Tuesday July 18 2017, Daily News Digest

fintech adoption

News Comments Today’s main news: Laplanche shares vision for Online Lending 2.0 at Lang Di Fintech. Elevate named a great place to work (again). FinLeap raises 39M Euro. Crunchbase-like database launches in Singapore. Today’s main analysis: Ant Financial poised for more growth. Fintech use reaching mass adoption among digital consumers. Today’s thought-provoking articles: OCC vs. New York DFS.  Ant Financial […]

fintech adoption

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United Kingdom

China

European Union

International

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Asia

News Summary

United States

Elevate Named Great Place to Work by Independent Analysts for Second Year in a Row (4-Traders), Rated: AAA

Elevate was recently certified as a great workplace by the independent analysts at Great Place to Work®. Elevate earned this credential based on ratings provided by its employees in anonymous surveys. A summary of these ratings can be found at 

“According to our study, 87 percent of Elevate employees say it is a great workplace,” says Sarah Lewis-Kulin, Vice President of Great Place to Work Certification & List Production.

79% of Elevate employees completed a survey, resulting in a 90 percent confidence level and a margin of error of ± 2.04.

Ex-LendingClub CEO Laplanche sees new Upgrade venture growing loan volumes (Yahoo! News), Rated: AAA

Online lender Upgrade, launched by former LendingCLub Corp CEO Renaud Laplanche in April, expects to grow its loan volumes and add new asset managers to its roster of buyers in coming months, Laplanche said in an interview on Monday.

Upgrade has been testing its credit quality and risk management systems, compliance framework and other operations, as well as building up its infrastructure to deal with rising volumes before ramping up the service, Laplanche added. The company has signed up six asset managers who are already buying or plan to buy loans originated by the company, including Jefferies LLC and an unnamed Hong Kong firm, he said.

OCC vs. New York DFS: Battle for the Future of FinTech (Bloomberg BNA), Rated: AAA

In the rapidly developing world of financial technology it often is unclear who has the legal authority to regulate the activities of newly created companies. Many of these companies do not neatly fit into any established regulatory scheme. However, answering the question of who will be creating the regulatory rules for FinTech companies is important both for regulators and the FinTech companies themselves.

State Regulators Want to Regulate FinTech

Over the past several years, state regulators have been staking out positions as leading regulators of FinTech companies.

During this same period, federal regulators have announced the intention to assert control over the regulation of FinTech companies.

The OCC indicated that its authority to grant FinTech Charters to nonbank FinTech companies stems from 12 C.F.R. § 5.20(e)(1), which states that the agency may grant such charters to institutions that conduct “at least one of the following three core banking functions: receiving depositions, paying checks, or lending money.”

The Lawsuit

The DFS did not limit itself to criticizing the proposed FinTech Charters. On May 12, 2017, the DFS filed a lawsuit against the OCC in the District Court for the Southern District of New York, alleging that the OCC’s proposed FinTech Charters exceeded the agency’s statutory authority under the National Banking Act and violated the Tenth Amendment. Based on these claims, the DFS sought declaratory and injunctive relief that would declare the proposed FinTech Charters to be unlawful and prohibit the OCC from creating or issuing these charters in the absence of express authorization from Congress.

Third, even if the OCC prevails and begins granting FinTech Charters, state agencies such as the DFS will still attempt to regulate FinTech companies. This could lead to future disputes over the nature and scope of the federal preemption of state regulations, which will add to the confusion over which regulations apply to which FinTech companies.

As a result of these issues, FinTech companies have little idea what the future regulatory terrain will look like. This uncertainty makes it difficult for companies to predict the future regulatory cost of business decisions they would like to make today.

Worthy Financial Announces the Closing of Its Seed Financing Round (BusinessWire), Rated: A

Worthy, a digital investment app that redefines how Americans access investment products, diversify their portfolios and save for retirement, announced the successful closing of its seed financing round. The funds will be used for the full-scale roll-out of the Worthy mobile app, and will enable Worthy to expand its growing user base as well as to broaden the array of investment product options it offers retail investors.

Worthy provides users with the unprecedented ability to spend their way to retirement by investing retail round-ups into high-yielding fixed interest bonds, the proceeds of which fund growing businesses. In doing so, anyone has the capability to build a nest egg, enhance portfolio returns, mitigate risk, and generate both social as well as financial returns. Worthy investors grow their portfolios while simultaneously supporting American entrepreneurs.

Stash, now valued at $ 240 million, lets anyone start investing in the stock market with just $ 5 (Business Insider), Rated: A

Krieg and Robinson realized then that they had an opportunity to help.

They founded Stash, an app that lets you build a portfolio and start investing with only $5, plus it teaches you the ins and outs of the stock market.

Krieg and Robinson realized then that they had an opportunity to help.

The company launched in October 2015 and just closed on a $40 million Series C led by Coatue Management. That brings Stash’s total funding to $78 million and values the New York-based startup at $240 million, according to a person familiar with the company.

Stash makes money by charging a subscription fee of $1 per month for accounts with less than $5,000. When an account has more than $5,000, Stash charges a fee of 0.25% fee.

Stash now has about 850,000 customers nationwide.

Why Robo-Analysts, Not Robo-Advisors, Will Transform Investing (The Financial Revolutionist), Rated: A

Robo-advisors and robo-analysts are both important to enabling wealth management firms to cut costs without sacrificing quality of advice, but the importance of a robo-analyst to enhance the quality of investment advice shouldn’t be underestimated.

Today, many of the tasks performed by robo-advisors are low value-added services such as determining and communicating asset allocation strategies (e.g., 60% equities, 30% fixed income and 10% cash). In fact, these services are so low value-added that advisors cannot make money doing them unless they are bundled with higher value-added services.The value proposition of a robo-analyst is very different.

Specifically, by shining an analytical light in the dark corners of financial filings, robo-analyst technology can identify many critical data points overlooked by most research analysts today. No longer must investors rely on the headlines or management-manipulated earnings. With new technologies, investors can receive a much fuller, more comprehensive analysis of financial filings, company profits and valuation so as to make better informed decisions than ever before. As a result, robo-analyst tech raises the analytical bar universally, enabling investors to transcend the short-sighted and high turnover trading mentality that, in the long run, does more damage to investors than good.

Bankers Worry About Jobs Lost to Automation (Newsmax), Rated: A

A quarter of banking’s “front line” professionals are worried about losing their jobs to robots and artificial intelligence-boosted mobile apps, according to a LinkedIn survey.

In the poll of 1,012 pros from financial technology, investment banking, retail and corporate banking, financial and hedge fund management, accounting, insurance, and private equity, 25 percent said they are concerned automation will impact their job security – with 34 percent of retail bankers saying it is a significant concern for them.

The survey also found 42 percent of financial services pros think financial technology is a “direct threat” to traditional financial services, compared with 13 percent of professionals who work in traditional financial services, and 18 percent of all the financial professionals.

Matthew Wong of CB Insights on Insurtech (Lend Academy), Rated: A

In today’s episode of the Lend Academy podcast we have Matthew Wong of CB Insights. He has been following innovation in the insurtech space for some time and his weekly insurtech newsletter has a subscriber base of more than 18,000 people.

In this podcast you will learn:

  • Matt’s background and how he first became involved in insurtech.
  • What CB Insights does.
  • The headwinds facing insurance industry incumbents today.
  • Why millennials are not buying insurance as much as other generations.
  • Why insurtech is hot right now when it comes to VC investments.
  • Some of the most interesting companies in the insurtech space right now.
  • Why it will probably take a long time for these startups to get to scale.
  • Why Matt likes Zhong An Insurance, the first and largest online insurer in China.
  • How the incumbent insurance companies have been reacting to this surge in startup activity.
  • Why Munich Re is one of the most interesting incumbents.
  • Matt’s view on what SoFi is doing partnering with a life insurance company.
  • The endgame for many of the insurtech startups.

Solar Loans Are A Risky Investment But Not Unlike Other ABS (ValueWalk), Rated: A

Solar loans are on the rise as the industry undergoes a transition and credit investors consider whether these asset-backed securities are worth the risk. In some ways, they’re similar to other types of collateral, and credit investors are already used to dealing with the types of risk they pose. However, analysts at Moody’s warn that they’re one of the riskiest securitization asset classes.

The reason solar loans are so new is because until now, the residential solar market has been dominated by third-party ownership of solar panel systems via power-purchase agreements and leases. GTM Research projected late last year that 2017 will be the year direct ownership of residential solar panels retakes its position as the top solar financing model.

The firm projected that 55% of the U.S. residential solar capacity that’s installed this year will be bought by customers who either pay in cash or take out a loan to finance their systems.

Jefferies gives IBM Watson a Wall Street reality check (TechCrunch), Rated: A

IBM’s Watson unit is receiving heat today in the form of a scathing equity research report from Jefferies’ James Kisner. The group believes that IBM’s investment into Watson will struggle to return value to shareholders.

The narrative isn’t the product of any single malfunction, but rather the result of overhyped marketing, deficiencies in operating with deep learning and GPUs and intensive data preparation demands.

If job postings are any indication, IBM is not keeping pace with other technology companies in hiring machine learning developers.

Cascade Fintech Signs 3-Year Contract for AU10TIX ID Authentication & Onboarding Automation (WVAlways.com), Rated: A

US prepaid card and P2P payment services provider Cascade Financial Technology Corp has signed a 3-year contract to power customer onboarding and KYC with 2nd generation ID authentication and onboarding automation. AU10TIX Secure Customer onboarding (SCO) cloud service that already powers major players across financial services markets, is known not only to increase KYC robustness and fraud protection but also improve customer conversion success chances and operating efficiency.

The future of Millennial banking (Marketing-Interactive), Rated: A

In the last ten years, the fundamental assumption that financial institutions are the only avenue to financial transactions is being called to question, especially by Millennials, who are by far the most entrepreneurial generation.

In a disruptive world, what does the future of banking and finance look like? How can and should financial institutions adapt to remain relevant, or even lead in this era of change?

  • Seamless, efficient and fast

Payments are perhaps the most basic and prevalent interaction with finance for the masses, yet for the longest time, payments to businesses saw minimal innovation. P2P transfers were never a focus for banks since it was a zero commission business. This was a pain-point to Millennials, who are used to sending everything from photos to documents electronically – having to withdraw physical cash or obtaining account details to securely transfer money for lunch is considered old fashioned!

  • Flexibility and access to funds

Traditional unsecured loans might require a strong financial history or proof of steady income stream, which would be unlikely if the individual were not taking a salaried job. Cash advances on credit cards would usually incur overly high interests costs.

This creates opportunities for peer to peer (P2P) lending marketplaces such as Prosper and Lending Club, platforms which create alternative ways to access cash loans while providing alternative yields on deposits.

  • Information access

Websites such as MoneySmart, DirectAsia, GoBear and Milelion position themselves as third-party and an unbiased advisor of investment products and policies. They perform the heavy lifting of trawling through multiple sites to aggregate and analyse information, empowering consumers to make informed purchases in the shortest time.

  • The reversal to brand love

The answer lies in placing the consumer in the centre of their businesses and asking the right questions constantly to redefine scope of value-add. It is an iterative journey, and worthwhile to include consumers as co-creators in product design and transformation.

Wela, the World’s First Financial Advice App Pairing Artificial Intelligence with Real Advisors, Available for Android Devices (Marketwired), Rated: B

Wela, a personal finance app that pairs artificial intelligence (AI) and human advisors, announces today it is available for download on Android devices in addition to iOS. Wela pairs real financial advisors with AI through the personification of its digital advising algorithm, Benjamin. The first true digital advisor, Benjamin utilizes AI to track users’ daily, weekly and monthly spending habits and provides personalized advice based on their financial needs and goals. Unlike other free consumer finance apps, Wela also offers access to real financial advisors via phone, video chat or in-person at no additional cost.

The Android app contains the full functionality of the iOS version and employs the same innovative features that allow users to track all their financial accounts in one place. Wela protects user privacy by leveraging bank-level security, as well as 256-bit SSL encryption and two forms of secure authentication. Capable of aggregating data from more than 13,000 financial institutions, Benjamin pulls linked account information to run a complete analysis, helping users take steps toward financial wellness based on three main pillars: creating an emergency reserve, paying off debt and implementing an investment strategy. In addition to Benjamin’s foundational metrics, the algorithm delivers custom insights on demand, helping users stay on track to reach their short- and long-term goals.

Three Leading Lawyers Take the Helm of Manatt’s Financial Services Group (BusinessWire), Rated: B

Manatt, Phelps & Phillips, LLP, today announced new co-chairs of the firm’s industry-leading financial services group, with the appointment of Richard Gottlieb, Brian Korn and Donna Wilson.

Gottlieb is a partner in the firm’s Chicago office, Korn is based in Manhattan, and Wilson practices in Manatt’s Los Angeles office.

United Kingdom

MarketInvoice Stands at £1.34 Cumulative Invoices Funded (Crowdfund Insider), Rated: AAA

This past February, MarketInvoice shared it had funded invoices over £1.1 billion since platform launch in 2011. The online lender said it expects to top the £2 billion in invoices funded by the end of the year.

In Q2 of 2017, MarketInvoice announced that it had funded invoices from UK businesses worth £161.9 million. Compare this amount to the £103 million funded in Q2 of 2016 and the platform is generating some serious momentum.

In the first quarter of 2017, MarketInvoice generated £130 million in invoice finance.

RateSetter’s new chairman heralds benefits of provision fund (P2P Finance News), Rated: AAA

RATESETTER’S new non-executive chairman Paul Manduca (pictured) has heralded the peer-to-peer lender’s “simplicity”, citing its provision fund as an example, on his first day in his new role.

The asset management veteran said that financial innovation can sometimes result in overly-complex products that investors cannot understand, which is “complacent and out of step with what customers want”.

Activist investor increases stake in Ranger Direct Lending fund (AltFi), Rated: A

The LIM Asia Special Situations Master Fund has increased its stake in the £243m Ranger Direct Lending fund, following the portfolio’s move to a double-digit discount.

The Hong-Kong based fund had already invested in the closed-ended portfolio, which invests in a host of online lending platforms, owning less than 4 per cent. Last week it increased its holding to 5.48 per cent (on the 7th July).

Assetz Capital Continues UK P2P Expansion with Scotland Appointment (Crowdfund Insider), Rated: A

Assetz Capital is continuing its strategy of establishing a local presence across the UK with the appointment of Ian Craig as Regional Relationship Director to help manage operations in Scotland. The appointment comes as Assetz Capital says growth in Scotland continues with a target of £50 million in lending (subject to two upcoming completions). Assetz Capital says it is well on its way to becoming the second largest alternative finance lender in Scotland.

Craig will be responsible for helping local Scottish businesses acquire finance through the peer-to-peer platform and ensure borrowing with Assetz Capital runs seamlessly.

P2P lenders helped British Business Bank fund £717m of SME loans last year (P2P Finance news), Rated: A

PEER-TO-PEER lenders were among the delivery partners helping the British Business Bank (BBB) fund £717m of loans to small businesses last year, the firm’s annual report revealed.

The state-backed institution, which has channelled funds through P2P platforms such as RateSetter, Funding Circle and MarketInvoice, facilitated 94 per cent of its finance through banks outside of the ‘big four’ last year, up from 90 per cent in 2015 and 79 per cent in 2014.

The BBB has a key performance indicator of having more than 75 per cent of its finance facilitated through providers other than the four largest banks over five years, so it has already surpassed that aim.

China

Renaud Laplanche Shares His Vision for Online Lending 2.0 at Lang Di Fintech (Lend Academy), Rated: AAA

In his first public appearance in over a year Renaud Laplanche, the CEO of Upgrade, gave a presentation this past weekend at Lang Di Fintech, LendIt’s annual Chinese conference, in Shanghai. Titled Online Lending 2.0 he laid out his vision for where he thinks the online lending industry is going next.

He talked about how one of the big innovations in Online Lending 1.0 was the introduction of more data into the underwriting process. Ten years ago, which marked the beginning of Online Lending 1.0, this new data allowed more accurate underwriting of consumers. But in Online Lending 2.0 this has expanded dramatically with not just more data but new and better tools available to analyze this data.

The two key data points that are being added in Online Lending 2.0 are location data and free cash flow analysis. We need to adjust underwriting to take into account location because a consumer in New York City has a much higher than average cost of living while a consumer in Greenville, SC has a much lower than average cost of living for example. This is why Debt-to-Income (DTI) is less important than free cash flow today.

Alibaba Affiliate Ant Financial: World’s Largest Fintech Poised For More Growth (Seeking Alpha), Rated: AAA

Ant Financial, Alibaba’s (NYSE:BABA) financial affiliate, is the largest fintech in the world, and leads the pack of the world’s largest fintech unicorns, the top four of which are from China, the largest fintech market in the world: Ant Financial (US$60 billion), Lufax (US$18.5 billion), JD Finance (US$7 billion) (NASDAQ:JD), and Qufenqi (US$5.9 billion).

Alipay

Payments make up the biggest portion of fintech in China and this is expected to be the same going forward.

Mobile phones function as mobile wallets for about 425 million Chinese, or 65% of all mobile users. This is the highest penetration rate in the world. At 38 trillion yuan (US$ 5.5 trillion) last year according to data from iResearch, China is the world’s largest mobile payments market and is over 50 times bigger than the American market where mobile payments reached US$112 billion.

China’s e-commerce market is expected to continue its upward climb. Online sales represented 16.4% of China’s total retail sales in the first half of 2016 and this is expected to climb to 21.7% by 2020 which should benefit Alipaygoing forward.

Wealth Management

Wealth management is the largest area of fintech after payments.

There are about 325 million Chinese investors in Yu’e Bao, a number almost as big as the population of the United States and the fund has more assets than the rest of the top 10 Chinese peers combined.

The majority of Yu’e Bao users are millennials under the age of 30 and about 99.7% of its investors are individuals, according to its annual report, rather than companies or financial intermediaries as is usually the case at other Chinese money-market funds.

Credit scoring

Data from the World Bank’s Global Findex study revealed that the bank account ownership rate among individuals aged 15 and older is quite high in China (79% in 2014) yet credit usage is relatively low at 14% in 2014.

The People’s Bank of China covers credit profiles for just about 25% (around 350 million) of China’s 1.3 billion population and shares this data only with selected banks. This absence of reliable credit scoring is partly the reason individuals and small enterprises experience difficulty obtaining a loan from China’s state-controlled banking system which tends to favor large corporates and state-owned enterprises.

Lending

Credit data from the system will also be used to support lending activities at Ant Financial’s MYbank, an internet-only bank which provides loans to SMEs. Set up in mid-2015, the bank will extend loans up to US$800,000 as well as smaller loans that state banks usually don’t pay much attention to.

China has just 8.1 commercial bank branches and 55 ATMs per 100,000 people. This compares with US and Canada which have 28.2 branches and 222 ATMs per 100,000 people and in Europe where there are 28 branches and 81 ATMS per 100,000 people.

PBOC calls upon fintech firms to help fund system to monitor online transactions (SCMP), Rated: A

China’s central bank has urged financial technology (fintech) companies to help pay for a government-controlled monitoring system to watch over financial transactions on the internet.

Sun Guofeng, director general of the People’s Bank of China’s research institute, said the fast-growing fintech businesses have ratcheted up pressure on authorities to invest heavily in regulatory technology, or regtech, but he pointed out that it would be unfair to cover the costs by using taxpayers’ money.

Merger and acquisition may be the future trend for P2P lending sector (Xing Ping She), Rated: A

Recently, Dianrong announced that the company has purchased Quark Finance, Quark Credit Workshop and its related branches and teams. Before that, the merger has been spread for a long time. The merger seems indicate a direction for P2P lending platforms: small platforms might be realise the compliance requirements by being merged, and big platforms also could expand and increase their market share through the acquisition. Thus, mergers and acquisitions might become the next new wave of the P2P lending industry in China.

PwC: Fintech Survey China 2017 (Crowdfund Insider), Rated: A

There are three main areas of finance that are poised to be irreversibly changed, according to PwC. Consumer banking, investment & wealth management and transfers & payments are becoming pretty much all digital and data driven.

Some high level bullet points on China and Fintech include:

  • 68% of financial institutions expect to increase Fintech partnerships in the next three to five years
  • 85% believe mobile apps are the fastest growing customer channel
  • 71% regard price wars as one of the challenges of Fintech
  • Personal loans are at the top of the list for moving to Fintech over the next 5 years

Download the full report here.

European Union

German fintech factory FinLeap raises EUR39 million (Finextra), Rated: AAA

FinLeap, the startup platform behind Germany’s solarisBank, has secured EUR39 million in equity capital to support its ongoing fintech incubation programme.
Having launched twelve fintech ventures so far – including bank account switching platform FinReach, digital debt management outfit Pair Finance, insurance broker Clark, and Germany’s solarisBank – FinLeap is already active in ten European countries.

Regulating FinTech: the Way Forward (Fexco), Rated: A

On Friday 14th July Brian hosted an event at the European Parliament offices in Dublin entitled ‘Regulating FinTech: the Way Forward’. Speakers at the event were the Minister for Financial Services Michael D’Arcy TD, Neil Ryan, COO Quaternion Risk Management; Derek Butler, CEO Grid Finance; Camille Blackburn, Central Bank of Ireland, and Ruth McCarthy, Director of the FinTech and Payments Association of Ireland and CEO of FEXCO Corporate Payments.

The panel discussed regulatory responses to FinTech services at EU and domestic level, as well as examining opportunities within the FinTech ecosystem in Ireland.

Strong networks, good government supports and the presence of major innovators are enabling Ireland to stay at the cutting edge, and these factors will help Ireland to achieve its IFS2020 target for job creation in financial services.

Bricknode: Reporting To fFnancial Regulators With The XBLR Format Creates Confusion (Mondovisione), Rated: A

Financial institutions of various types are required to conduct periodic reporting to local regulators, like the Swedish Financial Inspection and EU-authorities like the European Banking Authority. Following the financial crisis of 2007/2008 numerous resolutions were past to increase regulations of the participants in financial markets. These initiatives are now being implemented regularly. Both MiFID II and MiFIR are scheduled to be implemented as of January 2018 with extensive reporting requirements and scarce information of how this should be implemented practically. During 2017, financial institutions and FinTech companies were impacted by EU-reporting in practice. One example is the reporting file format called XBLR were a lot of confusion exists.

International

Fintech Use Reaching ‘Mass Adoption’ Among Digital Consumers (The Financial Brand), Rated: AAA

Findings from the EY Fintech Adoption Index 2017, published by EY, indicate that fintech firms are approaching mass adoption among digitally active consumers. Leveraging digital technology, combined with personalized solutions, fintech firms are differentiating the customer banking experience. Simplicity, clean design, personalization, real-time insights and transparency are the defining components of these new solutions.

The four key themes that emerged from the 2017 EY Fintech Adoption Index were:

  1. Fintech services have reached mass adoption in most global markets
  2. New services and players are driving increased adoption
  3. Fintech users prefer digital channels and technologies
  4. Fintech adoption will continue to gain momentum

According to the EY report, some of the primary strategies used by fintech firms to gain traction include:

  • Offering a service for free or at a much lower cost that traditionally had a cost associated
  • Solve a problem an existing customer base
  • Provide an entirely new service
  • Create word-of-mouth advocates
  • Build a strong brand identity
  • Leverage highly targeted marketing

The most dramatic variance between fintech users and non-users is the ways consumers prefer to manage their lives. According to EY, “64% of FinTech users prefer managing their lives through digital channels, compared to 38% of non-FinTech users. FinTech users are also more likely to be users of non-fintech digital platforms, such as on-demand services (digital taxis, online food, etc.) and the sharing economy (bike and housing rentals).”

India

Alt Lending platform OxyLoans plans to raise Rs 200 cr debt (MoneyControl), Rated: AAA

The city-based alternative lending platform, OxyLoans, today said it is planning to raise a debt of Rs 200 crore to meet the requirements of borrowers.

He said they have over 240 asset-backed applications from borrowers, and expressed hope to complete the process (raising debt of Rs 200 crore) within six months.

Thatavarti further said that OxyLoans, which has set a loan disbursal target of Rs 156 crore in three years, has facilitated loans to the tune of Rs 64 crore in the last nine months.

This startup is an end-to-end digital platform for lenders and borrowers – TachyLoans (KnowStartup), Rated: A

TachyLoans is an online lending marketplace catering to both Individuals & Small and Medium Enterprises (SMEs). Their platform is based on Peer-to-Peer lending paradigm that uses the proprietary credit decision model designed with some of the best and innovative practices in the financial industry using the cutting edge technologies like Artificial Intelligence & Machine Learning and is built through state of the art technology.

Founded by Brahma, TachyLoans is based out of Bangalore and was established in the year 2016. Brahma brings to the table more than 20 years experience and expertise in Retail Banking, Sales, Marketing and Operations.

When airlines don’t have parachutes, why should P2P lending platforms have LPF? (India Times), Rated: A

The regulations will lay out the corporate structure that each of the platforms would need to follow and most importantly the DOS and Don’ts related to dealing with lenders and borrowers. However, of late, there has been an interesting trend of platforms coming up with a lender protection fund. What does it do? In case a lender loses the money he has extended to a borrower as a loan, the lender protection fund is expected to cover the losses for the investor. On the face of it, it sounds like a good idea, but if you dig deeper, there are several issues.

The flyer is aware of the risk, but he trusts the plane. You have a life vest under your seat for an emergency landing on water, but you do not have an escape pod that can be activated if a flight is about to crash. Similarly, the lender on a P2P site should be able to trust that the lending platform has built a system that can help Lender earn higher returns by mitigating risk. While a P2P platform cannot shirk its responsibilities when it comes to investor protection, having a fund to mitigate losses is not the answer. Proper systemic safeguards and strong ethics should alone suffice.

Launching LPF would in some ways signal that a platform does not have confidence in its own credit evaluation and risk-mitigation system.

Paytm invests in Mobiquest (e27), Rated: B

India’s leading digital payments and m-commerce company Paytm has made an investment in loyalty app developer Mobiquest. The funding amount was not disclosed.

Asia

Fintech non-profit launches database for financial technology startups in Singapore (Tech in Asia), Rated: AAA

The Singapore Fintech Association (SFA) announced today it has created an online directory for fintech companies based in the city-state. The database contains a short description of each company and information about its founding team, funding status, and business model.

Currently listing around 300 startups, the database is free to use and data is maintained by the companies themselves. The directory looks similar to Crunchbase and Tech in Asia’s own startup database, but it’s exclusive to fintech.

The SFA built the directory in collaboration with US data company Let’s Talk Payments and its Medici platform, which provides information and resources about the fintech industry.

South Korean FinTech Firms To Offer International Money Transfer Services (ETH News), Rated: A

According to The Korea Heraldofficials at South Korea’s Financial Supervisory Service (FSS) announced last week that they expect approximately 40 FinTech firms to provide international money transfer services starting August 15.

Per Yonhap News Agency, South Korea’s international money transfer market currently totals approximately 10 trillion won ($8.7 billion). Opening the market to FinTech firms will encourage competition and drive down costs to consumers since the companies can offer money transfer services at much lower prices than traditional banks.

Single transfers via FinTech firms will be capped at $3,000, and individual annual limits will be set at $20,000. For FinTech firms to qualify for the FSS permit, they must possess 2 billion won ($1.77 million) and a debt-equity ratiobelow 200 percent.

Authors:

George Popescu
Allen Taylor

Wednesday June 7 2017, Daily News Digest

Ranking by average gross yield

News Comments Today’s main news: SoFi to add 400 Delaware workers by 2018. KBRA rates Upstart Securitization Trust 2017-1. RateSetter, MarketInvoice, LendInvest make Fintech50 list. China P2P lenders face tighter disclosure rules. Danish fashion tycoon invests in Klarna. Today’s main analysis: RentRange identifies 25 markets with highest average gross yield. Today’s thought-provoking articles: Did someone cancel the fintech revolution? Innovators […]

Ranking by average gross yield

News Comments

United States

United Kingdom

China

European Union

International

India

Canada

News Summary

United States

FinTech company SoFi to add 400 Delaware workers by 2018 (Delaware Online), Rated: AAA

SoFi, an online provider of personal loans, will add 400 workers to its Claymont office by the end of 2018.

SoFi entered Delaware in February when it acquired Claymont-based Zenbanx for an undisclosed sum. The Zenbanx purchase bolstered SoFi’s portfolio of online personal finance offerings. Among the former Zenbanx products that now belong to SoFi are software that enables customers to transfer international currency through mobile devices and an app that allows users to transfer money through the sound of their voice.

SoFi has vowed to ramp up the former Zenbanx office with an aggressive hiring plan that will see it add 100 workers by August, 200 workers by the end of the year and 400 employees by the end of 2018.

The majority of the openings are call center jobs, but SoFi is also looking to fill IT, business development and management positions. Of the first 200 openings, 130 will be call center positions, 30 will be mortgage operations jobs and the remaining 40 will be IT, business development and office staff.

KBRA Rates Upstart Securitization Trust 2017-1 (KBRA Email), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Upstart Securitization Trust 2017-1 (“UPST 2017-1”). This is a $163.107 million consumer loan ABS transaction that is expected to close on June 21, 2017.

This transaction is Upstart Network, Inc.’s (“Upstart” or the “Company”) first securitization of prime and near prime unsecured consumer loans. The loans are facilitated by Upstart’s proprietary models supporting an online marketplace that connects borrowers and investors by offering consumer loans originated by Cross River Bank (“CRB”) through the platform, www.upstart.com (the “Upstart Platform” or the “Platform”).

RentRange Identifies 25 Markets with the Highest Average Gross Yield (Markets Insider), Rated: AAA

RentRange, one of the premier providers of market data and analytics for the housing industry, today released data ranking the top 25 U.S. metropolitan statistical areas (MSAs) by highest average gross yield for singlefamily1 homes during the first quarter (Q1) of 2017. The data analysis also identified the average rental rate increase between the first quarter (Q1) of 2017 and the same quarter in 2016, average vacancy rate in Q1 2017 and investor purchases over the past 12 months.

The Q1 2017 RentRange® data shows that the highest yielding markets are dominated by older metro areas in the Midwest and Northeast.

Analyzing the average vacancy rates, which is the percentage of rental properties that are vacant or unoccupied at a particular time, the lowest rates from the list are in Pittsburgh, Indianapolis, St. Louis, Oklahoma City and Canton. Lower vacancy rates generally mean properties stay vacant for less time, limiting the loss of rent.

Source: Markets Insider

Lenders Seeking to Provide Real-Time Credit Offers Online Can Cut Implementation from Months to Weeks with TransUnion Find My Offer Solution (Globe Newswire), Rated: A

As financial institutions seek to improve customer experiences online, TransUnion (NYSE:TRU) today announced the launch of Find My Offer to help lenders deliver relevant credit offers to consumers online. Find My Offer is a set of configurable white-label web screens that support a lender’s consumer prequalification and digital prescreen initiatives.

Lenders can use Find My Offer to acquire new customers and expand existing relationships online. The site automatically integrates with TransUnion’s DecisionEdge suite, allowing lenders to use their existing underwriting criteria for their online marketing.

A top 20 national bank recently utilized Find My Offer to increase online acquisitions. Its IT team estimated a six month development cycle to build a customer-facing site to initiate credit offers online. Using Find My Offer, the bank saved more than 40% in development costs and was able to present relevant, tailored offers to consumers within three weeks – approximately 20 weeks earlier than what was projected using internal IT resources.

Sharestates Launches Auto-Invest Tool for Highly-Tailored Investments While Surpassing $ 500M in Loan Originations (PR Newswire), Rated: A

Sharestates, an online real estate investment marketplace, announced today the launch of its new Auto-Invest tool, a feature that will maximize the investor’s chances of investing in the platform’s highly sought after real estate debt opportunities. The new feature will allow investors to choose from multiple strategies, including a custom investment strategy that includes 12 underwriting filters to choose from. The launch of this new tool coincides with the company reaching a major milestone of $500 million in loan volume.

With the Auto-Invest tool, the investor will have the ability to increase the frequency at which their funds are deployed. These automatic investments will give the investor a better chance of eliminating “cash drag,” which occurs when the investor does not have a chance to log in, review the new loan and manually make their investment before the loan sells-out.

The interface provides a user-friendly and client-focused tool, making investing in real estate loans hassle-free. Additionally, after every auto-invest transaction, the investor will receive a confirmation email with loan and investment details, where they will then have a 24-hour window to opt out or increase participation.

In order to tailor the best possible loan selection for each individual, Sharestates uses a multitude of adjustable measurements for each investor to meet their investment goals. These measurements include; investment totals per loan, maximum investment frequency and limit, interest rate requirements, risk ratings, property types and more.

Sharestates continues to outperform the online real estate lending industry with originations exceeding $500 million since inception in 2014. Current run rates have Sharestates exceeding $1 billion in total originations before the end of 2017, with current monthly totals hovering around $60 million. Sharestates has funded more than 520 individual loans, providing an average return on investment of 10.62%.

Kuber’s Fluid App that Allows Students to Borrow Money Interest Free Now Live on iTunes (Crowdfund Insider), Rated: A

Kuber Inc, a Southern California based Fintech company, has launched it’s personal finance product targeting the more than 22 million university students in United States. Fluid App is now live on Apple iTunes store and free to download. This is first of its kind finance product is designed specifically to build credit for college students in America.

Using the app, users may borrow up to $500 dollars interest free and without and other associated fees. The lending and repayment activities are then reported to major U.S. credit bureaus to start building credit from day one.

Direct Online Loans: Support That Works For You (NuWire Investor), Rated: A

Direct lenders have streamlined their rules and regulations to help those typically overlooked by conventional lenders. They still review you application carefully, but they don’t necessarily use subprime credit scores to reject your application. If you speak with the representatives at MoneyKey, they’ll you know what you need to provide. These reps may review your rating through other channels, but it’s not the only way they’ll determine your candidacy. It’s just one number amongst many factors they use to review your application.

They also don’t rely on in-person meetings to determine your candidacy, as they do most of their business online. All they require is basic contact and financial information submitted in an online application, and they’ll notify you if you qualify within minutes. For those that do, you’ll receive a phone call from a representative to verify the information that you supplied. If everything checks out, direct payday lenders like MoneyKey deposit your approved short term loan into the account that you supplied on your application. In some cases, you’ll receive your cash in as little as one business day.

Robo-Advice Is Not Your Differentiator (FA Magazine), Rated:  AAA

Increasingly, robo-advice technology will become bare necessities for any retail financial advice firm that wants to grow by adding value to financial advisors and their clients.

How to Get Small Business Loans: Part 2 (FX Daily Report), Rated: B

At some point, bank is one of the most reputable lenders. Banks usually have lower interest rates and the credit duration may be longer. However, large banks usually have more requirements and slower process.

These banks may have slightly higher interest rates. However, local community banks offer simpler procedures, as they always want to be the partners for small business. Local banks commonly offers shorter credit period.

They are the most welcoming partners for quick loan. Direct online lenders usually apply a relatively easy loan process. They are also supported by reputable lenders. Another advantage is that the lenders may not require you to provide collateral. Some lenders do not even check your credit record before making approval. Some lenders even offer overnight credit process. Once you send the application today, you will get the money in your account tomorrow.

The disadvantages include higher interest rates, shorter duration, and lower credit limit. Direct online lenders can be easily found on internet. Some of them have only online presence, but some are online divisions of a conventional lending agency.

They also have online presence. However, peer-to-peer lending sites are not the true lenders. Instead, they act as the middlemen between the clients and the lenders.

Merrill Lynch, Betterment Execs Agree On Financial Advice For New Grads (FA Magazine), Rated: B

Joe DePaulo, CEO and co-founder of College Ave Student Loans, had this advice for grads starting a job on how to ease the burden of the ball and chain of college debt weighing on their finances:

1. Organize all your student loans to make sure you know when your monthly payments start, the amount due for each one and your various due dates so you don’t accidentally miss any payments or pay late.
2. Get to know your loan servicers — the companies handling the billing and payment services for your loans — and make sure each of them have your current contact information, including both your e-mail and mailing address.
3. Consider signing up for auto-pay for each loan through your student loan servicers. You’ll often get a discount on your interest rate when you’re making automatic payments, and you’ll know that your payments are being made on time each month. It’s a great way to save money and build good credit.
4. Know your grace period for your student loans, or how long you can wait after leaving school before you have to make your first payment. This can vary by loan depending which types of loans you have. The grace period is usually six or nine months, and it’s designed to give you time after you graduate to find a job and get on your feet before payments are due. Interest continues to accrue during the grace period on most loans though, so if you have the ability to start making payments before the grace period ends, you should. This will help you save money in the long run.
5. Pay attention to the interest rate on each loan. When you can afford to pay a little extra, you’ll usually save the most money by paying down the loan with the highest interest rate first.

United Kingdom

RateSetter, MarketInvoice and LendInvest make this year’s Fintech50 list (P2P Finance News), Rated: AAA

RATESETTER, MarketInvoice and LendInvest have made this year’s Fintech50 list, while Funding Circle and Zopa have been awarded a place in the Fintech50 Hall of Fame.

The annual Fintech50 list, which was first launched in 2013, selects the 50 European fintechs that are transforming financial services and recognises innovation rather than revenue. The companies are selected by a panel of more than 60 industry experts, following extensive year-round research from the Fintech50 team.

This year’s list, unveiled at a launch event at Silicon Valley Bank in London on Tuesday night, was chosen out of 1,500 companies. As well as an impressive presence from a raft of UK peer-to-peer lenders, the list includes business finance provider Iwoca, crowdfunding platform Seedrs, challenger lender Atom Bank and cryptocurrency Ethereum.

The Fintech50 2017:

  • Action.ai (London, UK)
  • Advice Robo (Amsterdam, Netherlands)
  • Aire (London, UK)
  • Algomi (London, UK)
  • AQMetrics (Kildare, Ireland)
  • Atom Bank (London, UK)
  • Azimo (London, UK)
  • Behaviosec (Stockholm, Sweden)
  • Bonify (Berlin, Germany)
  • Clearmatics (London, UK)
  • Clearscore (London, UK)
  • ComplyAdvantage (London, UK)
  • Contego (London, UK)
  • Credit Benchmark (London, UK)
  • Curve (London, UK)
  • Cuvva (Scotland, UK)
  • DarkTrace (Cambridge, UK)
  • Digital Shadows (London, UK)
  • Ethereum (worldwide)
  • FeatureSpace (London, UK)
  • Fenergo (Dublin, Ireland)
  • Figo (Hamburg, Germany)
  • FundApps (London, UK)
  • Iwoca (London, UK)
  • Kantox (London, UK)
  • LendInvest (London, UK)
  • Mambu (Berlin, Germany)
  • MarketInvoice (London, UK)
  • Meniga (Rejkyavik, Iceland)
  • Monzo (London, UK)
  • N26 (Berlin, Germany)
  • NetGuardians (Switzerland)
  • Onfido (London, UK)
  • OpenGamma (London, UK)
  • PayKey (Tel Aviv, Israel)
  • Privitar (London, UK)
  • Qumram (Zurich, Switzerland)
  • Railsbank (London, UK)
  • Raisin (Berlin, Germany)
  • RateSetter (London, UK)
  • Revolut (London, UK)
  • Scalable Capital (Munich, Germany / London, UK)
  • Seedrs (London, UK)
  • SETL (London, UK)
  • solarisBank AG (Berlin, Germany)
  • Suade (London, UK)
  • Thought Machine (London, UK)
  • Traxpay (Berlin, Germany)
  • Trussle (London, UK)
  • WeFox (Switzerland)

The FinTech50 Hall of Fame:

  • Adyen (Amsterdam, Netherlands)
  • Currencycloud (London, UK)
  • eToro (Limassol, Cyprus)
  • Funding Circle (London, UK)
  • iZettle (Stockholm, Sweden)
  • Klarna (Stockholm, Sweden)
  • Nutmeg (London, UK)
  • Transferwise (London, UK)
  • WorldRemit (London, UK)
  • Zopa (London, UK)

The Hot Ten – this year’s ones to watch:

  • Bud (London, UK)
  • ClearBank (London, UK)
  • Cleo (London, UK)
  • Datasine (London, UK)
  • Deposify (Dublin, Ireland)
  • Governance.io (Luxembourg)
  • Meteo Project (Paris, France)
  • Nxchange (Amsterdam, Netherlands)
  • Post Quantum (London, UK)
  • 10xBanking (London, UK)
China

China P2P lenders facing tighter disclosure rules (China Economic Review), Rated: AAA

Efforts to clean up China’s scandal-plagued peer-to-peer (P2P) lending sector are taking another step forward with a pilot program that imposes tighter information disclosure requirements to protect customers from being swindled, Caixin reports.  Under an initiative announced on Monday, companies will have to give people who use their P2P platforms a range of information including their registration address, shareholders, who provides custodian services, how many investors they have, their bad loan ratio and their outstanding loans. Altogether 47 separate pieces of information will need to be disclosed, 32 of which are mandatory, according to the National Internet Finance Association of China (NIFA), which is in charge of the pilot.

Chinese banks boost offshore lending in Asia-Pacific (The Asset), Rated: A

Chinese banks have been increasing their offshore lending volume in Asia-Pacific, outside of Japan, since 2014. Based on the pro-rata mandated lead arranger (MLA) role, China’s offshore lending amounted to US$70.5 billion via 300 deals in 2016, or nearly double the 2015 figure of US$36.3 billion, and nearly three times the 2014 volume of US$24 billion in 2014.

Figures released by Thomson Reuters on June 5 show that the bulk of China’s offshore lending has been concentrated in Northeast Asia. In 2016, Chinese banks accounted for US$52.7 billion through 172 transactions on a pro-rata basis at the MLA lender level, representing an increase of 83% from 2015.

European Union

Danish fashion tycoon invests in Swedish payments firm Klarna (Daily Mail), Rated: AAA

Anders Holch Povlsen, owner of Danish fashion retailer Bestseller, is buying a stake in payments firm Klarna, one of Europe’s most highly valued tech startups, the firm said on Wednesday.

A Klarna spokeswoman declined to comment on the precise size of the stake, but said it would be at least 10 percent.

Klarna said Povlsen’s company Brightfolk would buy shares from General Atlantic, DST Global and Niklas Adalberth, who will all still retain stakes in the firm.

Doing KYC on International Investors and the Potential of Automation (P2P Banking), Rated: A

On the majority of p2p lending marketplaces that accept non-resident international investors, the necessary process to comply with ‘Know Your Customer’ (KYC) rules involves multiple manual steps both on the side of the investor and on the side of the marketplace. After filling in details in forms the investor typically needs to submit scans (or photos) of an ID or a passport. As an investor  I balk at the very few marketplaces that ask me to submit these via unsecured email. The better ones offer an upload inside the SSL secured website after login. The British marketplace typically also require a recent utility bill to confirm address.

In continental Europe a few marketplaces are doing video ident. Recently when I registered at Paskoluklubas, aside from entering details in forms I needed to schedule a Skype video call in which I answered several questions and had to show my ID live. While it was straightforward, it is not more time efficient (both for investor and for marketplace). And I was lost for words for a split second when asked for my zodiac. How many non-native-english speakers can answer that question without hesitating for the right word (luckily mine is easy to translate).

Another example of outsoucing is the process Lenndy uses. When registering, all an investor is asked by Lenndy is his email address, nothing else. Then the investor is required to link an Paysera account with at least level 3.

Last week British Relendex moved from a manual document upload process to an automated process for investors of 7 countries; Australia, Canada, Denmark, Germany, Sweden, Switzerland. Relendex uses the Call Validate solution and checks (in case of Germany) first , middle, last name, gender, phone, address, city and postal code with the data coming from three different data sources and which Relendex says has high match accuracy. Relendex’s criteria was that the data available should be of equal quality and accuracy to that of the UK database.

Irish fintech start-up Plynk raises €25m in fundraising round (The Irish Times), Rated: A

Dublin-based financial payments start-up Plynk has raised €25 million in a Series A fundraising round as it looks to roll out its money-messaging app globally.

The investment, which has been led by Swiss Privee, is one of the largest-ever Irish Series A rounds.

The company has also announced plans to increase headcount from eight to 28 over the next 12 to 18 months as the number of users it has in Ireland this week reached 6,000, easily surpassing its initial target of 4,000.

Plynk has a licence to operate across the European Economic Area, which includes the EU along with Iceland, Liechtenstein and Norway. While only available in Ireland, the start-up intends to roll out its app in Spain over the summer with Portugal to follow shortly after.

German fintech platform Fincompare raises €2.5 million to provide financing for SMEs (Tech.EU), Rated: A

The German fintech startup Fincompare has raised €2.5 million in seed financing. The funding comes from the VC Speedinvest and Uniqa insurance, both from Austria. Several business angels from Berlin also participated in the round.

The Fincompare platform allows SMEs to receive and compare various offers for loans – anywhere from €10,000 to €5 million.

Grundag Real Estate Crowdfunding Platform Launches Powered by CrowdDesk (Crowdfund Insider), Rated: A

A new real estate crowdfunding platform has launched in Germany. Grundag GmbH & Co., a wholly-owned subsidiary of CrowdDesk, has launched to provide debt based crowdfunding for German real estate projects. CrowdDesk is a white label crowdfunding platform that powers several well established platforms in Germany. The new site was launched in partnership with ERGE Miet- & Finanzvermittlung GmbH & Co. KG.

International

FINTECH – DID SOMEONE CANCEL THE REVOLUTION? (Finextra), Rated: AAA

There are indications the Fintech revolution has stalled. It promised to change market structure, to radically improve products and services, and to save the incumbent banking sector from a slow slide to invisible utility status.

But these promises are yet to come to pass. Yet the revolution could still be completed – the underlying technologies are real and, deployed in the right way, they can still have a transformative effect on the financial services industry.

Source: FinTech – Did Someone Cancel the Revolution, Accenture

Read the full report.

FinTech Innovators vs. Incumbents: Understanding the Odds (Morgan Stanley), Rated: AAA

How can investors navigate this next chapter in FinTech? In a recent global collaborative report, “FinTech: A Gauntlet to Riches,” Faucette and his colleagues offer an investment framework for understanding where FinTech companies are likely to disrupt—and where established players are poised to get ahead.

Indeed, the pace of venture capital funding in FinTechs has slowed recently, suggesting that early-stage investors are coming to grips with the challenges of this space, and that established financial services firms are likely to take a more meaningful role in funding and developing new technology.

To understand which trends favor startups and which bode well for incumbents, investors should ask some key questions:

  1. What is the existing infrastructure? Innovators have the best shot at success in areas that lack established infrastructure. One area that is particularly poised for growth is B2B payments, a large and underserved corner of the market, with roughly 50% of payments still made via checks.
  2. Is consumer behavior changing? Early adopters in a nascent market tend to be more receptive to a new technology or provider, giving innovators a first-mover advantage. This bodes well for FinTech disruptors focused on small-business insurance (a.k.a. InsurTech).
  3. Does government help or hinder innovation? 
  4. How important is access to data? Investors should take note of the role of data, which can limit a small firm’s ability to scale without partnering with a data owner.
  5. Does success hinge on collaboration? 
  6. How important is access to capital markets? Companies that require continuous access to capital markets are subject to a high degree of market volatility, which can put an entire business model in jeopardy if still early in its formation, says Faucette. For fledgling U.S. marketplace lenders (a.k.a. peer-to-peer lending) and mortgage originators, access to capital markets could be a limiting factor, especially now that established players are investing in the space.
  7. Is the industry concentrated?

TransferWise CEO: ‘There is a huge fight to be the fintech capital of the world’ (Business Insider), Rated: A

The CEO and cofounder of TransferWise says cities around the world are becoming increasingly competitive in attempts to attract tech companies.

Luxembourg earlier this year set up a public-private partnership called the “House of Fintech,” aimed at attracting more companies to set up in the country. Lobbyists from Paris have made multiple trips to the UK in recent months in a bid to tempt financial services, including fintech, to set up in the French capital in the wake of Brexit. The Monetary Authority of Singapore has also copied the UK regulator in setting up a regulatory “sandbox,” which allows innovative companies to experiment with new products in a safe environment.

Why Trustly CEO Oscar Berglund Is Offering An Alternative To Credit Cards (Forbes), Rated: A

Excitement over fintech remains high even though investor enthusiasm has been curbing in recent months. According to a KPMG report, the flow of investments has started to ease. Global investments dropped to $3.2 billion in Q1 of 2017 from $4.15 billion in Q4 of the previous year. Indeed, investors seem to have made their wagers and are now more focused on ensuring that existing fintech companies start delivering.

More mature segments, such as payments, are also seeing saturation, as new competitors seek to maximize opportunities in markets keen on going cashless.

Having processed a whopping €3.2 billion in transactions in 2016, payment startup Trustly has recently emerged as a leader in the global fintech scene. Based in Stockholm, Trustly offers a fresh perspective on payments by putting the bank account at the center of digital payments instead of credit cards. The company is now used in 29 European countries, enabling merchants to perform cross-border business easily.

Berglund: We aren’t really going head to head against big banks. We see the bank account as the hub of people’s financial lives, and it’s what most other payment methods depend on. Trustly’s service is built around the relevance of the bank account and as such around the relevance of banks.

In Europe banks focused on the online channel are at the forefront of the adoption of new technology and I believe more banks will no doubt make use of our services going forward.

Berglund: Credit cards were invented to make payments easier in the physical world, but they may not have the same raison d’être as people move to online and mobile platforms. The truth is, it’s a pain to dig for your credit card and key in a long string of numbers, especially if you’re on the go and trying to make a purchase from a tiny smartphone screen. With Trustly, users can make a payment in just a few steps using only information they know top of mind. And our product is optimized for mobile and other devices to make it even more convenient. So while credit cards won’t be going anywhere for a while, it’s important to offer other user-friendly alternatives too.

India

CIOs Will No Longer be the Most Influential Technology Decision Makers (BW Disrupt), Rated: AAA

The year 2016 registered an impressive impact on the Indian economy and therefore was a landmark year for fintech and banking industries. This year, 2017 started out to be an exciting one for Financial Technology which will spell out a future of continued scale and disruption for the industry, especially after India’s digitalisation movement. With the proliferation of cloud and mobile technologies advancing and customer demand for better digital banking experiences growing, Fintech firms will continue to innovate faster and offer new services with richer user experiences.

Top 5 Trends to watch out for: 

  1. Mobile Everything
  2. Chatbots, machine learning & AI
  3. Banks & Fintech firms to partnerAccording to a recent Business Insider report, 87% of banks that have partnered with financial service providers (fintech companies) have been able to cut costs. Additionally, the same study found that 54% of partnerships increased revenue.
  4. Blockchain moves out of the labs into the real world
  5. Reforming Digital Leadership: CIOs will no longer be the most influential technology decision makers. With the continued rise of the Chief Digital Officer and in many cases the Chief Marketing Officer will help financial institutions usurp the IT team in implementing ‘digital’ throughout the organisation.

FinMomenta Plans to Expand Footprint of P2P Lending Model ‘Tachyloans’ to Other Asian Nations (BW Disrupt), Rated: A

FinMomenta founders believe that they are the Next Moment in FinTech industry. With their latest product TachyLoans, they plan to build a digital lending marketplace that connects people (Investors/Lenders) who wants to invest/lend their incomes, with people (Borrowers) who are looking to borrow funds to meet their financial requirements. The platform caters to both Individuals and Small & Medium Enterprises (SMEs).

How does the platform FinMomenta work?

Investors can earn returns as high as 25% per annum and borrowers can avail loan at lower interest rates starting from 11.5% per annum. Interest rates are charged based on borrower’s creditworthiness. Lenders and borrowers can negotiate on the loan amount, interest rates and loan tenor through a two-way bidding process available on their dashboard.

Please elaborate key features/services of Tachyloans?

The platform uses a unique proprietary credit scoring model enabled by Artificial Intelligence and Big Data to assess the creditworthiness of applicants. It also uses e-KYC and Aadhaar for verification of the borrowers that helps lenders to automatically invest in the recommended list of borrowers.

Tachyloans not just focuses on cutting down the transaction time for lenders and borrowers but also reduces the overhead costs associated with the traditional lending process and enables us to pass on the cost savings to lenders in the form of higher returns and to borrowers in the form of lower interest rates. Lenders and borrowers can negotiate on the interest rates through Tachyloans platform.

What is the Monetization model of FinMomenta?

FinMomenta charges a service fee to both lenders and borrowers for having loans enabled on the platform.

What is the market size and opportunities for companies operating in Fintech industry in India?

Consumer credit market in India is currently at $300bn out of which $98bn is the personal loans market. The market is currently growing at 14% year on year. The SME business loan market is currently at $600bn and is expected to grow to $3.4 trillion by 2022. In terms of the population, out of 1.2bn population only 150mn population has their history in credit bureaus and 20mn has scores acceptable to banks. There is a very small population that is being serviced by the banks. Around 10mn citizens are entering jobs every year and with more than 55% less than 45 years, the population would have huge aspiration to grow in life which would require access to credit for them.

Canada

Aztec Exchange Launches PayMe in Canada with EDI Gateway (PR Newswire), Rated: A

Aztec Exchange, a global supplier of invoice finance products and services, and Canadian EDI provider EDI Gateway today announced a partnership to deliver Aztec’s breakthrough early e-invoice payment service PayMe (payme.cloud) to EDI Gateway’s (edigateway.com) Canadian supplier and corporate clients.

PayMe is unique in the early payment market because, unlike with factoring firms, creditworthiness is based on that of the buyer, not the supplier.  There is complete pricing transparency, meaning there are no hidden fees or interest charges.  Suppliers are only required to pay a minimal invoice discount charge and a standard transaction fee.  For customers on the EDI Gateway platform using PayMe, this means they’ll typically receive payment within 24 hours.  Furthermore, because it’s entirely online, they can submit for early payment any time from any internet-connected device.  There are also no restrictive long-term contracts and suppliers can sell as many approved invoices as they want.

This partnership with EDI Gateway is the latest for PayMe, which launched in May 2016.  Over the course of the past year, PayMe has had tremendous growth and is now available to more than 100,000 SMEs globally via e-invoice providers as a white label solution for traditional banks.  It will soon be launched directly through corporates. For EDI Gateway, PayMe complements their existing e-invoicing solution, enabling them to offer an integrated payment and financing service.  The firm looks to continue this approach going forward to attract and retain their retail and vendor clients.

Authors:

George Popescu
Allen Taylor

Tuesday May 2 2017, Daily News Digest

Morningstar average credit spreads

News Comments Today’s main news: CFPB sues 4 online Indian-tribe lenders. Sharestates launches real estate lending white label solution. China Rapid Finance announces IPO pricing. Yirendai files Form 20-F. Today’s main analysis: Corporate credit tightens amid sluggish Q1 growth. Avant’s first 2017 ABS. Today’s thought-provoking articles: Europe on pace to set new record for fintech deals. United States CFPB […]

Morningstar average credit spreads

News Comments

United States

  • CFPB sues four online lenders operated by Indian tribe. GP:”In general India-tribe lenders attract more lawsuits. It is unclear if it is because they tend to be sloppier on compliance or lenders who are more aggressive on terms tend to partner with Indian-tribes because no bank will partner with them. In all cases being associated with an Indian-tribe seems to bear stigmata at least recently.”AT: “The CFPB is attempting to do what it was set up to do, but with attacks coming from state regulators, who knows how long it will be able to continue to do so?”
  • Corporate credits spread amid Q1 economic growth sluggishness. GP:”An interesting data point in the overall economic cycle.”
  • Avant’s first 2017 ABS. GP:”A good test of market perception of the Avant underwriting and product quality. Securitization has seen favorable investor demand. Avant retained 5% of the deal per Dodd-Frank. “
  • Sharestates launches white label solution for real estate private lenders. GP:”A sign that the market is maturing. Also a sign that cost of customer acquisition is growing as real estate crowdfunding companies get into technology sales / white labels entrusting 3rd parties to finding customers and letting them focus on the platform.”AT: “This is brilliant, and I’m not just saying that because I write for this company. Real estate is inherently local. By establishing a white label solution for real estate private lenders, Sharestates could position itself as the leader in RECF for many years to come. As far as I know, this is the first white label solution specifically for the real estate lending market. If the solution is any good, they should get a lot of participation.”
  • Colorado moves to dismiss suits. GP:”A very standard move in any lawsuit. It is unlikely to suceed.”AT: “These are interesting arguments, but I don’t see it happening. There is too much at stake to allow states to railroad online lenders and relegate them to second-class status. There needs to be a real discussion about which level of government has the power to regulate and legislate online lending.”
  • Fundrise files new Reg A+ for Income eREIT. GP:”We haven’t seen many Reg A+ fund raises in our space. I do think it is a very interesting tool for early stage companies. “AT: “This should have been expected. Selling out of shares as quickly as they did on the first round, I wonder why they didn’t file a second Reg A+ sooner.”
  • Thrive to power small biz lending for Horizon Community Bank. AT: “Perhaps we’ll see a wave of community banks getting in on the online lending act.”
  • Online lending has reached a tipping point. GP:”I think they actually mean it has reached maturity.” AT: “GDR’s Charlie Moore lays good groundwork for his argument. He makes some great points.”
  • Lendio announces annual list of top 10 best states for small business lending. GP:”There is very little transparency and public data in the SME lending space (unlike in personal lending thanks to Lending Club for example). This data is a step in the good direction. We hope more will be made available.”AT: “This is based on their own data, so it’s not objective. Interesting nonetheless.”
  • The future of finance. AT: “What’s interesting about this is the unchanging talking points from SoFi’s Mike Cagney about how banks should adopt technology, and how it would affect their businesses if they did. Short story: They could lay off more employees and cut business expenses.”
  • How Goldman Sachs is trying to erase debt stigma. GP:””
  • Leverage digital tech to forge relationships with your clients’ children. AT: “For financial advisors.”
  • Justices affirm cities’ right to sue banks under housing law.
  • SoFi personal loans review. GP:”A good summary of SoFi’s approach, which has pushed them where they are today. Most notably: no origination fee. SoFi is probably the only major online lender that has no origination fee. Avant started without an origination fee and lately had to introduce one for profitability. “
  • Celent’s corporate banking appoints Alenka Grealish as senior analyst.

United Kingdom

  • TransferWise to set up office in Singapore. GP:”Singapore is a good compromise between pro-business environment, trained workforce with good skills and price. Hong Kong is extremely expensive. Mainland China is not a good base to do business outside China. However, in the past, I found that for South East Asia a good cost/quality/location compromie was Jakarta.”AT: “I can’t think of a better place to set up office if you want to tackle the Asian markets.”

European Union

Australia

China

India

News Summary

United States

CFPB Sues Four Online Lenders Operated by a California Indian Tribe (Crowdfund Insider), Rated: AAA

The Consumer Financial Protection Bureau (CFPB) has sued four online lenders for collecting debt from consumers they allegedly did not owe. The four lenders include: Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc., and Majestic Lake Financial, Inc.

The CFPB alleges that the lenders made deceptive demands and illegally took money from consumer bank accounts for debts that consumers did not legally owe. The CFPB filed to stop the practices, recoup relief for impacted consumers, and asses a penalty on the aforementioned lenders. Each of the four lenders operate out of a single address in Upper Lake, California and is owned and incorporated by the Habematolel Pomo of Upper Lake Indian Tribe (Habematolel Pomo Tribe or the Tribe), a federally recognized Indian tribe.

The CFPB states that since at least 2012, Golden Valley Lending and Silver Cloud Financial have offered online loans of between $300 and $1,200 with annual interest rates ranging from 440 percent up to 950 percent.

Read the actual complaint here.

Economic growth for the first quarter of 2017 slowed to a 0.7% annualized rate compared with a 2.1% rate in the fourth quarter of 2016. This represents the slowest rate of economic expansion over the past three years.

On a positive note, business investment picked up rapidly.

The average corporate credit spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) tightened 2 basis points over the course of last week to +121. In the high-yield market, the Bank of America Merrill Lynch High Yield Master Index tightened 22 basis points to end the week at +375. In the equity markets last week, the Nasdaq index broke through 6000 to new highs and the S&P 500 rose 1.5%.

As an indication of how tight corporate credit spreads have become compared with their historical averages, since the beginning of 2000, the average spread of the Morningstar Corporate Bond Index has registered below the current level only 26% of the time. The preponderance of the time that the index was at a level tighter than the current credit spread occurred during the buildup to the 2008-09 credit crisis. In 2004-07, corporate credit spreads were pushed to historically tight levels as new structured investment vehicles were engineered to arbitrage the differentials in expected default risk. But once the credit crisis emerged, investors found that many of these vehicles did not perform as advertised.

Avant’s First 2017 ABS (PeerIQ), Rated: AAA

We see a bifurcation in credit performance trends between mass affluent credit card issuers, and issuers focused on mass market credit segments. Synchrony, the largest store credit card issuer, shares dropped 16% on Friday due to a 45% increase in its loan loss provision. Capital One and Discover also increased their provision by 33% and 14% respectively. By contrast, the credit card master trusts of large card issuers (AXP, BAC, JPM) exhibit delinquencies that are near all-time lows (as analyzed in prior PeerIQ newsletter) due to their focus on higher credit quality relationship customers.

On Friday, bond investors welcomed the first Avant ABS deal of the year. AVNT 2017-A was upsized to $247.8 Mn collateral and received significant interest from broader credit investors.

Avant Loans Funding Trust 2017-A (AVNT 2017-A)

Avant priced its first unsecured subprime consumer deal of 2017 on April 26th (AVNT 2017-A), its fourth rated securitization. The transaction was upsized from $192.6 Mn to $218.9 Mn due to favorable investor demand. The deal was led by JP Morgan who also structured the transaction, as well as Credit Suisse and Morgan Stanley. Avant retained 5% of the deal, consistent with risk retention requirements of Dodd-Frank Act.

Source: PeerIQ, Bloomberg, Kroll Rating

Strong Alignment of Interests

Avant’s business operating model allows for several important components that strengthen alignment of interests between Avant and institutional investors. According to Kroll Rating’s pre-sale report, as of March 31st Avant retained approximately $2.5 Bn (65%) of the $3.8 Bn in loans originated through the Avant Platform. For this transaction, Avant contributed 95% of the loans in the collateral pool.

Further, on the deal Closing Date, Avant or its majority-owned affiliate acquires and retains at least 5% of the fair value of total capital structure by Regulation Risk Retention.

Loss Assumptions

Kroll increased the weighted average cumulative net loss (CNL) rate when rating AVNT 2017-A. For loans with 36 months or less terms, the CNL was increased from 13.86% in AVNT 2016-C to 18.39% in AVNT 2017-A (“Run-off Portion”). Further, Kroll assumed 16.55% for the representative portion in its pre-sale report, suggesting an upward shift in loss assumptions for AVNT loan product.

Pricing Tighter

We observe a parallel shift in the credit curve: the A tranche was 100 basis points tighter and the B tranche was 185 basis points tighter than the corresponding tranches in AVNT 2016-C. The C tranche was priced at 450 basis points.  The C tranche (BB-rated) was fourteen times over-subscribed, reflecting credit investors’ “risk-on” mentality.

Source: PeerIQ

Trigger Talk

The exhibit conveys that trigger profiles can be very different even for similar collateral from the same shelf. AVNT 2017-A shows a much higher starting CNL profile (MOB=1) than AVNT 2016-B, starting at 1% and peaking at 25%. Although the changes in the underwriting standard is obvious, the loss trigger profile is slightly steeper, reflecting more up-front loss timing for AVNT 2017-A as compared to older deals, such as AVNT 2016-B.

Source: PeerIQ

Sharestates Launches White Label Lending Solution for Real Estate Private Lenders: Shareline Solution (Crowdfund Insider), Rated: AAA

Sharestates, an online real estate investment marketplace, has announced the launch of a new financing capability; Shareline Solution. The new service is a hybrid between lending and brokering a loan. Private lenders will have access to Sharestates lending capabilities to directly serve their clients all under their own brand. The new lending service is described as a white label, correspondent lending program that empowers private lenders to quickly launch a robust real estate crowdfunding and lending marketplace.

With this solution, Sharestates explains it will tap into more geographical regions by working directly with local, private lenders through strategic partnerships.

Colorado Moves to Dismiss Suits (Orrick), Rated: A

As we noted in a recent Alert, WebBank and Cross River Bank filed separate federal civil actions to enjoin the Administrator of Colorado’s Uniform Consumer Credit Code from enforcing state lending laws against Avant, Inc. and Marlette Funding LLC, online lending platforms that facilitate and service loans originated by the two Banks. The Banks assert that Colorado’s lending laws are preempted by federal banking statutes. On April 25, the Administrator moved to dismiss the Banks’ actions on several grounds.

First, the Administrator contends that the lawsuits do not present a federal question and thus fail to establish subject-matter jurisdiction.

Second, the Administrator argues that the Banks lack standing because their alleged injuries—including loss of revenue from the assignment or sale of their loans—are either inadequately pled or insufficiently related to the enforcement proceedings against Avant and Marlette.

Third, the Administrator argued that if the State’s enforcement actions against Avant and Marlette (which were removed to federal court) are remanded to state court, then the federal court should either dismiss or stay the action brought by WebBank and Cross River Bank’s cases based on the Younger abstention doctrine (which establishes rules against federal courts from interfering with ongoing state court or administrative proceedings).

Fourth, and perhaps most significantly, the Administrator asserts that the Banks’ preemption arguments fail as a matter of law because federal banking statutes—particularly the National Bank Act (“NBA”), 12 U.S.C. § 85, and the Depository Institutions Deregulation and Monetary Control Act (“DIDMCA”), 12 U.S.C. § 1831d—do not preempt the application of state lending laws to nonbank entities.

Fundrise Files New Reg A+ for Income eREIT (Crowdfund Insider), Rated: A

Fundrise, an online marketplace for investing in real estate, has filed a Reg A+ offer with the SEC to sell additional shares in their Income eREIT. This will be the second round for the Fundrise Income eREIT. The first round sold out raising the maximum amount allowable of $50 million. Fundrise is offering up to $41,189,280 in common shares which represents the value of shares available to be offered as of the date of the offering circular out of the rolling 12-month maximum offering amount of $50 million in the eREIT shares.

Thrive Platform to Power Small Business Lending for Horizon Community Bank (Thrive Email), Rated: A

Thrive Inc. (Thrive) is pleased to announce a multi-year technology licensing agreement with Horizon Community Bank (HCB), a leading Arizona-based FDIC insured bank and subsidiary of Horizon Bancorp, Inc.

Thrive’s proprietary cloud-based lending technology will power the complete, end-to-end small business lending process for HCB encompassing:

  • Digital applications, automated credit / financial analysis and background/verification checks, loan offers and declines, e-closings, integrated servicing, borrower interface and real-time risk management capabilities
  • Operationally, HCB will benefit significantly from improved loan processing efficiencies and reduced origination costs:
    • Loan processing time is expected to be reduced from weeks to days
    • Cost reductions of greater than 40% are expected for each loan application cycle
  • HCB will benefit extensively from new digital customer acquisition channels, while user experiences for existing and new customers will be modernized and improved

Online lending has reached a tipping point (Business Insider), Rated: A

Online lenders have been facing an uphill battle recently as investors question whether they are truly getting the loan transparency they need to confidently invest in this young industry. Investors, credit providers and ratings agencies are worried about loan data integrity as well as collateral and ownership rights behind the loans.

Phase One: Concept – The Early Days (2006-2010)

The concept of partner banks – like WebBank and Cross River – issuing loans on behalf of these platforms, quickly became an established model. These banks helped ensure the borrower regulations were met, including state licenses among others. Consumers are well protected and borrower fraud is tightly managed.

But in 2008, regulators took notice of this rapidly expanding market, and the SEC issued a statement requiring lending platforms to register and report loan financials to the Commission to protect investors. With this change, the SEC highlighted the need to treat fractional loans as securities that need to be reported.

Phase Two: Institutional Entry – Enter the Big Dogs (2011-2015)

In 2011, the landscape changed for online lenders with institutional investors, in search of yield in a near-zero interest rate environment, tossing their hats in the ring to enter this emerging industry. A $5 million investment from an anonymous institutional investor into LendingClub marked the first infusion of institutional investor capital into the online lending space.

And that was only the beginning as institutional investment continued to flow into the market, primarily from specialist hedge funds, often with lines of credit from well-known large investment banks. At this point, the industry evolved its name from Peer to Peer to Marketplace Lending and ultimately Online Lending to reflect the fact that large institutions were now funding a large portion of the loans.

Also in 2013, securitization changed the face of online lending, providing lending platforms more scalable access to capital to fund the needs of new lenders. Eaglewood Capital closed on a $53 million unrated securitization deal for loans originated by LendingClub, making it the very first securitization deal in the space.

Analytics and secondary markets began to emerge in 2015, with companies like PeerIQ, dv01 and Monja providing analytics and reporting tools to help investors better track their online lending investments. Secondary markets for these loans kicked off this same year, with the launch of both Orchard and Ldger, aiming to provide additional liquidity options for investors in the space.

Later in 2015, the first partnership between a bank and lender was forged with JP Morgan and On Deck leading the charge.

Phase Three: Maturity & Scale – The Future is Clear (and transparent!) (2016 – …)

And now we arrive at the present – a tipping point where the fate of the industry lies squarely in its ability to adopt effective risk control infrastructure for investors to bring certainty to this asset class and therefore attract new capital.

A modern fintech lending model has been using a thirty-year-old due diligence methodology, comparing loan tapes with loan agreements, both provided by the seller. It goes without saying that this method is far from modern or efficient, with no independent validation of data integrity against trusted data sources.

Today, transparency is being redefined. Online lending has undoubtedly provided greater loan data and performance reporting than investors are used to. However, loan transparency from the seller without independent data certainty has been proven dangerous.

A vital part of this infrastructure is for the industry to adopt a central loan information clearing house that focuses on ownership rights and asset certainty for each loan as well as serving as a collateral pledge registry to prevent the double pledging of assets. Increased asset certainty is helping to protect and attract capital from new larger, more risk averse investor segments. With the infrastructure changes we’re seeing emerge in the industry today, including the potential of Blockchain technology, this goal of new capital sources is closer to reality for online lenders than ever.

Lendio Announces Annual List of Top 10 Best States for Small Business Lending (PRWeb), Rated: A

In honor of National Small Business Week, Lendio, the nation’s leading marketplace for small business loans, today announced its second annual list of top 10 states for small business lending, based on lending data from the Lendio platform, which matches businesses with more than 75 lenders.

This year’s top states for small business lending are:

  1. Utah
  2. Washington
  3. California
  4. Virginia
  5. Texas
  6. Florida
  7. New York
  8. New Hampshire
  9. Pennsylvania
  10. Georgia

The ranking is based on a calculation of several key indicators, including approval rates and loan sizes, from among thousands of Lendio’s customers from April 2016 to March 2017.

1 – Utah
2016 Ranking: 3
No. SMBs: 268,872*
No. SMB Employees: 540,268*
Average Loan Size: $37,648

2 – Washington
2016 Ranking: 4
No. SMBs: 574,455*
No. SMB Employees: 1,300,000*
Average Loan Size: $24,746

3 – California
2016 Ranking: 2
No. SMBs: 3,800,000*
No. SMB Employees: 6,800,000*
Average Loan Size: $23,391

4 – Virginia
2016 Ranking: 13
No. SMBs: 706,626*
No. SMB Employees: 1,500,000*
Average Loan Size: $20,520

5 – Texas
2016 Ranking: 6
No. SMBs: 2,600,000*
No. SMB Employees: 4,600,000*
Average Loan Size: $21,003

6 – Florida
2016 Ranking: 7
No. SMBs: 2,400,000*
No. SMB Employees: 3,200,000*
Average Loan Size: $21,103

7 – New York
2016 Ranking: 18
No. SMBs: 2,100,000*
No. SMB Employees: 4,000,000*
Average Loan Size: $23,014

8 – New Hampshire
2016 Ranking: 5
No. SMBs: 132,432*
No. SMB Employees: 289,914*
Average Loan Size: $19,893

9 – Pennsylvania
2016 Ranking: 22
No. SMBs: 1,000,000*
No. SMB Employees: 2,500,000*
Average Loan Size: $17,561

10 – Georgia
2016 Ranking: 8
No. SMBs: 1,000,000*
No. SMB Employees: 1,600,000*
Average Loan Size: $16,348

*Source:

The Future of Finance: More Data, Fewer People (Institutional Investor), Rated: A

Credit Suisse is now piloting a robot named Reggie, a virtual assistant not unlike Amazon’s Alexa. Credit Suisse’s Reggie was programmed to answer regulatory questions, according to Brian Chin, CEO of global markets for the investment bank. Chin, who spoke on a panel at the Milken Institute Global Conference in Los Angeles on Tuesday, expects that the Swiss bank will be able to ultimately cut the number of calls to its call center by 50 percent. But at this point, Reggie is better at providing information for simple questions than appropriately addressing more complex inquiries.

The technology exists now to streamline labor-intensive processes such as loan underwriting. Mike Cagney, CEO and co-founder of SoFi, an online consumer lender, uses five pieces of data to provide instantaneous loan decisions. SoFi is now moving to use non-traditional information for underwriting, including data from cell phones, which it thinks will predict consumers’ future behavior. Cagney said banks could shed thousands of people if they used similar technology.

How a Goldman Sachs brand is trying to erase debt stigma (Tearsheet), Rated: A

“There’s a stigma around debt, people don’t like to talk about it,” Nicole Sbarra, a product manager for Marcus, said at an event in New York Thursday night. “It makes them very uncomfortable. And most people also don’t think of credit card debt as actual debt, they see it as a balance… [Marcus] is going to help you understand that there’s more to you than this extreme amount of debt on your shoulders.”

Keeping the brand separate, as much as possible, from Goldman is necessary, in some ways, considering the bank’s history. From 2005 to 2007, Goldman issued and underwrote mortgages and securities backed by residential loans that were borrowed by consumers with poor credit. This led to the housing bubble burst and economic recession. Last year Goldman paid out $5.1 billion for its role in the financial crisis.

Money is one of the most personal and sensitive topics for people, even people with lots of it, which is why empathy plays such an important role in building a financial product. The average American carries some $16,000 in credit card debt and about 70 percent of them don’t know there are alternative options to that credit card debt, said Michael Cerda, head of product.

Leverage Digital Technology To Forge Relationships With Your Clients’ Children (FA Magazine), Rated: A

According to various statistics, millennials and members of Generation X will inherit anywhere from $15 trillion to $40 trillion or more from their baby boomer parents by 2050. This will be the largest cross-generational transfer of wealth in history, but many financial advisors haven’t yet prepared for this opportunity.

As the relationship progresses, advisors can proactively invite a client’s children to meetings, and reach out to them to offer financial planning education at applicable stages of their lives. This education can have a big impact if it is taught using the state-of-the-art reporting, proposal and prospecting tools that come with today’s digital advice platforms. For example, when a client mentions that their teenage son or daughter just secured their first after-school job, the advisor can offer to meet with them to deliver an interactive digital presentation on how to save and invest their earnings.

Justices affirm cities’ right to sue banks under housing law (Arkansas Online), Rated: B

The Supreme Court ruled Monday that cities may sue banks under the federal law that bans discrimination in housing, but it said such lawsuits must tie claims about predatory lending practices directly to declines in property tax revenue.

The justices’ 5-3 ruling partly validated an approach by Miami and other cities to try to hold banks accountable under the federal Fair Housing Act for the wave of foreclosures during the housing crisis a decade ago.

SoFi personal loans: 2017 comprehensive review (Bankrate), Rated: B

Who is a SoFi personal loan good for?

  • Anyone with good to excellent credit. SoFi borrowers have an average credit score of 730, although credit scores range from 680 to 850, according to the company. Check your credit score for free before you apply.
  • High-income earners. SoFi borrowers have an average annual income of $114,000. Real median household income in the U.S. is about $56,500.
  • Someone who has a short credit history. SoFi has no minimum requirement for how long you’ve used credit, but rather looks at how responsible you’ve been at paying bills.
  • Someone who doesn’t need a co-borrower. SoFi, like many other online lenders, does not allow joint borrowers on a single loan. If your credit or income aren’t good enough to qualify on your own, you may want to consider using a different lender.
  • Someone who doesn’t mind an entirely online experience. The entire process takes place virtually — from applying for a loan to receiving approval to having the money deposited in your bank account if you are funded.

SoFi offers both fixed- and variable-rate personal loans that range from $5,000 to $100,000 and are repayable over three, five or seven years. Minimum loan amounts are higher in four states: Arizona, Kentucky, Massachusetts and New Hampshire.

Fees and penalties

  • SoFi doesn’t charge an origination fee.
  • Late payment fee is either 4% of the unpaid installment amount or $15, whichever is less.
  • You won’t be penalized for paying off your loan early.

Celent’s Corporate Banking Appoints Alenka Grealish as Senior Analyst (citybizlist), Rated: B

Celent is pleased to announce that Alenka Grealish will be joining the Banking practice as a Senior Analyst based in San Francisco. Her research will focus on innovation in treasury management services, trade finance, working capital finance, and the implications for customer journeys across segments, including small business. As part of her research, she will track the digitization of the financial supply chain, and the rise of fintechs and new business and revenue models.

United Kingdom

TransferWise Goes Big. Sets up Office in Singapore for Asian Expansion & Global Domination (Crowdfund Insider), Rated: AAA

I am not alone in using the service as Transferwise has grown rapidly around the world. In the UK, 10% of the people who transfer money utilize the service. A recent funding round gave Transferwise a billion dollar valuation so it has achieved Fintech Unicorn status.

Today, Transferwise is moving  around $ 1.2 billion monthly. They estimate they save consumers and businesses, around $2 million daily. Who loses out? The banks, of course.

Global remittance stands at around half a trillion dollars each year. According to the World Bank, remittances in East Asia and Pacific registered about $126 billion last year. If you add South Asia (India, Pakistan, Nepal and Bangladesh) you can add another $110 billion to that number. Transferwise setting up shop in Singapore just makes sense.

European Union

Europe On Pace for Record Year in Fintech Deals (Crowdfund Insider), Rated: AAA

CB Insights reported that European fintech firms raised over $667 million over the first three months of the year through a total of 73 deals. It’s important to note that CB Insights’ report is based only on VC-backed deals as opposed to KPMG’s Q1 report which was based on all types of deals, which is why the report released by KPMG last week showed over $880 million raised from 89 deals in Europe.

In just three months, European firms this year have already raised 60% of the total amount that was raised all of last year.

What’s also promising is the fact that early-stage investing has increased as well. Over $195 million of the amount raised in Q1 of this year was in seed and series A funding rounds. Q4 of 2016 only saw $54 million raised in those rounds.

Australia

PledgeMe Launches Lending Month of May: Seeks to Help Kiwis Learn More About Crowdlending (Crowdfund Insider), Rated: A

On Monday, New Zealand’s crowdfunding platform PledgeMe announced it was dedicating the month of May to lending related goodness.

As part of the program, the PledgeMe crew will be doing the following:

  • Explaining what it means in a super straight forward way; borrowing money doesn’t need to be as complicated as it’s been made out to be. 
  • Create case studies on how it has worked in the past.
  • Hosting a webinar to answer questions real time, and then blog about it.
  • Writing a weekly blog series showcasing how crowdlending can work for various company organizations 
  • Creating a podcast series
  • Putting together a mini-documentary on the company behind “the bubble”

Australian youth drive P2P revolution (AltFi), Rated: A

But its millennials that are driving the P2P revolution. They’re turning away from banks and property in droves and creating space for fintech disrupters, according to new research by RateSetter Australia.

The company has seen the number of millennial investors using its platform increased a startling 250 percent the past 12 months.

The average investment from millennials was only A$10,000, much smaller than the A$50,000-plus averaged by baby boomers and the ‘silent generation’.

China

China Rapid Finance Announces Pricing of Initial Public Offering (PR Newswire), Rated: AAA

China Rapid Finance Limited (“China Rapid Finance”) (NYSE: XRF) announced today that its initial public offering of 10,000,000 American depositary shares (“ADSs”) was priced at US$6.00 per ADS, with a total offering size of US$60 million. Each ADS represents one Class A ordinary share of China Rapid Finance. China Rapid Finance has granted the underwriters a 30-day option to purchase up to an additional 1,500,000 ADSs at the initial public offering price, less the underwriting discounts and commission. The ADSs have been approved for listing on the New York Stock Exchange and are expected to begin trading on April 28, 2017 under the symbol “XRF.”

Yirendai FORM 20-F (SEC), Rated: AAA

119,512,300 ordinary shares, par value US$0.0001 per share, as of December 31, 2016.

IFC and Ant Financial to enable digital financial inclusion in emerging markets (The Asset), Rated: A

IFC, a member of the World Bank Group, and Ant Financial Services Group, the parent company of Alipay, have signed a memorandum of understanding to make basic financial services more accessible in China and other emerging markets.

Under the new memorandum the two parties will strengthen their collaboration for inclusive digital finance, green digital finance, business-environment enhancement and credit-data analysis.

Ant has invested in payment and digital finance companies in India, Thailand and Indonesia.

P2P Industry News (Xing Ping She Email), Rated: A

Monthly Report of China’s P2P Lending Industry
On 1st May, Online Lending House released the monthly report of P2P lending industry. According to the report, the total business volume decreased in April due to the two minor long leaves(Qingming Festival holiday and May Day holiday). However, the trend of the industry is optimistic especially in the number of borrowers, cumulative trading volume and the development of lending platforms.

In April 2017, the loan volume is 224.92 billion RMB, and the cumulative volume reached to 4,330.12 billion RMB, however, the same figure of the corresponding period last year was 1,888.12 billion RMB. Over the past year, the volume in P2P lending industry has nearly increased by 2.5 trillion RMB. The loan balance mainly concentrates on Beijing(338.70B RMB), Shanghai(242.35B RMB) and Guangdong province(177.98B RMB) , jointly accounting for 79.26% of the country’s total balance.

Ant Financial:Alipay Model will be Replicated in B&R(Belt and Road) Countries
The globalization process of Ant Financial started since February 2015 and the business has spreaded to India, Thailand, Indonesia and the Philippines etc. “We look for local partners instead of running a branch abroad, and aim at developing countries with great demand for e-payment rather than developed countries. The immediate benefits from this mode will save 5-8 years’ research and development time.” Jia Hang, the general manager of international division, explained the company’s overall global strategy for the first time. Ant Financial also announced they would keep replicating the Alipay business to other B&R Countries.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

This week, China Banking Regulatory Commission released a documentation “Guidelines on risk prevention and control in banking industry” to regulate the small cash loans market by perfecting the in-out mechanisms, paying more attention to the supervision and decreasing operation risk.

Here are some recommendations for this round of regulatory reform:

  • At present, diverse interest rates should be permitted to coexist, but the existence of exorbitant usury must be prohibited. It is reported that the average interest rate of cash loans has reached 158%, which produces disastrous influence on the development of microfinance industry in China.
  • To reduce risk, government should make the relevant laws to conduct stricter regulation on different kinds of cash loans companies.
  • Training should be provided to microfinance organizations in order to improve operations and strengthen management capabilities.

The Beijing Municipal Administration Traffic Card, more commonly known as the Yikatong, is preparing to tap into demand for mobile payment devices, with the launch of a wristband capable of making contactless payments.

With the wearable tech industry on the rise, Yikatong believes engineering a variety of payment methods is essential to ensuring customer satisfaction. According to analysts at IDC, the wearable devices market is booming, with around 50 million units projected to be sold in 2017, which is expected to achieve a target of 78% average growth a year until 2018.

One of China’s largest online lending platform, CreditEase, has launched a private blockchain service based on ethereum.

Renren Inc., which operates a social networking service and internet finance business in China, announced to reach a strategic partnership with Ping An Bank to develop automobile finance in China.

This week, Chinese bike-sharing startup ofo announced a strategic investment from Ant Financial, but the total funding volume was not disclosed. In the future, ofo will work with Ant Financial on payments, credit and other international business expansion.

India

FinMomenta launches peer-to-peer online lending platform Tachyloans (The Hindu BusinessLine), Rated: AAA

Even as a final set of regulations is yet to be firmed up in the country’s burgeoning digital peer to peer (P2P) lending space, a Singapore-based fintech start-up FinMomenta has launched its operations to tap individuals and businesses that are considered ‘risky’ by the bigger NBFCs and banks.

The company uses a proprietary credit scoring model enabled by Artificial Intelligence and Big Data to assess the creditworthiness of applicants. It also uses e-KYC and Aadhaar for verification of the borrowers that helps lenders to automatically invest in the recommended list of borrowers, according to Khaderbad.

Tachyloans also analyses the social media profiles of its borrowers and uses psychometric analysis to understand their creditworthiness.

The platform is currently open for all resident individuals looking for loans in 50 cities across India.

Tachyloans Targets India’s Fintech Segment Which is About to Touch $ 2.4B By 2020 (BW Disrupt), Rated: A

Tachyloans has made its entry at a strategically important time in India’s burgeoning fintech sector that is forecasted to touch $2.4bn by 2020. Tachyloans uses a proprietary credit scoring model enabled by Artificial Intelligence and Big Data to assess the creditworthiness of applicants. The stronger the credit profile, lesser the credit or default risk. The company’s innovative platform electronically verifies the borrower information using the KYC (Know Your Customer) documentation provided, and qualifies them through their proprietary credit decision model.

At Tachyloans, the entire registration, application and documentation procedure is simplified for both borrowers and lenders, thereby offering complete transparency throughout the process. Unlike the traditional banks, in Tachyloans lenders can earn returns as high as 25% per annum and borrowers can avail loan at lower interest rates starting from 11.5% per annum. The background verification check of the borrowers is also done by various parameters at the backend before getting them on board.

Furthermore, FinMomenta will be looking at collaborating with banks and other financial institutions to ensure a straightforward process and faster disbursement of loans.

Authors:

George Popescu
Allen Taylor