Tuesday November 20 2018, Daily News Digest

Consumers pick for Robo-Advisory Source

News Comments Today’s main news: Klarna launches Boost. Funding Circle going where banks won’t. Zopa CEO says marketing restrictions appropriate for riskier platforms. ApplePie Capital hits $300M franchise loan milestone. Menē, Affirm partner. Today’s main analysis: SoFi and Prosper Q3 earnings. Today’s thought-provoking articles: LendingClub is healthier than ever. Average homeowner age in U.S. metro areas. Robo-advisors growing. Top 5 emerging […]

Consumers pick for Robo-Advisory Source

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

ApplePie Capital Reaches $ 300 Million Milestone in Franchise Business Loans (Citizen Tribune) Rated: AAA

ApplePie Capital, the first and only online lender dedicated to franchising, announced that it recently surpassed $300 million in loans originated to franchise entrepreneurs opening or expanding their businesses.

SoFi and Prosper 3Q Earnings, Volatility Ahead, PeerIQ’s Lending Earnings Insights (Peer IQ) Rated: AAA

The gap between current and projected financial conditions continues to widen suggesting greater volatility ahead:

Source: PeerIQ, The Daily Shot, St. Louis Federal Reserve

Prosper’s 10Q revealed that the company lost $19.8 Mn in 3Q, a $7.2 Mn improvement YoY. Net revenues declined from $28.9 Mn to $20.7 Mn YoY. Originations declined from $822 Mn to $640 Mn YoY driven by tighter credit guidelines and rising interest rates.

SoFi’s EBITDA loss in Q3 was $12 Mn compared to an EBITDA gain of $56 Mn in Q3 2017. SoFi’s originations were $2.5 Bn, down by 30% YoY. Rising rates have slowed SoFi’s student loan refinancing business and have contributed to the drop in originations. SoFi now has 700 k checking account customers and the company is branching into offering a suite of wealth management services to these customers. SoFi recently closed a $560 Mn line of credit.

Below is a comparison of key financial metrics of Prosper, SoFi, and their publicly-traded counterpart LendingClub.

Source: PeerIQ

LendingClub: Looking Healthier Than Ever (Seeking Alpha) Rated: AAA

Investors are barely noticing it, but LendingClub (LC) continues to pump through another record-setting quarter as the P2P lending platform shores up its core business and boosts its profit targets for the year. Volatility has largely left LendingClub stock; the company has traded in the $3-4 range for the better part of this year as investors have moved on to more exciting names, but in my view, LendingClub is well-positioned for a near-term rebound.

On the back of LendingClub’s strong Q3 report, the company also inched up its guidance for FY18. The forecast now calls for $693 million in revenue and $91.5 million in EBITDA at the midpoint of management’s ranges:

Source: LendingClub

Court appoints lead plaintiffs in class action against LendingClub (Northern California Record) Rated: A

The U.S. District Court for the Northern District of California appointed lead plaintiffs in a class-action suit against LendingClub, alleging the San Francisco-based company tried to artificially inflate securities and defraud investors.

The plaintiffs, under the title LendingClub Investor Group (LIG), include Xiangdong Ding and Zhenbin Chen, who will serve as lead plaintiffs in the suit according to the Nov. 7 ruling. Ding and Chen invested in and allegedly suffered substantial monetary losses as a result of the fraud.

LendingTree Compares Average Homeowner Age Across 100 Largest U.S. Metropolitan Areas (Lending Tree) Rated: AAA

LendingTree set out to find which metro areas have the oldest homeowners. Using data from the U.S. Census Bureau’s American Community Survey, we ranked the 100 largest metropolitan areas by average homeowner age. While some of the rankings aren’t surprising (Florida metros dominate the “old” end of the list), cities popular among millennials aren’t necessarily gaining young homeowners.

Key findings

  • The average age of a homeowner across the 100 largest metropolitan areas in the United States is 54. Only two metros in our analysis — Provo and Ogden, Utah — have an average homeowner age below 50.
  • Homeowners in Florida are older than homeowners in most other states. Seven out of the top 10 metropolitan areas with the highest average homeowner age were in Florida.
  • Homeowners in cities in Utah are among the youngest in the country. Out of the top 10 metropolitan areas with the lowest average age for homeowners, metropolitan areas in Utah — Provo, Ogden and Salt Lake City — held the top three spots.
Source: LendingTree

LendingHome Shines Spotlight on California in First-Ever “State of The Flipping Market” Report (PR Newswire) Rated: A

LendingHome today released a never-before-seen, inside look at localized market statistics based on a combination of LendingHome proprietary data and publicly available real estate records.

LendingHome’s inaugural “State of The Flipping Market” focuses on California which experienced the biggest surge in brand-new house flippers – those who buy, rehabilitate (fix), and resell (flip) residential homes – compared to any other state in 2017. California was also LendingHome’s top state for loan originations in 2017.

LendingHome’s report also pinpoints California’s Top 10 flipping hot spots by county. Ranking first was Los Angeles County, where a whopping 25.71% of all houses purchased were flips. The Top 10 in order:

Source: PR Newswire

Real Estate Crowdfunding Pros Respond to RealtyShares’ Troubles (National Real Estate Investor) Rated: A

Executives at three of RealtyShares’ real estate crowdfunding counterparts—ArborCrowd, CrowdStreet and EquityMultiple—say the collapse of a player like RealtyShares is an unfortunate but inevitable growing pain in an evolving industry. Charles Clinton, co-founder and CEO of EquityMultiple, calls the RealtyShares situation a “natural blip.”

The fall of RealtyShares isn’t “an indicator of the health or the longevity of this industry,” Steen says. “It’s actually an indicator that the industry is maturing. In an industry like this—crowdfunding of commercial real estate—you’re going to have certain business models that survive and certain ones that might not.”

Plastiq Raises $ 27M in Series C Funding (FinSMES) Rated: A

Plastiq, a San Francisco, CA-based provider of a solutions to pay bills by credit card, raised $27m in Series C financing.

The round was led by Kleiner Perkins with participation from DST Global. In conjunction with the funding, Kleiner Perkins general partner, Ilya Fushman, will join the Plastiq Board of Directors.

The company intends to use the funds to accelerate growth and roll out new services, develop and deepen its partnerships with key players in the financial and payments sectors, such as MasterCard and other major card brands.

SuperMoney Launches Student Loan Refinancing Marketplace (Finovate) Rated: A

Financial services comparison site SuperMoney is venturing into new territory this week with the launch of its student loan refinancing comparison marketplace. And since student loans are the largest source of unsecured debt in the U.S., with outstanding loan amounts totaling $1.53 trillion, now is as good a time as ever for the new endeavor.

The new marketplace aims to help students make smarter decisions when refinancing their existing student loans. By submitting a single application, users can receive actual rate quotes in real time from multiple lenders, including LendKey, CommonBond, and SoFi. Each offer transparently shows users a breakdown of monthly costs, payments, and fees so that they can make the best decision based on their circumstances.

7 ways to finance your investment home renovation (AZ Big Media) Rated: A

2. Open a Home Equity Line of Credit – If you’ve been paying down your mortgage for a few years, you’ll have built sizeable equity into your home. Assuming you have decent credit, most banks will give you a line of credit based on that equity.

4. Look into Peer-to-Peer Lending – Peer-to-peer lending is another way to get funding with a comparatively low barrier to entry. Investors put their extra cash into a peer-to-peer lending platform so you borrow from individual investors rather than a bank.

6. Crowdsource the Money – If friends and family are sympathetic to your needs, you may be able to generate funds from them. It’s easy to collect money through crowdsourcing with platforms such as GoFundMe.

Klarna Cuddles Up With Gravity Blanket To Give Consumers The Luxury Of Paying Over Time (PR Newswire) Rated: B

Today, Klarna, a leading global payments provider, announced a new collaboration with Gravity Blanket, creator of weighted blankets and sleep products engineered to naturally reduce stress and increase relaxation. Shoppers will now be able to use Klarna’s Slice it and brand-new Slice it in 4 products, which allow consumers to pay for their products in installments.

ArborCrowd Co-Founder Adam Kaufman Recognized as a HIVE 50 Innovator (AP) Rated: B

ArborCrowd, the only online platform that enables individuals to make equity investments in institutional-quality commercial real estate, announced today that its Co-Founder and Managing Director, Adam Kaufman, was named a HIVE 50 Innovator by Hanley Wood, the premier company serving the information, media, and marketing needs of the residential and commercial design and construction industries.

The prestigious HIVE 50 is made up of the top people, products, and processes that are leading the charge to inspire creativity, improve performance, and explore better ways to build. This year’s honorees were separated into five categories. Mr. Kaufman was selected as one of the top innovators in the “Capital” category for his role in co-founding and leading ArborCrowd, which provides accredited investors with access to institutional-quality real estate investment opportunities.

United Kingdom

Funding Circle Is Going Where Banks Won’t (Barrons) Rated: AAA

One company that isn’t quite doing that is Funding Circle , the platform lending company founded in the U.K. in 2010. After an initial public offering earlier this year, it’s publicly traded on the London Stock Exchange with a $1.6 billion market cap.

That’s a lower valuation than the company hoped for and that “less than giddy IPO,” as Bloomberg put it, has been seen as a cautionary data-point for other soon-to-be-public fintech lenders.

Zopa CEO: Marketing restrictions appropriate for riskier platforms (Peer2Peer Finance) Rated: AAA

ZOPA’S chief executive has said that proposed investor marketing restrictions are appropriate for platforms that offer riskier manual lending opportunities but not for them.

Jaidev Janardana (pictured) said that when an investor is lending against one property or one business, this could be riskier and “we need to make sure investors are sophisticated when they make these decisions”.

Robo-advisors are growing but incumbents still dominate investment services (Business Insider) Rated: AAA

A growth in the demand for low-cost investment services in the UK is driving new investor uptake in fintech robo-advisors, according to Boring Money research. Through Q3 2018, 800,000 new DIY investment accounts — where customers decide on investment choices without the help of financial advisors — were opened in the UK.

Source: Business Insider

Of those new account openings, a third were with one of the UK’s leading fintech robo-advisor operators, including Nutmeg and Moneyfarm, compared with 11% a year ago. The total number of DIY investment accounts, inclusive of customers of robo and traditional platforms, rose to 4.8 million in the same period — a 22% uptick.

Klarna launches search for UK’s ‘Smooothest Stores’ (Fashion United) Rated: A

Klarna is searching for eight small and medium-sized enterprises to help them grow and take their businesses to the next level with its ‘Smooothest Store’ competition.

Open to businesses specialising in fashion, jewellery or lifestyle products, who are less than two years old, with an e-commerce store and a turnover in excess of 100,000 pounds per annum, the competition will help the winning up-and-coming retailers with a tailored combination of guidance, finance, and Klarna’s in-demand Pay later payment product.

FCA hails positive impact of P2P regulation for cryptos (Peer2Peer Finance) Rated: A

Speaking at the LendIt Fintech conference in London, Chris Woolard (pictured) said the FCA wants the UK to be a “good place” for cryptoassets but it must be safe for consumers.

He highlighted that the way P2P platforms have become authorised shows that regulation is not to be feared.

Customer journey of trying to get a loan and how it could be improved (Lendit) Rated: A

Today’s customers are looking for transparency and speed. My credit card provider had years to collect data on my and had ample opportunity to contact me and explain what information they needed. Sadly they chose to wait for me to get fed up with their slow process. We see companies struggle everyday with the balance between calculated risk and customer experience. At Equiniti we have dealt with many similar situations in which we try to find the right balance for our client so that they can offer their client the credit they need in a safe and structured way without sacrificing speed. Perhaps it is time that I offer this service to my own bank. But I would make them ask me 3 times………

Paul Stallard: Why should advisers recommend peer-to-peer lending? (Professional Adviser) Rated: A

Peer-to-peer lending is growing in popularity among borrowers and investors but where could financial advisers fit into the picture? Paul Stallard has some thoughts on the matter.

Peer-to-peer lending is growing in popularity among borrowers and investors alike, offering a flexible alternative to traditional investment products. In particular, peer-to-peer lending is catching on among property investors, with platforms offering attractive returns without the associated hassle and risk of traditional buy-to-let investing.

European Union

Klarna launches financing program Boost (Ecommerce News) Rated: AAA

Klarna has launched its own financing program for SME retailers in Europe. The new initiative is called Boost and is aimed to further support retailers in accelerating their growth. The company promises the application process will be simple and straightforward.

Klarna’s Boost is currently available in Austria, Denmark, Finland, Germany, the Netherlands, Norway and Sweden for selected merchants only, but it will be widely available in these seven European countries from the beginning of December.

The company explains the release by saying how cash flow is often one of the biggest hurdles for entrepreneurs and small businesses who want to grow further.

How direct lending and securitization can disrupt consumer lending in the Nordics (Lendit) Rated: A

The consumer credit market in Sweden is a relatively large and growing market. The total loan volumes amount to approximately Bn EUR 23, distributed among 1.4 million individuals. According to the Swedish central bank, the average interest rate is 12.5% ​​and credit losses are between 0.9% to 1.5% per annum.

The funding predominantly comes from Swedish banks and niche banks which are advanced in digitization and benefit from the Swedish population being used to managing their finances online. However, digitization has not contributed to improving competition or the conditions for consumers. Instead, net interest rates (rates after deduction of funding costs) have risen well beyond 8-10% and created the world’s most profitable banks with a return on equity often well above 30%.

International

Menē Inc. Partners with Affirm to Offer New Credit Alternative to U.S. Customers (Business Wire) Rated: AAA

Menē Inc. (TSX-V:MENE) (“Menē” or the “Company”), an online 24 karat investment jewelry brand, today announced its partnership with Affirm, which provides U.S. customers with a new option based on real-time credit decisions that allow them to split Menē purchases into monthly payments while receiving items directly following payment capture.

Qualified U.S. customers will be offered 0% APR loans for 3 or 6-month terms, while remaining customers will be offered 10-30% APR loans for 3, 6 or 12-month terms. For example, a $600 loan over six months at 0% APR would cost $100 per month. Affirm’s offering is in addition to Menē’s existing Harvest Plan payment program, which remains available to Canadian and other international customers.

Top 5 Emerging Fintech Hotspots in 2018 (Bank Innovation) Rated: AAA

Charlotte, N.C. 

According to a report, the city has seen a 28% increase in technology jobs in the last five years.

The city already has major fintech players like online marketplace LendingTree, automated bill solutions provider AvidXChange, home lending platform Movement Mortgage, mobile payment companies like Passport and Payzer, and the list goes on.

Mexico City, Mexico

It’s already home to fintechs like Bankaool, a challenger bank offering an annual interest rate of 3.75%; Conekta, an AI-powered platform develops that helps FIs in Latin America detect and prevent fraud; as well as CLIP, a Square Cash-like company that allows merchants to turn their phones and tablets into POS terminals.

SALT Lending Platform Investigated, WSJ Continues Attack On Erik Voorhees (Crypto Disrupt) Rated: A

The WSJ reports that a subpoena was sent to the SALT lending platform this February and the SEC is currently evaluating whether or not the ICO constituted an unregistered securities offering. SALT’s troubles do not end there. The SALT CFO has also filed a lawsuit against the company because favorable loans were given to company executives and family members.

India

How FinTech is Changing the Game for Microbusinesses (Entrepreneur) Rated: AAA

The FinTech ecosystem is a financial evolution in itself. Right from money transfers to personal loans, from account management to asset management, FinTech is rapidly making its way into the lives of the tech-savvy microentrepreneurs of today. Just a few years ago, the only way to start a business was to approach a bank or an investor for financial assistance. Thanks to FinTech, the micro or small businesses now can choose to no longer go through the conventional methods to get microloans for starting, running or scaling up their businesses.

FinTech has opened a whole new world of opportunities for small businesses. They can now offer more and better services at a reduced price. But, if you want to not only sustain but succeed in your business, it is important that you embrace technology and stay up to date with the latest FinTech developments.

Asia

Chinese fintech firm CashCash gets funding while website and app are blocked in Indonesia (Krasia) Rated: AAA

P2P (peer to peer) lending has grown popular in Indonesia. These online lenders promise quick loans with few questions asked. According to Indonesia Investments, credit disbursement through P2P lending in Indonesia has soared 204.7% this year.

Hundreds of fintech startups launched in Indonesia with variations of the P2P loan model; some of the older players are starting to see traction, while some others are facing various challenges due to increasingly stringent regulations.

The Financial Services Regulator, OJK, at some point put out a list of more than a hundred online lenders that it had banned for pushing into the market without going through the mandatory registration with the regulator, but that doesn’t appear to deter startups from participating in the lending gold rush.

Canada

HSBC eCredit: New Service to Streamline Banking for Small Businesses (Globe Newswire) Rated: AAA

Biz2Credit is working with HSBC Bank Canada to give Canadian small business owners quicker and easier access to apply for business financing.

HSBC eCredit is a digital-first approach to lending, which will allow small business owners to apply for financing online. Currently available by invitation in selected areas, HSBC eCredit will be fully available country wide in English December 2018 and in French the following month.

Authors:

George Popescu
Allen Taylor

Monday August 27 2018, Daily News Digest

personal loan balances

News Comments Today’s main news: Upgrade gets $62M injection from CreditEase Fintech Investment Fund. Elevate Credit issues earnings results. Wonga on the brink of collapse. Today’s main analysis: Calculating spreads for valuation, competition, and opportunity in unsecured lending (A MUST-READ). Today’s thought-provoking articles: Lenders who shunned personal loans are now competing for them. The sophisticated algorithms behind P2P […]

personal loan balances

News Comments

United States

United Kingdom

International

Other

News Summary

United States

Consumer Credit Platform Update Secures $ 62 Million Through Series C Funding Round Led By CreditEase Fintech Investment Fund (Crowdfund insider) Rated: AAA

CreditEase FinTech Investment Fund (CEFIF), the U.S.-based Fintech Fund of the Chinese fintech CreditEase, recently led $62 million Series C round investment for consumer credit platform, Upgrade.

Calculating Spreads for Valuation, Competition & Opportunity in Unsecured Lending (PeerIQ), Rated: AAA

US stocks look set to enter the longest-ever bull market. The current bull market at 3,453 days since the low in March 2009 is now tied with the 1990-2000 bull market, and is on pace to exceed that target.

Competition – and Opportunity – in Unsecured Lending

Competition for personal loans is heating up. Mailings soliciting personal loan borrowers exceeded credit card mailings in six of the last seven months, even though the credit card industry is almost 6 times larger. Goldman Sach’s Marcus has been one of the new competitors having originated nearly $4 Bn in personal loans since their launch – approximately a $2 Bn annual run-rate – smaller than Lending Club and others, and likely tempering their ambitions due to late-cycle credit conditions. Marcus recently launched in the UK with personal loans and savings accounts.

Source: PeerIQ and TransUnion
Source: PeerIQ and TransUnion

Valuation Framework

The price of a loan is the present value of the loan’s future cashflows (after accounting for losses and prepayments), discounted by an appropriate discount rate:

Source: PeerIQ

Calculating the Spread at Origination

The SATO is a zero-volatility spread over the benchmark swap curve that equates the present value of the cashflows to the market-observed price. Since the benchmark is considered a risk-free rate, SATO is effectively a credit spread due to the uncertainty of future cash flows.

Source: PeerIQ

Elevate Credit (ELVT) Issues Earnings Results (Fairfield Current) Rated: AAA

Elevate Credit (NYSE:ELVT) announced its quarterly earnings data on Monday, July 30th. The company reported $0.07 EPS for the quarter, topping the Zacks’ consensus estimate of $0.05 by $0.02, MarketWatch Earningsreports. Elevate Credit had a return on equity of 12.68% and a net margin of 0.14%. The business had revenue of $184.38 million during the quarter, compared to the consensus estimate of $186.46 million. During the same period in the previous year, the company posted $0.08 earnings per share. The business’s revenue for the quarter was up 22.5% on a year-over-year basis. Elevate Credit updated its FY18 guidance to $0.55-0.90 EPS.

Lenders Shunned Risky Personal Loans. Now They’re Competing for Them. (Wall Street Journal) Rated: AAA

Lenders are stepping up offers of consumer loans with few strings attached, often to individuals with poor credit histories they all but ignored in the years after the financial crisis.

The offers promise a way to help pay down other debts or fund home renovations or vacations, fueling concerns that customers could overextend themselves. “Take control of your finances,” says one mass mailing. “Your dream can come true,” says another.

American Express Co. , Goldman Sachs Group Inc., GS -0.52% LendingClub Corp. LC -1.54%and Social Finance Inc. are among those behind an onslaught of unsolicited mailings offering unsecured loans, known as personal loans, as large as $100,000. In the first half of this year, lenders mailed a record 1.26 billion solicitations for these loans, according to market-research firm Competiscan. The second quarter marked the first period that lenders mailed out more offers for personal loans than credit cards, a much bigger market, according to research firm Mintel Comperemedia.

The sophisticated algorithms behind peer-to-peer money lending (Silicon Angle) Rated: AAA

One of the companies that has capitalized on growing consumer interest in P2P is LendingClub Inc. The company has issued $38 billion in loans since its founding in 2007, and the firm has built a sophisticated technology platform on which to evaluate risk and put investors and borrowers together.

LendingMatch is essentially the firm’s secret sauce. The system relies on algorithms that can weigh a number of key factors, including an investor’s risk tolerance and the borrower’s credit score, to determine a suitable match. Other factors include geography, education and connectedness within social networks.

2018 Supermoney Mortgage Industry Study (SuperMoney) Rated: AAA

It’s no surprise FinTech lenders are disrupting the mortgage industry In 2017, the top lender in the United States was Quicken Loans with $25.1 billion. The second largest loan issuer was Wells Fargo. FinTech lenders process mortgage applications faster (10 days as opposed to 50 days). They also have lower default rates — 25% lower (source). FinTech lenders also tend to be more agile and flexible when it comes to adapting to changing financial circumstances.

What is the size of the U.S. Housing Market?

If you combine mortgage debt and housing equity you get a total value of $25.1 trillion, which is nearly $2.5 trillion more than its previous peak in 2006.

Source SmartMoney

See the full report here.

At Marlette Funding, CEO Jeffrey Meiler a ‘straight shooter’ with a sense of humor (Delaware Online) Rated: A

Jeffrey Meiler founded Marlette Funding in 2013. The CEO calls himself the company’s “first employee.”

Five years later, there’s more than 300 of those. Its quick growth, and Meiler’s drive in heading the Fairfax-based lender known for its brand Best Egg resulted in a Top Workplaces award for leadership at the mid-size company level.

Marlette Funding as a whole placed second overall among mid-size companies as the best place to work.

Alternative Lenders to Gain Greater Predictive Power with TransUnion CreditVision Link Short-Term Risk Score (Transunion) Rated: A

The opportunity for alternative credit and small dollar loans remains high with a market size that approaches $40 billion annually. To help these lenders better segment risk in an increasingly competitive market, TransUnion (NYSE: TRU) introduced today the CreditVision Link Short-Term Risk Score.

This new predictive risk scoring model, tailor-made for alternative lenders, combines traditional and alternative data to offer a holistic picture of consumers. Information about the benefits of this new risk score will be highlighted during TransUnion’s webinar, Alternative Loan Insights with TransUnion Risk Scores, scheduled for 1 p.m. CDT on August 30.

Unity Bank streamlines lending processes with Finastra (Finastra) Rated: B

Unity Bank, whose holding company is based in Augusta Wisconsin, and which has branches in Minnesota, has selected Finastra’s Total Lending solution to streamline its commercial lending and consumer lending processes, including its agricultural lending business.

United Kingdom

UK’s biggest payday lender Wonga ‘on the brink of collapse’ (The Guardian) Rated: AAA

Britain’s biggest payday lender, Wonga, is teetering on the brink of collapse following a surge of customer compensation claims in recent weeks that could cause it to call in administrators.

The short-term loan provider has reportedly lined up accountancy firm Grant Thornton to handle a potential administration of the company should its board believe it is unable to avoid falling into insolvency. The report from Sky News said Wonga could appoint Grant Thornton as soon as this week.

Overfunding: P2P Lender Welendus Secures £850,000 Funding Target Through Latest Seedrs Round (Crowdfund Insider) Rated: A

Just a little over a week after launching its latest equity crowdfunding round on SeedrsShort-term peer-to-peer lending platform Welendus has successfully secured its initial £850,000 funding target. Founded in 2015, Welendus seeks to redefine the short-term lending market by launching a peer-to-peer short-term lending platform to help customers with short-term financial needs.

Assetz Capital supports construction of 517 homes during summer (Development Finance Today) Rated: B

This announcement was in addition to the P2P lender reporting a surging interest from business owners and developers in the last two months, which saw it fund over £60m to SMEs.

In May, Assetz Capital revealed that it had lent over £500m since its inception in 2013, which has now increased to £590m, up 18% in less than three months.

In order to fulfil the influx of enquiries, Assetz Capital has appointed six more regional relationship directors in 2018, bringing the total to 26, and has also hired four senior relationship managers across the UK.

Victory Park Capital fund continues strong performance (Peer2Peer Finance) Rated: A

VICTORY Park Capital Specialty Lending (VSL) is expecting to recommence payment of performance fees to its investment manager in the coming months, after an improvement in net asset value (NAV) returns.

In its latest monthly report, released on Friday, the alternative finance-focused fund reported a total NAV return of 1.15 per cent in July.

In May, VSL posted a record NAV return of 1.03 per cent – the highest figure since its fruition in March 2015 – and has now posted NAV returns above one per cent for three consecutive months.

China

Here’s what to expect from Yirendai’s earnings report (Markets Insider) Rated: AAA

Yirendai will report Q2 earnings on August 28.

5 analysts are forecasting earnings of $0.779 per share compared to earnings of $0.663 per share in the same quarter of the previous year.

Analysts expect Yirendai to report sales of $256.2 million, an increase of 45.52% over the same period last year.

Peer-to-Peer Cryptocurrency Lending Gains Popularity in China (Coin Geek) Rated: A

At the same time that China is putting pressure on the crypto industry, peer-to-peer (P2P) cryptocurrency lending continues to gain in popularity. According to local media outlet Sohu, more and more crypto lending platforms are popping up, but their livelihood could ultimately be cut short because of tightened regulations in the country.

One source close to the activity is a crypto veteran, Zhang Le. He told the media outlet, “At present, most of the market only recognizes two major currencies, Bitcoin and Ethereum. This business is currently earning interest.” Another individual, Xu Lizhen, pointed out that those lending crypto are generally long-term holders who have no interest in trading on the markets. He added, “This is just the need. When the currency is low, people who are speculating in the currency will definitely not be willing to sell the coins. Once they are short of money, they must find such platforms. The demand has formed this market.”

International

Crowdfunder Indiegogo allows companies to sell security tokens (Coin Geek) Rated: AAA

Crowdfunding giant Indiegogo has expanded its cryptocurrency operations to make room for security tokens. This comes less than a year after the company started offering tokens on its platform last December.

According to Crowdfund Insider, Indiegogo’s first security token offering (STO) is already available on the platform. The STO is from a luxurious ski resort, St. Regis Aspen Resort in Aspen, Colorado. According to reports, Indiegogo will only allow accredited investors to purchase the resort’s Aspen Coins, which will be offered by a real estate investment trust (REIT) called Aspen Digital.

What are the Possible Advantages of Blockchain Technology in P2P Lending? (Financial Report 24) Rated: A

With smart contracts, ownership can be attested and linked to the terms of a specific contract. Smart contracts are kept on the blockchain and performed automatically as a part of the transaction. For instance, the XDC blockchain is constructed upon Quorum. The power smart contract functionality which exists in the Ethereum protocol is accessible easily via Quorum. XinFin created a smart contract manager which enables for interoperability between the public blockchains and XDC blockchain. The platform included punitive smart contracts which link to the QuorumChain consensus smart contracts to guarantee those who stake at XDCs to operate network infrastructure remain truthful.

European Union

TRAXION’s Blockchain Technology to help in building one Mindanao (Davao Today) Rated: A

A transaction management company that specializes in blockchain technology believes that Mindanao will be a good place to implement this kind of technology by connecting large business companies to micro entrepreneurs to create one economic force.

Statistics shows that one of the reasons why a typical farmer refuses to open a bank account is because they only wear slippers. “It sounds absurd but is the truth. Most of the indigenous people in this region doesn’t have their own identities so they have the tendency to change their names if they want to. They are prone to abuses because of this,” she said.

India

List of top 10 P2P lending startups in India (The Indian Wire) Rated: AAA

According to a report by Boston Consulting Group (BCG), the fintech space has witnessed an explosive growth in the recent years and digital lending industry is expected to touch $1 trillion over the next five years.

Here is a comprehensive list of top 10 P2P lending startups in India:

Faircent – It last raised $4 million in a series B funding from Muthoot Fincorp and Incofin Investment Management in December 2017.

Lendingkart – The startup had last secured ₹300 crores in debt funding Aditya Birla Sun Life AMC and others in August 2018.

Finzy – It provides a digital platform to facilitate quick, easy and secure loans at personalized rates based on borrowers capabilities.

NBFCs to see up to 35-40% rise in hiring in next 1 yr, say experts (Times of India) Rated: A

Hiring activity in the non-banking financial companies (NBFC) sector is likely to expand by up to 35-40 per cent in the next 12 months driven by rising innovation and growth, according to industry experts.

The ability of NBFCs to tap ‘unbanked’ customer base at a time when the banks are facing headwinds in coming out of the NPA mess is driving the growth in the sector, they explained.

Experts see increased hiring in tier-II cities for roles in sales, collection underwriting and risk.

Fintech startup Shubh Loans raises $ 4.2m from Saama Capital, others (Deal Street Asia) Rated: A

Datasigns Technologies Pvt. Ltd, which runs fintech lending platform Shubh Loans, has raised $4.2 million in an investment led by venture capital firm Saama Capital, said Monish Anand, founder of Shubh Loans. Shubh Loans’ existing investors—SRI Capital, Beenext and Pravega Ventures—also participated in the round. The fintech startup had raised $1.6 million from these investors in September 2017.

Asia

Partnerships pushing Pi Pay to next level (Southeast Asia Globe) Rated: A

The main partnership, with its growing customer base, has seen the Pi Pay app downloaded 270,000 times in the last year with close to US$100 million in transactions processed through the app.

Partnerships with merchants mean Pi Pay can be used in over 2,100 locations across Cambodia, with new partners being added every day.

Partnerships with overseas fintech giants like Alipay and WeChat have opened up new possibilities for Pi Pay merchants to service the growing number of Chinese visitors to the Kingdom.

OJK issues regulation on financial technology (The Jakarta Post) Rated: A

The Financial Services Authority (OJK) has issued a regulation on financial technology (fintech), which is more comprehensive than a prevailing regulation that only regulates peer-to-peer lending.

The regulation, issued on Aug. 15, consists of 45 articles that cover innovation in digital technology for the financial sector, kontan.co.id reported on Friday.

The regulation covers a number of issues such as transaction settlement that relates to investment, while for fund-raising, the regulation covers equity crowdfunding, virtual exchange, smart contract and alternative due diligence.

Africa

Kenyan fintech lender gets Sh45m grant (Business Daily) Rated: AAA

Kenya-based financier Lendable has secured a Sh45 million convertible grant from Dutch Development Bank (FMO) that will go into funding alternative lenders set up across the region.

Lendable, a fintech platform for unconventional lenders, operates in microfinance and other pay-as-you go services including energy.

Authors:

George Popescu
Allen Taylor

Monday June 11 2018, Daily News Digest

credit card issuers

News Comments Today’s main news: How to invest in the sharing economy. Elevate expected to report $184.82M in sales. Funding Circle scraps downloadable loanbook. Ant Financial valued at $150B. Standard Chartered to apply for virtual bank license in Hong Kong. Today’s main analysis: Marcus update. Today’s thought-provoking articles: PeerIQ lending earnings insights. Alternative uses of fixed-income markets. LendingTree Personal Loan Offers […]

credit card issuers

News Comments

United States

United Kingdom

China/Hong Kong

International

Other

News Summary

United States

3 Ways to Invest in the Sharing Economy (Motley Fool) Rated: A

While not a hard asset like a home or car, lending services have also come into the crosshairs of the sharing economy. Lending Club, the nation’s largest peer-to-peer lender, gets borrowers lower interest rates and smaller fees than a credit card or other traditional lending source typically offers by connecting them with investors on its online platform.

Since becoming a public company in December 2014, Lending Club revenue has soared more than 50% as seeking out alternative means of funding has increased in popularity. That sounds like a great investment, but Lending Club has actually fallen on hard times. The stock is down 75% from its 2014 debut as a result.

Other concerns, like increased competition, have surfaced: Goldman Sachs‘ online-only bank Marcus is just one of them. But there is some hope for this “sharing” company as first-quarter 2018 revenue increased 22% on an 18% increase in lending origination.

Lending Earnings Insights: 2Q2018 (PeerIQ) Rated: AAA

Where are we in the credit cycle? Most lenders see the US consumer in a good place with high consumer confidence, home prices, and higher take-home pay from tax cuts. The economy is at or near full employment with low wage and productivity growth. GDP gains are driven by consumer spending, fueled in term by consumer credit (8% YOY growth – well ahead of GDP and wage growth). Over the next few quarters due to stimulus and short-term effects there may be robust GDP prints, however, 16 to 24 months out we expect a lower pace of growth and heightened recession risk.

Credit re-normalization continues across all major lending groups. Credit performance this quarter is generally in-line with expectations. We see some of the lowest charge-offs and delinquencies at near-prime and retail lenders such as Enova and OneMain. Online lenders such as LendingClub have increased their charge-off estimates by ~50 bps.

Card issuers are increasing loan loss reserves at a higher rate than loan growth, indicating expectations of higher losses going forward. American Express increased loan loss provisions by 35% although loan growth was only 16% and Discover increased loan loss provisions by 26% on loan growth of 9%. Capital One saw a drop in loans outstanding.

Read the full report here.

Marcus Update (PeerIQ), Rated: AAA

GS Marcus Update

Personal loans are just the start, with possible expansion opportunities for Marcus into mortgages, credit cards, auto loans and insurance. There are 4 key product areas – Borrow, Spend, Save, Protect with 12 separate products listed with a focus on Clarity Money. Since its launch Marcus has served ~1.5 Mn customers with $3+ Bn loans originated and $20+ Bn in online deposits.

GS views their lack of legacy banking software as a competitive advantage and has invested heavily in building their platform. GS has invested, through capital spending and operating losses, $600 Mn, including reserves, up by $100 Mn.

GS is building Marcus as a business “for the next 50 years” but is expanding the personal loan program cautiously as the credit cycle may turn. GS wants to integrate the consumer platform with its wealth management business.

Source: Goldman Sachs

PeerIQ Webinar: Lending Earnings Insights Report – 2Q2018 (PeerIQ) Rated: B

PeerIQ is hosting a webinar by CEO Ram Ahluwalia on “Lending Earnings Insights 2Q2018” on Wednesday 6/13 at 3 p.m. EDT. We look forward to hosting you! Click to register and to add the invitation to your calendar.

$ 184.82 Million in Sales Expected for Elevate Credit (ELVT) This Quarter (StockNews Times) Rated: AAA

Equities analysts expect that Elevate Credit (NYSE:ELVT) will report $184.82 million in sales for the current quarter, Zacksreports. Two analysts have issued estimates for Elevate Credit’s earnings, with estimates ranging from $182.44 million to $187.20 million. Elevate Credit posted sales of $150.47 million during the same quarter last year, which suggests a positive year over year growth rate of 22.8%. The business is scheduled to issue its next earnings results on Monday, July 30th.

According to Zacks, analysts expect that Elevate Credit will report full-year sales of $803.08 million for the current fiscal year, with estimates ranging from $801.06 million to $805.10 million. For the next financial year, analysts expect that the firm will report sales of $930.53 million per share, with estimates ranging from $920.75 million to $940.30 million. Zacks’ sales averages are an average based on a survey of analysts that follow Elevate Credit.

Mulvaney Fires All 25 Members of CFPB Advisory Board (PJ Media) Rated: A

Mick Mulvaney, acting director of a controversial consumer finance bureau, fired an advisory board after the members criticized the new leadership for not taking their advice.

The Consumer Financial Protection Bureau (CFPB) announced Wednesday that the 25 current Consumer Advisory Board members will be replaced, and will be ineligible to reapply to the board, the Washington Post reports.

Eleven advisory board members held a news conference Monday calling out Mulvaney for canceling several meetings — which are required to take place under the Dodd-Frank Act which created the agency.

ALTERNATIVE USES OF THE FIXED-INCOME MARKETS (All About Alpha) Rated: AAA

The report, called “Building Resilience into Portfolios,” explains that the traditional use of fixed income in a portfolio is quite straightforward. That use generally involves a long position on debt of various sorts (sovereign, corporate, developed or emerging markets), that is relied upon to reap premiums from duration and credit risk.

But there are alternative uses of these instruments, and given the “rapid pace of change within fixed-income markets” in recent years they have become more available than ever, with the goal of securing absolute return, “steady positive returns above cash.”

These strategies include the exploitation of relative valuation differentials and/or the taking of short positions in order to profit from rising yields.

One obvious problem is that the central banks are about to start (in some jurisdictions have started) raising rates, reversing the tailwind that has benefitted the traditional use of FI in recent years.

Alternative investors in FX, though, have the flexibility to avoid such problems. They can “avoid issues, sectors, or sub-categories of assets altogether, as they see fit, investing solely in their highest conviction views.”

LendingTree Personal Loan Offers Report – May 2018 (Lending Tree) Rated: AAA

Offered APRs continue to rise for all borrowers, while lenders offer slightly lower loan amounts. Rate and loan amount offers varied widely among consumers, depending on factors including, but not limited to, credit score, income, and current debt obligations.

The most common reasons for seeking a personal loan are credit card refinancing and debt consolidation. These two categories comprise 63% of all loan inquiries.

Source: Lending Tree

Use Technology To Play The Real Estate Investment Market (Forbes) Rated: A

In Chicago, a new startup has introduced a tool that builds algorithms based on questions completed by the investor to establish the baselines. The tool then finds both on- and off-market deals that suit the preferences of the investor.

PayPal is launching a pop-up art exhibit in New York City (Tearsheet) Rated: A

PayPal wants its customers to get a tangible experience of what cash-back rewards look like, adding a physical and emotional association with the digital financial-services company.

PayPal is hosting a live walk-through pop-up exhibit in New York City on June 8 and June 9, the first time the company has hosted an experiential event of this kind. Anyone can attend the free event with music and refreshments. PayPal is the latest financial company to add realness to what many consumers see as abstract, transactional products.

Real Estate Crowdfunding Earns $ 10 Million in First Week (DS News) Rated: A

Atlanta-based real estate mogul Jay Morrison recently launched a new real estate crowdfundingprogram, and it’s finding some strong early success, having raised nearly $10 million in its first week.

The Tulsa Real Estate Fund is described as “the first African-American owned Regulation A+ Tier II crowdfund designed to revitalize urban communities across the U.S.” According to the group’s press release, the Tulsa Real Estate Fund “allows both accredited and non-accredited investors to collectively invest and own real estate projects around the country that are unique, diversified, and yield a reasonable rate of return.”

Ironhorse Funding Raises $ 30M of Capital from Crestline Investors (FinSmes) Rated: A

Ironhorse Funding, LLC, a Beverly, MA-based financing platform that provides operational and capital support for dealers and distributors in the motorcycle and powersports market, raised $30M strategic financing.

Crestline Investors made the investment through the firm’s Opportunity Fund III platform, which seeks to deploy capital where Crestline finds inefficiencies in the primary credit markets in North America and Europe.

The funding will be used to provide alternative financing solutions for consumers in the motorcycle and powersports market.

SBI HOLDINGS INC ORDINARY SHARES (OTCMKTS:SBHGF) on Focus After Report of Less Shorts (Fricisco Fastball) Rated: A

The stock of SBI HOLDINGS INC ORDINARY SHARES (OTCMKTS:SBHGF) registered a decrease of 3.53% in short interest. SBHGF’s total short interest was 3.16M shares in June as published by FINRA. Its down 3.53% from 3.28M shares, reported previously. With 11,600 shares average volume, it will take short sellers 273 days to cover their SBHGF’s short positions. The short interest to SBI HOLDINGS INC ORDINARY SHARES’s float is 1.59%.

The stock decreased 1.20% or $0.32 during the last trading session, reaching $26.41. About 3,352 shares traded. SBI Holdings, Inc. (OTCMKTS:SBHGF) has 0.00% since June 8, 2017 and is . It has underperformed by 12.57% the S&P500.

How two fintech entrepreneurs are rising from the ashes (San Francisco Business Times) Rated: A

Renaud Laplanche at Lending Club and Mike Cagney at SoFi were high-profile fintech founders, but each left under a cloud. Now they are seeking quick comebacks — and a measure of vindication.

Debt restructuring company Lendstreet receives $ 7m funding (Fintech Futures) Rated: A

US-based Lendstreet has just closed a $7 million series A equity round, led by Prudential Financial and Radicle Impact.

Prudential and Radicle join Lendstreet’s existing investors Accion, the Centre for Financial Services Innovation (CFSI), Serious Change, Crunchfund, Kapor Capital, and Cross Culture Ventures in participating in the round.

Knowledge Gap Contributing To Housing Market And Affordability Concerns, Cautiousness (PR Newswire) Rated: A

Ten years after the 2008 housing crisis, Americans eye the housing market with caution, as more than half (53%) of Americans who have or plan to buy a home admit they’re concerned about their ability to afford a home in the current market, according to a recent study of college-educated adults. The findings, release today by national online lender and FDIC-insured bank Laurel Road, also reveal that Americans on average believe a similar housing crash will occur in the next five years, and nearly one-fifth of respondents anticipate a crash in less than one year.

The survey found that women in particular are potentially underestimating affordability, as they are significantly less likely than men (49% vs. 59%) to be familiar with the alternatives.

This lack of knowledge around alternative options potentially contributes to the fact that more than one-third (35%) of respondents – and 46% of millennials – do not feel confident that they could currently afford a 20% down payment. Women (45%) feel particularly less confident than men (24%), while more than two-fifths (42%) of student loan carriers do not feel confident.

United Kingdom

Funding Circle scraps downloadable loanbook (Peer2Peer Finance) Rated: AAA

FUNDING Circle has withdrawn its downloadable loanbook and stopped publishing loan performance data on a daily basis.

The peer-to-peer business lender announced on Thursday that it has launched a new statistics page which will be updated every three months.

The platform also announced that it has partnered with analytics firm AltFi Data who will provide independent verification of its quarterly loan information.

Foreign investment in UK technology firms doubles in just one year (The Telegraph) Rated: AAA

British tech businesses attracted $7.8bn of funding last year, which was almost double the amount received in 2016. Research by Dealroom and Tech Nation showed that the UK’s venture capital investment last year was higher than Germany’s total of $3.2bn and France, which brought in $2.8bn.

According to a report by EY, there was a 22pc increase in digital investment into the UK, which helped to offset a decline in investment to sectors such as a financial services and logistics, due to investor concerns over Brexit.

New SME funding hub will boost awareness of P2P (P2P Finance News), Rated: A

PEER-TO-PEER finance resources will be included in a new funding hub for high-growth businesses looking to scale up in the UK.

The state-backed development bank has partnered with 12 industry bodies to provide information on 17 types of finance, including P2P lending.

Silicon Valley CTO joins UK fintech MarketInvoice (PCR), Rated: A

Fintech start-up MarketInvoice has appointed Rija Javed as its chief technology officer (CTO) as the company looks to invest heavily into its technology. Rija Javed joins from Wealthfront, a leading Silicon Valley based start-up.

P2P fund boss Simon Champ exits Pollen Street Capital (AltFi News) Rated: B

P2P fund pioneer Simon Champ has left his role as head of the investment manager of the £735m P2P Global Investments trust, AltFi can exclusively reveal.

Champ was a founding partner of P2P Capital Solutions which later became MW Eaglewood Europe and was the driving force behind the launch of the P2P Global Investments trust (P2P GI), raising a large seed portfolio for the investment trust from respected fund managers such as Neil Woodford and Mark Barnett.

BNP Paribas Asset Management launches SME alternative lending platform, completes first UK loan (AltFi News) Rated: A

BNP Paribas Asset Management has completed its first UK loan on its new SME lending platform.

The loan, a six year senior unsecured amortising loan, was made to a specialist recruitment services company based in the West of England.

Leading the way (Peer2Peer Finance) Rated: A

SINCE its fifteen minutes of fame back around ‘OB Day’ on 13 January, when excited media reports promised the dawn of a new era of high-tech banking, Open Banking has slipped back into the fintech background, accompanied from some quarters by accusations of having been something of a damp squib.

But such claims misunderstand the nature of the beast, says Imran Gulamhuseinwala, implementation trustee of the snappily-named Open Banking Implementation Entity (OBIE) which develops and tests the APIs on which the  system is built.

There are a handful of peer-to-peer lending platforms already active in Open Banking, including Zopa and Lending Works.

LendInvest’s Buy to Let Product Propels Boom in Hiring as Demand Surges (Crowdfund Insider) Rated: B

Online mortgage lender LendInvest reports it is scrambling to hire new employees due to the demand of its Buy-to-Let (BTL) product. The LendInvest team has now grown to 15 people in the short period since the  BTL product was launched in November 2017.

Pike, joined the team from Fleet Mortgages.

LendInvest has also hired field-based Business Development Manager, Shane Wallace to cover the East of England. Shane brings over 10 years’ experience from Aldermore, where he was most recently employed as a Commercial Mortgage Manager.

China

Jack Ma’s Ant Financial Valued Around $ 150 Billion After Funding Round (Wall Street Journal) Rated: AAA

China’s Ant Small and Micro Financial Services Group Co. on Friday said it raised around $14 billion from domestic and global investors in one of the largest private-capital raises on record.

Standard Chartered says it will apply to operate a virtual bank in Hong Kong (SCMP), Rated: AAA

Hong Kong and London-listed Standard Chartered plans to apply for a virtual bank licence, making it the first traditional bank seeking a licence locally to operate purely online without physical branches.

European Union

The race to build Europe’s Robinhood: Invstr, Freetrade, Revolut, Dabbl and more (Business Insider) Rated: AAA

Startups across Europe are racing to try and replicate the success of Robinhood, the hot US stock trading app. San Francisco-based Robinhood offers a zero-fee trading app that has taken off with young Americans. Founded in 2013, it claims to have 4 million customers and in May hit a valuation of $5.6 billion. This success has not gone unnoticed. Fast-growing UK fintech startup Revolut on Thursday announced plans to build a commission-free stock trading platform, similar to the way Robinhood works.

Brokers are charging people as much as £5.00 ($6.70) per trade and the user interfaces are typically clunky, slow and confusing for consumers. The pain points are clear for us and the room for improvement is massive. We’ve just done some research and found 94% of millennials don’t actually invest but do want to, Ackred said. There are 16 million millennials just in the UK and 100 million more in Europe who are new to investing and have no good options to start.

International

The Center for Financial Inclusion Digs Into the Global Findex 2017 Numbers (Lend Academy) Rated: AAA

Source: Lend Academy

The Center for Financial Inclusion, part of Accion, have released a follow up report digging into the Findex data and the picture is less rosy than what was highlighted in the World Bank’s initial report.

On the surface it looks like the world is making good progress towards financial inclusion with the Findex report showing that 68% of adults globally having some kind of bank account versus 61% in 2014 and 51% in 2011. That is rapid progress.

But CFI found a different story when just focusing on active accounts, those accounts that had some kind of transaction in the past 12 months. This takes the percentage down to 55% and what is worse the gap is widening between total accounts and active accounts indicating a growing number of people who open an account but never use it. This is true for both developing and high income countries but the gap is getting much wider in developing countries as shown in the graphic below.

Source: Lend Academy

SuperMoney Launches No-fee Financing Platform (DeBanked) Rated: A

At the Finovate Spring 2018 conference, CEO Miron Lulic and CFO Jesse Stockwell presented the company’s new SuperMoney No-fee Financing platform, which allows merchants to obtain point of sale financing from online lenders and banks.

The new platform allows a small business merchant, like a furniture store, to create a free profile that is co-branded with SuperMoney. With the profile, the merchant can easily see when a customer has applied for financing and follow up.

According to a Forrester Consulting study on SuperMoney’s website, businesses that offer point of sale financing enjoy an average increase in sales of 17 percent and an average increase in order value of 15 percent.

Spotting a Scamcoin: Ethconnect (Coin Clarity) Rated: B

While the term “lending platform” might sound harmless and even beneficial to society, it was never disclosed outright to whom the coins were being lent or for what exact purpose they were being lent (though they did have the courtesy to mention “volatility software” – a trading bot concept directly plagiarized from Bitconnect). They were in fact being “lent” to Ethconnect themselves. This lack of detail did not stop hundreds of people, blinded by the prospects of huge profits, from throwing thousands of dollars at the project. But also unlike Bitconnect, none of them would ever see another penny of it again.

Australia

Prospa founders admit float lost ‘vital momentum’ (Sidney Morning Herald) Rated: AAA

The co-founders of small business lender Prospa maintain the company can return to the public markets for a future float, after a last-minute regulatory query this week created “confusion” that sapped the listing of vital “momentum.”

India

Digital SME Lenders Bank On Co-Lending To Make Their Presence Felt (Bloomberg Quint), Rated: AAA

If corporate lending was the flavour of the season at the turn of the decade, then retail lending has captured the attention of financiers over the last few years. Now, it is lending to the country’s small and medium enterprises, which is attracting increased focus from both traditional and new-age financial sector entities.

Capital Float, ranked among the country’s largest digital lending platforms, disbursed Rs 1,500 crore to MSMEs in 2017-18 out of a total portfolio of Rs 2,500 crore, according to information provided by the company. The ticket size of loans ranged from Rs 50,000 given to small local businesses to Rs 8-10 lakh loaned to larger SMEs.

Latin America

Fintech Regulation Promotes Invocation In Brazil (Mondaq) Rated: AAA

Resolution no. 4.656/2.018 published by the Brazilian Central Bank on 26 April,  which regulated credit fintechs in Brazil, opens the door of the highly concentrated banking sector in Brazil, so that financial technology companies can offer products and financial services in the credit market. Today, credit fintechs already operate in the financial market, but always through a financial institution duly regulated by the Brazilian Central Bank (CB).

With this new regulation, two types of financial institutions with different business models were created. They are: the “Sociedade de Crédito Direto” (SCD) (“Direct Credit Company”), which will carry out credit operations only using its own financial resources, and the “Sociedade de Emprésimo entre Pessoas” (SEP), (Peer-to-Peer Loan Company), which will carry out credit operations only as a financial intermediary without retaining risks or using their own resources, known in the market as “peer-to-peer lending”. Both institutions, after approval by the Central Bank (CB), will be authorized to operate, only, through an electronic platform.

Asia

China’s fintech companies are exporting AI and big data to Asia’s ‘laggard’ banking markets (SCMP), Rated: AAA

Chinese fintech companies have made headway in expanding their business to Southeast Asian markets, as they increasingly find their know-how in big data and artificial intelligence being sought after by Asian financial institutions in risk management and compliance.

Online consumer finance platform Weshare, which offers consumer loans through its mobile app, says it is applying for a P2P licence from Indonesia’s central bank.

Korean web harvesting giant is ready to scrape data around the world (Korea Joongang Daily) Rated: A

We also have smaller fintech start-ups as our clients. One of them is Bomapp, an insurance service application that is designed to offer insurance advice and find redundant coverage of registered insurance. For a start-up like Bomapp, we don’t charge per piece of data because we acknowledge that start-ups lack funds. Instead, we agreed to take equity from Bomapp.

As P2P start-ups become more active, we also provide user data for them. Among our clients are Lendit and 8percent. They use the data to assess credit ratings and get information about individual asset size. They try to use the online data because the P2P companies pursue a different credit rating approach to banks. We see there is a great opportunity in the fintech industry because they are keen to venture into new businesses.

Authors:

George Popescu
Allen Taylor

Loan Supermarket: Taking on LendingTree

SuperMoney personal finance

The traditional bank with limited financial products has given way to a financial supermarket where consumers are spoilt for choice. But hundreds of options also leave them feeling clueless. When it comes to financial decisions, it becomes imperative to have in-depth knowledge about the pros and cons of all the products that are available in […]

SuperMoney personal finance

The traditional bank with limited financial products has given way to a financial supermarket where consumers are spoilt for choice. But hundreds of options also leave them feeling clueless. When it comes to financial decisions, it becomes imperative to have in-depth knowledge about the pros and cons of all the products that are available in the market. Though there are many platforms focused on selling financial services and products, few concentrate on truly helping people make better financial choices. Sensing the opportunity, Miron Lulic launched SuperMoney with the goal of helping “people make smart financial decisions.”

SuperMoney was launched in 2013 in Santa Ana, California. Lulic, founder and CEO, is a serial entrepreneur who is passionate about technological innovation. Prior to this, he founded LoanNow and Swagsy and worked as VP at a tax resolution firm. SuperMoney has no outside investors. Lulic himself has pumped almost $1 million into the business. He does not want to raise capital until the company achieves meaningful scale.

SuperMoney’s Humble Beginnings

When Lulic started SuperMoney, it was nothing but a small personal finance blog. Taking a cue from the Yelp business model, he built a similar platform for personal finance. Using an advanced algorithm, it ranked financial products and companies on multiple parameters. But by 2016, the platform started generating serious traffic, especially for personal loans. Then, in 2017, SuperMoney launched a loan offering engine.

The underlying principle behind SuperMoney is to provide financial transparency and help people make better financial decisions. It has partnered with a handful of lenders, and by using real-time APIs the company scores and rank products offered by those lenders on various parameters, such as origination fees, repayment costs, APR, and more.

SuperMoney’s Technology and Business Model

Since startup, SuperMoney has diversified into several verticals including personal lending, auto loans, student loans, and business lending. It sells clicks as well as leads, but it’s mainly focused on a performance-based advertising model. As such, it only gets paid when advertising partners are successful. The company charges by the loan.

The underlying technology is developed in-house and uses a proprietary segmentation system. SuperMoney has built its own weighted sorting algorithm based on attributes such as user review score, average revenue, and more. This means it is able to store tons of attributes from different lenders and help narrow the target audience for each loan offer. Its partners do not influence ratings and offering decisions. Rather, SuperMoney provides data that helps consumers make better financial decisions for their situation.

With the help of a soft credit pull that does not affect the consumer rating in any way, SuperMoney pre-approves the consumer for multiple offers they can then compare, and pick the best one.

What Differentiates SuperMoney From the Competition

Most consumer finance platforms providing similar services make a profit selling leads to the highest bidder. SuperMoney is more transparent. Instead, it calculates the total repayment cost, interest expense, origination fees, and other lending parameters for the consumer. It directly integrates with all its partners via APIs, which helps give consumers a better perspective in terms of cost associated with each product. This ability to offer apples-to-apples comparison in a clear and transparent manner is the hallmark of the marketplace.

The platform has tasted major success in recent years, and its organic search results have grown exponentially. SuperMoney currently witnesses nearly 1 million visitors per month.

Last April, it launched its personal loan engine and has received financing requests topping $400 million, with close to 1,000 personal loan applications per day. The personal loan has quickly become its biggest vertical. In August 2017, SuperMoney ventured into auto loans. It is also looking at the mortgage space and other niche verticals for future expansion.

Comparison to LendingTree

LendingTree is SuperMoney’s biggest competitor. An online lending exchange that connects consumers with multiple lenders, banks, and credit partners, it is not a direct supplier of loans, but a broker. Their core business model is selling leads to lenders. Lulic believes this is bad for consumers as they are deluged with dozens of tele-callers hawking their products.

SuperMoney is different. It does not let lenders contact the borrower unless the borrower has moved ahead with an offer. Its performance-based model enables them to align interest with end users and partners in a more fruitful manner. Even its marketing strategy is different from other platforms; SuperMoney concentrates on content marketing believing in “quality over quantity.”

Future Trends in Consumer Lending

Lulic believes the industry will witness a prolonged consolidation phase in order for market dynamics to settle. Strong performance of platforms like Golman Sachs’ Marcus will give the banking community self-belief to bring their own direct ventures into this space.

Moving forward, the big solution will be focusing on underserved niches. One such initiative is a dealer financing solution. Lately, a lot of traction has been witnessed in home improvement loans. SuperMoney wants to focus on individual contractors like roof installers, pool installers, and other service providers who do not have good financial solutions at their disposal.

Specialty financers available in the consumer lending space charge high discount rates from contractors, and that has had a ripple effect on contractor’s charges inching higher. To tackle this problem, SuperMoney tweaked its loan offering engine framework to launch a dealer-financing solution with a co-branded landing page. This will help contractors receive multiple competitive offers. It has tested the prototype with 100 dealers and further plans to move into other verticals like elective medical, funeral homes, legal service providers, and more.

SuperMoney also wants to strike additional partnership with banks, add more partners to its marketplace platform, and include dealers for the home improvement space. It is looking to collaborate with a wide variety of financial institutions and financial service providers. If everything goes according to plan, it will raise fresh capital in 2018 to fuel its growth.

Conclusion

The company has laid the blueprint to become one of the leading financial service research tool providers. By venturing into a variety of verticals, SuperMoney has made clear it has big ambitions and wants to become the premier go-to-resource for personal and business finance decisions.

Author:

Written by Heena Dhir.

Thursday August 24 2017, Daily News Digest

corporate bond credit spreads

News Comments Today’s main news: Walmart getting closer to a deal with Afffirm. AutoFi raises $10M. Zopa reports diminishing losses, rising revenues for 2016. Landbay closes 2.4M GBP round on Seedrs. USAmeriBank goes live on Finastra. Today’s main analysis: After shallow sell-off, corporate credit spreads stabilize. Today’s thought-provoking articles: A call for more considered critiques of P2P lending. What’s behind […]

corporate bond credit spreads

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United States

United Kingdom

China

European Union

International

India

Asia

News Summary

United States

Walmart reportedly closes in on pilot deal to offer Affirm loans (Retail Dive), Rated: AAA

Walmart reportedly is closing in on an agreement with loan services startup Affirm for a pilot program under which Affirm would offer the retailer’s customers installment loans for purchases, sources familiar with the matter told The Wall Street Journal.The pilot could start as early as this fall.

Why are retailers so enamored with Affirm? Giving customers the option to take out an installment loan to finance a purchase gives customers more choices, making it more likely that they actually will make the purchase. Millenials and other younger demographioc consumers are often loathe to carry mountains of personal debt that way previous generations have.

However, it also has to do with the inflexible and sometimes excessive terms of store credit cards, which generally charge higher interest rates than the lowest portion of Affirm’s rate range. Still interest revenue and late fees from store cred cards contribute a significant amount of money to retailers’ bottom lines, making it difficult for them to commit to giving their customers more financing choices.

Overall though, retailers, banks and credit card companies are all starting to understand that at a time of massive change in how and where people shop, they need to make it easier for shoppers to close the deal. Mastercard may recognize this as well as Walmart does. The card network aligned with Verifone late last year to begin offering instant installment financing at the point of sale.

You can now buy 0 pants with a subprime loan (The Outline), Rated: A

Affirm may be a relatively new company, but the service it offers isn’t particularly innovative: It’s taking the concept of layaway, a type of no-interest payment plan that became popular during the Great Depression that lets you pay for things in fixed installments and take them home once you’ve paid for it in full, and twisting it for millennials.  Unlike layaway, Affirm delivers your purchases instantly — but the cost of instant gratification is interest rates as high as 30 percent.  The service is basically a cross between credit cards and layaway, combining the worst aspects of both.

Once your Affirm loan is approved, you can choose to pay it off in 3, 6, or 12 months, and interest rates range from 10 to 30 percent. The average customer takes out a $750 loan with a 21-percent interest rate and pays it back in nine months. Compared to credit cards, which have an average APR of 17 percent, and personal loans that typically have interest rates ranging from 5 to 36 percent, Affirm isn’t a particularly good deal.


Wal-Mart Stores To Exacerbate Synchrony Financial Woes With Affirm Deal (Baystreet), Rated: A

Affirm and Walmart have been in discussion about the possibility of teaming up since last year. Talks appear to have picked pace this year as the retailer continues to explore ways of giving customers access to a wide range of financing options to boost sales and shrug off competition posed by e-commerce platforms.

However, the move would also spell trouble for Synchrony Financial (NYSE:SYF) which is the retailer’s exclusive U.S card issuer.

The fact that Affirm offers loans could significantly reduce the number of people who apply for Synchrony credit cards.

After shallow sell-off, corporate credit spreads stabilize (Morningstar), Rated: AAA

Credit spreads in the corporate bond market stabilized last week after a brief sell-off the prior week pushed spreads higher. The average spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) tightened 2 basis points to +113, and the average credit spread of the BankAmerica Merrill Lynch High Yield Master Index tightened 2 basis points to +398.

Earlier this month, British American Tobacco (BBB, stable) decided to issue $17.25 billion worth of bonds to fund its acquisition of Reynolds Tobacco. This transaction is the second-largest corporate bond deal Page 3 of 22 Morningstar Corporate Credit Research Highlights | 21 August 2017 | See Important Disclosures at the end of this report. Page 3 of 22 Page 3 of 22 Page 3 of 22 Page 3 of 22 Page 3 of 22 Page 3 of 22 Page 3 of 22 issued this year, surpassed only by AT&T’s (BBB/UR-) $22.5 billion transaction, which itself was the third-largest corporate bond deal in history. The proceeds from the AT&T transaction will be used as the final installment for the permanent financing of its pending acquisition of Time Warner (rating: BBB+/UR-). In addition, McCormick & Co. (A+/UR-) had issued $2.5 billion of new bonds two weeks ago to finance its acquisition of Reckitt Benckiser’s food division.

Through the week ended Wednesday, Aug. 16, investors pulled $2.3 billion of assets out of the highyield market. Among the open-end funds, investors withdrew $1.0 billion of funds, and across the highyield exchange-traded funds, there was $1.3 billion of net units redeemed.

AutoFi Raises $ 10 Million Series A To Make It Easier To Get A Car Loan (Forbes), Rated: AAA

AutoFi has raised $10 million in its quest to make it easier to take out a car loan.

The San Francisco-based financial technology company said on Thursday it has completed a Series A funding round, with investors including Crosslink Capital, Ford Motor Credit Company and Lerer Hippeau Ventures.

AutoFi makes a white-label technology platform that allows car dealers to offer faster, online financing to customers. It recently partnered with Ford Motor Credit and is in the midst of launching at select Ford and Lincoln dealerships.

How TD Ameritrade tackles security in Facebook Messenger chatbot (Financial-Planning), Rated: A

A common refrain in financial services these days is that companies need to go where customers are, not wait for people to come to a banking app or brokerage website.

TD Ameritrade is following that advice with a Facebook Messenger chatbot that will give customers instant updates on their portfolios and trades. The bot, unveiled Tuesday, will require the unit of Toronto-Dominion Bank to work through the privacy and security issues financial firms face whenever they communicate with customers via third-party platforms such as Messenger and Amazon’s Alexa.

The Future of Simple (Simple.com), Rated: A

Over the last few years, we have been focused on rebuilding Simple’s technology on our new partner bank, Compass. Our focus on infrastructure and supporting customer growth means we haven’t been fully invested in building new technology that helps people feel confident that they’re doing money right. We have not made good on our promise to change an industry that is failing them.

We have been focused on growth instead of innovation. We have been acting like a bank instead of a technology company. And that changes today.

Today, we are recommitting to being a technology company that is completely focused on product. We are re-designing our team so that everything we do is in support of this focus. We will be ruthlessly dedicated to identifying customer problems and building products that solve them.

SuperMoney’s Auto Loan Offer Engine Will Change the Way You Buy A Car (Supermoney), Rated: A

After debuting its personal loan offer engine at Finovate in April 2017, SuperMoney today unveiled an automotive focused loan offer engine where its lending partners compete in real-time with customized auto loan offers.

The new auto loan offer engine allows borrowers to submit a single, easy, online application and receive multiple auto loan offers back. The tool makes apples to apples comparisons easy when shopping for the best auto financing rates, fees, and terms.

Only 31.6% of car buyers negotiate the interest rate on their loan

A recent survey by the Federal Reserve reported that 76.1% of car buyers negotiated the purchase price with the seller, but only 31.6% negotiated the interest rate on their loan. It gets worse. 27.1% of car buyers considered the monthly payment on their auto loan as the most important factor, but only 6.1% considered the interest rate on the loan as the most important factor (source).

 

 

Lending as a service (LaaS) and why it matters (CIO), Rated: A

Banks today are turning away more loan applicants than in recent memory thanks to stricter regulations and lingering memories of the recent financial crisis. Younger entrepreneurs who have little or no credit history often find themselves rejected from these financing options.

Even when they are accepted, the loan process can be arduous and needlessly complicated, taking longer than business owners can afford. Applications take several visits to the bank, credit checks, records requests and weeks’ worth of back-and-forth communications just to reach the underwriting phase.

The major catalyst for this new lending paradigm has been the rapid pace of online technology innovation over the last decade. Improvements in cloud infrastructure and artificial intelligence systems enable fintech companies to create reliable evaluation and matching systems for loans. Companies can now examine a potential borrower’s financial records in minutes instead of weeks. Thanks to this compressed timeline, approval can now happen in as little as one day.

Instead of multiple meetings with bank lenders over the course of many weeks to compare options, users can often be approved in under a day by a reputable LaaS company.

LaaS platforms such as Ezbob promise to approve a business loan for companies and deliver funds in under thirty minutes. The company’s algorithm examines more than credit scores, evaluating company financials and records to quickly distribute capital to those that require it most.

New Report on Fintech from the World Economic Forum (Lend Academy), Rated: A

Today, the World Economic Forum released a report titled, Beyond Fintech: A Pragmatic Assessment Of Disruptive Potential In Financial Services, that was the result of those and many other discussions they had with leaders from around the world. The report aims to answer the question about whether fintech companies will really change the financial landscape.

Below are some of the key findings from the report:

  • Fintech start-ups have so far fallen short of their ambitions to upend the competitive landscape in finance, driving innovation but struggling to capture market share in mature markets.
  • What fintechs have done is define the direction and speed of innovation across most areas of financial services; they have also set new and higher bars for user experience.
  • Large technology firms like Amazon and Google may represent the largest competitive threat to financial institutions, as their AI and cloud computing services become more central to the sector, and customer data rises in importance.
  • Models of financial services innovation around the world are diverging, benefitting local firms and making it harder to co-ordinate a regulatory response.

Douugh Rises to Challenge with AI-Powered Banking (Paybefore), Rated: A

Banking challenger Douugh has unveiled its artificial intelligence (AI)-powered financial platform, guided by “Sophie”—a 24/7 personal assistant for finances, reports Paybefore sister publication Banking Technology.

Douugh plans to use Sophie to help consumers make better financial decisions by:

  • Connecting a user’s existing bank accounts and credit cards, Sophie will collate, organize and inform on spending habits all in one place;
  • Using Sophie as their own personal banker to perform transactional tasks—such as paying and splitting bills, requesting money, saving, tracking and management of spending and savings goals;
  • Integrating with Alexa and Siri for voice activation.

Rebundling financial services is aspiration of startup Douugh (American Banker), Rated: A

“You are 0% of the way to your retirement goal! You have plenty of time, keep up the good work.”

This message I recently received from the Wela app reminded me to kick my retirement saving efforts into gear. It’s an example of the kind of personalized financial advice many banks and fintechs are trying to provide right now, often with artificial intelligence engines analyzing customers’ account data, predicting future trends and making recommendations.

Based in San Francisco, Douugh strives to use artificial intelligence to help the 25-to-35-year-old set reduce their credit card and student loan debt and make better spending and saving decisions.

Ripple- Just As Good If Not Better (Investing.com), Rated: A

If you could buy a wristwatch that is the same quality as a Rolex or a Cartier for $350, would you wear it?

A company called Filippo Loreti aims to deliver just that. The level of support that the young company is receiving from alternative investors is truly inspiring.

Thanks to the power of the Internet this watchmaker has already raised $6 million in two rounds of funding making it one of the most successful crowdfunding projects in history.

Smart Solutions for Smart Cities (JD Supra), Rated: B

Property “consumers” will be able to compare real-time information on a wide range of variables affecting property assets – for example, energy efficiency, connectivity and traffic noise.  Banks will no longer be the only source of funds, with fast availability of internet peer-to-peer lending speeding up the time taken to put a deal together.

Blockchain or distributed ledger technology raises a number of opportunities in this field, from mortgage valuations, to rental and service charge payment systems. Smart contracts will replace the traditional approach to conveyancing – the main incentives being that the technology will expedite the process, reduce fraud and offer total transparency.

SCORE: Dos and don’ts for crowdfunding small businesses (PostBulletin), Rated: B

To help make a rewards-based crowdfunding effort successful, Dargie offers these dos and don’ts:

Do:

  • Understand the differences between rewards-based crowdfunding, equity crowdfunding and peer-to-peer lending.
  • Pick the right platform for your rewards-based campaign.
  • Follow through on your promises. Watchdog groups and state and federal consumer protection bureaus have begun to shift their attention to deceptive crowdfunding campaigns.

Don’t:

  • Fail to manage the expectations of your campaign’s backers.
  • Launch a campaign without the liability protection of a properly formed business entity.
  • Forget about taxes.

“When We Decided to Sell the Company, it Became Apparent that RealtyShares Was the Right Choice” (Crowdfund Insider), Rated: B

Last month, Real estate crowdfunding platform RealtyShares announced it acquired technology-first, marketplace platform Acquire Real Estate.

Now, less than 30-days later, Director of Business Development at RealtyShares and former CEO of Acquire, Josh Klimkiewicz, is sharing more details about the acquisition.

“The mission doesn’t end here. I will join the RealtyShares team as the director of commercial business development to lead that channel as RealtyShares continues to scale. In my new role, I will concentrate on building long-term relationships between RealtyShares and real estate owners across the country.”

Wealth Management vs. Financial Advice: They’re Not the Same (Kiplinger), Rated: B

Wealth management is one of the terms that is most overused, and it’s often misunderstood. But it’s actually pretty straightforward. Wealth management takes things up a notch, with an adviser or advisory team providing a full range of services for the client in three distinct ways.

  1. Investment consulting
  2. Advanced planning
    • Wealth enhancement: This is the use of strategies to deal with cash-flow issues and liquidity concerns, mitigate taxes and maximize growth.
    • Wealth transfer: Advisers look for the most efficient ways to pass your wealth on to your heirs in a way that lets your beneficiaries keep most or all of the money.
    • Wealth protection: For those who are subject to a lot of liabilities, there are strategies that can help protect hard-earned savings and avoid any blind spots.
    • Charitable giving: With proper planning, donating to a charity or charities can be a win-win, maximizing support for a favorite cause while making the most of certain tax advantages.
  3. Relationship management

How to Win an Argument (Mental Floss), Rated: B

To persuasively drive your point home, follow the tips below, provided by online lender CashNetUSA’s SavingSpot blog and spotted by Entrepreneur.

United Kingdom

Zopa Reports Diminishing Loss as Revenues Rise for 2016 (Crowdfund Insider), Rated: AAA

Zopa, the first peer to peer lender to set up shop in the UK, has filed its annual accounts for 2016, and according to their numbers business is looking better.

Top line revenue improved by 61% jumping to £33.2 million for 2016. The operating loss stood at £5.9 million for the year, an improvement over the £8.9 million from year prior.

A call for more considered critiques of P2P lending (AltFi), Rated: AAA

Between RateSetter’s wholesale lending saga and subsequent withdrawal from the Peer-to-Peer Finance Association, Zopa’s heightened loss expectations, and Funding Circlesignalling an end to manual investment, industry detractors are hardly short of fuel for their fires.

And yet we continue to endure spurious headlines that seem to be born of a broad desire to bash P2P, on the basis of seemingly anything.

Anyway. The latest episode of this kind comes courtesy of The Financial Times, which reported on Monday that peer-to-peer lending websites are “struggling to attract UK customers who want to borrow money”.

Source: AltFi

Landbay Closes £2.4M Crowdfunding Round on Seedrs (Finsmes), Rated: AAA

Landbay, a London, UK-based buy-to-let mortgage lender, has closed a £2.4m crowdfunding round.

The funds were raised via Seedrs.

The company, which has raised approx. £7m to date via the crowdfunding platform, intends to use the funds to continue to expand operations and launch new products.

IFAs still most influential source of financial advice (P2P Finance News), Rated: A

INDEPENDENT financial advisers (IFAs) are the most trusted source of external investment advice, but investors are still more likely to trust their own judgement, new research claims.

A survey by property finance firm Minerva Lending found that almost three quarters (72 per cent) of active investors prefer to take the advice of an IFA. However, the vast majority of active investors (77 per cent) said that they would rather trust their own judgement. Three in five (60 per cent) said that they would be more likely to trust word of mouth.

The survey also found that investors still prefer traditional investment advice over newer fintech solutions. Only 12 per cent of the investors surveyed said that they would trust a robo-adviser to offer financial guidance, and just 22 per cent would trust a standalone piece of software.

Should more banks form partnerships with alternative lenders? (Bridging and Commercial), Rated: A

More banks should be forming partnerships with alternative lenders, one business finance provider has stated.

In the bank referral scheme, the UK’s biggest banks pass on the details of SMEs that have been turned down for loans to three SME finance platforms, which then share their details with alternative finance providers.

Almost £4m of funding was accessed by 230 SMEs under the matchmaking scheme.

Chirag Shah, CEO of Nucleus Commercial Finance, felt there were clear benefits to the collaboration between banks and alternative lenders, but also urged for transparency.

Debunking the peer-to-peer lending myths (City A.M.), Rated: A

So let’s look at some of the common arguments raised and try to filter out the fact from the fiction.

P2P will suffer in an economic downturn

Yet the oldest UK platform Zopa – which launched in 2005 – managed to survive during the financial collapse of 2008.

Admittedly the default rates jumped to 4.2 per cent from 0.4 per cent the year before, but figures from Zopa show that investors were still able to earn a four per cent annual return during the financial crash, compared to six per cent in 2007.

P2P platform Landbay commissioned an independent report in 2015 to find out how it would perform in poor economic conditions.

While the loss rate on Landbay’s loans is 0.03 per cent in normal economic conditions, the loss rate was estimated to hit 0.48 per cent if times got tough – that is, if GDP was down 3.5 per cent, unemployment rose to nine per cent, and UK house prices fell by 20 per cent. So even if the economy shrinks, investors would not have lost money.

An interest rate rise will kill the P2P industry

But Lucy Bott, head of customer operations at RateSetter, points out that interest rates on P2P platforms are not set by the banks, but by the supply of and demand for money.

P2P is for young people

He points to a report from Nesta, which found that more than half of P2P lending investors are aged 55 and over, while a third of lenders are aged 35 to 54, and just 12 per cent of investors are under 35.

P2P Lending Sites Not Quite Wooing UK Customers (PYMNTS), Rated: A

Among 1,100 British consumers polled by consultancy firm EY, only 7 percent indicated they had used such a service to borrow money this year. A separate poll of 1,050 Brits by Blumberg Capital revealed just 4 percent of them had utilized alternative lending platforms over the previous year, according to the Financial Times.

Where FinTech firms worldwide attracted $20 billion in investments over the first half of 2016, that number dropped to just $12 billion during the first six months of 2017.

The lower funding amounts could be attributed to banks having joined the peer-to-peer lending landscape, creating their own technologies or joining forces with startups to stay current, thus broadening the competitive field.

China

Fintech in China: What’s Behind the Boom? (Brink News), Rated: AAA

The country makes some of the world’s largest investments in the sector, and it has adopted fintech technologies faster than anywhere else. Companies such as Alipay, Lufax and ZhongAn Insurance have made their names across the globe by using fintech to develop some of the most disruptive business models. These players have enjoyed the fruits of fintech’s unprecedented growth by filling the gaps in China’s structurally imbalanced financial system in an open regulatory environment.

We believe the development of fintech in China has reached an inflection point. From this point, technology will be the key driver of value-chain disruption in an increasingly data-driven industry.

For example, it took four years for peer-to-peer transaction volume to exceed $5 billion in the U.S., while it took only two years in China. Lufax, a Chinese peer-to-peer lending platform founded in 2011, reached an annual loan origination amount of 9 billion yuan in just two years, compared to five years for Lending Club, the biggest peer-to-peer lending company in the U.S.

A global block chain summit was spot inspected, caused shock on ICO market (Xing Ping She), Rated: A

Recently, the Market Supervision Bureau of Shanghai Pudong New District has raided a global block chain summit that is suspected of false propaganda. According to the investigation, 35 companies set up booth to promote technology and financial products on the spot, and nearly 2,000 people attended the summit. The organizer is a Shanghai-based software technology company. The company referred to “bitcoin” technology and has developed a digital cryptocurrency ETP (entropy) on its own, which was traded on its platform.

On the spot, Law enforcement officials ordered the meeting to be halted immediately and interviewed with the parties involved. And in the same day, this news triggered a nearly 200% shock in the value of related tokens on some trading platforms, reflecting the growing risk of the ICO market. Now the company is still under investigation for alleged violations.

European Union

Klarna co-founder seeks to spur European tech giving (Financial Times), Rated: AAA

In the US, technology magnates from Microsoft’s Bill Gates to Facebook’s Mark Zuckerberg have started a long line of high-profile, high-minded initiatives often aimed at combating disease and helping the poor.

But in Europe, where many of the unicorns — start-ups valued at more than $1bn — are of a more recent vintage, many founders are still thinking of how to make money rather than spend it.

Two years ago, Mr Adalberth had become bored with what he describes as “the constant chasing of the next goal or achievement” at Klarna. So he stepped aside from the group and its relentless attempt to conquer the digital payment world by becoming a bank and attracting Visa in as an investor.

Instead, Mr Adalberth became one of the first of the recent crop of European tech founders to think about giving away money. The result is Norrsken Foundation, which has a triple-pronged approach aimed at encouraging social entrepreneurship. His venture is risky but is likely to be closely watched by the growing ranks of multi-millionaire European founders to see if it can provide some kind of blueprint. “There is a trend in the US to give something back. This trend has come to Sweden and maybe Europe as well,” he says.

Rabobank constructs physical model to understand IT architecture (Finextra), Rated: A

Rabobank has built a 3D model of its own organisation and supporting IT systems to help visualise improvements that can be made as it embarks on its digital transformation programme.

As a banking co-operative operating at both local and regional levels, the Dutch bank runs a complex network of independent IT platforms often performing the same functions depending on local practices.

International

USAmeriBank live on Finastra hosted payments hub (Finextra), Rated: AAA

USAmeriBank selected Finastra’s hosted solution in order to have the flexibility to quickly add new payments rails and services, future-proofing its technology investment, while improving customer service and increasing straight-through processing.

In addition to quick time-to-market and ease of implementation, another benefit of using a hosted solution is a reduction of maintenance effort and total cost of ownership, as the technology and business services are maintained by Finastra.

In the coming months, the bank plans to add US ACH, and eventually real-time payments components, completing the bank’s journey to a fully-outsourced payment processing model.

AI Is the New UI – Exclusive Interview With Jake Tyler, CEO of Finn.AI (Let’s Talk Payments), Rated: A

 

LTP: Give us a high-level paragraph pitch for your company.

JT: The Finn Virtual Banking Assistant is a personal banking and financial management assistant, powered by artificial intelligence.

Finn delivers a personal banker within a customer’s favorite channels, including Facebook Messenger, Amazon Alexa, Google Assistant, SMS, iOS and Android apps, and web chat. We believe that AI is the new UI.

LTP: In a sentence or two, what specific problems are you solving today?

JT: We help banks connect with customers where they already are (in major instant messaging and voice platforms), adapt to a new paradigm of consumer expectations set by Apple, Amazon, Google and Facebook where deep personalization and simple conversational interfaces are the norm, and reduce costs by augmenting human customer care agents with AI.

LTP: What are the biggest challenges you face when building with AI and ML, being nascent technologies? How have you overcome, or are you overcoming, those challenges?

JT: The biggest challenge is data, both quantity and quality. We address this by going deep in one core vertical – banking. We have a large, pre-existing data model in this domain that grows daily as consumers use our assistant. As new banks adopt Finn they are able to leverage this data model to deploy a high-quality assistant with proven features much faster than they would otherwise be able to do.

India

RBI to harmonise NBFC regulations (India Times), Rated: AAA

There is scope for harmonisation of regulations covering non-banking financial companies (NBFCs) and the Reserve Bank is moving in that direction, Deputy Governor N S Vishwanathan said today.

He also said there is a need to create some new types of NBFCs to cater to the needs of the growing economy.

Guernsey consultation to update regs governing ‘non-regulated’ financial businesses (International Investment), Rated: A

The 103-page Lending, Credit & Finance Consultation Paper  is aimed jointly at enabling Guernsey to accommodate the growing number of “innovative, often digitally-enabled, financial services which don’t neatly fit into the boxes marked banking, insurance, investment or fiduciary covered by current laws”, as well as to better protect Guernsey consumers and investors, “particularly those who are less financially able, from unscrupulous lending practises”, the GFSC says, in a summary of the LC&FCP‘s contents.

The proposed legislation would replace this existing NRFSB Law.

To read and download the consultation paper, click here.

Asia

He also said there is a need to create some new types of NBFCs to cater to the needs of the growing economy.

Read more at:

The future of banking in Southeast Asia is in Cryptocurrency (Hero Email), Rated: B

There are an estimated two (2) billion people in the world who remain unbanked and underbanked. That’s roughly a quarter of the entire planet’s population who have little to no direct access to financial services most commonly found in banks and formal lending institutions.

In Southeast Asia, approximately only twenty-seven (27%) of the entire region are financially included, leaving the rest with little to no defense in times of economic crises.

Hero will build a blockchain-based credit algorithm and lending platform. Hero will be launching its own cryptocurrency coin called Hero Token through an upcoming token sale.

The majority of populations who suffer from financial exclusion live in emerging countries such as the Philippines, Indonesia and their neighbors in Southeast Asia. A notable fact about this region [SEA] is that it is the fastest growing Internet region in the world and is also the fourth largest.

Backed by an award winning group of experts, the organization started operating in the Philippines in 2015 as PawnHero, offering collateralized loans using an online platform, and since then has been helping thousands of Filipinos obtain access to affordable credit.

There will also be a ‘pre-sale’ wherein people can buy tokens prior to the actual token sale and get bonuses. During the pre-sale, Hero will offer 80% of all tokens to be created for purchase by the public in the Hero Initial Coin Offering under the ticker symbol Hero. The remaining 20% of all Hero tokens will be distributed to early believers, advisors and founders.

To participate in the Hero token sale people can send the following currencies – Ethereum (ETH), ETH Classic, BitCoin (BTC), Ripple, LiteCoin, and Waves from a wallet they directly control to the Hero wallet. Aside from these, extra tokens will be offered to those who commit early. Bounties are provided when the crowdsale ends. All payments received for Hero tokens in connection with this token sale will be held in escrow in a multi-signature address, with a multi-key structure.

For more information go to .

Authors:

George Popescu
Allen Taylor

Wednesday July 26 2017, Daily News Digest

Lending Club loans

News Comments Today’s main news: Seedinvest cancels Sharestates’ Series A Offering. LendInvest bond issue. How Samoyed Financial is outsmarting Tencent, Alipay. Faircent launches auto-invest. MoneyMatch to replace 5-6 scheme in Philippines. Today’s main analysis: The state of business lending. Fintech lending: Financial inclusion, risk pricing, and alternative information. Today’s thought-provoking articles: How Goldman Sachs is disrupting consumer lending. How FCA consultations will […]

Lending Club loans

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

Canada

Philippines

News Summary

United States

Seedinvest cancels Sharestates Series A Equities (Anonymous Email), Rated: AAA

Seedinvest gave the investors this explanation, according to our anonymous source:

The closing was held up and we subsequently discovered new material information. Sharestates’ offering (i.e. the ability to make new investments) came to a close during Q1 of this year. As we were working through closing operations, we requested a final set of offering documents from Sharestates’ counsel. This request in and of itself took months to be satisfied. While reviewing the red-line version of these updated documents, our counsel discovered that Sharestates had begun distributing quarterly management bonuses using cash they were generating through normal course of operations. As a result, we do not recommend proceeding with an investment. We are also withdrawing our fund’s commitment. 

How Goldman Sachs Is Disrupting This Trillion Industry (The Motley Fool), Rated: AAA

It’s been just over nine months since Goldman Sachs (NYSE:GS)launched Marcus, its newly created consumer lending venture, and the platform has been rather successful so far. In fact, the company recently announced that it has surpassed $1 billion in loans already, and it could have much more room to grow.

It’s been just over nine months since Goldman Sachs (NYSE:GS)launched Marcus, its newly created consumer lending venture, and the platform has been rather successful so far. In fact, the company recently announced that it has surpassed $1 billion in loans already, and it could have much more room to grow.

In addition, there’s no legacy credit card business to worry about, unlike most banks that also make personal loans.

According to Talwar, Marcus customers enjoy rates that are 300 to 500 basis points lower than credit card interest rates, and Marcus’ loans come with no origination, prepayment, or late fees — a rarity in consumer lending.

The State of Business Lending in 2017, According to Small Business Owners (Fundera), Rated: AAA

The biggest factor that’s presently clouding small business lending is the post-financial crisis surge of alternative small business lenders. Fundera’s VP of Strategy, Brayden McCarthy (along with Karen Mills, former head of the Small Business Administration) identifies in his working paper on small business lending that tighter restrictions on lending were imposed on banks after the 2008 financial crisis. Because of these tighter restrictions, banks had their hands tied when it came to providing loans to small businesses—providing a space within the small business lending market.

Main Takeaways

  • Small businesses are mainly applying for offensive financing rather than defensive financing.
  • Small businesses are still overwhelmingly going to brick-and-mortar banks to apply for financing.
  • A disconnect exists between small businesses owners and educational resources made specifically for them.

When you look at the business owners we surveyed, they are, by-and-large, successful. 56% of the businesses surveyed had a revenue of greater than $100,000 a year, and 60% of those surveyed ran businesses that had been in business for five years or more.

Furthermore, 80.6% of the small business owners reported having a personal credit score of 650 or above, one of the most important parts of the business loan application, and 68% reported having a business credit score of 80 or above.

One of the more shocking results was that a mere 5.94% of the respondents sought business financing in order to refinance a loan.

Meanwhile, only 10.89% of respondents said they applied for small business financing with an online lender. 

That being said, our respondents demonstrated a preference for the experience of applying online. 57.23% applied for a business credit card online directly while another 16% applied online through an affiliate like Creditcards.com, Nerdwallet, or The Points Guy.

Our poll found that 89.73% of those polled checked their personal credit at least once a year. Meanwhile, within the same sample of small business owners, 58.19% don’t check their business credit score at all.

Even more, when we asked respondents if they would be interested in a free business credit check, 34.23% said that they were “not at all interested.”

FINTECH LENDING: FINANCIAL INCLUSION, RISK PRICING, AND ALTERNATIVE INFORMATION (Philadelphia Fed), Rated: AAA

In this paper, we explore the advantages/disadvantages of loans made by a large fintech lender and similar loans that were originated through traditional banking channels. Specifically, we use account-level data from the Lending Club and Y-14M bank stress test data. We find that Lending Club’s consumer lending activities have penetrated areas that could benefit from additional credit supply, such as areas that lose bank branches and those in highly concentrated banking markets. We also find a high correlation with interest rate spreads, Lending Club rating grades, and loan performance. However, the rating grades have a decreasing correlation with FICO scores and debt-to income ratios, indicating that alternative data is being used and performing well so far. Lending Club borrowers are, on average, more risky than traditional borrowers given the same FICO scores. The use of alternative information sources has allowed some borrowers who would be classified as subprime by traditional criteria to be slotted into “better” loan grades and therefore get lower priced credit. Also, for the same risk of default, consumers pay smaller spreads on loans from the Lending Club than from traditional lending channels.

Download the white paper here.

LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q2 2017 (PR Newswire), Rated: A

LendingTree today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the second quarter of 2017. The list features the top lenders in multiple loan product categories, including Mortgages, Personal Loans, Business Loans and Auto Loans, all of which are included in LendingTree’s online loan marketplace.

Lender rankings are based on a weighted average of overall rating and the total volume of customer reviews for mortgage, personal, business and auto loans. Lenders were rated on offered rates, fees and closing costs, responsiveness, customer service and overall customer experience.

Mortgage Category

#1 Winner: Busey Bank

Personal Loans Category

#1 Winner: Avant

Business Loans Category

#1 Winner: RapidAdvance

Auto Loans Category

#1 Winner: RefiJet

Mobile banking startup Varo Money has applied for a bank charter (TechCrunch), Rated: A

But Varo Money, which provides a mobile-first banking product to consumers, is up to that challenge. In an effort to offer similar — but better — checking, savings and lending products to consumers, the company has applied for a national bank charter with the Office of the Comptroller of the Currency.

To get the company off the ground, Walsh raised $27 million from Warburg Pincus and spent the last two years creating a mobile-first competitor to existing checking accounts.

Meet the World’s First Robo-Lawyer for Real Estate Investing (PR Newswire), Rated: A

Bootstrap Legal, a legaltech and fintech startup, today launched software that automates the drafting of complex legal paperwork for those raising capital for real estate projects of $2 Millionand under. For the first time, real estate investors can draft their own legal offering documents using artificial intelligence. The new online service was launched in recognition of the changing marketplace of real estate investing. More and more smaller investors are able to access investment opportunities online. For platforms and issuers originating these offers, a streamlined and low cost service to provide necessary legal documents is vital.

This first-of-its-kind legaltech product both undercuts the legal fees associated with real estate capital raises and expedites the process. Real estate investors typically have limited time to raise capital for their project, and Bootstrap Legal’s new software allows users to control the legal process, so that they can have extra time to raise capital. Users who require additional assistance are connected to a real estate securities attorney to get questions answered.

These Bay Area FinTech Companies Are Revolutionizing The Lending Space (Benzinga), Rated: A

BeSmartee: BeSmartee is an artificial intelligence-powered lending and mortgage platform that originates documents, credit checks, and other financial information in just minutes.

Capsilon: Capsilon builds technology solutions for the mortgage industry’s most imperative challenges.

Credit Sesame: Credit Sesame is a fintech company that operates in the fields of education, credit, and personal finance.

Home Captain: Home Captain is a lending company that pairs clients with a pre-screened realtor in their area with the help of a real estate concierge throughout the way.

SuperMoney: SuperMoney compares financial products and services to give people the information they need to make better financial decisions.

CoinList Attempting to Standardize & Self-Regulate ICOs (Crowdfund Insider), Rated: A

CoinList, founded as a partnership between Angel List and Protocol Labs, is quietly trying to standardize initial coin offerings (ICOs) by self-imposing similar restrictions as the SEC imposes on companies that conduct certain private offerings under Regulation D.

CoinList, which was founded in part by AngelList, appears ready to launch token offerings on its site that are similar to the offerings available on AngelList’s site; that is, offerings regulated by the SEC under Regulation D. In order to invest in the offerings on CoinList, investors have to be “accredited” which is the same requirement that investors on Angel List have to meet as imposed by Rule 506(c) of Regulation D. However, since the SEC hasn’t come out with any guidance on ICOs and token sales yet, the requirement that investors be accredited on CoinList is one that is self-imposed by CoinList.

Why This Co-Founder Keeps His Calendars Public to His Employees (Entrepreneur), Rated: A

From client meetings to doctor appointments to family time, most things Sam Hodges does is public knowledge to his employees. All they have to do is check out his online calendar, which is set to “public” for employees. So why is this co-founder and managing director OK with letting others in on even his private life? Because at Funding Circle, Hodges says he fosters a culture of openness and transparency — in every respect.

“The first really crucial trait is around vision. As a leader your job is to understand the market, understand the business’ capabilities and then come back to the organization with a view on what you need to do in order to become successful.

“A second really vital skill is communication — being able to communicate in the right way with many different types of stakeholders.

“A third really important skill is problem-solving. In a leadership position, oftentimes what you face day to day are the things that are not going well and the opportunities that exist — so comfort with ambiguity, the ability to put structure around problems and the ability to be calm in the face of things blowing up.”

The Emotional Robo-Counselor For Your 401(k) (NASDAQ), Rated: A

So he co-founded Dream Forward, a 401(k) supplier that offers, as its website says, “Emotional Advisor A.I. technology.”

Easterbrook: The super high level of what we do is we’re selling 401(k) plans, fix all the obvious problems, lower the cost, make it easier to use, cause less headaches, no conflicts of interest, and then add conversational AI that employees can talk to about whatever they don’t understand, whatever the issues are.

Easterbrook: It looks like an online chat. It’s a chatbot. It’s designed to basically have 24/7 chat available to employees on whatever they don’t understand, whatever their issues are, whatever concerns they have. It talks to them in plain English in a way that we call it almost an emotional advisor instead of a robo-advisor.

AI 100: The Artificial Intelligence Startups Redefining Industries (CB Insights), Rated: A

Google can take on Amazon’s cloud dominance: PayPal co-founder (Fox Business), Rated: A

Tech companies are increasingly becoming more mobile and cloud based. According to Affirm and PayPal co-founder Max Levchin, Google’s (GOOGL) best bet to rival Amazon (AMZN) is through the cloud services business.

In his opinion, Google should diversify and focus on its cloud storage services as a means of competing and catching up to Amazon’s AmazonDrive.

A quick guide to what’s at stake in the SoFi charter controversy (American Banker), Rated: A

Social Finance’s application for an industrial loan charter has not only drawn opposition from a coalition of incumbent banks and community activists. It also serves as a microcosm of several perennial debates in financial services policy.

From complaints about an unlevel playing field to warnings about systemic risk, from giving back to the community to fostering innovation, here’s a rundown of the issues.

Why I Am Joining Affirm (LinkedIn), Rated: B

I’m excited to share that I recently joined Affirm as Head of Product to help build honest financial products that improve lives.

Affirm presents a new and unique opportunity for me at the intersection of technology, user experience, and financial services. If we’re successful, Affirm has the potential to be the most innovative and globally loved financial institution in the world.

4 Fintech Companies That Might Replace Your Bank One Day (Benzinga), Rated: B

Based in San Francisco, SoFi has changed the lending and wealth management space of fintech.

Wealthfront has introduced to the automated financial advisor to the world. Based in Redwood City, the company has deployed high tech software to follow market trends and create analysis for good investments. The automated financial investor manages risk, lowers taxes, and minimizes fees. Wealthfront’s trademark product, PassivePlus, combines high-level research experts with high-level technology to create a speedy and precise automated financial advisor.

Nerdwallet is the hub for free information on credit cards, banking, investing, mortgages, loans, credit scores, and more.

LendingClub Corp LC, based in San Francisco, allows people to invest and borrow money. The company offers personal loans, small business loans, auto refinancing, and now loans for medical treatments. Investors make monthly payments in order for investors to make a monthly return. Scott Sanborn is the CEO of the company, which has lent $26 billion and has over 1.5 billion customers.

United Kingdom

LendInvest Bond Issue (SyndicateRoom), Rated: AAA

Property investment platform LendInvest is launching a five year retail bond, offering investors a fixed rate of 5.25 per cent. The Bond is due to reach maturity in August 2022.

The bonds will bear interest at a fixed annual rate of 5.25 per cent, payable semi-annually on 10th February and 10th August. The minimum initial subscription is £2,000, each Bond has a face value of £100. Once launched, investors will be able to sell their bonds on the open market at any time during market hours. The offer period is now open and is expected to close at 12 noon (London time) on 4 August 2017.

Upcoming FCA consultations will shape future of UK P2P lending (AltFi), Rated: AAA

Peer-to-peer (P2P) lending will continue to go from strength to strength, with low interest rates still squeezing bank margins, a trend towards fintech and a requirement for rapid decision making. P2P lending is establishing its position in the market even with an uncertain economic and political climate. As a result, myriad of opportunities and challenges must be considered across the sector.

The regulator has also expressed concern that P2P firms’ wind-down plans may not be adequate and is planning to strengthen the rules around this. Firms should therefore expect to see an increase in capital requirements.

Another cause of concern, which requires further exploration, is around potential conflicts of interest. There’s a risk that large investors will have greater access to preferential deals, over small investors, which creates problems for effective competition within the sector. Given the regulator’s mandate to promote competition more generally across financial services, it will be interesting to see how this gets applied to the new rules.

Is new retail bond from LendInvest a buy? (AltFi), Rated: A

That looks a smart move because it’s now planning to return to the retail market but this time via bond – Funding Circle, by contrast, chose to use an investment trust to raise money from the stock market, with a target annual yield of around 6.5%.

Compared with the rates on offer from rival P2P platforms such as Zopa and Ratesetter, the yield of 5.25% is not bad and unlike its nearest rivals the investor also get secured assets to work against. That’s important when comparing the Lendinvest yield of 5.25% against the Funding Circle SME Loan income fund yield of around 6.5%. The latter is not secured and is mostly invested in risky SME loans.

Also, Lendinvest has a sensible average LTV ratio at 63% which should give private investors some comfort although I would observe that if house prices fell more than 15% across the board, the bond might be in danger of breaching its covenant. I don’t think that is likely but it is always possible.

The damaged reputation of asset-backed securities is on the road to recovery (City A.M.), Rated: A

It’s been a decade since the collapse of two hedge funds managed by Bear Stearns. The funds were backed by subprime mortgages, and they failed when hoards of borrowers defaulted on their loans. This sparked a chain reaction which culminated in the global financial crisis of 2008.

“ABS could therefore represent the future of crowdfunding more generally, but real estate crowdfunding in particular. This long-suffering acronym could very well make a comeback to help revolutionise the market for real estate investment as we know it.”

Growth Street bolsters team with new sales and relationship management hires (LendIt), Rated: B

SME lender Growth Street has brought on board a new Director of Sales, Head of Relationship Management and Business Development Manager as the firm’s expansion continues.

The new appointments bring a wealth of sector experience to Growth Street. Chan Purewal, formerly of Boost Capital and Bibby Financial Services, has joined the business as Director of Sales.

Nicola Weedall, previously of GE Capital and latterly Head of Risk and Compliance at invoice financing specialist DueCourse, has joined Growth Street as Head of Relationship Management. Her role will be split between London and Manchester.

Meanwhile, Nick Owers, formerly Head of Banking Relationships at iwoca, becomes a Business Development Manager. Nick has also worked for Lombard and Royal Bank of Scotland in the past.

VC investment into UK FinTech ‘fell by 40% in Q2 2017’ (Tech City News), Rated: A

According to CB Insights’ ‘The Global FinTech Report: Q2’17′, venture capital-backed deals in UK FinTech fell by 40% during the second quarter of this year.

The report says funding plummeted by 52% after a temporary surge in the first quarter of the year following Atom Bank’s and Funding Circle’s $100m deals.

How to boost your retirement income with Peer-to-Peer? (Radio Times), Rated: B

Over the past ten years, peer-to-peer lending has taken the UK by storm and has become a viable option for many people looking for a potential retirement income. To date, more than £10 billion has been invested through UK peer-to-peer lenders, returning on average 7.17% total gross interest. (source: AltFi Data)

With the right peer-to-peer loans that are backed by tangible assets like property, such as ones offered by Assetz Capital, the risk of loss can be reduced as those assets may be sufficient to recover lent funds should the loan default.

Creditors set to miss out in Morgan Tucker administration (The Business Desk), Rated: B

Morgan Tucker, the Nottinghamshire-based consulting engineering firm, went into administration at the end of May owing over £3m to creditors, according to papers seen by TheBusinessDesk.com.

The business’s expansion into the Middle East caused significant losses, it emerged in June.

Among some of the firm’s biggest creditors were Funding Circle which was owed £218,513 and Vendor Loans which was owed £112,000. The firm also owed HMRC £286,513.

China

This Chinese Credit Card Company Plans On Outsmarting Tencent And Alipay With A More Secure Product (Forbes), Rated: AAA

Startup firms like Samoyed Financial, a Chinese online credit card issuer, are on the cutting edge of consumer lending.

Samoyed Financial offers prime consumers credit cards online at below-market interest rates. While so many consumers require loans to make larger purchases, online lending firms in China (particularly peer to peer lending firms) have in the past struggled to control risk.

Credit card use in China has risen from five million in 2002 to 300 million at present.

Because China lacks a complete credit risk credit rating system like FICO, firms have been forced to rely on their own credit risk assessments in the burgeoning consumer lending market. Lin’s firm uses data taken from the consumers’ phone records and online behavior, with consumers’ authorization. The data is then used to build a credit risk model.

Samoyed Financial also incorporates artificial intelligence in the form of the Alpha S robot to review information and determine whether an applicant looks suspicious.

China declares war on get-rich schemes, citing risk of social unrest (SCMP), Rated: A

Chinese police will strike hard against shady financial schemes because of the risk of social unrest from such fundraising ploys, according to the Public Security Ministry.

Guo said at a nationwide meeting with local police authorities on Sunday that law enforcers must use “big data” technology to uncover and stop such crimes as early as possible.

Chinese Fintechs Use Big Data To Give Credit Scores To The ‘Unscorable’ (Forbes), Rated: A

Last November 11, China’s so-called Singles’ Day, sales across Alibaba platforms reached new heights: RMB 120 billion, or $17.9 billion.

Offline borrowing, however, is still largely absent. Hua Bei is basically a virtual credit card, but 60% of the users have never owned a physical credit card. Traditional banks are not lending money to individuals because they lack a reliable credit score. In fact, most Chinese people, by Western standards, are simply “unscorable”–only 25% of the population have a credit history.

With spending increasing, credit card use per capita actually declined from 0.34 in 2014 to 0.29 at the end of 2015, according to People’s Bank of China. In that same year, however, mobile payment users grew 65%. For the whole year, $5.5 trillion third-party mobile payments were completed in China.

Chinese P2P Neo Online Helps Children Realize Football Dream with International Champions Cup (Markets Insider), Rated: B

Neo Online, a leading Chinese peer-to-peer lending platform under Neo Capital Management Group Co., Ltd. (“Neo Group”), joined with the 2017 International Champions Cup China to hold a public interest meeting under the theme “Big big kids in a big big world”.

In January 2017Neo Online launched the public welfare program “Kids Are Awesome”, which supports adolescent development and growth in such areas as culture, sports, arts, and health.

European Union

P2P lending platforms poised to join Nutmeg and Seedrs on Fidor marketplace (AltFi), Rated: AAA

One of the most interesting and recent of these partnerships is between challenger bank Fidor and host of other players such as digital wealth manager Nutmeg.  Fidor’s UK commercial customers can now access a whole suite of investment opportunities through the digital marketplace, including access to alternative investment opportunities via a number of the most respected fintech companies in the UK.

Fidor Bank is a digital bank with over 100,000 users across Germany and UK.

Interview with Loit Linnupõld, CEO of Crowdestate (P2P-Banking), Rated: A

What are the three main advantages for investors?

Pre-vetted real estate investment opportunities – Our experienced real estate and finance team evaluates thoroughly each aspect of every project and picks the best investment opportunities to be published for crowdfunding.
Low minimum investment amount – the minimum investment on our platform is just 100 euros, meaning basically anyone can afford to invest into real estate with Crowdestate.
Everyone can invest – Crowdestate is open to all investors all around the world, provided that they have a way to make an international bank transfer to their virtual investment account previously created on our platform.

There are many different types of investment opportunities on Crowdestate. Debt, equity, secured, unsecured… Why did you decide to use so many different types for the offers?

What ROI can investors expect?

The historical money-weighted average internal rate of return on our exited investment currently at 29.59%. However, as the fast-increasing money supply is driving the expected returns down, the investors’ annual returns are probably going to remain between 10-20%.

Stock loan falls short for buy side as liquidity source (Securities Lending Times), Rated: A

In a joint survey by InvestOps and SimCorp, 14 percent of 100 respondents highlighted securities lending as their most popular source of liquidity.

The survey did not detail respondents’ reasons for neglecting securities lending as a liquidity source or expand on whether heads of operations simply considered the practice as a back-up option.

International

ID Finance’s chatbot cuts client services workload by a third (ID Finance Email), Rated: AAA

ID Finance, the digital finance, credit scoring and emerging markets company has developed and introduced a self-learning chatbot for MoneyMan, its online lending platform serving customers in Spain, Georgia, Russia, Poland, Kazakhstan and most recently Brazil.  Since launch at the beginning of July, over a third of customer requests are already being processed automatically.

The chatbot interacts with new customers at the loan application stage and with registered users when they log in to their personal account. The chatbot helps to locate the information required to determine loan eligibility, and provides recommendations of relevant products tailored to the individual’s requirements and financial prudence. General advice on personal budget planning and financial literacy is also offered.

The chatbot works within the NLP (Natural Language Processing) and NLU (Natural Language Understanding) AI frameworks. Information is processed based on statistical matches covering a wide range of frequently asked questions. And the NLU platform enables analysis of messaging flow so the meaning of the information can be sought out in context.

Additional capabilities include finding non-trivial links in dialogue with users and providing relevant answers to questions unrelated to credit and finance. Thanks to the machine learning technology, the number of questions the chatbot is able to answer increases by 20 per cent daily. The average response time is around ten seconds and if a question cannot be answered the message is automatically forwarded to an available client support operator.

Australia

Former big bank CIO joins fintech board (Broker News), Rated: B

Online loan marketplace and fintech HashChing has welcomed two new financial services heavyweights to its advisory board.

Paul Rickard, managing director of CommSec and former executive at Commonwealth Bank of Australia, and Marty Switzer, chief operating officer of the Switzer Financial Group both joined the board in June earlier this year.

India

Faircent.com launches fully-automated ‘Auto Invest’ feature (DNA India), Rated: AAA

In a pioneering development for the country?s fintech sector, Faircent.com, India?s largest peer-to-peer lending platform has launched a new Auto Invest feature for registered lenders.

It eliminates the need for lenders to browse through several borrower profiles by automating the entire process.

As per its latest Data and Analytics report, 90 percent of the lenders on the platform are earning 18 percent to 26 percent gross returns.

Softbank to pick up 20% stake in Paytm’s parent company One97 Communications (Money Control), Rated: A

The Competition Commission of India (CCI) on Tuesday approved Softbank’s acquisition of 20 percent stake in Paytm’s parent company One97 Communications.

The Competition Commission of India (CCI) on Tuesday approved Softbank’s acquisition of 20 percent stake in Paytm’s parent company One97 Communications.

The target launch is August 15, 2017.

Why India’s Hike messaging app adding payment services matters (Kapron Asia), Rated: A

Hike messenger, a popular phone messaging service app in India, has recently decided to introduce payment services on its platform.

The payment service includes both peer to peer payments that do not require bank accounts and use in-app wallets, and bank to bank payments using the UPI platform introduced by the National Payments Corporation of India (NPCI).

Hike has been able to beat Whatsapp to providing in-app payment services.

Asia

‘Flexible’ Regulations Give Indonesia’s Peer-to-Peer Lending Startups Room To Grow (Forbes), Rated: AAA

It’s been seven months since the Indonesian government issued regulations for the peer-to-peer (P2P) lending industry, and the mood in the sector is optimistic.

Suleiman said the market is dominated by local companies that engaged with regulators as the guidelines were being created and were primed to grow once the legal structure was in place.

Indonesia’s Financial Services Authority (OJK)stipulated that startups must have $200,000 in capital before they can be approved for an operating licenses as lenders, and capped loan values at $150,000. For now, that amount suits most P2P lenders just fine, Suleiman said.

Suleiman said that most SMEs fail to secure traditional bank funding because they don’t have enough collateral, which he said is especially problematic in creative industries.

One company meeting the demand for SME financing is Investree, a P2P marketplace startup that launched in 2016.

Ant gold service together Malaysia’s second largest bank to build local version of Alipay (Tech.Sina.com.cn), Rated: A

The ant gold service today announced an agreement with Touch’n Go (TNG), a subsidiary of CIMB, to form a joint venture to provide electronic wallet solutions for local users.

At present, millions of Malaysians use the Touch’n Go card for electronic payments every day in retail stores, car parks and public transport systems. In the future, new e-wallet will help TNG’s new and old customers to get more services on their mobile phones, including electricity providers.

Indonesian FinTech Launches App For Individual SME Investors (PYMNTS), Rated: B

Reports Friday (July 21) said Mitrausahua Indonesia Group, which operates a peer-to-peer lending platform, has launched a mobile app for individual investors of small businesses.

The app joins Mitrausahua’s flagship offering Modalku. For small businesses, interest rates range from 12 to 26 percent. For investors, Modalku promises returns higher than those of commercial bank deposit and fixed investment products.

The app offers a feature, Automatic Funding, which automates the process by which investors can find SME borrowers suitable to lenders’ preferences. Investors can start investing at $75 but must have $750 deposited into their accounts.

Middle East

Middle East women seed crowdfunding campaigns attract more backers (Khaleej Times), Rated: AAA

A total of 97 campaigns were successfully funded in the region in 2015 and 2016, 24 of which were female-led and 73 male-led. And while the number of campaigns funded in the region is still relatively low vis-a-vis more established territories, however, seed crowdfunding is still relatively new to the region. Average pledge amounts to female-led campaigns are 29 per cent higher than male-led campaigns, compared with a difference of only 5 per cent globally, said PwC and The Crowdfunding Centre report – Women Unbound: Unleashing female entrepreneurial potential.

Seed crowdfunding generated a total financing of $ 3.25 million (with $527,300 going to female led campaigns) in the Middle East for 2015 and 2016, with female-led campaigns in the Middle East generating an estimated 5,320 backers, compared with 4,240 for those that were male-led, it added.

Canada

Despite recent gains, Canada lags in fintech adoption (The Globe and Mail), Rated: A

Although the percentage of Canadians using new financial technology has doubled over the past 18 months, Canada lags much of the rest of the world in adopting services offered by online providers.

In Canada, only 18 per cent of digitally active Canadians have used two or more fintech services in the past six months, compared with 33 per cent globally, according to Ernst & Young LLP’s FinTech Adoption index. And while the Canadian rate has almost doubled from 8 per cent in 2015, Canada remains in the bottom of world rankings along with Japan and Belgium.

China has the highest adoption rate at 69 per cent, while India and Britain are close behind with 52 per cent and 42 per cent, respectively.

Philippines

New lending platform to replace ‘5-6’ scheme (The Standard), Rated: AAA

MoneyMatch, an online peer-to-peer lending platform developed by local company FinTech Global Inc., aims to provide Filipinos an alternative to “5-6” scheme, or moneylenders charging exorbitant interest rates on loans.

Bautista said a borrower could apply for loan from P10,000 to P2 million which could be used to start to a small business, get a housing loan, or a new car, and pay for their loan at terms that they could afford.

The interest rate for the loans will range from 15 percent to 36 percent depending on creditworthiness of the borrower.

Authors:

George Popescu
Allen Taylor