- Today’s main news: Consumer Financial Protection Bureau (CFPB) to sue Santander. Welendus surpasses 150K GBP fundraising target. Klarna’s profits increase. The CFPB leadership fight migrates to email. Chinese regulator looks at online lender custodian banks. ETHLend, Brickblock partner on blockchain lending.
- Today’s main analysis: Everything you need to know about the P2P lending market in New Zealand.
- Today’s thought-provoking articles: Cards, bank loans, and alt finance ease SMBs’ funding woes. Workers get faster access to wages with new payments apps. Only 1 in 5 save due to lack of financial advice. ETHLend, Brickblock partner on blockchain lending. Indian banks assess credit risk on smartphones.
- CFPB to sue Santander over auto protection product. AT: “Are you starting to get the idea that the Consumer Financial Protection Bureau was set up expressly to deal flesh wounds to financial services providers?”
- Cards, bank loans, and alternative finance eases SMBs’ fundraising efforts. AT: “Some interesting stats from research projects by Biz2Credit, Reliant Funding, and Mercator.”
- Workers get almost instant access to wages with payday apps. AT: “This is interesting. The future labor market could become more competitive based on how quickly employers can promise to pay their employees. Will we see the day where employees get paid by the hour on the hour for work accomplished. How about by the minute, or real-time payments?”
- Mulvaney, English both take charge of CFPB by email. AT: “This is a silly little feud that no one can win. It would be better if the Dems cede the fight to the Trump Administration, since ultimately he will get to choose Cordray’s successor anyway. Take it up in the next election battle.”
- LendEDU rates gift cards.
- Immigrant lending clubs are older than the U.S. banking system.
- Merton on fintech.
- Welendus surpasses 150K GBP funding goal. AT: “Congratulations. It’s been less than a week.”
- 1 in 5 savers save less due to lack of financial advice.
- Lendable signs 300M GBP loan deal with Castle Trust.
- London bankers, including Atom CTO, partner on digital bank.
- Open Banking to unlock the door for digita-only banks. AT: “This is a wait-and-see. Open Banking is scheduled to go into effect in January. I don’t think we’ll see a wave of digital-only banks right away. I can see a long-term trend of growing interest in them by consumers as they learn about them.”
- The housing shortage is not someone else’s problem, says LendInvest.
- Startups stress over Brexit and ping pong. AT: “This is more about ping pong, but there are some interesting points scattered throughout.”
- Regulator assess online lender custodian banks.
- Credit information platform promises to make credit more accessible.
- LexinFintech IPO on shaky ground.
- Klarna profits on the increase.
- EU rules will increase competition between fintechs and banks.
- Flender closing in on 2M Euro raise.
- All you need to know about P2P lending in New Zealand. AT: “The best read of the day.”
- The Financial Markets Authority’s report on P2P lending.
- Valuiza to study financial advice.
- RateSetter, Bigstone favor tighter regulation of lending.
- United States
- CFPB Set To Sue Santander Over Auto Protection Product (PYMNTS), Rated: AAA
- Cards, Bank Loans And AltFin Easing SMBs’ Search For Financing (PYMNTS), Rated: AAA
- Workers Get Faster Access to Wages With These New Apps (WSJ), Rated: AAA
- Mulvaney Shows Up For Work At Consumer Watchdog Group, As Leadership Feud Deepens (NPR), Rated: A
- Picking the best gift card this holiday season (Consumer Affairs), Rated: A
- Immigrant lending clubs provide capital, at a cost (Marketplace.org), Rated: A
- MERTON ON FINTECH, RETIREMENT, MORE (Top 1000 Funds), Rated: B
- United Kingdom
- Short Term P2P Lender Welendus Surpasses £150,000 Funding Target Through Latest Seedrs Round (Crowdfund Insider), Rated: AAA
- One in five save less because they can’t get advice (FT Adviser), Rated: AAA
- P2P Lender Lendable Signs £300 Million Loan Deal With Castle Trust (Crowdfund Insider), Rated: A
- City veterans aim for ‘Google of finance’ with new digital bank (The Telegraph), Rated: A
- Open Banking Will Unlock the Door for Digital-Only Banks (AltFi), Rated: A
- Addressing the housing shortage is not someone else’s problem (Mortgage Strategy), Rated: A
- London’s Startups Stress Out Over Brexit—and Ping Pong (Bloomberg), Rated: A
- Regulator Assessing Custodian Banks for Online Lenders (Caixin), Rated: AAA
- Credit information platform will lift safeguards (China Daily), Rated: A
- Chinese Online Lender’s IPO On Shaky Ground (PYMNTS), Rated: A
- European Union
- Swedish payment services firm Klarna posts profit rise (Reuters), Rated: AAA
- New EU rules increases competition and security between banks and fintech (Independent), Rated: A
- Irish P2P Flender Close to Raising Over €2 Million Through Latest Funding Round (Crowdfund Insider), Rated: A
- ETHLend and Brickblock team up for lending on the blockchain (Finextra), Rated: AAA
- Australia/New Zealand
- Everything you need to know about the P2P lending market (Interest), Rated: AAA
- FMA publishes benchmark P2P lending, crowdfunding figures (Scoop), Rated: A
- Fintech firm to undertake study into financial advice (SMSFAdviser), Rated: A
- Fintechs back tighter regulation of lending to small guys (The Australian), Rated: B
- Are You a Credit Risk? Indian Banks Dig Deep in Your Phone to Find Out (WSJ), Rated: AAA
- What does India’s fintech leader of the year have on her mind? (YourStory), Rated: A
- Japan insurer Sompo sets up fintech base in Tel Aviv (Reuters), Rated: A
- Fintech firm Ovamba moves into African commodities exports (Global Trade Review), Rated: AAA
CFPB Set To Sue Santander Over Auto Protection Product (PYMNTS), Rated: AAA
The Consumer Financial Protection Bureau (CFPB) is gearing up to sue Spain-based Santander Bank, claiming the bank has overcharged its car loan customers.
Citing sources familiar with the CFPB’s plans, Reuters reported that the CFPB suit could happen as soon as Monday (Nov. 27). The lawsuit is focused on Santander’s guaranteed auto protection financial product that protects car buyers from a portion of the cost if there is a serious crash.
Auto lending is big business for Santander, representing $38.5 billion of the bank holding company’s $137 billion in assets.
Cards, Bank Loans And AltFin Easing SMBs’ Search For Financing (PYMNTS), Rated: AAA
New reports from Biz2Credit, Reliant Funding and Mercator take a look at how small businesses are accessing external financing towards the end of the year as the holiday rush descends.
25 percent of SMB loan applications at large banks were approved in October, according to the latest research from Biz2Credit. That means large banks (with $10 billion-plus in assets) have boosted their SMB loan approval rates to a new post-recession high, researchers said.
56.8 percent of SMB loan applications were approved by alternative lenders, according to Biz2Credit.
12 percent of SMB owners told Reliant Funding they are aware of alternative lending and have used it. Nearly half said they are at least familiar with alternative lending. 39 percent of SMB owners told Reliant that they have never even heard of alternative lending.
42 percent of SMBs that use alternative finance say they use it to buy inventory, while more than one-fifth said they use it to replace or buy new equipment. One-fifth also said they use it for marketing initiatives, Reliant Funding found.
Workers Get Faster Access to Wages With These New Apps (WSJ), Rated: AAA
Uber Technologies Inc., McDonald’s Corp. and Bloomin’ Brands Inc.’sOutback Steakhouse are among a growing group of employers giving workers near-instant access to their wages through payday apps.
New tools that allow people to spend the money they just earned have provided some workers an alternative to short-term, high-interest loans, say the technology startups offering the services. The payment plan also can boost employee attendance and tenure, managers say.
Daily payments could help some workers smooth out the financial volatility of fluctuating work schedules and income, economists say.
President Trump’s pick to lead the consumer watchdog, Mick Mulvaney, arrived at the office early Monday morning with a bag of Dunkin’ Donuts in hand. Mulvaney, the director of the Office of Management and Budget, is the acting director of the group until Trump can get a permanent leader through the Senate confirmation process — at least, according to the Trump administration.
But the former head of the CFPB, Richard Cordray, appointed Leandra English to lead the group following his departure. English has since filed a complaint in U.S. district court in Washington, D.C., to block the Trump administration’s rival appointment.
On Monday morning, English was communicating with CFPB staff through an all-staff email — a Thanksgiving message expressing gratitude and saying it was an “honor” to work with her colleagues.
Mulvaney, meanwhile, sent a competing all-staff, advising staff to “please disregard” messages from English in her “presumed capacity as Acting Director.”
Picking the best gift card this holiday season (Consumer Affairs), Rated: A
Online student loan marketplace LendEDU has ranked the best gift cards, pointing out the attributes that make one gift card a better choice than another.
According to LendEDU, roughly $1 billion in gift cards sold last year were not redeemed.
“The most important question to consider when buying a gift card is this: Is it versatile?” he told ConsumerAffairs.
Another important consideration, Brown says, is a gift card’s resale value. The recipient might rather sell the card for cash on one of the many gift card exchanges. The most popular gift cards often sell for 80 to 90 cents on the dollar, while less popular cards can go for half their face value or less.
A LendEDU poll of consumers found that 78.7 percent of consumers plan on giving at least one gift card this holiday season and 75.6 percent of consumers would rather receive a gift card than an actual gift.
Immigrant lending clubs provide capital, at a cost (Marketplace.org), Rated: A
When Chinese immigrants in Brooklyn’s Sunset Park have problems — legal, financial, marital — they come to see John Chan.
Lately, they’ve been coming to John Chan about money — specifically the collapse of informal lending clubs known as “biao hui.”
Biao hui are essentially informal banks made up of immigrants lending money to each other. A group — in China, this would traditionally be a group of close friends or relatives —gets together and throws money in the pot. One person acts as the organizer or banker and the money is then lent out on a rotating basis, with varying interest rates depending on how much money is needed, and when a person needs it.
But in New York City this year, two biao hui worth a combined $22 million collapsed.
MERTON ON FINTECH, RETIREMENT, MORE (Top 1000 Funds), Rated: B
“Fintech will do a lot of good things, and help us, but it won’t do many of the things people are talking about, or it’s not going to do them well.”
Short Term P2P Lender Welendus Surpasses £150,000 Funding Target Through Latest Seedrs Round (Crowdfund Insider), Rated: AAA
Less than a week after launching its latest equity crowdfunding campaign on Seedrs, short-term peer-to-peer lending platform Welendus has successfully secured its initial 150,000 funding target from more than 100 investors.
One in five save less because they can’t get advice (FT Adviser), Rated: AAA
More than one in five are saving or investing less because they cannot access advice on how to handle their money, research for the Nottingham Building Society has suggested.
The study found 21 per cent of adults believe they are not saving as much as they could and would be able to put away an extra £134 a month on average if they could get financial advice – the equivalent of more than £1,600 or three weeks’ average earnings before tax.
The research showed younger savers and investors were affected most by this, with nearly one in three (30 per cent) of under-35s believing they were not saving enough because of a lack of advice compared with just 12 per cent of over-55s.
P2P Lender Lendable Signs £300 Million Loan Deal With Castle Trust (Crowdfund Insider), Rated: A
According to AltFi, the agreement with Lendable is Castle Trust’s second major transaction in the alternative finance industry this year.
City veterans aim for ‘Google of finance’ with new digital bank (The Telegraph), Rated: A
Three senior City bankers are masterminding the launch of a new digital bank focused on shaking up the UK savings market.
The trio is led by Huy Nguyen Trieu, a fintech entrepreneur who led a capital markets team at US bank Citi in London until quitting last summer. He is working on the project with his former colleague Lionel Durix, who remains in a senior Citi role, and Paul Hanks, the former chief technology officer of UK digital bank Atom.
They plan to launch a mobile savings app that uses artificial intelligence to give savers tailored advice and offers “risk-free” products such as Isas and high interest rate savings accounts to help them reach their financial goals.
Open Banking Will Unlock the Door for Digital-Only Banks (AltFi), Rated: A
Yet in parallel to this, there is a growing cohort of digital-only banks that are bucking the trend – the most famous of which include Monzo, Atom Bank and Starling Bank. Not only do they have different client service delivery models, they have cultivated a customer base that is highly supportive and engaged.
But while Monzo has acquired over 400,000 customers for its pre-paid card since 2015, as Barclays has seen over 142,000 customers switch from its current account over a similar period – digital-only banks still remain relatively unknown.
Yet Open Banking – set to launch on January 13th – stands to change this.
Addressing the housing shortage is not someone else’s problem (Mortgage Strategy), Rated: A
Last September we launched our first LendInvest Property Development Academy. A year on, it’s fair to say that the response has been overwhelming.
For too long, the housebuilding crisis has been someone else’s problem. It’s been up to the big builders to get on with, or whichever ambitious politician has been handed the housing brief this week. And let’s be honest, that strategy has been an abject failure, lacking in direction and impetus.
No, if we are going to tackle the shortage of homes across the UK, we need to recognise that it is something we can all play a part in. So if the big builders on their own are unable to build the homes the nation needs, we must do more to cultivate a generation of smaller builders, taking on more modest but no less meaningful projects. A wider source of housing developers will inevitably mean more homes are built.
London’s Startups Stress Out Over Brexit—and Ping Pong (Bloomberg), Rated: A
For all of the cheer and hip-hop thumping throughout the hall, there was an unmistakable undercurrent of anxiety this year as London’s tech community reckoned with the coming of Brexit.
“It isn’t just that we’re at risk of losing our engineering talent,” Meekings said, half-joking. “We might lose our ping-pong stars as well.”
More than 30 percent of Funding Circle’s London employees are non-British EU nationals. Ever since the company was founded in 2010, many have gravitated to the ping-pong table that co-founder Samir Desai set up in its lobby, next to a cabinet that has steadily filled up with trophies. Funding Circle is one of four companies Bloomberg is following through the Brexit process.
The deals showed that even as Brexit dents the U.K. economy, the fledgling online-lending industry continues to grow. In the third quarter, Funding Circle arranged 114 million pounds in net lending to its borrowers. That surpassed comparable loans by U.K. banks, on a combined basis, for the first time.
Regulator Assessing Custodian Banks for Online Lenders (Caixin), Rated: AAA
A national inspection team, led by the China Banking Regulatory Commission (CBRC), has recently asked local authorities that supervise online lending to assess commercial banks appointed by P2P platforms to provide custodian services for investors’ funds, multiple bank employees told Caixin.
Credit information platform will lift safeguards (China Daily), Rated: A
The National Internet Finance Association of China recently passed a resolution to jointly launch a personal credit information platform with eight third-party credit service agencies.
The NIFA will hold a 36 percent stake in the forthcoming platform, which is expected to have registered capital of 1 billion yuan ($152 million), and it will invest no more than 360 million yuan in the platform within five years.
The platform will mainly serve online personal lending institutions, in addition to other market players including traditional commercial banks, regulators and third-party credit service agencies.
Chinese Online Lender’s IPO On Shaky Ground (PYMNTS), Rated: A
LexinFintech Holdings Ltd., operator of China’s leading online lender Fenqile, was slated to meet with advisers over the weekend to decide if it will go ahead with a proposed initial public offering (IPO) in the U.S.
According to Bloomberg reports, the company is expected to decide soon if it should launch a roadshow for its IPO or wait until a later time to go public.
Swedish payment services firm Klarna posts profit rise (Reuters), Rated: AAA
Swedish online payment services firm Klarna, one of Europe’s highest-valued tech startups, on Monday reported sharply higher revenues and earnings for the first nine months of 2017.
Klarna said in a statement its sales rose 24 percent year-on-year to 3.16 billion Swedish crowns ($382 million) in January through September while net earnings climbed 75 percent to 349 million.
New EU rules increases competition and security between banks and fintech (Independent), Rated: A
The European Commission approved rules on Monday to increase competition and toughen up security in how people pay for goods and services across the European Union, pitting banks against financial technology firms.
The rules flesh out an update to the bloc’s payment services law and are among the most disputed in recent financial regulation, sparking intense lobbying as banks and fintech firms clashed over access to customer data.
The revised law comes into force on 13 January, though some of the security elements approved on Monday won’t be binding until September 2019 to give banks and fintech firms time to adjust.
Irish P2P Flender Close to Raising Over €2 Million Through Latest Funding Round (Crowdfund Insider), Rated: A
Irish peer-to-peer lender Flender has reported attracted close to more than €2 million through its latest funding round. This news comes less than a year after the lending platform secured £501,700 through its equity crowdfunding campaign on Seedrs.
ETHLend and Brickblock team up for lending on the blockchain (Finextra), Rated: AAA
ETHLend and Brickblock are announcing a strategic partnership to explore the possibilities of lending with Blockchain technology.
A primary focus will be on the tokenization of assets to simplify lending and bring secure real-world assets into the lending procedure as collateral.
The application is ideal for token holders who are in need for liquidity and those who want to participate in a free lending market. Instead of selling and closing a token position, a borrower can easily pledge digital tokens to receive Ether. Moreover, ETHLend is introducing token lending, which enables profiting from down market by enabling short selling market.
Tokenizing real-world assets such as real estate achieves three disruptive objectives:
- A strong collateral that can be expected to keep its value for a short-medium time period.
- An opportunity for people to collateralise their property with Brickblock, and then using it to secure their loan.
- New investment opportunities for downside market by enabling short selling for tokenized real assets.
Everything you need to know about the P2P lending market (Interest), Rated: AAA
Nearly nine in every 100 loans written through New Zealand’s peer-to-peer (P2P) lending platforms are in arrears, according to the Financial Markets Authority (FMA).
Borrowers responsible for 1,469 loans, worth more than $20 million, are overdue on their loan repayments.
While the bulk of lenders are investing smaller amounts of money (IE under $5,000), 48 have lent an average of $1.54 million each. Totalling $73.84 million, this is equivalent to a quarter of the $289.10 million of loans outstanding (loans that were still within their specified term at the end of the reporting period).
Harmoney – the first P2P lender to launch in New Zealand in 2014 – is also the largest, with 83% of outstanding loans in the market written through its platform.
The FMA’s data also shows there are 207,230 borrowers registered with P2P platforms, 843 of which are repeat borrowers, who have repaid their loans and taken out new ones.
FMA publishes benchmark P2P lending, crowdfunding figures (Scoop), Rated: A
The figures show individuals took out $121 million of new loans in the year ended June 30 through P2P platforms and businesses borrowed $31.5 million with total loans outstanding at $259.6 million and $29.6 million respectively as at June 30. Meanwhile, crowdfunding platforms raised $74.2 million from retail and wholesale investors, with 34 successful offers out of 50 in the year.
The data show peer-to-peer lending still pales in significance to the established lending channels, with $10.89 billion personal consumer loans with banks as at Sept. 30 and a further $6.88 billion with non-bank lenders. Business loans with banks totalled $101.61 billion as at Sept. 30 and$4.59 billion with non-banks. Peer-to-peer lenders had 16,977 outstanding personal loans and 92 business loans as at June 30. In terms of asset quality, 1,469 P2P loans worth $20.4 million were in arrears, or 8.61 percent of total loans outstanding, while 833 loans worth $8.5 million were written off.
Fintech firm to undertake study into financial advice (SMSFAdviser), Rated: A
Fintech firm Valuiza will conduct an Australia-wide study of the state of financial planning by gathering feedback from existing clients of practices to measure their experience and intentions. It is currently inviting advice practices to participate in the study.
The data for the report will be collected during January and February next year with practices able to review the results in real time, he said. The results for individual practices will be confidential.
Are You a Credit Risk? Indian Banks Dig Deep in Your Phone to Find Out (WSJ), Rated: AAA
Indian banks have started mining data on customers’ smartphones for fast loan approval, testing out cutting-edge but controversial technology in what is potentially a huge market for such products.
Long hampered from lending to the hundreds of millions of Indians without credit histories, banks are hoping to slash risk-assessment costs and trigger a new wave of consumer lending with apps that look at everything from Facebook connections to online shopping habits to rate potential borrowers.
India’s most sophisticated banks are working with local and international fintech startups to develop, test and launch a version of a technology used by microlenders in Africa, China and elsewhere.
Commercial banks had around $1.09 trillion of loans outstanding in September, according to the Reserve Bank of India. Of that, about $270 billion were personal loans, a portion whose growth is outpacing the overall loan market.
But about 40% of HDFC’s 8 million and 12 million loan applications a month are from people without credit histories. Most Indians have never had a credit card or taken a home loan.
What does India’s fintech leader of the year have on her mind? (YourStory), Rated: A
Before she co-started one of India’s few digital EMI startups, Lizzie served as the India head for Wonga, the British payday loan company. She then joined Development Bank of Singapore to help launch ‘digibank’, the new mobile-only virtual bank of India. Very recently, the India FinTech Awards 2017 named her Woman Leader in the Fintech category.
“I think fintech, especially in India, is one of the most exciting and biggest opportunities in the world. The opportunity here is not just to build huge valuable businesses, but also make a real impact on people’s lives and the economy. I think fintech is taking off in such a big way because the timing is right. It’s such a HUGE problem to solve, and we finally have all the pieces of the puzzle in place – whether it is KYC, mobile adoption or digital payments,” she added.
“I am biased of course, but I expect to see a lot more focus on payments coupled with credit in the form of ‘Paylater’ solutions, EMI solutions and all things related to transactional credit. This is such a great solution for this market where credit cards don’t make sense but consumers are keen to shop,” Lizzie said.
Japan insurer Sompo sets up fintech base in Tel Aviv (Reuters), Rated: A
Property-and-casualty insurer Sompo Holdings Inc (8630.T) has set up a fintech hub in Israel, becoming the first Japanese insurer to do so in a country where it hopes to tap local expertise in digital and cyber-security technologies.
Fintech firm Ovamba moves into African commodities exports (Global Trade Review), Rated: AAA
Ovamba, a fintech firm that uses blockchain and other new technologies to connect investors with African SMEs, has facilitated a €30mn deal for the purchase and export of cocoa for Cameroonian commodity marketing company Producam.