Thursday May 10 2018, Daily News Digest

Quarterly Originations

News Comments Today’s main news: Quarz Capital Management outlines proposals to unlock >70% returns in LendingClub share price. Sharestates surpasses $1B in loan originations. Funding Circle hires first female NED. Today’s main analysis: Review of LendingClub’s Q1 2018 earnings results. Today’s thought-provoking articles: LendingTree’s monthly mortgage offer report for April 2018. Crowdfunding in the absence of liquidity constraints. Digitization […]

Quarterly Originations

News Comments

United States

United Kingdom

China

European Union

International

News Summary

United States

Quarz Capital Management Outlines Proposals to Unlock Return of >70% in the LendingClub’s Share Price (PR Newswire) Rated: AAA

Quarz Capital Management, Ltd. (QCM), an investment manager, today issued a letter urging LendingClub to take immediate and decisive steps to address the severe undervaluation of its share price and unlock a potential attractive total return of >70% for shareholders.

US ONLINE MARKETPLACE LENDING BEHEMOTH TRADING AT ‘STARTUP’ VALUATION
– POTENTIAL TOTAL RETURN IN EXCESS OF 70% OVER THE NEXT 3 YEARS –

LendingClub is the largest online lending marketplace platform in the US with an estimated ~50% market share1. The firm is projected to generate more than $700million of revenue on ~$11billion of loan originations in 2018E. LC’s substantial loan origination volume of more than $35billion since 2006 and its proprietary credit data increase the effectiveness of credit and risk models and enable the largest institutional investors to undertake the rigorous due diligence required to allocate capital on its platform.

Recommendation 1. Emphasize on cost control to increase profitability

Recommendation 2. Improve alignment of compensation system for top management

Recommendation 3. Increase shareholder return on sizeable cash holdings

LendingClub Q1 2018 Earnings Results Review (Lend Academy) Rated: AAA

During the first quarter, LendingClub is typically affected by the seasonality of the lending business so it’s beneficial to look both at the last quarter as well as the prior year period. In the first quarter of 2018, LendingClub posted originations of $2.3 billion. This represents a 5% decrease from the previous quarter, but an increase of 18% from the prior year period.

Source: Lend Academy

Revenue came in at $151.7 million, down 3% from the previous quarter but up 22% from the prior year period. They incurred a GAAP net loss of $31.2 million which included legal expenses related to legacy issues of $17 million.

Source: Lend Academy

 

Here’s Why Lending Club Is Soaring Today (The Motley Fool) Rated: A

The company called for 20% growth in its 2018 outlook, so 22% revenue growth is even better than expected. And, the company’s full-year outlook calls for total revenue in the range of $680-$705 million. At the midpoint, this implies average revenue of more than $180 million per quarter for the rest of the year. Considering that the first quarter’s revenue was “just” $151.7 million, this represents some impressive growth ahead.

Q1 2018: LendingClub Platform Update (Lending Club) Rated: A

During the first quarter of 2018, we continued to observe that credit performance across the industry is returning to long-term averages and interest rates are rising across fixed income assets.1 On the platform, we continue to see both of these trends in action: investors show higher demand for higher quality assets and are looking for higher interest rates overall.

Sharestates Surpasses $ 1 Billion in Loan Originations; Celebrates With $ 100,000 Giveaway to Investors (PR Newswire) Rated: AAA

Online real estate investment platform, Sharestates, today announced they have surpassed $1 Billion in loan volume – an incredible milestone that showcases their continued growth in the real estate investment space. To celebrate the achievement, Sharestates is giving away $100,000 to mark the occasion.

LendingTree Releases Monthly Mortgage Offer Report for April (PR Newswire) Rated: AAA

LendingTree today released its monthly Mortgage Offers Report which analyzes data from actual loan terms offered to borrowers on LendingTree.com by lenders on LendingTree’s network. The purpose of the report is to empower consumers by providing additional information on how their credit profile affects their loan prospects.

See the full report here.

CRE Crowdfunding Firms Continue to Scale Up Platforms (National Real Estate Investor) Rated: A

Crowdfunding firms have put a lot of effort into educating accredited investors on real estate crowdfunding and real estate investing in general. Those efforts are starting to pay for firms such as CrowdStreet. The firm hit a major milestone in March with more than 99,000 registered investors on its platform. CrowdStreet also is generating a high volume of repeat investors that are using crowdfunding to create diversified real estate portfolios with different sponsors, property types, geographic markets and risk profiles, notes Tore Steen, CEO, CrowdStreet.

The average investor on CrowdStreet has five investments in their portfolio, and over 20 percent of investors on CrowdStreet have invested more than $1 million across 12 unique investments.

Some crowdfunding platforms, such as Fundrise, Realty Mogul and Rich Uncles, have introduced e-REITs as a way to reach non-accredited investors and expand their potential customer base. But for the most part, crowdfunding firms are firmly focused on raising capital from accredited investors.

Groundfloor is one of the few crowdfunding platforms that is providing direct investment opportunities to non-accredited investors.

Banks in constant game of catch-up in combating mobile fraud (American Banker) Rated: A

Even as banks and other financial firms have invested heavily in technology designed to protect customers’ data, fraudsters have become more and more aggressive in trying to steal consumers’ identities to open accounts, take out loans or intercept payments.

According to ThreatMetrix, a global cybersecurity network used by banks and e-commerce firms to help determine the authenticity of digital transactions, 210 million attempted attacks were made on its network during the first quarter of 2018, a 62% increase over the same period last year.

Cohn says starting ‘digitized’ bank one option for next job (American Banker) Rated: A

Gary Cohn, the former director of the White House Economic Council, said he’s still weighing options for his next role but one possibility is a digital bank.

“I do have an idea for a company,” Cohn, who was president of Goldman Sachs before joining the Trump administration, said Tuesday in an interview on CNBC. “It would be an interesting concept playing on the knowledge I know from the banking world, in running a regulated bank, but in a digitized world.”

Where big banks fear to tread (Financial Times) Rated: A

Bank accounts for small businesses is an area of fintech not yet solved; Azlo is looking to fill that void as they believe banks have built their small business offering for the traditional small business owner; the new age business owner doesn’t have years of tax returns to share, providing accounts for them is not a risk banks want to take; Azlo also plans to move into loans later as an alternative to overdraft fees; they believe a straightforward, transparent offering will allow them to serve the type of small business banks have overlooked for years.

How Northwestern Mutual is using LearnVest to build advisory services (Tearsheet) Rated: A

Northwestern Mutual is growing its advisory services, building on the technology and expertise of LearnVest, which is currently shutting down and preparing for a rebrand as a content site this year.

In a statement, Northwestern Mutual said it wants to serve customers wanting an “end-to-end experience” with a human adviser using LearnVest’s digital planning platform, alongside a new content site. The integration also allows the parent company to concentrate on full-scale financial planning — a message consistent with a recent job posting that noted the company is scaling its technology and personal finance approach to reach millions of people across both LearnVest and Northwestern Mutual brands.

Bitcoin Sees Wall Street Warm to Trading Virtual Currency (The New York Times) Rated: A

The parent company of the New York Stock Exchange has been working on an online trading platform that would allow large investors to buy and hold Bitcoin, according to emails and documents viewed by The New York Times and four people briefed on the effort who asked to remain anonymous because the plans were still confidential.

Rebundling the bank: an interview with Renaud Laplanche (AltFi News) Rated: A

It’s clear that Laplanche has designed Upgrade from the start with scale in mind. Little more than a year after launching its first product, the company has 250 staff across three centres, San Francisco, Phoenix, and Montreal, and its series A funding round was no minnow at $60m. Originations are running at $100m a month, having reached a level after a year that it took Lending Club more than six years to reach. Laplanche said in April he expects to originate $2bn of loans this year.

Laplanche is scathing about credit cards, labelling them “fundamentally bad products”. They are expensive – the average interest rate on the US’s $1.03 trillion of balances is 17 per cent, he says, which rises to perhaps 25 per cent once fees are accounted for – and borrowers can run up debts without having to pay down the principal every month as they would with a loan. Many don’t even realise they are taking out a loan, and card issuers never use the word.

California bank goes online competitors one better (Banking Exchange) Rated: A

First Foundation Bank, an 11-year old $4.5 billion-assets bank headquartered in Irvine, Calif., gets that message. Lorrie Asker, senior vice-president, commercial banking, says she’s heard from many clients that they handle their finances and their banking between 10 P.M. and 2 A.M. In the Age of Amazon, everyone, she says, craves immediate online availability of services, including banking.

Marketplace business lenders frequently point out that busy small business owners’ lives often don’t synch with “bankers hours.” Being able to apply for credit with online players like Kabbage or OnDeck any hour of the day is a much touted advantage. It plays to the credit hungry who find their credit by Googling for it.

10 tips to beef up your crowdfunding campaign (Born2Invest) Rated: A

Researchers from Georgia Tech checked out nine million phrases culled from 45,000 Kickstarter campaigns, and they discovered the most-used phrases from fully funded campaigns versus those that failed.

Some platforms to consider include:

IndiegogoA popular crowdfunding platform that is home to mostly technological innovations. Aside from this, the platform also offers initial coin offerings (ICO) of new cryptocurrencies.

SeedInvestThis crowdfunding platform has a selection process for startups it wants to help out. While the company only accepts one percent of startups that apply, it presents a selection of highly vetted businesses.

StraightUpMade for real estate crowdfunding, the company invests along with its clients. If a client finds a project interesting, StraightUp also supports it by participating in the crowdfunding.

LendUp Bolsters Leadership Team Across Finance, Engineering, Credit Card Product, InfoSec, And Legal, (PR Newswire) Rated: B

LendUp, a fast-growing fintech firm for the emerging middle class, today announced a number of executive hires, including a General Counsel and VP of Engineering, as well as new heads of Capital Markets, Credit Card Product, and Information Security. These appointments will help LendUp expand the scope of its affordable, consumer-friendly products, as it becomes a first-of-its-kind destination for responsible spenders, savers, and strivers.

Beyond Spare Change: Debt Payment Startup Qoins Wins Country’s Largest Fintech Prize (Hypepotamus) Rated: B

Qoins, an Atlanta-based startup that rounds up users’ spare change to help them pay off their debt, took home the largest equity-free cash prize for startups in the country as the winner of the Fintech Innovation Award Challenge at this week’s FinTech South conference. The audience was able to vote on which of four finalists would receive the $50,000 check during a live pitch event.

4 Tips for Finding the Best Online Mortgage Lenders (Nerd Wallet) Rated: B

Since not every lender offers a fully digital mortgage and your experience can differ from one lender to the next, it’s a good idea to find a company that offers an online experience that meets your expectations. These four tips will guide you to the right fit.

  1. Know who offers the loan you need with qualifications you can meet
  2. Evaluate the customer service
  3. Find out if an online application is right for your situation
  4. Test-drive online lender platforms by getting preapproved

Laurel Road Named Winner Of Best Consumer Lending Product Category In 2018 Fintech Breakthrough Awards (PR Newswire) Rated: B

Laurel Road, an online lender and FDIC-insured bank, today announced that its online student loan solution has been selected as winner of the “Best Consumer Lending Product” award by FinTech Breakthrough, an independent organization that recognizes the top companies, technologies and products in the global fintech market today.

United Kingdom

Funding Circle, the UK’s biggest peer-to-peer lender, will this week take another step towards a £2bn London flotation by naming its first female non-executive director.

Sky News understands that the company, which is targeting a listing soon after the summer, will announce that former O2 executive Cath Keers is joining its board.

Ms Keers, who is an experienced non-executive director in the retail, technology and logistics industries, will bolster Funding Circle’s public market credentials as well as improving the gender balance in its boardroom.

NatWest fintech investments bear fruit as SME loans platform goes live (Computer Weekly) Rated: A

NatWest has launched a fintech (financial technology) lending platform aimed at small to medium-sized enterprises (SMEs) that cuts the time it takes to apply for a loan to 10 minutes. The project will help the bank fight off competition from peer-to-peer lenders.

The platform, known as Esme Loans, offers SMEs loans of up to £150,000 and makes it easier to apply for them by using the latest technology, including application programming interfaces (APIs).  The entire process is online and paperless, with customers able to apply in less than 10 minutes.

China

Six and the Citi unveil API partnerships in Hong Kong (Fintech Futures) Rated: AAA

Citi has made six API partnerships with corporations in Hong Kong as it looks to improve its digital banking services.

The six partnerships are:

  • HKTVmall integrated with Citi Pay with points API
  • EGL Tours integrated with Citi Pay with points API
  • AIA Hong Kong integrated with Citi Customers API
  • Octopus App integrated with Citi onboarding, cards and money movement APIs
  • Citi Visa Fetch App
  • Zurich Hong Kong integrated with Citi Customers API

China’s peer-to-peer lending hits the skids (Nikkei Asian Review) Rated: A

Peer-to-peer lending is slowing dramatically in China as a looming clampdown on the industry spurs platform providers to throw in the towel — sometimes after just a few months in business.

The balance of peer-to-peer loans, or financing between individuals, came to 1.29 trillion yuan ($202 billion) on April 30, up a mere 6% from the end of 2017. That increase represents a sharp slowdown from the 50% surge last year and the 100% jump in 2016, according to industry information provider WDZJ.com. Less than 200 billion yuan worth of contracts were signed for April, down around 20% year on year.

European Union

CROWDFUNDING IN THE ABSENCE OF LIQUIDITY CONSTRAINTS (All About Alpha) Rated: AAA

A forthcoming issue of the Journal of the European Economic Association will carry a study arguing that crowdfunding in the absence of liquidity constraints is a superior method of equity financing–superior to “traditional financing forms,” that is, unless those traditional financiers are fully competitive and perfectly informed.

By one estimate, global crowdfunding reached $195 billion in 2017. Of that, $13 billion was equity- or reward-based.

The 60 second interview: Lara Oyesanya (The Lawyer) Rated: A

Ahead of her session at the In-house Financial Services Conference, Lara talks to The Lawyer about the legal challenges of digital innovation and the way in which technology is transforming the in-house lawyer’s relationship with external counsel.

What legal challenges are brought forward by digitalisation?

Will AI function within current legal frameworks, do we actually know how it will function to properly assess legal risks, is monitoring required to ensure due legal process? There are then ongoing discussions around data, information and cyber security.Algorithms and Applied Programming Interfaces (APIs) are at the heart of digitalisation. With the continued development of artificial intelligence (i.e. algorithms with learning capabilities), there will be more legal challenges to address.

UniCredit Pushes on Cost, Asset Quality to Affirm Leadership (Bloomberg) Rated: A

UniCredit SpA Chief Executive Officer Jean Pierre Mustier is ramping up cost cuts and improving asset quality to keep his promise of building a leading pan-European bank.

A 5.2 percent decline in operating expense in the first quarter helped the bank increase net income to 1.11 billion euros ($1.3 billion) from 907 million euros a year earlier. That beat the 796 million-euro profit expected by the average of 8 analysts surveyed by Bloomberg.

UniCredit climbed as much as 2.6 percent in Milan trading and was up 2.4 percent at 17.96 euros as of 9:23 a.m. That boosts the bank’s gain this year to 15 percent.

Taaleri records a loss of about EUR 2.5 million from a German geothermal project (Globe Newswire) Rated: B

Taaleri Investments Ltd, part of the Taaleri Group, acquired the majority shareholding in Erdwärme Oberland GmbH (86.42% of shares and votes) from the Italian energy-company Enel on March 12, 2018.

Unfortunately, the tests on the first geothermic production site have proven that the project on the site in question is not commercially doable and, Taaleri Investments Ltd records hence a loss of approximately EUR 2.5 million, visible in Taaleri Groups half year results 2018.

International

Digitization of Money and Finance: Challenges and Opportunities (International Monetary Fund) Rated: AAA

The global economy is experiencing a non-stop digital revolution. Consider this one number: a recent study estimates that by 2025, what is called the “global data-sphere” will grow to 163 trillion gigabytes from 16.1 trillion gigabytes in 2016. That ten-fold increase will encompass data held everywhere from the cloud to our handheld devices.

It raises the prospect of expanding financial inclusion, especially in developing countries. The possibilities are exciting.

Companies working with artificial intelligence are exploring credit scoring based on payment data. Fintech startups in Latin America, Africa, and Asia are moving toward the use of peer-to-peer lending data, and information from mobile phone payments to build reliable credit databases.

Firmo protocol for financial derivatives on the blockchain (Next Big Future) Rated: A

The Firmo protocol executes financial contracts on blockchain technology. Contracts are written using the domain specific language; FirmoLang. FirmoLang provides a secure execution environment for financial contracts on decentralized asset-classes. Similar to software built for airplane coordination, FirmoLang is formally verified, yielding needed security benefits for smart contracts in finance. FirmoLang compiles directly to Ethereum Virtual Machine bytecode. The Firmo Protocol is designed to integrate with and support the advancing decentralized economy, including: Decentralized exchanges, p2p lending platforms, prediction market platforms and more.

Firmo is building the future of financial infrastructure. 1/7 of the world’s economy is derivatives, but these financial contracts are not securely available in the crypto economy yet.

Valorem : Blockchain, Loans, P2P Networks, Investing, Marketplace, Insurance and Charity. ICO is still live! (TechBullion) Rated: A

The Valorem foundation provides a decentralized platform enabled by smart contracts of the blockchain to allow users engage in cryptocurrency-based transactions and exchanges. The transactions between users are facilitated by an ERC20 standard token called VLR token.

Valorem Foundation’s VLR token is the utility token for this ever changing platform. Valorem Foundation is developing a unique platform with the following features: Microloans, Student Loans, Car Loans, P2P Networks, Business Investing, Crowdfunding, Buying/Selling of goods, Insurance and Charity.

Authors:

George Popescu
Allen Taylor

 

Monday May 7 2018, Daily News Digest

Morgan Stanley collateral comparison

News Comments Today’s main news: Square funded $339M to SMBs in Q1. RateSetter joins Finsure, LoanKit panels. WeLab to become licensed virtual bank. CredoLab nabs $1M investment. Today’s main analysis: MSRP 2018-SC1 resecuritization deep dive. Today’s thought-provoking articles: CommonBond highlights desire for student loan help from employers. Contrasting OnDeck with peers. Financial inclusion in the rich world. P2P lending, MPL unicorns […]

Morgan Stanley collateral comparison

News Comments

United States

United Kingdom

China

International

Asia

Other

News Summary

United States

Square Funded $ 339M to SMBs in Q1 (deBanked) Ranked: AAA

Square’s small business funding arm, Square Capital, made over 50,000 business loans for a total of $339 million in Q1, according to the company’s latest earnings report. That figure is a 35% increase year-over-year and puts them on pace to break last year’s $1.177B total. OnDeck, by comparison, who is arguably their top rival, made $2.11B in business loans last year.

MSRP 2018-SC1 Resecuritization Deep Dive (PeerIQ), Rated: AAA

A recent Bloomberg article discussed ratings on and the performance of MPL ABS. According to the article, ratings agencies that provide lower loss estimates on ABS transactions tend to do the most business, in part due to the “issuer paid” model. While there is no way to verify “ratings shopping” behavior, we do believe there are a few observations to share to balance the discussion.

Overall loss estimates have tended to lower with successive deals as ratings agencies gain access to longer performance histories. The securitization structures have also been extremely robust – we have seen about 10% of outstanding balance breaching triggers so far.

Deal Deep Dive MSRP 2018-SC1

Morgan Stanley is resecuritizing a portion of the residual tranche of SCLP 2015-1 (SoFi’s first consumer loan ABS) via MSRP 2018-SC1. SCLP 2015-1 had an original collateral pool of $252 Mn and issued $189 Mn in Class A notes. Today $96 Mn of that pool and $51 Mn of the A notes are outstanding. MS is issuing $37 Mn in a Class B bond with an initial CE of 11.2% that is rated BBB by Kroll.

Realized losses on SCLP 2015-1 are at 5.31%, 1.26% below KBRA’s initial estimates. KBRA is also lowering its total cumulative loss estimate on SCLP 2015-1 from 8.5% to 8.0%.

Source: PeerIQ, KBRA
Source: PeerIQ, KBRA

New Study From CommonBond Highlights Desire for Help with Student Loans from Employers (Lend Academy) Rated: AAA

The market for student loans has continued to climb. According to data from CommonBond, 44 million Americans currently owe $1.4 trillion in student debt with the average student loan debt in 2016 coming in at $37,172.

Source: Lend Academy; Commonbond

CommonBond’s study included 1,500 workers and 500 human resource executives. Their key findings as provided in their press release are copied below

  • Almost 75 percent of all workers have taken out loans to fund their own education, while 21 percent of workers expect to take out a loan for a child or other family member’s education in the next five years.
  • For employees with student debt, student loan repayment is the most-requested financial wellness benefit; however, human resources teams rank student loan repayment as their third priority.
  • Seventy-one percent of human resources executives see their benefits offering as innovative, compared with 50 percent of employees.
  • Seventy-eight percent of employees with current or future student loan debt want their employer to offer this benefit, and 65 percent of employees over age 55 in these categories want the same.
Source: Lend Academy; Commonbond

 

Contrasting OnDeck Capital (NYSE:ONDK) & Its Peers (Macon Daily) Rated: AAA

OnDeck Capital (NYSE: ONDK) is one of 29 public companies in the “Nondepository credit institutions” industry, but how does it contrast to its competitors? We will compare OnDeck Capital to related companies based on the strength of its valuation, risk, analyst recommendations, dividends, institutional ownership, profitability and earnings.

OnDeck Capital’s competitors have higher revenue and earnings than OnDeck Capital. OnDeck Capital is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Lending Club (LC) Set to Announce Quarterly Earnings on Tuesday (The Lincolnian Online) Rated: B

Lending Club (NYSE:LC) will be issuing its quarterly earnings data after the market closes on Tuesday, May 8th. Analysts expect the company to announce earnings of ($0.01) per share for the quarter.

Elevate: Providing Responsible Credit to Non Prime Lenders (Crowdfund Insider) Rated: A

While interest rates may be high, this is necessary to manage the overall portfolio risk. Elevate’s default rate is pegged at around 23% – which is quite a bit higher than a prime credit provider. The online lender recently announced their Q1 results and there services are booming. Elevate more than quadrupled year-over-year net income with 24% revenue growth and new customer growth of 32%. So they must be doing something right.

Better Mortgage Hires Former OnDeck Chief Financial Officer (BusinessWire), Rated: A

Better Mortgage, a digital mortgage company working to improve access to home financing through transparency, honest guidance and zero commissions, today announced that it has hired Howard Katzenberg as Chief Financial Officer.

Student Loan Genius Raises $ 4.7 Million in New Funding (Finovate) Rated: A

Xconomy is reporting that Austin, Texas-based Student Loan Genius has raised $4.7 million in funding. The news was seconded by Austin Business Journal, which added that 11 investors have participated in the round. Both reports – as well as a third from AmericanInno, are based at least in part on a SEC Form D filing, which suggests that the $4.7 million was part of a larger $5.8 million fundraising initiative. As reported, the new capital more than doubles Student Loan Genius’ total equity funding to more than $7 million.

Federal Court Dismisses “Speculative” And “Attenuated” Lawsuit By The Conference Of State Bank Supervisors Over Proposed OCC Fintech Charter (Mondaq) Rated: A

On Monday, a federal district court judge in the District of Columbia issued an order dismissing a lawsuit brought by the Conference of State Bank Supervisors (CSBS) regarding a proposal of the Office of the Comptroller of the Currency (OCC) to issue federal charters to certain Fintech firms. In dismissing the case, US District Court Judge Dabney L. Friedrich held the CSBS did not have standing to sue because the OCC had not yet officially decided to issue charters to Fintech companies. Judge Friedrich explained that the CSBS lacks standing to bring the suit because the harms it alleges are “contingent on whether the OCC charters” a Fintech company, and “[s]everal contingent and speculative events must occur before the OCC” issues such a charter.

Banks are using open source to collaborate, not compete (Tear Sheet) Rated: A

On the consumer side, product and marketing teams in banks in the Zelle network currently face new challenges as their partnership is crucial to their success. And on the backend, when banks began paying attention to blockchain technology (the original bitcoin blockchain was a breakthrough of open-source development), the largest companies including JPMorgan Chase and Wells Fargo joined industry consortia working on open-source blockchains.

Commercial loan slump chips away at bankers’ reluctance to automate (American Banker) Rated: A

Loan executives at the $5.1 billion-asset bank wanted commercial clients’ information in one place, where anyone within the organization could access it — especially from the road on their mobile phones.

In a report aptly titled “The Productivity Crisis in Commercial Lending,” David O’Connell, a senior analyst at Aite Group, found that at 78% of the banks he surveyed, lenders spent at least 30% of their time on noncore job responsibilities. At 46% of those institutions, lenders spent at least 40% of their time on those noncore functions.

 

Banks say they aren’t profitable enough for tech giants to bother with their business (Quartz) Rated: A

We’re-not-profitable-enough-to-bother-with is an unusual defense, which is why it caught my attention amid the usual distractions at these sorts of conferences (texts, emails, the snack table). The banker cited return on equity, which is a measure of profitability, as proof. FactSet calculates this measure by dividing net income by a trailing two fiscal-period average of total shareholder equity:

Source: Quartz

Granted, tax cuts and deregulation in the US will make banks there more profitable than before. But Amazon is making so much money selling cloud computing to the financial industry (charging them by the second) that taking deposits or writing mortgages wouldn’t seem worth the hassle by comparison.

United Kingdom

P2P lender joins Finsure and LoanKit panels (The Adviser) Rated: AAA

Peer-to-peer lender RateSetter has joined the panel of Finsure and LoanKit, giving accredited brokers access to its personal and green loan solutions.

As of this month (1 May), more than 1,400 brokers accredited with aggregators Finsure and LoanKit will be able to offer their clients personal loans and green loan products from the growing retail lender.

Financial inclusion in the rich world (The Enconomist) Rated: AAA

A report published in March 2017 by a House of Lords committee estimated that 1.7m adult British residents have no bank account; 40% of the working-age population have less than £100 ($140) in cash savings; and 31% show signs of financial distress.

In Britain such lenders include pawnbrokers, offering an APR of between 25% and 101% for a secured loan; doorstep lenders such as Provident, the biggest, which will charge an APR of 1,558% for a 13-week loan; “payday lenders” such as Wonga, which offer similar rates for a loan to be repaid after 1-35 days in one lump sum; and “rent-to-own” lenders, such as BrightHouse, which offer finance for purchases to be repaid in installments.

Are we seeing the beginning of the end for retail banking? (CL News) Rated: A

At the beginning of this week, the first waves splashed up on the shore as the Royal Bank of Scotland announced the closure of 162 branches throughout the UK, with the loss of 800 jobs. The full list is here if you would like to see if your town is affected.

The robot revolution gathers pace (Money Week) Rated: B

The first wave started a decade ago with the rise of online stockbroking platforms, which brought down dealing costs and sparked a wave of DIY investing. Then came the rise of robo-advisers – a rather daft term to describe what are in effect online wealth managers or advisers.

Now a second wave of new entrants has hit the market. Some big players have launched their own robo products, chief among them being private banks such as UBS and Investec – trusted brands with a great investment pedigree. They tend to focus on wealthier clients, however. Investec has a minimum investment of £10,000, while for UBS it’s £15,000. Another big player is IG and its Smart Portfolio, which has lower fees and a minimum investment of £500 per portfolio. Alongside these sit smaller companies such as Moneybox, Wealthify and Moola. The latest platform, Exo, launched just this week.

China

WeLab joins fintech race to become Hong Kong’s first licensed virtual bank (South China Morning Post) Rated: AAA

WeLab, Hong Kong’s home-grown fintech unicorn, is poised to be among the first batch of companies to apply for a virtual banking license from the Hong Kong Monetary Authority, according to its co-founders.

In the coming weeks, the HKMA is due to issue guidelines for virtual banking regulation based on a consultation in February.

CreditEase becomes Milken Institute’s first Asian Strategic Partner (PR Newswire) Rated: A

Tang Ning, founder and CEO of CreditEase, attended the 21st Milken Institute Global Conference in Los Angeles as both a strategic partner and a speaker, and said on the global capital market panel that driven by technology, the middle class and the high-net-worth individuals, a strong new economic growth can be seen in China these years, adding that China is now entering a new era.

European Union

Taaleri to buy Finnish robo-advisor wealth management firm Evervest (Banking Business Review) Rated: A

Taaleri Wealth Management has agreed to acquire Finnish robo-advisor wealth management firm, Evervest, for an undisclosed sum.

 

The acquisition will add Taaleri with functioning digital platform, which will help to extend service offering for customers.

Subject to approval by the Finnish Financial Supervisory Authority, the deal is expected to complete in the first half of this year.

Will ‘buy now, pay later’ change the in-store customer experience? (Econsultancy) Rated: A

I’m going to preface this by saying that this is something we as a business are working on at the moment at Klarna, so I may be biased. But we’re not the only ones experimenting with new bricks-and-mortar payment solutions – the industry is striving to align in-store with online.

International

The 27 fintech unicorns from around the world (Business Insider) Rated: AAA

CB Insights, which tracks the venture capital industry, recently provided a list of what it believes are all the fintech unicorns in the world — venture capital-backed, private businesses worth over $1 billion.

27. Funding Circle — $1 billion

Why it’s hot: Over £3 billion has been lent across the platform and the company is tipped for a blockbuster European float later this year.

27. Kabbage — $1 billion

Why it’s hot: The company has written over $4 billion-worth of loans and has partnered with Spanish bank Santander.

27. 51 Credit — $1 billion

Why it’s hot: 51 Credit provides risk management and credit advisory services to over 20 major banks working in China, including Citibank and Standard Chartered.

17. Tuandaiwang — $1.4 billion

Why it’s hot: The company has helped individuals and companies borrow $11.4 billion and helped lenders make $335 million in returns.

HQ: Dongguan.

14. Affirm — $1.8 billion

Why it’s hot: The company works with over 1,200 retailers in the US and its technology helps retailers increase average order sizes by 51%. Morgan Stanley and Singapore’s GIC are both investors.

13. NuBank — $1-2 billion

Why it’s hot: The bank has 3 million customers and has raised money from Sequoia Capital, Goldman Sachs, Tiger Global, and more.

HQ: Sao Paulo.

11. Avant — $1.9 billion

Why it’s hot: The company has lent over $1 billion and is backed by the likes of Tiger Global, KKR, and Jefferies.

8. Klarna — $2.5 billion

Why it’s hot: The company processes 800,000 transactions a day and has been used by 60 million people globally. Sequoia Capital, the Silicon Valley fund that backed PayPal, is an investor.

6. GreenSky — $3.6 billion

Why it’s hot: Steven McLaughlin, a former Goldman Sachs banker whose firm advised GreenSky on a funding deal, told Bloomberg in 2016 that GreenSky “is the single best fintech company created in the last 10 years, by far.”

4. SoFi — $4.5 billion

Why it’s hot: Like Zenefits, SoFi struggled with a slew of setbacks in 2017. Allegations of sexual misconduct and loan misstatements forced out founder Mike Cagney. Former Twitter CFO and ex-Goldman banker Anthony Noto is now leading a turnaround of the business.

1. Lu.com — $18.5 billion

Why it’s hot: Lu.com, also known as Lufax, is one of China’s largest online lenders and is tipped for an IPO this year.

WhizCoin ICO (WZC Token): Legit Crypto Lending Rewards? (Bitcoin Exchange Guide) Rated: A

Whizcoin is the latest entrant to the world of digital currencies. The project aims to create the biggest lending program in the world which offers exclusive bonuses as well as passive income on a daily basis for its holders. To realize this goal, Whizcoin has already established a token buyback mechanism that runs on a transparent profit distribution model, and thus enables members to increase the value of their digital coins. All transactions are secured by cryptographic encryption, a feature that also regulates the mining of new Whizcoin.

Unlike other digital currencies, Whizcoin does not require exceptional tech savvy from its users. To trade in Whizcoin, all an investor needs is a mobile or computer with a dependable internet connection.

 

 

 

Australia

Winners from banking Royal Commission (The Bull) Rated: A

The Royal Commission will surely slow the big banks down by adding extra compliance and costs, at a time when they need to be more nimble and aggressive to combat the fintech threat (and benefit from financial technology).
Peer-to-peer lending stocks could benefit if more borrowers look to bypass the banks, but most on ASX are too small and speculative for portfolio investors. Big fintech payment providers, such as Afterpay Touch Group, are a better bet but look fully valued after recent price gains.

Australian Banks Expected To Start Hiking Mortgage Lending Rates (Compare Dinkum) Rated: A

ME, the online lender has decided to raise the interest rate on its variable rate mortgages because it says funding costs have risen. ME is not the first bank to do this, nevertheless the lender hiked its standard variable rate for owner-occupier, principal and interest borrowers. Jamie McPhee CEO of the online lender said higher funding costs and increased regulatory compliance were the main reasons behind its decision to hike rates.

Funding costs are rising

Mr MchPee says over the last few months the bank has seen funding costs steadily rise in response to US interest rates that have been passed on to short term Australian interest rates. Simultaneously, regulatory requirements and industry reforms means that compliance costs are rising as well. ME’s decision follows on the heels of Suncorp which raised its rates in March and also cited higher funding costs as the reason behind its decision.

India

Money lending made easy (News Today) Rated: A

The online trading market has been booming at the moment and money lending has taken various forms. Monexo Fintech Pvt Ltd is one such online peer-to-peer lending company and News Today met up with its founder-CEO, Mukesh Bubna here for an exclusive chat.

Q) Being an online firm, technology must play a big part in your business. Do explain. 
A) Our system is 100 per cent online. A typical transaction has many stages. The normal way is cumbersome. There is the problem of being unserviced and second, you do not know how they will use your document. In our platform, your documents come from you to our system directly. There are no print-outs taken and even in our office, there is no printer. Everything is done instantly. With technology, privacy has gone up, speed will go up too.

Asia

Singapore Fintech CredoLab Secures $ 1 Million Investment from Global Venture Firm Walden International (Crowdfund Insider) Rated: AAA

CredoLab, a Singapore-based fintech provider of mobile-based alternative credit scoring solutions for banks, consumer finance companies, and retailers, announced on Thursday it secured a $1 million investment from established global venture capital firm Walden International. Established in 2016, CredoLab is headquartered in Singapore was previously backed by regional fintech venture capital firm Fintonia Group, and FORUM.

Beenext-backed Indonesian P2P lender Amartha targets to raise Series B round by June (Deal Street Asia) Rated: A

Indonesian peer-to-peer lending platform Amartha has revealed that it is currently in talks with investors to raise a series B round of funding which is expected to be closed in the second quarter of this year.

 

OJK Urges Sharia Finance to Optimize Fintech (Tempo) Rated: B

The Financial Service Authority (OJK) chief Wimboh Santoso encourages the sharia finance industry to continue expanding businesses using the latest technology. One way is by optimizing the utilization of financial technology or fintech.

Africa

Crypto-to-Cash Lending is Growing Quite Popular These Days (Nigeria Today) Rated: AAA

A new business model has formed recently called crypto-to-cash lending and this new financial sector is growing exponentially. The phenomenon follows the modern rise in recent years of peer-to-peer lending offered by financial giants like the Lending Club. Right now there are a few operations that are attempting to break the mold when it comes to this type of lending with projects such as Unchained Capital and Salt Lending taking the lead.

Then there is a new startup called Nexo that plans to provide crypto-infused instant credit to borrowers without the need for credit checks. VCs like the Techcrunch founder Michael Arrington, and others recently pumped $50Mn into Nexo and the company has a security partnership with Bitgo. Nexo believes it will be the first firm to provide instant crypto-backed loans as it states on its website.

Authors:

George Popescu
Allen Taylor