to share their hopes, wishes and predictions for the sector in 2017.

Stéphanie Savel, CEO of equity crowdfunding platform WiSeed

“The challenge faced by the French crowdfunding sector, and in particular by the equity crowdfunding, is to demonstrate its capacity to channel French consumer savings towards productive investments.”

Vincent Ricordeau, CEO of reward-based crowdfunding platform KissKissBankBank and crowdlending platforms HelloMerci and Lendopolis

“The change I would like to see is that platform regulation and investor taxation become as favorable for crowdfunding in France as they are in the UK.”

Olivier Goy, CEO of crowdlending platform Lendix

“We believe that 2017 will comfort crowdlending as an actual alternative for business finance. One or more platforms (including Lendix, of course !) will pass the milestone of financing €100 million worth of loans in a single year.”

Thomas de Bourayne, CEO of crowdlending platform Credit.fr

“In the same vein, closing good partnerships with traditional banks and institutional investors will be key. Any government measure that will help directing French savings towards SMEs through crowdfunding platforms will be the icing on the cake.”

Nicolas Lesur, CEO of crowdlending platform Unilend & Chairman of the Board of the French Crowdfunding Association.

“Disappointment with traditional asset classes will drive a growing number of retail investors to turn to crowdlending for better returns and stronger social and economic impact.”

Joachim Dupont, CEO of equity crowdfunding platform Anaxago

“In 2017, the higher returns as well as the depth, breadth, and quality of the assets it offers to investors, will enable crowdfunding to gain more visibility and reach new highs.”

Alex Raguet, CEO of green equity crowdfunding platform Lumo & Chairman of the Board of the European Crowdfunding Network

“The change I would like to see for the French crowdfunding sector is stronger tax incentives for crowdfunding investors, in line with those offered in the UK.”

Top fintech trends in Sweden in 2017 (Computer Weekly), Rated: B

Sweden has grown into one of Europe’s major fintech hotspots, with Stockholm-based payments companies Klarna (valued at $2.25bn) and iZettle ($500bn) leading the way.

The goal of the new directive is to level the competitive playing field, make payment services more secure and promote innovation. Key to these plans is the requirement for banks to open up their application programming interfaces (APIs) for qualifying payment service providers to access.

David Fock, CPO at Klarna, said personalisation through artificial intelligence (AI) and deep learning would be key trend for Sweden’s fintech sector.

India

Fintech startups flourish in 2016, mostly in lending (The Jakarta Post), Rated: B

As many as 135 fintech startups emerged as of December last year compared to only 51 in the first quarter of the year, OJK strategic management deputy commissioner Imansyah told a press briefing on Tuesday.

The OJK has yet to identify the types of fintech services the flourishing startups offer, with products ranging from payment, lending, insurance to capital markets.

“But most of them are P2P lenders,” Imansyah added.

Total transactions within the fintech platforms are forecast to reach US$37.15 billion in 2021, from $15.02 billion forecast in 2016, representing around 19.8 percent growth rate per year during the period, according to data from market statistics portal Statista. (est)

Canada

Mobetize Mobile smartLoan Platform to Include Real-Time Social Biometrics Identity Verification (Military Technologies), Rated: A

Mobetize Corp. (OTCQB:MPAY), a provider of mobile financial services (MFS) technology for the multi-billion dollar business to business (B2B) segment of the Fintech as a Service (FAAS) sector, is pleased to announce it has implemented real-time social biometric Digital Identity Verification to enhance Know Your Customer (“KYC”) capabilities to counter online identity fraud for its smartLoan platform.

Our solution will be to analyze social behavioural patterns using an artificial intelligence system together with proprietary machine learning algorithms to determine whether an online identity is authentic, a fraudster or a bot.

Katipult selected as 1 of 6 firms for Hong Kong FinTech mission (Digital Journal), Rated: A

After completing a highly competitive application process, Katipult and five other Canadian fintech companies are selected to participate in the Canadian Fintech Mission to Hong Kong on January 15th – 20th!

Katipult is looking to expand its presence in Asia while already boasting a regional sales office and clients in Singapore, Thailand, Indonesia, and Malaysia.

Asia

UangTeman to Adopt Peer-to-Peer Service as OJK Bars Balance-Sheet Lending (Jakarta Globe), Rated: AAA

UangTeman, Indonesia’s first online lending service, is set to change its business model to peer-to-peer lending to comply with the Financial Services Authority’s latest, a top executive said on Tuesday (10/01).

UangTeman is among the local fintechs who use a balance sheet lending model, meaning it distributes funds from its own pocket instead of passing funds from individual or business lenders in a peer-to-peer business model.

Zulkifli’s comments came as a response to OJK’s latest regulation on financial technology released Dec. 29. The regulation forbids any financial technology companies to loan out its own money, to prevent them prying on best debtors from traditional financial firms and banks.

Campfire closes $ 2.9m investment to fund social lending expansion (Deal Street Asia), Rated: A

Tokyo-based crowdfunding site Campfire, which is expanding into the social lending space, has closed a 330 million yen (~$2.9 million) funding round.

To date, crowdfinance in Japan is dominated by the likes of cross-border lending marketplace Crowdcredit and peer-to-peer (P2P) lending platform Maneo, which possesses a first mover advantage given its inception in 2008 and its use of a franchise model that allows people to wihtelabel it.

Coinciding with the investment, Campfire has named Taniya, the founder and chairman of Japanese robo-advisory startup Money Design, as well as someone with expertise in the financial robo-advisory space, as its new chairman while Yusuke Sato, the CEO of Freakout Holdings, and Antonio Kamiya, the CTO of listed firm Fujisan Magazine Service, have joined the company as external directors.They have also added a chief information officer, Hiroue Harada.

An analysis by the Lending Times, a publication covering developments in the alternative investments space, P2P lending has faced slow growth in Japan due to a substantial number of lending options available to consumers, with banks possessing an average lending rate of less than 2 per cent and loan to deposit ratio estimated at 70 per cent.

Authors:

George Popescu
Allen Taylor