Thursday June 7 2019, Weekly News Digest

economic downturn

News Comments Today’s main news: SoFi completes first rated pass-through certificates offering. Y Combinator backs Monzo for U.S. expansion. Funding Circle set for largest securitization. Dianrong shifts strategy. Funding Circle inks 50M Euro deal with Avida Finans. Open raises $30M. Today’s main analysis: Chance for recession is rising (A MUST-READ PeerIQ analysis). Today’s thought-provoking articles: […]

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

economic downturn

News Comments

United States

United Kingdom

International

China

APAC

News Summary

United States

SoFi Completes First Offering of Rated Pass-Through Certificates (PR Newswire), Rated: AAA

SoFi announced today that it completed a $200 million offering of post-graduate student loan asset-backed certificates issued by SoFi Alternative Trust 2019-C (SAT 2019-C). The Certificates are rated single-A by DBRS and mark the first rated pass-through certificate transaction issued by SoFi and the first publicly rated student loan pass-through transaction in the securitization market.

Unlike traditional student loan ABS transactions, SAT 2019-C does not use overcollateralization or bond subordination as forms of credit enhancement.  The A rating assigned to the certificates by DBRS reflects the strong credit attributes of the borrowers. The portfolio has a weighted average credit score of 783 and a weighted average annual income of $175,746.

Y Combinator says Monzo’s community will help it succeed in the US where others have failed (AltFi), Rated: AAA

Leading US startup backer Y Combinator has become the latest high-profile backer of Monzo, on the eve of the bank’s American expansion.

Today Monzo confirmed it had raised £113m in a round led by Y Combinator’s Continuity fund, along with Latitude, General Catalyst, Stripe, Passion Capital and others.

Recession Risks; OCC Charter + Big Tech (PeerIQ), Rated: AAA

Weak economic data continue – inflation expectations tumble, manufacturing has moved into recession, and the 10y/3m yield curve remains mildly inverted. Although the FOMC took no rate action this week, dovish signaling has led market participants to expect a 70% chance of 3 or more rate cuts in 2019.

Source: WSJ, PeerIQ

CPI Since 1879 During Business Cycles

Source: Deutsche Bank, PeerIQ

How A Former J.Crew And Pillsbury Exec Is Applying His CFO Expertise At A Financial Unicorn (Forbes), Rated: AAA

Scott Rosenberg: Kabbage represented a great opportunity for me to apply my prior experiences and help architect the future vision of a fast-growing company. Every role in my career has allowed me to lead or influence multiple divisions within a company, which makes my operational approach similar to that of a COO or General Manager. Beyond leading the CFO office in previous roles, I led Marketing at J. Crew, Operations at Pillsbury and most recently was the President of Purchasing Power. This broad vantage point lets me ensure financial growth as the CFO, but also identify opportunities to establish operational efficiencies more broadly across the organization. I take the same approach at Kabbage as I lead multiple disciplines, including Capital Markets and Legal. It encourages transparency across teams which allows us to move faster. With more than 175,000 customers accessing over $7.0 billion to-date, it’s an exciting role to drive hyper growth and deliver the best products and experiences for U.S. small businesses.

According to a survey released today by Kabbage that polled more than 500 companies across multiple industries, 80% of American entrepreneurs said they felt confident in their readiness to weather another economic crisis.

H&M and Klarna Grow Partnership to US (Yahoo! Finance), Rated: A

H&M and Klarna announced that they have expanded their current partnership agreement to also include the US market, in the development of an unrivalled payments and shopping experience across touchpoints. Together, H&M and Klarna are aiming at further integrating H&M’s digital and physical stores to give customers a seamless, personalised and engaging shopping experience no matter where, when and how they shop.

This Commercial Real Estate Marketplace Provides Direct Investment Opportunities (TheStreet), Rated: A

CrowdStreet, which launched in 2014, is the leading player in the fast-growing field of online commercial real estate investing. The company’s online Marketplace allows individual investors to reap the rewards of investing in the $6 trillion commercial real estate sector, investing in everything from multifamily apartment buildings to self-storage facilities and senior-living centers.

The average return on the first 14 deals financed on CrowdStreet’s platform — those which have fully wrapped up, yielding final returns to investors — is 31.7%, with a 1.6x equity multiple and a holding period of two years.*

MassMutual, CommonBond Team Up to Tackle Student Debt in the U.S. (Mass Mutual), Rated: A

Total student loan debt in the U.S. is now over $1.5 trillion, which prevents many people from passing financial milestones and saving for the future.

Massachusetts Mutual Life Insurance Company (MassMutual) has teamed up with CommonBond to offer a new student loan refinancing program through CommonBond with a rate advantage to help people take control of their student debt. This program – available online to all individuals with student debt today — is among the first of its kind in the student lending and insurance industries. The program is becoming available on a rolling basis in local communities across the U.S. through MassMutual’s network of financial advisors, currently 9,000 strong.

Ocrolus Raises $ 24M to Modernize Workflows with a Human Touch (PR Newswire), Rated: A

Ocrolus today announced $24M in Series B funding led by Oak HC/FT, a premier venture growth equity fund with deep fintech expertise. Ocrolus is powered by an elegant blend of artificial intelligence and crowdsourced human quality control, enabling firms across the financial sector to automate high-stakes business processes with precision. The company will use its new funding to automate underwriting workflows for lenders and banks, and expand into new verticals.

How Citizens Bank is rethinking mobile and online banking (American Banker), Rated: A


Robos are getting political. Will Wall Street follow? (FinancialPlanning), Rated: A

Forged in the wake of the financial crisis and political movements like Occupy Wall Street, digital advisory firms have become decidedly open about their political agendas. By advocating for the democratization of financial advice and stronger consumer protections, digital investment platforms have become the face of progressive politics in the market. That’s attractive to young investors — assets managed on digital platforms are expected to soar to $1.26 trillion by 2023, according to a report by Aite Group.

Cross River gets onboarding system it coveted in fintech deal (American Banker), Rated: A

The $1.5 billion-asset bank agreed on Monday to buy Seed for an undisclosed amount. The 5-year-old fintech offers a mobile account for small businesses, complete with bill payment, remote deposit and an attached debit card.

“It’s About Time” Documentary Sheds Light on Earned Wage Access (PR Newswire), Rated: A

Today, PayActiv, Inc., the leader in employer-sponsored, holistic financial wellness service for employees, unveiled its documentary made in collaboration with Early Light Media and Roundtable Companies about the direct benefits of timely earned wage access. Now available at ItsAboutTimeTheFilm.com, the documentary, titled It’s About Time, looks at pay timing and its correlation with epidemic financial stress being experienced by millions of working Americans.

Fintech MX gets $ 100 million in funding to expand operations (American Banker), Rated: B

The data company MX is set to announce Tuesday an infusion of $100 million from a host of partners, including National Bank of Canada and Washington Federal.

Neighborhood Ventures Closes on Third Investment Property Near Old Town Scottsdale (Yahoo! Finance), Rated: B

Arizona’s first real estate crowdfunding company, Neighborhood Ventures, recently closed on its third investment property, an eight-unit apartment building in Old Town Scottsdale. Ninety Arizona residents invested a total of $550,000 into the purchase of the property, which will be renovated with a plan to operate it as an Airbnb.

United Kingdom

Funding Circle set for its largest ever securitisation (P2P Finance News), Rated: AAA

DEUTSCHE Bank has unveiled more details on Funding Circle’s fourth securitisation, revealing it will be the highest-value package of loans it has offered so far.

The investment bank, which has been mandated as sole arranger and lead manager, said the deal will comprise 3,030 loans, with an aggregate balance of £244m and an average interest rate of 9.91 per cent.

FTSE 250 movers: Funding Circle falters (ShareCast), Rated: A

London’s FTSE 250 fell 0.14% lower to 19,260.07 in afternoon trade on Wednesday, with Funding Circle leading the index lower.

The peer-to-peer lending marketplace was accompanied by fellow financial stocks, with Amigo HoldingsCharter Court Financial ServicesPlus500 and Onesavings Bank all featuring among the top fallers.

OakNorth completes £60m facility for three new retirement schemes (Development Finance Today), Rated: A

OakNorth has completed a £60m loan to Affordable Housing & Healthcare Group (AHH) for the development of three new affordable retirement living schemes.

He said that in retirement he will continue to be a school governor, and that he intended to devote more time to the two charities he is involved with (the other one being Lendwithcare – peer to peer lending to entrepreneurs in a number of Third World countries).

China

Top Chinese peer-to-peer lender to shift strategy after latest fundraising (ETPrime), Rated: AAA

Wu Yujian and Liu Jiefei Dianrong, one of China’s largest peer-to-peer (P2P) lending platforms, said it’s planning a shift in strategy to focus on cooperating with traditional financial institutions as China’s regulators continue to tighten their grip over the industry. The move was revealed on Thursday as the Shanghai-based company confirmed (link in Chinese) it had completed a new

Government Asks Victims of P2P Fraud Case to Register for Compensation (Caixin Global), Rated: A

An intermediate court in Beijing overseeing the Ezubo case said on Wednesday that victims could detail their cases to authorities at local registration sites between July 2 and Aug. 30.

European Union

A very Nordic fintech revolution (Pitchbook), Rated: AAA

Europe is a hotbed of activity when it comes to fintech investments, as the sector continues to mature. Year after year, billions of euros are plowed into promising startups, with last year seeing more than €2.8 billion raised across 438 deals, per the PitchBook Platform.

Below is a list of some of the most innovative fintech companies founded in the Nordics, together with noteworthy investments and backers.

EU Moves Closer To New Bloc-Wide Crowdfunding Rules (Law360), Rated: A

European lawmakers floated new rules on Wednesday to make it easier for businesses and investors to ask the public to fund their projects, bringing the European Union a step closer to forging a common set of rules for national regulators overseeing crowdfunding.

International

Funding Circle strikes €50m loans deal with Sweden’s Avida Finans (AltFi), Rated: AAA

Funding Circle has struck a deal with Swedish finance house Avida Finans to lend an initial €50m to small firms in Germany and the Netherlands this year.

How DeFi startups are providing an alternative to traditional lending (Sociable), Rated: AAA

DeFi lending startups are leveraging blockchain to shake-up the traditional money lending industry.

Digital Assets Kept as Collateral

Salt is one company which has been borne out of the cryptocurrency sector.  Through its platform, digital assets are kept as collateral but returned upon repayment of the loan.

Automated P2P Lending Agreements on Blockchain

ETHLend is another DeFi platform built on top of the Ethereum network.  It creates a means for lenders and borrowers from around the world to establish peer to peer lending agreements over blockchain.

Blockchain Catering to the Unbanked in Latin America

A Blockchain-Driven Lending Circle

A completely different approach is being taken by startup, WeTrust.

When it comes to lending, users can establish a ‘lending circle’ on the platform.

Australia

P2P lender expands presence in third-party space (TheAdviser), Rated: AAA

Peer-to-peer lender RateSetter has announced its new partnership with Choice Aggregation Services (Choice), providing accredited brokers with access to the lender’s personal loan offerings.

P2P lender joins aggregator panel (Broker News), Rated: A

The partnership will make RateSetter’s unsecured personal loan product available to Choice Aggregation Service’s network of more than 1,600 brokers, in line with the trend towards servicing a more diverse array of client needs.

Recognising SMEs’ contribution to the economy (AustralianBroker), Rated: A

Prospa research has highlighted how lending to small business positively affects the economy through contributing to GDP and creating and supporting jobs.

Data released this week by accounting software firm Xero, analysed invoices from 150,000 Australian SMEs and concluded that 53% of trade credit invoices are paid late by big business suppliers and customers – on average 23 days after their due date. Squeezing SMEs, Xero calculates these late payments are worth $115bn.

Technology boosting financial literacy (Financial Review), Rated: A

Technology will need to play a bigger role in boosting the financial literacy of Australians as a large number of financial planners leave the profession, says Bronny Speed, financial advice leader at Chartered Accountants Australia New Zealand.

Speed says as increased educational and licensing standards for Australia’s 29,000 financial advisors will push some out of the market, it will leave a gap in the profession’s ability to provide financial advice and boost literacy.

India

India’s Open ‘neo-bank’ raises $ 30 million to help businesses automate their finances (TechCrunch), Rated: AAA

Open, a Bangalore-based startup that operates a “neo-bank” to help businesses automate and run their finances, has bagged $30 million in a new funding round as investors look to replicate a globally tried and tested business idea in emerging markets.

Open Banking is Disrupting the Traditional Banking System and Indian Neo Banks are Gearing up for it (Entrepreneur), Rated: A

In today’s age of digitisation, it is all about the customer and improving his/her experience. To achieve this goal, banks and fintech companies have to support each other. This change in the ecosystem has invented the concept of neo banking which can be rightly dubbed as the new era of the banking industry.

Govt should look at alternative financing option like P2P lending to solve MSMEs’ credit woes (MENAFN), Rated: A

As Budget is about to come in few weeks, it’s time for the government to look at alternative financing option like P2P lending to solve the credit crisis in Micro Small and Medium Enterprises (MSME) sector, said Rajiv M Ranjan, Founder & CMD, Paisa Dukan.

While sharing the budget expectations, he said, ‘Getting access to institutional credit has been one of the major problems of the MSMEs and to maintain the wealth of the Indian middle class, P2P lending can turn a milestone.

Is fintech reeling under new challenges? (DNA India), Rated: A

The super exciting fintech segment in the start-up ecosystem has been encountering a host of challenges in the recent past. Following a move by the Reserve Bank of India (RBI) to start a regulatory sandbox for the beta-testing of new fintech products in a controlled environment prior to their release, comes the issue of a liquidity crunch in the non-banking finance companies (NBFC) space.

STEADY GAINS

  • Over 1,300 new fintech ventures had cropped up in the sector between 2015 to 2018, according to a data
  • Fintech is a broad sector. It is wrong to connect the NBFC crisis to the whole fintech space
  • For a peer-to-peer (P2P) lending player who is dependent on retail investors for funding loans, maintaining trust is the key challenge
Asia

Singapore is ‘actively studying’ virtual banking licences, says country’s prime minister (SCMP), Rated: AAA

Singapore is actively studying whether to allow companies with no banking parentage to set up virtual banks, paving the way for start-ups like on-demand services operator Grab to potentially enter the formal financial services industry.

KoinWorks Closes $ 12M In Series B Funding Round (PYMNTS), Rated: A

KoinWorks announced that it has raised $12 million in a Series B funding round. The round was co-led by EV Growth and Quona Capital, with participation from existing investors. The funding will be used to expand the KoinWorks team and partnerships, as well as further develop the company’s systems and technology.

Business environment needs strong Gov’t actions: VBF 2019 (Vietnam News), Rated: A

The American Chamber of Commerce in Việt Nam (AmCham) expressed its desire for a highly standardised, transparent and stable business environment so all investors are treated equally.

Concerns were also raised by the Korea Chamber of Commerce in Việt Nam (Kocham) and the Japanese Chamber of Commerce and Industry in Việt Nam (JCCI).

The limit of foreign ownership in local financial firms has also prevented fintech and P2P firms from calling for foreign capital, making them unable to hire talent and keeping their businesses less competitive.

PT ALAMI Fintek Sharia (Alami) came in as the runner-up position in the TaqwaTech Pitch Pit organised by Gobi Partners Venture Capital.

Three companies from Indonesia qualified for the top ten, namely Alami, as well as two marketplace startups for pilgrimage services PergiUmroh.com and Umroh.com.

Authors:

George Popescu
Allen Taylor

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

Thursday June 7 2019, Weekly News Digest

economic downturn

News Comments Today’s main news: SoFi completes first rated pass-through certificates offering. Y Combinator backs Monzo for U.S. expansion. Funding Circle set for largest securitization. Dianrong shifts strategy. Funding Circle inks 50M Euro deal with Avida Finans. Open raises $30M. Today’s main analysis: Chance for recession is rising (A MUST-READ PeerIQ analysis). Today’s thought-provoking articles: […]

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

economic downturn

News Comments

United States

United Kingdom

International

China

APAC

News Summary

United States

SoFi Completes First Offering of Rated Pass-Through Certificates (PR Newswire), Rated: AAA

SoFi announced today that it completed a $200 million offering of post-graduate student loan asset-backed certificates issued by SoFi Alternative Trust 2019-C (SAT 2019-C). The Certificates are rated single-A by DBRS and mark the first rated pass-through certificate transaction issued by SoFi and the first publicly rated student loan pass-through transaction in the securitization market.

Unlike traditional student loan ABS transactions, SAT 2019-C does not use overcollateralization or bond subordination as forms of credit enhancement.  The A rating assigned to the certificates by DBRS reflects the strong credit attributes of the borrowers. The portfolio has a weighted average credit score of 783 and a weighted average annual income of $175,746.

Y Combinator says Monzo’s community will help it succeed in the US where others have failed (AltFi), Rated: AAA

Leading US startup backer Y Combinator has become the latest high-profile backer of Monzo, on the eve of the bank’s American expansion.

Today Monzo confirmed it had raised £113m in a round led by Y Combinator’s Continuity fund, along with Latitude, General Catalyst, Stripe, Passion Capital and others.

Recession Risks; OCC Charter + Big Tech (PeerIQ), Rated: AAA

Weak economic data continue – inflation expectations tumble, manufacturing has moved into recession, and the 10y/3m yield curve remains mildly inverted. Although the FOMC took no rate action this week, dovish signaling has led market participants to expect a 70% chance of 3 or more rate cuts in 2019.

Source: WSJ, PeerIQ

CPI Since 1879 During Business Cycles

Source: Deutsche Bank, PeerIQ

How A Former J.Crew And Pillsbury Exec Is Applying His CFO Expertise At A Financial Unicorn (Forbes), Rated: AAA

Scott Rosenberg: Kabbage represented a great opportunity for me to apply my prior experiences and help architect the future vision of a fast-growing company. Every role in my career has allowed me to lead or influence multiple divisions within a company, which makes my operational approach similar to that of a COO or General Manager. Beyond leading the CFO office in previous roles, I led Marketing at J. Crew, Operations at Pillsbury and most recently was the President of Purchasing Power. This broad vantage point lets me ensure financial growth as the CFO, but also identify opportunities to establish operational efficiencies more broadly across the organization. I take the same approach at Kabbage as I lead multiple disciplines, including Capital Markets and Legal. It encourages transparency across teams which allows us to move faster. With more than 175,000 customers accessing over $7.0 billion to-date, it’s an exciting role to drive hyper growth and deliver the best products and experiences for U.S. small businesses.

According to a survey released today by Kabbage that polled more than 500 companies across multiple industries, 80% of American entrepreneurs said they felt confident in their readiness to weather another economic crisis.

H&M and Klarna Grow Partnership to US (Yahoo! Finance), Rated: A

H&M and Klarna announced that they have expanded their current partnership agreement to also include the US market, in the development of an unrivalled payments and shopping experience across touchpoints. Together, H&M and Klarna are aiming at further integrating H&M’s digital and physical stores to give customers a seamless, personalised and engaging shopping experience no matter where, when and how they shop.

This Commercial Real Estate Marketplace Provides Direct Investment Opportunities (TheStreet), Rated: A

CrowdStreet, which launched in 2014, is the leading player in the fast-growing field of online commercial real estate investing. The company’s online Marketplace allows individual investors to reap the rewards of investing in the $6 trillion commercial real estate sector, investing in everything from multifamily apartment buildings to self-storage facilities and senior-living centers.

The average return on the first 14 deals financed on CrowdStreet’s platform — those which have fully wrapped up, yielding final returns to investors — is 31.7%, with a 1.6x equity multiple and a holding period of two years.*

MassMutual, CommonBond Team Up to Tackle Student Debt in the U.S. (Mass Mutual), Rated: A

Total student loan debt in the U.S. is now over $1.5 trillion, which prevents many people from passing financial milestones and saving for the future.

Massachusetts Mutual Life Insurance Company (MassMutual) has teamed up with CommonBond to offer a new student loan refinancing program through CommonBond with a rate advantage to help people take control of their student debt. This program – available online to all individuals with student debt today — is among the first of its kind in the student lending and insurance industries. The program is becoming available on a rolling basis in local communities across the U.S. through MassMutual’s network of financial advisors, currently 9,000 strong.

Ocrolus Raises $ 24M to Modernize Workflows with a Human Touch (PR Newswire), Rated: A

Ocrolus today announced $24M in Series B funding led by Oak HC/FT, a premier venture growth equity fund with deep fintech expertise. Ocrolus is powered by an elegant blend of artificial intelligence and crowdsourced human quality control, enabling firms across the financial sector to automate high-stakes business processes with precision. The company will use its new funding to automate underwriting workflows for lenders and banks, and expand into new verticals.

How Citizens Bank is rethinking mobile and online banking (American Banker), Rated: A


Robos are getting political. Will Wall Street follow? (FinancialPlanning), Rated: A

Forged in the wake of the financial crisis and political movements like Occupy Wall Street, digital advisory firms have become decidedly open about their political agendas. By advocating for the democratization of financial advice and stronger consumer protections, digital investment platforms have become the face of progressive politics in the market. That’s attractive to young investors — assets managed on digital platforms are expected to soar to $1.26 trillion by 2023, according to a report by Aite Group.

Cross River gets onboarding system it coveted in fintech deal (American Banker), Rated: A

The $1.5 billion-asset bank agreed on Monday to buy Seed for an undisclosed amount. The 5-year-old fintech offers a mobile account for small businesses, complete with bill payment, remote deposit and an attached debit card.

“It’s About Time” Documentary Sheds Light on Earned Wage Access (PR Newswire), Rated: A

Today, PayActiv, Inc., the leader in employer-sponsored, holistic financial wellness service for employees, unveiled its documentary made in collaboration with Early Light Media and Roundtable Companies about the direct benefits of timely earned wage access. Now available at ItsAboutTimeTheFilm.com, the documentary, titled It’s About Time, looks at pay timing and its correlation with epidemic financial stress being experienced by millions of working Americans.

Fintech MX gets $ 100 million in funding to expand operations (American Banker), Rated: B

The data company MX is set to announce Tuesday an infusion of $100 million from a host of partners, including National Bank of Canada and Washington Federal.

Neighborhood Ventures Closes on Third Investment Property Near Old Town Scottsdale (Yahoo! Finance), Rated: B

Arizona’s first real estate crowdfunding company, Neighborhood Ventures, recently closed on its third investment property, an eight-unit apartment building in Old Town Scottsdale. Ninety Arizona residents invested a total of $550,000 into the purchase of the property, which will be renovated with a plan to operate it as an Airbnb.

United Kingdom

Funding Circle set for its largest ever securitisation (P2P Finance News), Rated: AAA

DEUTSCHE Bank has unveiled more details on Funding Circle’s fourth securitisation, revealing it will be the highest-value package of loans it has offered so far.

The investment bank, which has been mandated as sole arranger and lead manager, said the deal will comprise 3,030 loans, with an aggregate balance of £244m and an average interest rate of 9.91 per cent.

FTSE 250 movers: Funding Circle falters (ShareCast), Rated: A

London’s FTSE 250 fell 0.14% lower to 19,260.07 in afternoon trade on Wednesday, with Funding Circle leading the index lower.

The peer-to-peer lending marketplace was accompanied by fellow financial stocks, with Amigo HoldingsCharter Court Financial ServicesPlus500 and Onesavings Bank all featuring among the top fallers.

OakNorth completes £60m facility for three new retirement schemes (Development Finance Today), Rated: A

OakNorth has completed a £60m loan to Affordable Housing & Healthcare Group (AHH) for the development of three new affordable retirement living schemes.

He said that in retirement he will continue to be a school governor, and that he intended to devote more time to the two charities he is involved with (the other one being Lendwithcare – peer to peer lending to entrepreneurs in a number of Third World countries).

China

Top Chinese peer-to-peer lender to shift strategy after latest fundraising (ETPrime), Rated: AAA

Wu Yujian and Liu Jiefei Dianrong, one of China’s largest peer-to-peer (P2P) lending platforms, said it’s planning a shift in strategy to focus on cooperating with traditional financial institutions as China’s regulators continue to tighten their grip over the industry. The move was revealed on Thursday as the Shanghai-based company confirmed (link in Chinese) it had completed a new

Government Asks Victims of P2P Fraud Case to Register for Compensation (Caixin Global), Rated: A

An intermediate court in Beijing overseeing the Ezubo case said on Wednesday that victims could detail their cases to authorities at local registration sites between July 2 and Aug. 30.

European Union

A very Nordic fintech revolution (Pitchbook), Rated: AAA

Europe is a hotbed of activity when it comes to fintech investments, as the sector continues to mature. Year after year, billions of euros are plowed into promising startups, with last year seeing more than €2.8 billion raised across 438 deals, per the PitchBook Platform.

Below is a list of some of the most innovative fintech companies founded in the Nordics, together with noteworthy investments and backers.

EU Moves Closer To New Bloc-Wide Crowdfunding Rules (Law360), Rated: A

European lawmakers floated new rules on Wednesday to make it easier for businesses and investors to ask the public to fund their projects, bringing the European Union a step closer to forging a common set of rules for national regulators overseeing crowdfunding.

International

Funding Circle strikes €50m loans deal with Sweden’s Avida Finans (AltFi), Rated: AAA

Funding Circle has struck a deal with Swedish finance house Avida Finans to lend an initial €50m to small firms in Germany and the Netherlands this year.

How DeFi startups are providing an alternative to traditional lending (Sociable), Rated: AAA

DeFi lending startups are leveraging blockchain to shake-up the traditional money lending industry.

Digital Assets Kept as Collateral

Salt is one company which has been borne out of the cryptocurrency sector.  Through its platform, digital assets are kept as collateral but returned upon repayment of the loan.

Automated P2P Lending Agreements on Blockchain

ETHLend is another DeFi platform built on top of the Ethereum network.  It creates a means for lenders and borrowers from around the world to establish peer to peer lending agreements over blockchain.

Blockchain Catering to the Unbanked in Latin America

A Blockchain-Driven Lending Circle

A completely different approach is being taken by startup, WeTrust.

When it comes to lending, users can establish a ‘lending circle’ on the platform.

Australia

P2P lender expands presence in third-party space (TheAdviser), Rated: AAA

Peer-to-peer lender RateSetter has announced its new partnership with Choice Aggregation Services (Choice), providing accredited brokers with access to the lender’s personal loan offerings.

P2P lender joins aggregator panel (Broker News), Rated: A

The partnership will make RateSetter’s unsecured personal loan product available to Choice Aggregation Service’s network of more than 1,600 brokers, in line with the trend towards servicing a more diverse array of client needs.

Recognising SMEs’ contribution to the economy (AustralianBroker), Rated: A

Prospa research has highlighted how lending to small business positively affects the economy through contributing to GDP and creating and supporting jobs.

Data released this week by accounting software firm Xero, analysed invoices from 150,000 Australian SMEs and concluded that 53% of trade credit invoices are paid late by big business suppliers and customers – on average 23 days after their due date. Squeezing SMEs, Xero calculates these late payments are worth $115bn.

Technology boosting financial literacy (Financial Review), Rated: A

Technology will need to play a bigger role in boosting the financial literacy of Australians as a large number of financial planners leave the profession, says Bronny Speed, financial advice leader at Chartered Accountants Australia New Zealand.

Speed says as increased educational and licensing standards for Australia’s 29,000 financial advisors will push some out of the market, it will leave a gap in the profession’s ability to provide financial advice and boost literacy.

India

India’s Open ‘neo-bank’ raises $ 30 million to help businesses automate their finances (TechCrunch), Rated: AAA

Open, a Bangalore-based startup that operates a “neo-bank” to help businesses automate and run their finances, has bagged $30 million in a new funding round as investors look to replicate a globally tried and tested business idea in emerging markets.

Open Banking is Disrupting the Traditional Banking System and Indian Neo Banks are Gearing up for it (Entrepreneur), Rated: A

In today’s age of digitisation, it is all about the customer and improving his/her experience. To achieve this goal, banks and fintech companies have to support each other. This change in the ecosystem has invented the concept of neo banking which can be rightly dubbed as the new era of the banking industry.

Govt should look at alternative financing option like P2P lending to solve MSMEs’ credit woes (MENAFN), Rated: A

As Budget is about to come in few weeks, it’s time for the government to look at alternative financing option like P2P lending to solve the credit crisis in Micro Small and Medium Enterprises (MSME) sector, said Rajiv M Ranjan, Founder & CMD, Paisa Dukan.

While sharing the budget expectations, he said, ‘Getting access to institutional credit has been one of the major problems of the MSMEs and to maintain the wealth of the Indian middle class, P2P lending can turn a milestone.

Is fintech reeling under new challenges? (DNA India), Rated: A

The super exciting fintech segment in the start-up ecosystem has been encountering a host of challenges in the recent past. Following a move by the Reserve Bank of India (RBI) to start a regulatory sandbox for the beta-testing of new fintech products in a controlled environment prior to their release, comes the issue of a liquidity crunch in the non-banking finance companies (NBFC) space.

STEADY GAINS

  • Over 1,300 new fintech ventures had cropped up in the sector between 2015 to 2018, according to a data
  • Fintech is a broad sector. It is wrong to connect the NBFC crisis to the whole fintech space
  • For a peer-to-peer (P2P) lending player who is dependent on retail investors for funding loans, maintaining trust is the key challenge
Asia

Singapore is ‘actively studying’ virtual banking licences, says country’s prime minister (SCMP), Rated: AAA

Singapore is actively studying whether to allow companies with no banking parentage to set up virtual banks, paving the way for start-ups like on-demand services operator Grab to potentially enter the formal financial services industry.

KoinWorks Closes $ 12M In Series B Funding Round (PYMNTS), Rated: A

KoinWorks announced that it has raised $12 million in a Series B funding round. The round was co-led by EV Growth and Quona Capital, with participation from existing investors. The funding will be used to expand the KoinWorks team and partnerships, as well as further develop the company’s systems and technology.

Business environment needs strong Gov’t actions: VBF 2019 (Vietnam News), Rated: A

The American Chamber of Commerce in Việt Nam (AmCham) expressed its desire for a highly standardised, transparent and stable business environment so all investors are treated equally.

Concerns were also raised by the Korea Chamber of Commerce in Việt Nam (Kocham) and the Japanese Chamber of Commerce and Industry in Việt Nam (JCCI).

The limit of foreign ownership in local financial firms has also prevented fintech and P2P firms from calling for foreign capital, making them unable to hire talent and keeping their businesses less competitive.

PT ALAMI Fintek Sharia (Alami) came in as the runner-up position in the TaqwaTech Pitch Pit organised by Gobi Partners Venture Capital.

Three companies from Indonesia qualified for the top ten, namely Alami, as well as two marketplace startups for pilgrimage services PergiUmroh.com and Umroh.com.

Authors:

George Popescu
Allen Taylor

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

London Fintech Week 2018

Fintech Week

July 6th – 13th, 2018 QEII Centre, London UK Fintech Week is a series of conferences, exhibitions, workshops, hackathons, meetups and parties. Each day, the focus is on a different topic. There is also plenty of time for networking and meeting other innovators. The main conference/exhibition takes place at the QEII Centre in Westminster, but […]

Fintech Week

July 6th – 13th, 2018
QEII Centre, London UK

Fintech Week is a series of conferences, exhibitions, workshops, hackathons, meetups and parties. Each day, the focus is on a different topic. There is also plenty of time for networking and meeting other innovators. The main conference/exhibition takes place at the QEII Centre in Westminster, but other events take place across the city of London, Canary Wharf and “Tech City.”

Expect 600-1,000 conference delegates per day from over 50 countries and 3,000 – 5,000 participants in events throughout the week.

Register here.

Bringing Net Lease Into the FinTech Age

net lease brokerage technology

Covering an estimated 1.3 million properties and aiming to help clients buy, sell, and trade real estate across the nation, Brokers+Engineers has emerged as the first technology-driven trading and brokerage platform for net lease real estate. Powered by artificial intelligence, data analytics, and innovative engineering, Brokers+Engineers offers Net Lease Investment Sales, Sale-Leasebacks, 1031 Exchange Advisory, […]

net lease brokerage technology

Covering an estimated 1.3 million properties and aiming to help clients buy, sell, and trade real estate across the nation, Brokers+Engineers has emerged as the first technology-driven trading and brokerage platform for net lease real estate.

Powered by artificial intelligence, data analytics, and innovative engineering, Brokers+Engineers offers Net Lease Investment Sales, Sale-Leasebacks, 1031 Exchange Advisory, and Research/Analytics services on its platform. A process that used to be cumbersome and fraught with manual inefficiencies is finally getting its day in the digital sun.

The Platform

The Brokers+Engineers platform has been successful in raising an estimated $750,000 from strategic partners. Presently, the firm has around 50 employees and seven brokers, which the founders are looking to increase to 20 by the end of 2019. B+E is particular about onboarding senior brokers only and empowering them with the right data and AI tools for growth. The company’s ethos lies in its people, and they focus on specializing in Net Lease and leveraging technology to deliver better solutions at scale.

The company also deals in complex 1031 exchange transactions where the seller needs to reinvest the proceeds into a new property to defer capital gains. Such deals are extremely management intensive and are usually executed by families that are looking to pass on their assets to younger generations. It handles transactions in all 50 states and has offices in three cities: San Francisco, New York, and Tampa. They are looking to expand to five cities by the end of this year.

B+E’s Dataset: Price-Regression Algorithm

The foundation of any business is data and the way it is organized. Recognizing this, B+E has the largest dataset in the net lease industry and leverages proprietary patent pending AI-powered price regression algorithms to bring better-priced deals to the market. The technology will is also used for establishing property values from year to year. The company uses a data-scrubbing technique to amalgamate data and clean it up before using the AI mechanism for sourcing deals.

Understanding the importance of municipal data in the development of proprietary tech, the platform also engages with Municipal Data Services to collect details about ownership and other property details to analyze through its artificial intelligence algorithms.

Delivering More Value at the Same Cost

Clients using the B+E platform are not charged additional market fees. They are charged a success fee depending on the sale of the net lease asset. If the platform fails to deliver its promise of sale, no fee is charged. This ensures the company is at parity with other players in the industry and there is no friction in onboarding clients.

Brokers+Engineers currently serves top tier REITs and real estate developers. Its roster of clients includes Stone Capital, WP Carey, and Sprint Financial. It typically deals with one-tenant properties, and though each transaction is different, the deals are much easier to negotiate if there is only one tenant involved. Transactions also involve hospitals, FedEx ground, retail and industrial properties, Amazon distribution centers, and office headquarters.

Blockchain and New Technology

Considering blockchain as a transformative option, the team at B+E is seriously evaluating distributed ledger alternatives. An innovation lab has been created to analyze how blockchain can help in storing transactions, memorializing deals, validating transactions, and interacting with other actors. B+E realizes that crypto is the future and is confident of its integration in the near future.

While transacting in Bitcoin is possible, the firm is wrestling with volatility management. Crytpocurrencies jump in value by as much as 20 percent on some days, so it is difficult to perfectly price deals and ensure fallback provisions if crypto prices go haywire. Therefore, Brokers+Engineers is treading lightly in this space.

The Founders

In 2017, CEO Camille Renshaw, along with Co-Founder Scott Scurich, launched Brokers+Engineers. They had worked with each other at Ten-X (a Google Capital company) and the Stan Johnson Company, both net lease brokerages. Brokers+Engineers is their third venture together.

Renshaw was the head of sales at Ten-X and Scurich was managing director. Renshaw founded the net lease division at Ten-X, which proved to be a great source of learning for both Renshaw and Scurich. However, it laid too much emphasis on deadlines. The zeal to bring the net lease brokerage industry into the modern era steered them to leave Ten-X and start B+E. Their goal is to facilitate easier, faster, and more intelligent transactions for all stakeholders.

Conclusion

The net lease industry will eventually have to adopt modern technology. Brokers+Engineers serves major players in the market and know they are waiting for the right product to incorporate. The clients are fundamentally excited to see a seamless platform which can enhance liquidity and boost transparency in the market.

Even though B+E has a significant market share, it is chasing its own tipping point towards domination. There is no runaway leader in the segment and the company wants to develop its platform as the go-to source for reliable data and premiere transaction support services. The company’s ability to leverage AI technology along with experiments in blockchain hold the key to long-term success.

Authors:

Written by Heena Dhir.

Wednesday April 4 2018, Daily News Digest

Wednesday April 4 2018, Daily News Digest

News Comments Today’s main news: OnDeck files first ABS in two years. Funding Circle opens second Denver office. LendingClub settles with Massachusetts regulator. OFF3R founder to launch personal investment assistant. China Rapid Finance reports unaudited Q4, full year results. Today’s main analysis: Strengthen your fraud prevention strategy. (A MUST-READ REPORT FROM LexisNexis) Today’s thought-provoking articles: True lender litigation is […]

Wednesday April 4 2018, Daily News Digest

News Comments

United States

United Kingdom

China

International

India

Other

News Summary

United States

OnDeck makes ABS return (Global Capital), Rated: AAA

The lender filed documents with the Securities and Exchange Commission for the upcoming deal on Tuesday. Deutsche Bank, Credit Suisse and SunTrust are leading the deal, according to the deal documents.

OnDeck spent the last two years holding a greater percentage of its loans.

Funding Circle Expands U.S. Operations with New Office in Denver (PR NEwswire), Rated: AAA

Funding Circle today announced it is expanding its U.S. operations with a second office in Denver, Colorado. With the move Funding Circle will look to hire around 290 new employees in the Denver area over the next two years to support the company’s growth.

LendingClub settles with Mass. banking regulator for $ 2M (American Banker), Rated: AAA

LendingClub has settled with the Massachusetts banking regulator to the tune of $2 million over claims that the company made unlicensed loans in the state.

The state division of banks said that the San Francisco-based LendingClub made over 46,000 loans to Massachusetts consumers without a license since 2011, when it surrendered its small loan company license as a condition of a consent order. The division also said that it found additional unlicensed lending activity at Springstone Financial, a wholly owned subsidiary of LendingClub that has its main office in Westborough, Mass.

“True Lender” Litigation on the Rise: Recent Litigation and Enforcement Actions (JDSupra), Rated: AAA

Over the last two years the financial industry has seen an uptick in litigation and enforcement actions aimed at banks and their non-bank lending partners. These actions have primarily challenged the validity of the bank partnership model that is used by many non-bank lenders to generate consumer and small dollar business loans.

Bank and Non-Bank Lender Partnerships

Although the structure of a bank and their non-bank lending partners can take many forms, the typical relationship involves the non-bank lender identifying loan opportunities for the bank, which then originates the loan and either immediately assigns the loan to their non-bank partner or another third-party. By partnering with banks, non-bank lenders avoid certain regulatory and licensing requirements in states where their bank partners operate.  In return, banks are able to utilize their relationships with their non-bank lending partners to generate leads for additional loans.

Colorado’s Uniform Consumer Credit Code Administrator Takes Action

In January 2017, the Colorado’s Uniform Consumer Credit Code (“UCCC”) Administrator, Julie Meade, filed two substantially similar complaints in Colorado state court against Marlette Funding, LLC, and Avant of Colorado, LLC. The complaints alleged violations of the UCCC based on the theory that Marlette and Avant were the “true lender,” not their bank partners, in a series of loans made to Colorado consumers, which loans contained interest rates that exceeded Colorado’s usury laws.

Broad Reaching Implications

The CashCallMadden, and other related actions threaten the traditional bank partnership model that the financial industry relies on to originate, buy, sell, and transfer loans.

Legislative Fix Coming?

There is currently at least one bill pending in the House and Senate that, if passed, would address both the “true lender” issue and the consequences of the Madden decision.

Why It’s No Surprise That Online Lender GreenSky Would Weigh An IPO (Forbes), Rated: AAA

Now, the company is challenging a near-sacred belief in Silicon Valley these days that staying private for longer is better. GreenSky has filed confidentially for an IPO, according to 

Strengthen Your Fraud Prevention Strategy (LexisNexis), Rated: AAA

Key Findings

  • The cost of fraud is sizeable for retail, eCommerce, financial services and lending organizations. Every $1 of fraud costs organizations in these industries between $2.48 and $2.82 – that means that fraud costs them more than roughly 2 ½ times the actual loss itself. Fraud cost as a percent of revenues ranges between 1.58% and 2.39%.
  • The eCommerce, financial services and credit (rather than mortgage) lending sectors are getting hit somewhat harder.
  • The digital space, either as a transaction channel or type of good being sold, is a high risk for even more negative fraud impact. Regardless of industry segment, the percent of average monthly fraud attempts is higher for these types of organizations. For those using the online channel, this is the result of more fraudster focus on the anonymous purchasing environment, particularly leveraging the nocard-present opportunities compared to EMV chip barriers at physical points of sale.
  • Yet, digital channel / digital goods selling organizations are not fully leveraging the value of risk mitigation solutions. Identity verification remains a challenge and common type of fraud; there is only moderate use of advanced identity verification solutions among these  organizations.
  • These issues will only increase as more firms adopt the mobile channel. Larger merchants / firms tend to be the pioneers of the mobile channel.
  • Findings show that retailers, eCommerce merchants and financial services and lending firms which layer solutions by identity and fraud transaction solutions
Source: LexisNexis

Read the full report here.

U.S. Insurtech Oscar Secures $ 165 Million Through Latest Investment Round Led By Brian Singerman & Founders Fund (Crowdfund Insider), Rated: A

Oscar Health, a U.S.-based insurtech, announced last week it has raised $165 million through its latest investment round led by Brian Singerman and Founders Fund. Founded in 2013, the company stated it is focused on utilizing technology, design, and data to humanize healthcare.

5 Major Ways Banks Are Getting Disrupted (The Motley Fool), Rated: A

The peer to peer lending term is kind of a loose term nowadays. Like Michael said, a lot of the bigger banks have started to copy this business model, so it’s not exactly peers loaning to peers anymore. But, at its heart, Prosper was actually the first mover on this. A lot of people think it was Lending Club but Prosper actually got there a little bit earlier. But, Lending Club was definitely the big one that got the banking industry on its toes in terms of peer to peer lending.

Marcus by Goldman Sachs is one of the newest ones. Goldman is getting into consumer banking a little bit. On the business side, you have companies like Funding Circle, which is a really interesting concept, because business lending is a big pain in the neck, especially in certain industries.

The Lending Game: Streamlining Customer Experience (Lendit), Rated: A

Lending, much like dating, has been brought online in the past decade with the aim of streamlining the process and dramatically reducing the time spent for both parties. But as the backend systems involved become more complicated to include more data and decisioning points, how do lenders continue to create a simplified customer experience that will bring good customers back for that “second date”?

New Fintech IPO on the Horizon with GreenSky (Lend Academy), Rated: A

So who is GreenSky exactly and what do they do? We wrote about the company earlier this year when we learned of their $200 million funding round from PIMCO which made them the most valuable company in the online lending space. The company has a unique model where they partner with merchants and contractors to offer financing at the point of sale. They view themselves as more of a tech company since they do not actually lend any money. This capital light business model has likely led to much of the success they have seen. Instead of lending their own money GreenSky has relationships with about 15 banks. On the tech side, the process is paperless and all done through a mobile device.

What Borrowers Do When Payday Loans Go Away (Lend EDU), Rated: A

For South Dakota consumers, payday loans used to be available at storefronts, but since late 2016, this access and annual interest rates have been cut.

 

Although South Dakota limited payday lending, it didn’t outlaw it. And some borrowers are hitting online lending agencies found through Google searches under “payday loans”—a familiar option for South Dakota consumers, according to KELO. This alternative carries risks such as a lack of oversight and inconsistent regulation; however, this is a national issue with these lenders.

It may be too early to write off robo start-ups (Investment News), Rated: A

News that robo-adviser Wealthfront’s valuation dropped was read by many in the financial advice industry as the writing on the wall for direct-to-consumer digital advice startups.

Scott Smith, the director of advice relationships at research firm Cerulli Associates, said the stories surrounding Wealthfront are proof that the market is favoring a hybrid advice approach. While the number of people who want a purely digital advice platform could grow over time, the majority of assets are still held by people over the age of 40 who want human assistance with their financial decisions.

As for Betterment, the company says it isn’t experiencing any headwinds at all.

Why banks have trouble selling real-time payments (Tearsheet), Rated: A

Real-time payments have landed in the U.S., but banks are still figuring out how to sell them to corporate clients. BNY Mellon, U.S. Bank, Citi, JPMorgan, PNC and SunTrust are the only banks using the Clearing House’s new real-time payments system.

One challenge is simply the legacy infrastructure on which most financial services companies today are built. Companies that provide ERP systems like SAP or Oracle have built their systems in a batch processing world and need to also become real-time.

In the age of PayPal, Venmo and Square Cash, it’s easy to forget that most transactions that take place day-to-day aren’t happening in real time. They feel like they are, but they really just move money from one PayPal user’s balance to another. Moving that balance from PayPal’s banking partner to the customer’s own bank account is still a multiday process.

U.S. banks are not that far away from ubiquitous real-time payments, according to Ward, who said he thinks 90 percent of banks will have implemented real-time payments by the middle of 2019. PNC hasn’t met too many challenges itself trying to sell RTP, Ward said, but clients are still figuring out the best way to take advantage of it and whether they prioritize the needs of customers or suppliers.

MetaBank Announces Partnership with Health Credit Services to Originate Personal Healthcare Loans (Markets Insider), Rated: B

MetaBank; a wholly-owned subsidiary of Meta Financial Group, Inc. (NASDAQ: CASH) (“Meta”) today announced a new, three-year agreement with Health Credit Services (“HCS”), a technology driven, patient financing company. MetaBank will approve and originate loans for elective procedures for HCS provider offices throughout the country. HCS will work with its provider partners to market the loans, as well as provide servicing for them. Over the course of this relationship, MetaBank expects to originate at least several hundred million dollars in personal loans.

 

Amber Baldet Leaving JPMorgan Blockchain Team to Start New Venture (CoinDesk), Rated: B

Amber Baldet, who oversaw development of JPMorgan’s permissioned blockchain platform, Quorum, is leaving the financial institution, according to an internal memo sent Monday by the bank’s head of blockchain initiatives, Umar Farooq.

United Kingdom

The robo-adviser of robo-advisers (Fn London), Rated: AAA

The story of robo-advisers is an old one, or so thinks Lex Deak, serial entrepreneur and creator of a new breed of online wealth management tool. Deak, who was the brains behind the launch of peer-to-peer lending aggregator Off3r, is rolling out a new online service that he claims will bring web-based investment to the masses and “battle the bias and bullshit that has dogged the investment sector for decades”. The new service, called Personal Investment Assistant — or Your Pia — uses artificial intelligence to help investors sift through a range of robo-advisers, wealth management platforms and IFA networks.

Big names on the board
Todd Ruppert, the former president and chief executive of T Rowe Price — who is no stranger to backing fintech start-ups — is taking a seat on the Pia board. He will be joined by Daniel Sauva, head of creative and buzz at money transfer service TransferWise, and Nigel Webber, who was global chief investment officer at HSBC Private Banking. Gayle Schumacher, a Coutts executive, is taking a seat, too.

 

A new Innovative Finance Isa (IF Isa) has launched offering a whopping 7.28% annual interest rate. The easyMoney ‘Balanced’ IF Isa allows you to invest in peer-to-peer lending – where your money is lent to individuals or small businesses – within an Isa wrapper, so your returns are tax-free.

The target rate of 7.28% is a guide to what return you can expect from investing in multiple property-backed loans, all of which have a maximum 75% loan to value.

The firm offers two different IF Isas: its ‘Conservative’ IF Isa, has a 4.05% targeted annual return with a minimum investment of £1,000. It is “aimed at investors who are looking for something more than the paltry rates offered by cash ISAs”, says Mr Candole.

 

China

China Rapid Finance Reports Unaudited Fourth Quarter and Full Year 2017 Results (Benzinga), Rated: AAA

China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE:XRF), operator of one of China’s largest consumer lending marketplaces, today reported its unaudited financial results for the fourth quarter and full year ended December 31, 2017.

Fourth Quarter 2017 Highlights:

  • Positive operating cash flow of $15.8 million
  • Total gross billings up 186% year-over-year
  • Facilitated 6.2 million loans with total loan volume of $1.03 billion
  • Added 627 thousand new borrowers, up 17% from the end of Q3 2017
  • Added approximately 10 thousand new investors to reach over 23 thousand investors
  • GAAP net loss of $3.9 million
  • Non-GAAP adjusted profit before income tax expense of $1.1 million

Full Year 2017 Highlights:

  • Year-end cash balance of $94.9 million, up from $74 million immediately after the IPO
  • Total gross billings up 102%
  • Added 2.9 million new borrowers, up 202% from the end of 2016
  • Facilitated over 23 million loans with total loan volume of $3.3 billion

Chinese P2P lenders get confidence boost with protection plan (Enterprise Innovation), Rated: AAA

China’s marketplace lending is bracing for regulation around “record filing” systems that kicks into effect this month (April 2018). However, said new regulations may not be addressing altogether the problem of runaway credit that is growing on the back of cash loans and microlending market.

Source: Enterprise Innovation

Technological Innovation and Anti-Fraud Technology in a Maturing Fintech Sector (Lendit), Rated: A

The current most prominent methods of financial fraud are organized fraud, regional fraud, and targeted-occupation fraud. Various criminal and fraudulent organizations, including organizations developing illegal software, hacking databases for sale, and batch registration, have been working together to increase profits. However, their golden times are over now.

An insider once commented, “Certain P2P platforms only have a user retention rate of 20% following promotional events due to malicious users while the remaining 80% became inactive. Platforms spend a lot of money on marketing which has directly led to continually rising costs in customer acquisition.”

  1. Hexindai’s risk control technology has laid a solid foundation for anti-fraud progress
  2. Introducing new technologies to enhance anti-fraud capabilities

 

International

HSBC partners with FinTech and asset managers for cloud-based data platform (Global Custodian), Rated: A

HSBC Securities Services has partnered with FinTech firm FINBOURNE, asset manager Fidelity International and hedge fund Altana Wealth to design a new cloud-based investment management platform.

The four organisations will collaborate to design a shared, cloud-based data utility that aims to reduce operating cost and improve the quality of information for in-house and client use.

The platform, named LUSID, is aimed at replacing existing in-house software and hardware, and achieve advanced standards of data handling for institutional clients.

 

Australia

SME lender gives insight on changing landscape (Broker News), Rated: AAA

Small business lender OnDeck Group is hosting an event centred on SMEs and the changing lending landscape in Australia.

Taking place on 17 April, CEO Noah Breslow, will host a select group of brokers, aggregators and finance partners, with special guest Stephen Koukoulas, Managing Director of Market Economics, and Economic Advisor to illion (formerly Dun & Bradstreet).

OnDeck has now loaned over $8 billion to 80,000 small businesses across the United States, Canada and Australia, making it one of the largest online SME lenders globally.

India

Cryptocurrency-backed Lending Startup BlockFi Eyeing Indian Market, CEO Reveals in Interview (Crypto-News), Rated: AAA

Borrowing against cryptocurrencies is becoming a big new trend in the industry. A number of startups have sprung in crypto-backed lending space, which include SALT, CoinLoan, Ethlend, Unchained Capital and most recently Nuo Bank. Now a new startup with similar offering is eyeing the Indian market from New York. The startup, called BlockFi, offers cryptocurrency backed loans to individuals and companies both in 35 states of USA as of now. However, it’s planning to expand internationally very soon, and in that expansion it sees India as a major opportunity. This was revealed by none other than company’s CEO Zac Prince in a recent interview to Bitcoin Magazine.

SME loans marketplace Namaste Credit raises $ 3.8 million (Fortune), Rated: AAA

Namaste Credit, a digital marketplace and technology platform for SME loans, has raised $3.8 million in a Series A investment round from Nexus Venture Partners.

The company intends to use the corpus raised to grow its geographic footprint, enhance its technology and data analytics platform, and further scale its business.  The company also plans to significantly increase its channel partner program across India and further expand its technology licensing partnerships with lenders globally.

 

 

Namaste Credit raises $ 3.8 million from Nexus Venture Partners (LiveMint), Rated: A

Owned by Delhi-based Opendoors Fintech Pvt Ltd, Namaste Credit is a digital platform which serves as a marketplace for borrowers and lenders. It focuses exclusively on small and medium enterprise (SME) customers.

“SME credit is seriously constrained due to lack of reach and relevant data to assess credit-worthiness of borrowers. Namaste Credit’s technology, combined with its channel partners and lender network, is already making a significant impact on facilitating credit to SMEs in a win-win manner for all,” said Anup Gupta, managing director at Nexus Venture Partners, in a statement.

Asia

3 Fintech Companies Answers Jokowi`s Challenge on Student Loans (Tempo.Co), Rated: A

Last month, state-owned banks was not up for President Joko Widodo’s (Jokowi) challenge to provide students with the option of student loans. However, companies of Fintech (technology-based financial services providers) responded positively to the president’s challenge.

Danacita and Koinworks are Fintech peer-to-peer lending companies that focus on funding the education sector. Meanwhile, Danadidik is an academic funds provider that is on crowdfunding as its main financial backing.

The three platforms also provide a long-term loan for university students with a tenor from four to six years. Each of these companies applies varying methods of repayments from 9 percent- 20 percent low installments up to profit sharing a student’s wage once they have found jobs.

Authors:

George Popescu
Allen Taylor

Tuesday March 20, 2018, Daily News Digest

fintechs

News Comments Today’s main news: Affirm intros in-store capabilities. SoFi prices first student loan ABS with medical residency refis. Experian targets non-prime borrowers with new credit score. RateSetter CEO warns of collaboration risk. Today’s main analysis: Hui Ying Financial Holdings’ 2017 financial results. Today’s thought-provoking articles: What the Senate Banking Committee bill means. Key Chinese technology players. What Europe’s investors […]

fintechs

News Comments

United States

United Kingdom

China

European Union

International

Other

News Summary

United States

Affirm Introduces In-Store Capabilities (Business Wire), Rated: AAA

Affirm will partner with merchants to make Affirm financing available in-store. Now shoppers can use Affirm InStore in brick-and-mortar locations, securing credit in just seconds before they even get to the cash register, and can pay for their purchase over time in simple, fixed monthly installments. Additionally, the company announced that consumers will have the ability to instantly add a newly issued Affirm virtual card to Apple Pay, the easy, secure and private way to pay, via the Affirm mobile app.

Affirm InStore brings the same easy experience shoppers and retailers have come to expect online to the point-of-sale in brick-and-mortar locations. Affirm gives merchants two flexible options: they can integrate the Affirm InStore API (application programming interface) with their Point Of Sale (POS) system or use Affirm’s expanded virtual card experience.

According to a survey conducted by Affirm, this can impact a retailer’s brand even if the financing product is offered by a third party. Fifty-five percent of respondents said they would think less favorably of a brand that offers a financial product that can be harmful to consumers.

Affirm’s platform makes it possible for shoppers to pay for purchases over multiple-month terms with simple interest loans that don’t charge compounding interest or late fees. And, unlike most credit lenders that base loan decisions on a consumer’s credit score and income alone, Affirm takes a more sophisticated approach, using data science in credit-scoring algorithms that combine credit history and other relevant factors to assess creditworthiness.

Affirm, a startup founded by PayPal co-founder, just launched Apple Pay Credit Card without the plastic (Tech Startups), Rated: A

Affirm now has more than 1,000 merchants using its service.

The company is going after the millennials with a new type of credit card, without plastic and only available online. The company announced today the launch of Affirm virtual card to Apple Pay Credit Card without the plastic. With Affirm Virtual Card, consumers will have the ability to instantly add a newly issued Affirm virtual card to Apple Pay, via the Affirm mobile app. With the virtual card, Affirm is reinventing credit with alternative to traditional credit cards and making its micro-lending program available through Apple Pay and letting customers use their iPhones to pay in brick-and-mortar stores.

SoFi prices 1st student loan ABS with medical residency refis (American Banker), Rated: AAA

Social Finance’s second private student loan securitization of the year, which priced Friday, is also its first to include loans refinancing the debt of medical residents.

Loans refinancing the debt of medical residents and fellows account for approximately 5% of the collateral for the original collateral for the transaction, SoFi Professional Loan Program 2018-B Trust, according to rating agency presale reports. The collateral for the deal was upsized, to $900 million from $700 million originally, in response to strong demand, though investors demanded slightly higher spreads on the senior notes compared to SoFi’s previous student loan securitization, completed in January.

Experian Releases a New Credit Score Aimed at Non-Prime Borrowers (Lend Academy), Rated: AAA

The ranks of thin file consumers continues to grow in this country. According to Experian these consumers now number 25% of the total U.S. population. These are people with five or fewer items in their traditional credit history.

Since the acquisition they have worked with the Clarity Services team to build a new score specifically for the non-prime segment. They are calling it the Clear Early Risk Score. As the name implies this new score is designed to give lenders a clearer view of the risk of these thin file consumers, many of whom should not be categorized as subprime.

When I asked Alex how this new score will be used in conjunction with their traditional FICO score he said it will be used in two ways:
1. When the consumer has no traditional file and therefore no credit score it will be used as an independent score.
2. The consumer may be originally scored as subprime and this new score could provide new  information that may lead to a different conclusion regarding risk.

 

 

 

Here’s what the latest Senate bill means for US fintech (Business Insider), Rated: AAA

A bill that the Senate Banking Committee has been drafting for several years, designed to reduce the regulatory burden for small- and mid-sized US lenders, received bipartisan approval in the Senate on Wednesday with a 61-38 vote.

The bill’s proposals include raising the threshold for the Dodd-Frank definition of a “systemically important” lender from $50 billion in assets to $250 billion, thus absolving smaller banks from strictures like annual stress tests; absolving banks with under $10 billion in assets from the Volcker Rule; and allowing small banks and credit unions to report less of their mortgage loan data, among other things.

Source: Business Insider

U.S. Online Merchants Believe Instant Financing Will Drive Increased Sales (PR Newswire), Rated: A

Online merchants in the U.S. are increasingly recognizing the importance of offering instant financing to shoppers, according to a new online e-commerce survey. Nearly two-thirds of retailers polled (64 percent) believe providing online financing options through their store is important to driving new and increased sales. Forty-six percent indicate it would decrease cart abandonment – still one of the most critical challenges for online retailers today.

The merchant survey, which recognizes the importance of instant financing among online retailers, corresponds with consumer attitudes as revealed in a Klarna-sponsored survey last year that showed:

  • Three quarters of consumers (75 percent) indicate preference for online merchants offering instant financing
  • 39 percent said they would spend more money if given instant credit options when purchasing goods and services online
  • 28 percent would be very likely or completely likely to change merchants in order to use instant financing
  • Nearly half of respondents (47 percent) would like to be presented with an instant financing option while shopping online

THE QUANTS, THE ALGORITHMS, AND THE PERFORMANCE (All About Alpha), Rated: A

In the forthcoming paper he contends that with only “a tiny handful of exceptions” (read “Renaissance”) such trading doesn’t produce exceptional results. The problem goes far beyond what one addresses by saying that the field is new and still developing, that machine learning will get better, that Big Data will get even bigger, and so forth.

Heaton asks us to contemplate Citadel LLC. This huge hedge fund “returned only about 13 percent in 2017,” which was short of the S&P 500 gain. Yet the S&P gain would have been “available quite inexpensively to anyone with the money to open an account at Vanguard Group.”

Does Citadel compensate for underperformance in bull markets by preserving capital in bear markets? Heaton says that it does not, “Citadel fell nearly 60 percent in 2008, far more than the S&P 500 index.”

Composing Architecture for Growth (Lendit), Rated: A

The same technology that is influencing this change is also making it possible to deliver that experience at a fraction of the time and cost it would take with older technology.

This ‘right’ technology means embracing cloud-based services and an API-enabled composable architecture.  Today, building an architecture is quick and cost effective, particularly through the use of cloud technology.  Rather than having to buy, build, and maintain a collection of poorly-connected systems, an API-enabled composable architecture lets institutions leverage services built on a flexible yet secure infrastructure.

A composable API-driven architecture is necessary to tap into the full potential of cloud technology. The traditional approach is all or nothing, build an end-to-end solution which relies on a single vendor which would be responsible for the implementation.  But the composable approach embraces thinking that one company cannot focus on everything and be the best at it.  The architecture can be divided in small pieces and managed through life cycles separately and tested, removed or replaced without risk.

Everlasting Capital Grows from a Basement to Inc.’s 500 List (deBanked), Rated: A

“I was making $267 a week at the pawn shop and I was having to ask friends to help me pay my rent for a room,” Feinberg said. “So at that point, I realized that something needed to change.”

That question prompted Feinberg to present to his brother and Murphy the idea to start a finance company. Feinberg said he drew up a business plan in a day and a half and his brother and Murphy agreed to give him $3,000 to start the company. That was November of 2012.

And it did. After a year, Feinberg’s company, Everlasting Capital, made $110,000 in commissions and $3.5 million in volume. Within that first year, he also hired three people and moved from the basement of the pawn shop in Rochester, NH to a 600 square foot office in the same town.

This lightning fast trajectory is by no means common. That’s why Everlasting Capital made it onto 2017’s Inc. 500 list, the iconic list of America’s fastest growing private companies. By year two, Everlasting Capital earned $640,000 in commissions, generating $14 million in volume, and by year three it earned $1.6 million in commissions with $18 million in volume.

A Conversation with Lendup’s CEO Sasha Orloff and Vice President Jotaka Eaddy (The Financial Revolutionist), Rated: A

We were happy to connect with LendUp’s co-founder and CEO Sasha Orloff and Jotaka Eaddy, the company’s vice president of policy, strategic engagement and impact. Orloff, Eaddy and the rest of the LendUp team are clearly mission-driven professionals who want to put borrowers on the pathway to better financial health.

The Financial Revolutionist: Sasha and Jotaka, it’s great to see you again. Sasha, I know you started the company in 2011 with your step brother, Jake. When did you start making loans?

Sasha Orloff:    Thanks Gregg. We recently hit our six-year anniversary of our first loan. Although Jake and I “started” the company in 2011, LendUp was really born after coming out of Y Combinator’s Winter 2012 class.

FR:     Is access to credit a civil rights issue that needs more attention?

JE:    Absolutely. It’s just that some of the blatant racism that’s confronting our nation these days takes center stage on TV and social media. But historically, race has played a major role in accessing credit and how people are marginalized when trying to access it. Plus, when you look at the predatory products across this country, they are heavily marketed to poor communities. So yes, safe access to credit is an important issue for me — and should be for everyone — and LendUp is on the right side of it.

OCC once wanted payday lenders to ‘stay the hell away’ from banks. No longer (American Banker), Rated: A

More than a decade has passed since federal regulators cracked down on partnerships between payday lenders and banks that had been designed to circumvent state interest rate caps.

Now the Office of the Comptroller of the Currency, operating under newly installed leadership, has taken a notable step in the opposite direction.

The agency said Friday that it has terminated a 2002 consent order with Ace Cash Express.

South Dakota is an example of a state that could be impacted. Sixteen months ago, the state’s voters approved a 36% interest rate cap. Critics of payday lending worry that federal banking regulators may effectively overturn such laws, and that last week’s decision by the OCC is a step down that path.

Goldman Sachs Adds LPL Financial to Its Securities-Lending Business (US News), Rated: A

Goldman Sachs Group Inc has signed LPL Financial Holdings, the largest U.S. independent broker-dealer by revenue, to its securities-based lending platform, the bank said on Tuesday.

Called GS Select, the platform was launched last year as a way for the Wall Street bank to target borrowers who have less than $10 million in investable assets. GS Select issues loans worth $75,000 to $25 million that are collateralized by the borrowers’ investment portfolios.

Goldman’s typical wealth clients have at least $50 million in assets.

Questions raised as robo advisers hire humans (FT Advisor), Rated: A

Robo-advice firms offering automated financial advice have begun incorporating human advisers into their service, raising questions about how this will impact their business models.

Schroders-backed Nutmeg is currently looking at introducing human advisers into its service, while rival Scalable Capital, in which Blackrock has a large minority stake, has recently done just that.

Cerberus completes Cyanco acquisition (PE Hub Network), Rated: B

Cerberus Capital Management, L.P. today announced the completion of the previously announced acquisition of Cyanco Holding Corp. by a Cerberus affiliate from funds managed by Oaktree Capital Management, L.P. The transaction closed on March 16, 2018.

Cyanco will continue to be led by its current management team. As part of its investment, Cerberus will be putting in place a new board of directors for Cyanco. The new board will be chaired by Daniel Ajamian, an executive who has been Chairman of several other Cerberus portfolio companies.

Here Are 7 Atlanta Startups That Have Raised More Than $ 100 Million in Funding (Atlanta Inno), Rated: B

Kabbage, a FinTech company that connects small businesses with capital they need, is sitting pretty at $1.6 billion in total funding acquired since its debut on the Atlanta credit scene in 2009. Kabbage was recently in the news after the lending startup announced that, in the wake of the Parkland shooting, it would stop processing loans to assault-style weapons manufacturers.

Greensky, a consumer lending company which offers paperless solutions and financial services to businesses, secured a total of $350 million in funding in just two rounds.

 

United Kingdom

RateSetter CEO warns of ‘risk’ of collaboration over competition (Peer2Peer Finance), Rated: AAA

At the Innovate Finance Global Summit at London’s Guildhall, Lewis warned that if the two cohorts solely collaborate, there would be little visible change from the viewpoint of the consumer.

“The technological advances being made are unstoppable; the question is who is going to take them to market,” he said on Monday.

There have been an increasing number of partnerships between fintech firms and the very incumbents that they are trying to disrupt. US investment bank Goldman Sachs has acquired a number of innovative start-ups through its online lending platform Marcus.

report released last month from consulting firm Capgemini and corporate networking website LinkedIn found that more than 75 per cent of fintech firms cite collaborating with incumbent firms as their primary business objective.

 

The state-backed Royal Bank of Scotland (RBS) is working on secret plans to create a standalone digital bank to compete with emerging British fintech champions including Monzo and Revolut.

Sky News has learnt that RBS has assigned one of its top executives to the project, which is so confidential that few people inside the company are aware of its existence.

RBS has already struck agreements with a number of leading fintech companies such as Funding Circle, with which it works to direct customers to peer-to-peer and other providers of alternative finance.

 

LendInvest launches second retail bond offer (Bridging & Commercial), Rated: A

The online platform for property finance has issued a five-and-a-half year 5.375% fixed rate retail bond due October 2023.

Payments under the bond will be guaranteed by LendInvest and the bond will be secured by way of a floating charge over the whole of the undertaking and all property, assets and rights, both present and future, of the issuer.

LendInvest’s first retail bond – which trades on the London Stock Exchange – raised £50m from a broad base of retail and institutional investors.

As of 31st December 2017, the bond was 99.6% utilised, with an interest coverage ratio of 192% and a weighted average LTV ratio of 57%.

Letter: Build a brighter future (Watford Observer), Rated: A

My suggestion was Funding Circle, which enables businesses to access finance independent of their banks and allows them to receive funds within a couple of weeks, compared to up to three months with a traditional bank loan.

It’s been a tried and tested investment since August 2010 and there are currently 18 councils investing through the Funding Circle platform, and the amounts invested vary from £1,000 to £2 million.

The Funding Circle minimum a council could lend to a business is £20, so Funding Circle suggests lending £2,000 would allow a council to lend to at least 100 businesses, lend no more than 1 per cent of the portfolio to each business.

What recent IPOs reveal about the state of fintech (AltFiNews), Rated: A

Over the last week or so we’ve seen not one but two fintech focused venture capital style listed funds list on the London market: Augmentum Fintech raised £94m while TruFin hit the market with a £70m valuation. Both of these funds have their own unique characteristics although perhaps the most interesting information from the listings is what they reveal about the likely worth of the alternative finance space in the UK.

The fund’s 15 per cent stake in Zopa, by contrast, seems a little more tangential though it’s also the single most valuable asset in the fund.

City of London and Innovate Finance Launch Fintech Strategy Group (Crowdfund Insider), Rated: B

The City of London Corporation and Innovate Finance have jointly announced the launch of the Fintech Strategy Group (FSG) to help continue the success of the UK Fintech sector. According to Innovate Finance, the group will combine senior industry leaders across the sector including banks, regulators, and innovative Fintech startups.

The purpose of the FSG is to foster a collaborative dialogue on the future of UK Fintech – a vital issue as Brexit weighs on the financial services industry.

 

 

China

Chinese Tech Major Key Players – Tencent, Vipshop, Weibo, and Yirendai Market Analysis & Forecast 2017 to 2022 (Digital Journal), Rated: AAA

China’s government is intent on upgrading its manufacturing sector and leading the world in a range of advanced technologies. Implicit in its “Made in China 2025” 10-year plan is the notion that China will displace the US as the world’s dominant technological power.

The US is likely to remain a leader in all major advanced technologies over the next decade, with Baidu the only Chinese player equipped to challenge the US’s lead in next generation technologies such as AI. There are signs though, that China is closing the overall gap faster than we expected.

This report researches the state and thrust of Chinese technology over the next two to five years and what it implies for global technology investors.

Hui Ying Financial Holdings Corp. Reports Fiscal Year 2017 Financial Results (Markets Insider), Rated: AAA

Revenues increased by 88.4% to $46.5 million and loans facilitated through platform increased 59.9% to over $1.3 Billion

Source: Markets insider
  • Total loans facilitated through our platform increased by 59.9% to $1,308.7 million for the year ended 2017 from $818.5 million in 2016, as China’s online peer-to-peer lending platform industry continued to grow significantly during 2017, coupled with an increased marketing campaign, promotion activities on our platform as well as increased brand awareness of our online marketplace. This led to accumulated value of loans facilitated through our platform in the aggregate amount of $2.87 billion since the launch of our marketplace in December 2013 through the end of 2017.
  • We had 8,047 borrowers and 69,232 investors participated in an aggregate of 23,263 loans during 2017, compared to 1,067 borrowers, 39,999 investors and 8,739 loans during 2016. As of the end of 2017, we had 367, 893 registered investors and 24 cooperative partners who frequently serve as guarantors of loans on our platform.
  • Total revenues increased by 88.4% to $46.50 million for the year ended 2017 from $24.68 million in 2016, as a result of an increase in loans facilitated through our platform and the contribution from the newly launched entrusted loan business. Revenues from loan origination service fees, loan repayment management fees and financing income from entrusted loans were $26.70 million$18.21 million and $1.58 million, respectively, for the year ended 2017 compared to $17.49 million$7.19 million and nil, respectively, in 2016.
  • Net income increased by 344.1% to $15.27 million for the year ended 2017 from $3.44 million in 2016. Diluted earnings per share was $0.21 for the year ended 2017, compared to $0.05 for 2016.

Blockchain startups are overvalued: Q&A with Anju Patwardhan, Managing Director at CreditEase China (Technode), Rated: B

Blockchain technology is in full swing. Baidu, Alibaba, and Tencent are all vigorously investing in blockchain technology and Chinese VCs are fishing for blockchain tech companies. What’s more, the Chinese government is also poised to educate Chinese people about this booming technology. However, that doesn’t mean that all blockchain projects are viable.

With a $500 million fund and another RMB fund with the same amount, CreditEase Fintech Investment Fund is investing in fintech companies, mostly participating in B and C rounds.

European Union

Here’s what investors in France, Spain and Italy are up to (GooRuf), Rated: AAA

Lendix is one of the leading European players in the crowdlending sector for SMEs and although it is not yet active in the UK or outside of Europe, it sure is expanding fast.

So what are investors’ preferences?

– The French investor prefers grade A projects with a duration of 37 to 48 months.
– Spaniards are the most risk-averse and tend to invest more in projects with A and A + grades, but are not opposed to longer durations.
– Italian investors are the most risk-prone: they prefer B rated projects but with shorter durations (0-24 months).

This data shows that the Lendix community invests 11% more on A, A + and B + projects than on B or C ratings. Moreover, the duration seems to have a relative impact in terms of amounts invested, even if investors are more attentive to this parameter in the case of small projects (amounts up to 100,000 euros). In general, the community invests 32% more in long-term projects.

These 2 brothers just declared a mortgage price war – and Sweden is going nuts (Business Insider), Rated: A

Sweden’s mortgage industry is today worth around 3 trillion krona ($370 bn), according to Statistics Sweden, and most of the interest on these loans end up in the pockets of big banks.

A new fintech venture called enkla.com has today launched a potentially game-changing service. The Swedish online lender offers consumers a 0.95% fixed mortgage rate for three years, which is considerably less than the 1,6% average for similar loans among Sweden’s major banks, according to Di Digital.

Enkla’s self-stated goal is to borrow 100 billion SEK ($12,2 billion) worth of mortgages in the next 18 months by issuing mortgage bonds on the international markets, Di Digital writes. If the target is met, Enkla.com would be looking at a 3 percent share of the Swedish mortgage market.

The service enters a market where Sweden’s household debt has exploded from 66 percent to 87 percent of GDP in the past decade, driven by soaring housing prices. Consumers are evidently hungry for a cheaper deal than what banks can offer. Currently, Sweden’s four biggest banks – Swedbank, Nordea, Handelsbanken and SEB – have 75 percent of the country’s mortgage market, Breakit reports.

Enkla.com takes a 0,35% cut on the mortgages.

Beyond data sharing, open banking boosts omnichannel payments (PaymentsSource), Rated: A

In Europe the move to open banking has been driven by regulations such as the revised Payment Services Directive PSD2 and General Data Protection Regulation (GDPR), which compel banks to open their core systems to allow customers to control and release their data to third parties delivering added value services.

In other territories with no regulatory imperative, the drive towards open banking is led by the desire to provide the best customer experience, with added value services, new business models and connected marketplace products from third parties and vice versa. To do this, the application programming interfaces (APIs) of the bank will need to be open and connected to external providers. And cloud technologies will be fundamental in enabling this to become a reality.

International

Tech and Global Money Transfers: Why We Need Each Other (Canstar), Rated: AAA

Digital disruptors such as peer-to-peer lending services, mobile apps and blockchain have shifted the market, offering borderless accounts combined with speed and transparency.

Powering these disruptors are new technologies like artificial intelligence, big data and robotics, which are changing the customer experience; providing unprecedented insights into customer behaviour that help deliver a more seamless money transfer experience.

The World Bank predicts the value of global remittances will grow by 3.4% to USD$616 billion in 2018. In order for the industry to continue to thrive, businesses will be better served by coming together to redefine the future of money transfers.

A bitcoin trading firm just opened up a lending business — and it’s going gangbusters (Business Insider), Rated: A

Bitcoin might be in a bit of a slump, but one brand new bitcoin business is going gangbusters.

Genesis Capital, the recently launched subsidiary of market making firm Genesis Trading, has close to $100 million in loans outstanding, a person familiar with the company’s operations told Business Insider. That’s a striking milestone, considering the business was launched two weeks ago.

It gives out loans worth $100,000 or more in cryptocurrencies including bitcoin, ether, and bitcoin cash. BlockTower Capital, a cryptocurrency hedge fund, and DV Chain, a crypto trading firm, are some of Genesis’ clients, according to people familiar with the matter.

Autonomous NEXT estimates the number of crypto funds has increased to 226. That’s up from approximately 50 at the end of August 2017. In total, they manage approximately $3.5 to $5 billion, a tiny fraction of the $3.2 trillion managed by traditional hedge funds.

What are the technology trends to look out for in 2018? (Investment Week), Rated: A

One key trend at the forefront of the digital space is artificial intelligence (AI). Some estimates predict that the AI market could grow from $5bn to $120bn by 2025.

A report from digital consultancy Juniper Research, has found that annual cost savings derived from the adoption of ‘chatbots’ in healthcare will reach $3.6bn globally by 2022, up from an estimated $2.8m in 2017.

The UK is leading the way when it comes to peer-to-peer lending, and is one of Europe’s largest alternative finance markets at £4.9bn, according to the University of Cambridge’s Judge Business School.

 

Fintech: partner, build, or buy? (Banking Exchange), Rated: A

“Fintech” covers many things, but is often used to refer to nonbank firms that leverage cutting-edge technology to deliver financial services directly to consumers and businesses. In that sense, banks initially viewed fintechs as competition, as they compete for lending, personal finance, payments, and other consumer services.

1. What’s the problem to be solved?

Sounds like common sense, but a fintech partnership should necessitate an extensive evaluation of the underlying need, such as filling in product or service gaps, or, in this bank example, offering borrowers a digital channel for applying and getting to closing quicker on a commercial loan as their primary competitors offered. Clear objectives help the bank and fintech determine if the match is on solid ground from the start.

A fintech partnership should offer the bank an upside—quantitative and qualitative—that simply isn’t available at more favorable cost, risk, and performance measures under the build or buy options.

2. What’s the difference between buying vs. partnering with a fintech?

Is it a shared risk and shared reward? Does the reward justify the risk? Or is it just the innovation culture of the third party? The definition is critical as the process of evaluating a fintech’s performance, costs, and risks entails unique considerations from a typical vendor evaluation.

Many partnerships are really just vendor relationships. That’s okay. In many cases, banks with extremely low risk appetites prefer the typically lower risk of a vendor relationship. One fintech exec noted how impossible it is to run many banks’ risk gauntlets because they don’t understand what they are getting into.

Asia

Indonesia eyes banking boom (Asean Economist), Rating: A

Indonesian banks will enjoy “more than 12 per cent” loan growth this year due to a recovering global economy and rising commodity prices, according to Jakarta’s financial regulator.

Loan growth in Indonesia has fallen below 10 per cent since early 2016, compared with more than 20 per cent during the preceding commodity boom.

MENA

Interview with Ahmed Moor, CEO of Liwwa (P2P Banking), Rated: A

What is Liwwa about?

liwwa is a marketplace lending platform that provides funding to small and medium businesses in Jordan. Our mission is to support job and income growth in the region. To date we have underwritten about 10 million USD in loans. This has helped to create 475 jobs in Jordan, 1.77 million USD in income, and 13.05 million USD in economic output.

What are the three main advantages for investors?

The type of investors we target are financially-savvy professionals who already have a portfolio of investments. They are attracted to our service because it is a way for them to further diversify their existing portfolio. The other advantage is that there are no big barriers to testing out the platform – provided he meets certain basic criteria, anyone can register and there is no minimum amount required in order to start lending.

What are the three main advantages for borrowers?

There is a 240 billion USD capital access gap in the MENA region. For borrowers, we provide a much-needed alternative to bank financing.

Canada

BMO launches banking chatbot with Finn.ai (Fintech Futures), Rated: A

The chatbot – called BMO Bolt – is available via Facebook Messenger, which is Canada’s “top messaging platform”, according to Finn.ai.

84% of the country’s population uses a smartphone to access Facebook and 38% performs mobile banking tasks via mobile phones, the vendor adds.

Authors:

George Popescu
Allen Taylor

Monday January 29 2018, Daily News Digest

financial advice market

News Comments Today’s main news: SoFi buys Clara Lending product, engineering teams. LendingClub files 8K on $200 warehouse agreement. Raisin surpasses 5B Euro. Columbian lender LoanPie goes online. Today’s main analysis: UK P2P lending hits 3.1B GBP, borrowers shift to online lending. Today’s thought-provoking articles: PeerIQ evaluates letter from Consumer Financial Protection Bureau (CFPB) Director Mulvaney. Funding Circle in no […]

financial advice market

News Comments

United States

United Kingdom

China

European Union

International

India

South America

News Summary

United States

SoFi Buys Teams From Mortgage Startup Clara to Boost Offerings (Bloomberg), Rated: AAA

Social Finance Inc. has acquired the engineering and product teams of mortgage startup Clara Lending, bolstering the financial technology company’s offerings beyond student-loan refinancing, according to people familiar with the matter.

SoFi confirmed the acquisition on Friday and said taking on the Clara teams allows it to “immediately ramp up our technical capabilities.”

San Francisco-based SoFi has plans to hire about 100 engineers, one of the people familiar with the matter said, and Clara filled about 20 of those spots.

How Credible.com Makes Refinancing Student Loans Easy (Pop Dust), Rated: A

While refinancing my own loans, it was a stressful situation to navigate, even with the help of my parents. Coming out of school with a $200,000 degree but only a $40,000 annual salary was a tough pill to swallow, and I wasn’t alone – several of my friends found themselves in a similar situation.

Credible is working to change all of that by simplifying the refinancing process. Instead of hopping from lender to lender and form to form looking for a good rate, Credible provides a one-stop shop where you can connect with a variety of vetted lenders and get real rates in about two minutes, without affecting your credit score.

LendingClub Files 8K on $ 200 Million Warehouse Agreement (Crowdfund Insider), Rated: AAA

LendingClub (NYSE:LC), the largest marketplace lending platform in the US, has just posted an 8K regarding a warehouse funding agreement with certain lenders. LendingClub has enlisted the assistance of JPMorgan Chase Bank, N.A. as administrative agent, and Wilmington Trust, National Association as collateral trustee. The warehouse is to provide a $200 million secured revolving credit facility.

LendingClub’s 8K filing.

Strong GDP growth, Mulvaney’s New Director for CFPB, SoFi’s New CEO (PeerIQ), Rated: AAA

In this week’s newsletter, we interpret key points of Mulvaney’s letter and how they may affect the lending industry.

Source: PeerIQ

The US economy grew by 2.6% in the 4th quarter, continuing the pattern of strong trend growth in 2017. Global economies continue to enjoy an unusual period of synchronized growth, a constructive pattern last seen in the mid-2000s. US growth was primarily driven by consumer spending of 3.8%. US consumer spending is supported by US consumer credit outstanding which grew at an annualized rate of 8.8% – well ahead of GDP growth.

Bank earnings continued to roll in this week. Retail banks reported that credit card losses rose 20% year-over-year to $12.5 Bn.  Credit card losses as a percentage of outstanding receivables have increased to 4.5% from 2.9% in 2015 as credit normalization trends continue. The combination of high consumer credit growth relative to GDP, full employment levels, and low productivity growth is casting doubts on whether 3%+ GDP prints are sustainable.

Earnest Co-Founder Steps Down a Few Months After Selling Startup (Bloomberg), Rated: A

Louis Beryl, co-founder and chief executive officer of Earnest Inc., left the online lender this week after selling his company in October.

The San Francisco-based startup was acquired by student loan provider Navient Corp. for $155 million after a lengthy search for a buyer. Beryl and his co-founder, Ben Hutchinson, were supposed to remain at the firm and continue running Earnest as a separate unit within the company. Hutchinson remains there as chief operating officer, Navient said.

Don Davis of Prime Meridian (Lend Academy), Rated: A

In this podcast you will learn:

  • When marketplace lending first got on Don’s radar.
  • Why he decided to start Prime Meridian.
  • How his offerings have expanded from one product to four.
  • The total AUM they are at today.
  • Who their typical investor is today and how that has changed over the years.
  • How his conversations with investors have changed.
  • What investors misunderstand about the space today.
  • What platforms his company is investing on today.
  • How they conduct due diligence on new platforms.
  • Don’s views on why some of platforms have failed.
  • How the investor pullback of 2016 affected Prime Meridian.
  • The state of the marketplace lending industry today.
  • What areas Don likes most and what he likes least.
  • The only two things that matter for marketplace lending platforms.
  • How he has been able to grow his company so quickly.
  • What’s next for Prime Meridian.

A bank’s unfolding plan to enter online consumer lending (American Banker), Rated: A

Meta Financial Group in Sioux Falls, S.D., has struck a deal to provide personal loans to customers of Liberty Lending, an online lender based in New York.

The $5.2 billion-asset Meta said it expects to originate $500 million to $1 billion in personal loans during the three-year partnership. The program marks Meta’s first foray into the direct-to-consumer credit business.

Discover CEO bashes online lenders (American Banker), Rated: A

Discover Financial Services CEO David Nelms said this week that many of the online lenders that have emerged in recent years do not understand how to underwrite the loans properly over the long run. He also jabbed at the technology-focused firms for their failure to achieve profitability.

JP Morgan Chase invests $ 20bn for new branches and jobs (Fintech Futures), Rated: A

JP Morgan Chase has unleashed a five-year $20 billion investment plan that includes 400 new branches, 4,000 jobs and an increase in staff wages across the US.

It is also a stark contrast to yesterday’s report concerning branches in 2017. Last year, US banks accelerated their pace of branch closures, shutting down 2,069 locations (an 18% increase compared to 2016).

According to JP Morgan Chase, these new branches and bankers will help the firm increase small business lending nearly 20%, or $4 billion, over three years.

7 failed fintech ideas that might succeed today (PaymentsSource), Rated: A

Blippy’s card-sharing social network

Contactless payment cards

Opendoor Raises $ 135M in Funding (Finsmes), Rated: A

Opendoor, a San Francisco, CA-based online home-selling service, raised $135m in funding.

The round was led by Fifth Wall Ventures and Lennar with participation from Rialto Capital Management.

Technology will have a massive impact on your financial future: here’s why (The Next Web), Rated: A

For consumers, that’s mostly good news; it means you have access to more services in a digital format, and at a much less expensive rate. For the finance industry, this is coming with big changes; as banks digitize more, Citigroup estimates that the industry will lose 1.7 million jobs or more to automation and digital environments.

On a level that’s probably more familiar with mainstream consumers, we can look to the emergence of money savings appsstock exchange appsbudgeting apps, and other tools designed to make financial management easier for the average customer.

As many as 45 percent of financial intermediary services are victims of economic crime every year, which makes security and privacy top concerns for the finance industry.

 

Ladenburg Thalmann Launches Tech Innovation Platform (Financial Advisor), Rated: B

Brokerage and advisory firm Ladenburg Thalmann Financial Services has announced the launch of its Enterprise Innovation initiative and Innovation Lab. The company said innovation strategist Dan Sachar has been named as the vice president of enterprise innovation.

United Kingdom

P2P Lending Tops £3.1 Billion in 2017, Q4 Sees Borrowers Shift to Online Lending (Crowdfund Insider), Rated: AAA

The UK Peer to Peer Finance Association (P2PFA) has published aggregate fourth quarter data for of 2017 for its member platforms. The P2PFA shows that during 2017 £3,145,098,842 in peer to peer loans were facilitated. Cumulative lending transacted through P2PFA member platforms exceeded £8 billion.

Funding Circle heads for market (The Times), Rated: AAA

Sources close to the lender said it was in “no hurry” to do an initial public offering but, if markets remain favourable, the float could go ahead in the second half of this year.

Atom Bank chairman to step down (AltFi), Rated: A

Anthony Thomson, the founder of UK challenger bank Atom Bank, is planning to step down from his role as chairman after it completes its latest £150m fundraise.

Existing non-executive director, Bridget Rosewell, will be taking over the helm of the Durham-based lender, subject to regulatory approval.

Best buy-to-let areas in the UK for 2018 (Simply Business), Rated: AAA

LendInvest’s latest buy-to-let index is out, and it makes great reading for landlords looking for the best buy-to-let areas.

  • Manchester is currently the best place to buy-to-let in England and Wales. It ranked highest for rental yields (5.55 per cent) and rental price growth (5.76 per cent). Manchester took the top spot after a steady climb up LendInvest’s rankings throughout 2017.
  • Colchester in Essex and Luton in Bedfordshire are in second and third position, with rental yields of over 3.78 per cent. Colchester has the strongest capital gains of all postcode areas over the last 12 months, while Luton remains a popular commuter town within easy reach of London.
  • The Midlands is still the buy-to-let location to watch, though – Leicester rose an incredible 17 places to reach ninth place in December’s index, while Birmingham narrowly missed out on the top 10, coming in at 11th.

According to the research, here are the 10 best buy-to-let areas 2018:

  1. Manchester
  2. Colchester
  3. Luton
  4. Rochester
  5. Southend-on-sea
  6. Hull
  7. Romford
  8. Norwich
  9. Leicester
  10. Ipswich

Top 10 areas for capital gains in the UK

Area Capital gains
Colchester 11.96%
Southall 11.09%
Hemel Hempstead 10.27%
Slough 10.19%
Harrow 9.89%
Ipswich 9.44%
Luton 9.16%
Southend-on-sea 9.12%
Ilford 8.82%
Hull 8.46%
Source: LendInvest

FCA reports increase in advice firm numbers (Money Marketing), Rated: A

Figures drawn from regulatory returns show 5,270 financial advice firms had at least one staff member advising on retail investments, with a total of 25,951 advisers recorded as at the end of November 2017.

The number of advisers at banks and building societies continued to decrease, however, from 3,525 to 3,374. 34 banks had at least one adviser as at the end of November last year, compared to 38 the December before.

Expert Tips to Keep a Close Eye on your Cash Flow this Year (NewBusiness), Rated: B

Find the right finance for you

Here are some examples of the various types of external finance that may be available if you need a helping hand:

Bank loan – one of the most commonly chosen finance options. The loan will be fixed over an agreed period, with a fixed rate and monthly repayments.  Eligibility for this can be dependent on how long you have been trading for.

Peer-to-peer lending – this is a form of borrowing without using a traditional financial institution such as a bank or building society. The lending involves individuals or ‘peers’ where you are matched up to people willing to invest in, and lend money to, your business.

Merchant cash advance – an alternative financial solution if you have strong sales and good volume of card transactions every month. You receive a lump-sum payment to be repaid via an agreed percentage of your future credit and debit card transactions.

Business credit card – stay in control of your business expenses and keep your cash flow moving. A business credit card is a short-term flexible way to manage expenses.

London fintech start-up Duco raises £20m (The Times), Rated: B

Duco, which was founded eight years ago by a computer science postgraduate from University College London, allows financial institutions to manipulate enormous amounts of data through remote internet servers, popularly known as the cloud. It is understood the funding round values the company at about $100m.

China

Future FinTech Announces Digital Assets Transfer Agreement (PR Newswire), Rated: A

Future FinTech Group Inc. (NASDAQ: FTFT) (“Future FinTech”“FTFT” or “the Company”), a financial technology company and integrated producer of fruit-related products, today announced that on January 23, 2018, one of its wholly owned subsidiaries, DigiPay FinTech Limited (“DigiPay”), entered into an agreement to acquire 60% of the digital assets associated with DCON, a blockchain development project that has developed 100 communities utilizing blockchain technology and which intends to conduct a variety of financial businesses to provide users with a diversified blockchain experience.

European Union

Deposit marketplace Raisin surpasses €5bn after record year (AltFi), Rated: AAA

Since its founding four years ago, Raisin has returned its first cash flow positive month after passing €5bn in brokered savings deposits.

The European marketplace for savings and investment products increased its total customer deposits by over €3bn in 2017, after its international expansion efforts bolstered growth. The company now serves over 30 European markets, with around 20 per cent of all new customer acquisitions coming from abroad.

Europe’s Alternative Finance Sector Accelerates (Forbes), Rated: AAA

Europe’s online alternative finance market continues to grow, but remains dominated by the UK, new research shows. The Cambridge Centre for Alternative Finance says the market was worth €7.7bn by the end of 2016, the most recent period for which data is available, with €5.6bn of that total accounted for by the UK.

The data means the alternative finance market across Europe grew by 41 per cent during 2016, providing a range of valuable funding for entrepreneurs and small and medium-sized enterprises that was not available from traditional funding sources. Stripping out the UK, however, the market was up by 101 per cent, with the less mature alternative finance industries of continental Europe now growing very rapidly.
The UK’s share of the European alternative finance market fell to 73 per cent in 2016 from 81 per cent a year earlier as other markets grew faster. France, Germany and the Netherlands are now the three largest alternative finance markets outside the UK, followed by Finland, Spain, Italy and Georgia.
Consumer lending remains the single biggest sub-sector of the alternative finance industry, with peer-to-peer lending sites accounting for 34 per cent of the marketplace. However, SME funding is significant, with peer-to-peer business lending, invoice trading and equity-based crowdfunding together accounting for 40 per cent of the market.
International

FintruX – Disrupting P2P Lending and Unsecured Loans on the Blockchain (ChipIn), Rated: A

Peer-to-peer lending platforms are also still on a global uptick. In just one country where this new kind of access to capital is having a major impact, the UK, over $3.3 billion in P2P loans were facilitated in 2017. That number is expected to continue to rise globally this year, and blockchain is likely to be right in the middle of it.

The FinTruX Network is one of the world’s first blockchain-based online marketplaces for unsecured lending that connects the dots in an environment augmented by specialized servicing agents who can configure and construct each borrower’s (smart) contract in real time.

Cascading levels of credit enhancement help borrowers improve creditworthiness. Lenders are provided with several forms of reassurances that their money will be repaid. Loans are over-collateralized. Local third-party guarantors and cross-collateralization act as an additional kind of insurance.

And here is the best part: All of this is enabled by a system token which creates not only a fee structure but a tracking device, authenticator, and payment system, all in one place.

Robo Advice: Are ETFs the Solution? (CFA Institute), Rated: A

RiskSave and True Link are examples of such emerging technology. The portfolios generated from a broader spectrum of assets improve on the current robo model, offering more efficiency and superior risk-return characteristics.

Robo advice and digital asset management will open up financial advice to a much wider market. People who previously were priced out of financial advice will now be able to afford it. The reduced costs of robo advice in the United Kingdom could give as many as 16 million more people access to financial advice, according to estimates from the Financial Conduct Authority (FCA).

Are ETFs the correct solution?

Much of the financial management industry has concluded that ETFs are the future of automated advice. That is naive.

Tradeshift explores new Frontiers with innovation lab launch (Fintech Futures), Rated: B

Business commerce platform Tradeshift has unveiled Tradeshift Frontiers, an innovation lab and incubator designed to apply emerging technologies like artificial intelligence (AI), distributed ledgers, and internet of things (IoT) to business networks, supply chains, and global trade, reports David Penn at Finovate (FinTech Futures’ sister company).

India

FinTech platforms providing robust loan disbursal to MSMEs (Outlook), Rated: A

CreditMantri helps small business connect with NBFCs and banks on its platforms and avail financial assistance. The easy and hassle-free digital procedure makes it easy for a business to avail a loan in lesser time.

Aye Finance, along with its commercial operations, also funds its non-profit initiative to coach MSMEs on market knowledge, business book-keeping and advising on operations techniques. These, in turn, help sustain employment at the bottom of the pyramid. Aye Finance has already impacted an ecosystem of over 40,000 MSMEs through its business enterprise loans.

CoinTribe is confident about the adoption of digital in the SME segment especially as younger generations enter the domain. With increasing digital adoption in the country and expansion of the MSME sector, CoinTribe aims to facilitate USD 5 billion of loans through its platform over a period of 5 years and is rapidly scaling up its marketplace operations.

Faircent’s P2P model serving business loan requirements is an example of how far lending industry has come to serve MSMEs. The platform has over two lakh registered borrowers and 18,000 registered lenders.

South America

Columbia business launches $ 1.8M investment website (Columbia Daily Tribune), Rated: AAA

LoanPie, an online local marketplace based out of Columbia for residential and commercial real estate investing, last week launched its website with over $1.8 million in investments available.

The company seeks to introduce more accredited investors to the secondary mortgage market using a web-based platform. LoanPie’s goal is to create return on investment for 25,000 subscribers by the end of this year.

Authors:

George Popescu
Allen Taylor

Monday January 8 2018, Daily News Digest

marketplace banking

News Comments Today’s main news: Texas regulator sends cease & desist order to BitConnect. UK wins race for tech investment. Tencent licensed to sell mutual funds to WeChat users. Wishfin to raise $50M. FINTQ goes beyond lending. Today’s main analysis: Strategies banks, credit unions must implement this year (a must-read). Today’s thought-provoking articles: How the tech giants are going […]

marketplace banking

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

APAC

News Summary

United States

Securities Regulator Issues C&D to UK Based Cryptocurrency Marketplace BitConnect & Planned ICO (Crowdfund Insider), Rated: AAA

The Texas State Securities Boardhas issued an Emergency Cease and Desist Order targeting BiConnect, a UK based cryptocurrency platform. BitConnect is planning a new initial coin offering (ICO) later this month and Texas is stating the tokens are unregistered securities.

The Texas regulators say BitConnecthas placed 9.4 million of the coins into the online cryptocurrency marketplace, representing a market value of $4.1 billion as of Jan. 3 and expects to issue a maximum of 28 million coins.

The tech giants are coming for your customers (American Banker), Rated: AAA

Lost in all this was an inescapable fact: Big tech firms like Amazon don’t need a charter to disrupt the banking industry. Indeed, they are already changing it.

Amazon has done more than $1 billion in small-business lending since it first started offering loans. In 2017, it launched Amazon Cash, which effectively allows it to take cash deposits from customers via ubiquitous convenience stores like 7-Eleven and Sheetz. Other tech firms, including Apple and Samsung, offer their own payment apps.

If banks effectively end up as utilities to larger tech firms, they will lose out. McKinsey forecasts manufacturing will produce only 35% of profits in finance, a return on equity of 4.4%. Distribution, meanwhile, will produce 65% of profits, with a return on equity of 20%.

It’s not clear what tech giants have in store next, but they will likely push the limits of traditional finance. It’s not hard to imagine the Bank of Alexa, enabling customers to move money and pay bills just by shouting at the Amazon Echo in their living rooms.

The year of digital is upon us (Business Insider), Rated: AAA

With that, these are our top 10 market structure trends to watch in 2018:

MiFID II soft launches

You’re probably thinking, “It’s not a soft launch—MiFID II is the law of the land now!” That is technically true, of course. And for better or worse, even though the SEC has provided U.S. firms with “no-action relief” from some European rules, Europe’s regulators don’t have the no-action relief lever that U.S. regulators became so fond of using as they implemented Dodd-Frank. However, MiFID II is so wide-reaching and impactful, it is unreasonable to think European regulators can or will crack down on imperfect compliance as the year gets underway.

Active investing is still huge, but passive keeps growing

However, Greenwich Associates research in 2017 found that most portfolio managers see 40% of assets in passive as the limit, compared to today’s 22%—that is a huge opportunity for growth.

Alternative data becomes less alternative

Ninety percent of investors using alternative data today tell Greenwich Associates they’ve see a positive return on their investment.

And while the alpha to be captured via alternative data is set to grow, the sheer quantity of data available to drive investment decisions is growing exponentially faster.

Data matters more than trading

But even in these and other cases where some data is made public, individual market participants can only find real value when also examining trades that failed, RFQs that were lost and orders that never left the blotter. Even equity exchanges will need to up their game, as the Consolidated Audit Trail (CAT) reporting requirements finally become a reality and MiFID II makes the market more transparent than ever before. Selling data is great, but helping clients to understand what it really means to them is even better. Inject the growing focus on indices (following several notable acquisitions in 2017) as passive investing grows, and things really start to get interesting.

Wealth management comes out of retirement

Robo-advisors are an opportunity, not a threat.

The move to fee-based accounts couldn’t have come at a better time, with this never-ending bull market generating wealth for investors that, in turn, generate fees for their managers. However, if the market decides to correct, as baby boomers pull out more money than millennials put in, this party might not last forever.

Podcast 133: Rosemary Kelley of Kroll Bond Rating Agency (Lend Academy), Rated: A

In this podcast you will learn:

  • How KBRA got started and how their focus has evolved.
  • When marketplace lending first got on Rosemary’s radar.
  • What made KBRA comfortable enough to be able to provide their first rating in the space.
  • How KBRA has become the leader in rating unsecured consumer lending deals.
  • What has been driving the growth of securitization in marketplace lending.
  • What does the tightening of spreads tell us about investor appetite.
  • How platforms creating their own shelf has changed how these deals get done.
  • Why the deals that have breached their triggers have not tempered investor demand.
  • Some best practices for a platform doing their first securitization.
  • What leads to KBRA deciding to upgrade a deal.
  • Rosemary’s thoughts on the macro environment and how it will impact consumer credit.
  • What platforms can do to mitigate a slow down in securitization markets.
  • What Rosemary thinks about the competitive environment in marketplace lending.

Roostify’s Rajesh Bhat: ‘We’re still in the first quarter of the online mortgage game’ (Tearsheet), Rated: A

Why did you enter the digital mortgage space?
That first year, we spent the entire year looking for a home to buy and it was an entirely painful and traumatic experience. Born out of that was the idea behind Roostify. That’s where we began building out the solution we have today.

Why are mortgages so hard to digitize?
The eligibility aspect is complex. Once eligibility is determined, the fulfillment process is equally complex — if not more. Those two things coupled with the fact that on a normal year over half the mortgages issued have a real estate transaction integrally tied to the mortgage transaction make it very complex.

Where are we in the evolution of the digital mortgage?
If this is a four quarter game, we’re still in the first quarter. The evolution has been, and will continue to be, driven by the consumer. Banks recognize that consumers are willing to do certain tasks themselves to drive this process. Companies are launching now that really understand the consumer pain points and they’re delivering to that as opposed to banks’ pain points.

YieldStreet brings new opportunities to smaller investors (Bankless Times), Rated: A

Rather than cut a $20,000 check to access one opportunity, what if you could use that amount to diversify across 30 deals? Mr. Mehere asked himself that question back in 2014 when consumer P2Ps, small business financing platforms and real estate companies were gaining footholds online.

YieldStreet launched in April 2015 with 80 investments across various asset classes. The idea has proven attractive to retail investors, from whom they have raised $240 million.

They have returned more than 100,000 individual payments and in excess of $80 million in principal and interest to investors. 15 of the original 80 investments have fully matured without a loss.

Wells Fargo’s 2017 Silver Lining Is Drop in CFPB Complaints (Bloomberg), Rated: A

Complaints lodged against the lender with the Consumer Financial Protection Bureau through Dec. 15 dropped 18 percent from the same period of 2016, the steepest decline among major banks, federal figures show. Still, it remained first among that group in total complaints.

Source: Bloomberg

Seven of the 10 biggest banks by U.S. deposits experienced a drop in CFPB complaints compared with the 2016 period, including Citigroup Inc., JPMorgan Chase & Co., and Bank of America Corp.

10 Answers to Frequently Asked Questions About Personal Loans (Quicken Loans), Rated: A

You might have a million questions running through your head. Luckily, we reached out to the experts at RocketLoans to answer these 10 frequently asked questions about personal loans.

What Is a Personal Loan?

Also known as an “unsecured loan,” a personal loan isn’t backed by collateral like a mortgage or car loan.

What Is a Personal Loan with Collateral?

If you don’t have a credit score that’s between the 600 and 700+ range that most personal lenders look for, some lenders might offer you a secured personal loan, also known as a collateral loan.

How Much Can I Borrow and How Long Can I Borrow?

Depending on the lender and your personal financial situation, personal loans can average between $5,000 and $15,000, with a maximum of $35,000 and terms between 24 and 60 months.

What Is an Origination Fee, and How Much Is It?

An origination fee can range from 1% to 6% depending on the lender and, like your interest rate, is based on your credit and length of the loan. Like the interest rate, the higher the credit score, the lower the origination fee.

Chord of Confidence: Making Real Estate Agents Look Like Rock Stars (RISMedia), Rated: A

Quicken Loans is the largest online mortgage lender and the second-largest retail mortgage lender in the United States, according to Inside Mortgage Finance.

Putting Agents at the Center of the Transaction
To make the mortgage process better for consumers, Quicken Loans executives turned their attention to working hand-in-hand with real estate agents, their most powerful ally, says Tom Dempsey, divisional vice president of Business Development with Quicken Loans.

The centerpiece of this effort: MyQL Agent Insight, a custom back-end platform that increases loan visibility by letting agents see exactly where their client stands in the loan approval process.

Service, Technology Part of a Broader Culture
What exactly makes Quicken Loans different from its competitors? It starts with the company’s culture of service and the many “ISMs,” or ideals, the company strives to work and live by, Dempsey says.

Some of the standout ISMs include “Do the right thing,” “Every second counts,” and “Simplicity is genius.”

Q-text
A texting service that allows agents to receive text updates on the status of their clients’ loans, keeping agents up-to-date on each step in the process while they’re on-the-go.

Elevating the Consumer Experience
Quicken Loans has evolved in its 33-year history as a direct lender.

In its first full year of operation, Rocket Mortgage funded more than $7 billion of the record $96 billion in total closed loan volume in 2016 for Quicken Loans.

Rocket Mortgage clients have gone from application to closing in as little as eight days on refinance loans, and 16 days on the purchase side, according to internal data. In contrast, the industry’s average closing time on new purchase loans is about 45 days.

President of the Jason Mitchell Group at My Home Group Real Estate in Scottsdale, Ariz., Mitchell has closed more than 900 transactions and over $215 million in sales volume since 2012. More than 65 percent of that business came from clients who used Quicken Loans, Mitchell says.

Source: RISMedia

FormFree’s AccountChek Asset Report Meets Underwriting Guidelines for VA Loans (PR Newswire), Rated: A

FormFree today announced that asset reports generated by its AccountChek® automated asset verification service meet all underwriting guidelines established by the U.S. Department of Veterans Affairs (VA) for loans guaranteed by its Loan Guaranty Service. The announcement follows the VA’s December 29, 2017 release of Circular 26-17-43, which was issued in response to increasing lender interest in automated verification of borrower assets for VA loans.

AccountChek eliminates the burden of gathering asset documents for loans by letting consumers easily and securely transmit their online banking, retirement and investment account data for automated analysis. In just minutes, AccountChek delivers asset data to lenders in a standardized report along with a ReIssueKey that enables secure and streamlined sharing with the secondary market. The result is an easier, safer and more accurate process that closes loans up to 20 days faster, provides a better borrower experience and circumvents a host of common “hiccups” that plague manual asset verification.

4 Best Investments To Make In 2018 (Forbes), Rated: A

#1: The Stock Market

One company I always suggest is Betterment. With Betterment, your money can be invested in ETFs and they don’t charge a fee for managing these for you. Plus, they actually pick the ETFs you invest in based on your appetite for risk, investing goals, and other factors.

Plus, there are a multitude of other “robo-advisors” to choose from.

#2: Peer-to-Peer Lending

A second place to stash some of your excess cash this year is in peer-to-peer lending platforms like Lending Club and Prosper. With these companies, you’re able to loan money to individuals in small increments as if you were the bank. The best part is, you get to earn a pretty decent rate of return – usually upward of 6% or more.

#3: Real Estate

One option I’m really excited about is a company called Fundrise. Fundriseoffers an investing scenario similar to the one above. They buy commercial properties and allow investors to invest small sums of money. Obviously, this is yet another hands-off investment. You may own part of a commercial real estate project, but you don’t even see or deal with the property itself.

Like Lending Club, Fundrise requires an upfront sum of around $1,000 to get started.

Fundrise claims its returns have averaged between 8.76% up to 12.42% over the last five years.

Payday Loan Mogul Trades Ferrari-Racing Life for Prison Term (Bloomberg), Rated: A

Scott Tucker says he’s a pioneering self-made man who, without a college degree, founded successful businesses in a variety of fields and contributed billions of dollars to the U.S. economy. A judge says he’s an unrepentant fraud and sentenced him to almost 17 years in prison.

Jurors found the men guilty of collecting unlawful debts, using misleading contracts and falsely stating that the businesses were owned and operated by Native American tribes. That bogus claim helped them get around state laws that prohibited the business practices, the U.S. said. The scam ran from 1997 to 2013, Castel said.

From 2008 to 2012 alone, Tucker victimized 4.65 million people, according to prosecutors, collecting $1.3 billion in illegal interest payments as some people paid a total of almost $1,000 to settle a $300 loan.

Ad Valorem! The Future of Niche Reserve Based Value Investing and Lending is Here (Huffington Post), Rated: A

Valorem Foundation, the community peer-to-peer platform for multi-party transactions, is launching soon. It is a new blockchain-based platform that allows users to exchange value via smart contracts. Once on the platform, users can borrow, lend, invest, transfer, and exchange money between each other, creating a trust-based platform that removes the need for 3rd-party services or external vendors.

One of Valorem’s products, the Microloan, has been quite successful because of the platform’s risk distribution system and foundation on smart contract-based functionality. Its feature of spreading loan default risk over multiple people forces people in the Valorem community to make smarter choices about buying products like cars, student loans, and insurance.

Marine Corps Vet Earns OnDeck Small Business Spotlight (Guru Focus), Rated: B

OnDeck (NYSE: ONDK), the leader in online lending to small business, today announced that digital agency Majestyk Apps, led by Marine Corps veteran Donald Coolidge, has been selected as the OnDeck Small Business of the Month for January 2018.

United Kingdom

UK shrugs off Brexit worries by winning race for technology investment (Express.co.uk), Rated: AAA

Venture capital funding in UK technology firms was nearly £3billion, more than double the amount invested in Germany and France combined.

London technology drew the most. Its £2.45billion was more than the other top 10 cities put together, according to funding database Pitchbook for London & Partners figures.

Fintech, or financial technology, attracted £1.34billion in venture capital funding, with TransferWise and Funding Circle investment, while artificial intelligence companies raised a record £488million, more than double 2016.

Brexit cynics were wrong about London’s fintech companies (Quartz), Rated: A

Below the surface there are reasons to be concerned, but the data so far looks positive. UK companies raised $7.7 billion last year, more than double that of 2016, according to Dealroom. Fintech companies raked in $2.9 billion, the biggest share. TransferWise raised £211 million ($286 million) while Funding Circle took in £81.9 million, according to lobby group London & Partners.

Source: Quartz

Attitudes across Europe are diverging. While the UK is the No. 1 destination for investment, entrepreneurs in France, Belgium, the Netherlands, and Luxembourg (Benelux) are substantially more positive about the future of Europe’s tech scene than their peers in Britain: 70% of the former are more optimistic than they were 12 months ago, compared with 42% in the UK and Ireland, according to a survey by venture capital firm Atomico.

Olivier Goy, founder of crowd-lending platform Lendix, says he’s even more positive about France’s potential than he was after the poll.

A risky P2P opportunity for 2018 (MoneyWeek), Rated: A

Returns from investing directly in the biggest platforms, including Zopa, Ratesetter and Funding Circle, averaged 5.4% including losses from defaults, according to analytics firm AltFi Data.

For example, P2PGI moved from a premium of 15% to a discount of 15% – ie, the share price now trades at 15% below the net asset value (NAV) of the fund’s investments.

Funding Circle’s SME Income fund trades at a small premium (around 2%) to NAV, and has delivered returns equivalent to a 5.6% yield on the current share price.

As for bonds, Lendinvest – a property lending platform – issued the first listed retail bond from a P2P platform, raising £50m at a yield of 5.25%. This was well received and is now trading at a small premium of 2%.

China

Tencent gets a licence to sell mutual funds to WeChat’s 1 billion users in China (SCMP), Rated: AAA

The Shenzhen Bureau of the China Securities Regulatory Commission, the nation’s top securities watchdog, has given Tencent subsidiary Tengan Funds Sales (Shenzhen) the licence to sell funds directly.

Before gaining the licence, the tech giant was only able to act as a platform for fund houses and third-party fund sales companies to sell their products through qian.qq.com, its online wealth managing platform and its popular instant messaging tool, WeChat. Qian.qq.com is for users to access the service on PC, while a similar service on WeChat is for mobile users.

Also on Thursday, the tech giant launched the promotion of a new service that will allow users to pay their credit card bills via using the money-market funds available on Licaitong, or WeChat’s wealth management app.

Users will avoid having to pay a 0.1 per cent charge on a credit card payment of more than 5,000 yuan (US$770) monthly. Tencent is also offering users cash incentives, capped at 88.88 yuan, for those who use the promotal service until February.

Chinese social network’s stock jumps 47% after it says it’s raising money through cryptocurrency (CNBC), Rated: A

The share price of Chinese social network Renren has almost doubled after the company said it was raising money through a digital currency sale.

The company, headquartered in China and listed on the New York Stock Exchange, saw its stock climb 47.39 percent to $18.32 a share by the close of the U.S. trading session Wednesday.

Renren is looking to raise funds through an initial coin offering (ICO), according to a white paper released Tuesday.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On January 2, 2018, the Shenzhen Securities Regulatory Bureau issued this year’s first fund sales license to internet giant Tencent Holdings, or more specifically Teng An Information Technology (Shenzhen) Co., Ltd.

The Nansha District Government Affairs Service Center in Guangzhou introduced “WeChat Police Certified” face recognition technology and issued China’s first WeChat ID card on December 26, 2017.

According to Bloomberg News, insiders said some loans on HNA’s P2P platform Jbh.com have been faced with deferred payment since last November. Jbh.com offers products like fixed income, P2P lending, insurance and funds on its app.

European Union

20 of Europe’s hottest fintech start-ups to watch in 2018 (The Finanser), Rated: AAA

Advanon is an online platform for invoice-financing SMEs. The platform enables SMEs to better manage their cash flows and focus on their core business. Founded in 2015 by Philip Kornmann, Phil Lojacono and Stijn Pieper, Advanon has raised $3.9m in funding so far, including a $3.5m Series A round from Btov Partners, VI Partners and Swisscom Ventures.


Circle is a P2P payments platform founded by Sean Neville and Jeremy Allaire. Using the technology – available as an app on iOS and Android devices or even through a Circle app for iMessage – users can send and receive P2P payments with native euro support. Circle also claims to be the first and only cross-border payments platform in the world to make it possible to beam cash from an app into a US bank account at no cost.

Founded by Marc Murphy, Fenergo offers solutions for client life-cycle management, anti-money laundering, regulatory compliance and client data management.

A fast-growing fintech company, ID Finance specialises in online lending in emerging and growing markets.

Regarded as one of Europe’s most valuable fintech firms, Klarnaprovides online payment services for e-commerce sites in order to eliminate the risk for buyer and seller.

Monzo has more than 20,000 current-account holders and the start-up bank has amassed something of a cult-like following in the UK, with almost 500,000 people using its distinctive hot coral cards and thousands more on the waiting list. It was founded in 2015 by Gary Dolman, Tom Blomfield, Jason Bates, Jonas Huckestein and Paul Rippon. Stripe, the payments company founded by Irish brothers Patrick and John Collison in San Francisco, joined Goodwater Capital and investor Michael Moritz (through his charitable investment vehicles) in a recent £71m investment round, joining existing investors Eileen Burbidge’s Passion Capital as well as Orange Digital Ventures and Joshua Kushner’s Thrive Capital in the round.

Founded in 2015 by Nikolay Storonsky and Vlad Yatsenko, Revolut is an app-based banking alternative with a multi-currency card.

TransferMate was founded in 2010 to reduce international payments costs for business customers and has since developed a wide regulatory footprint in Europe. So far, more than $10bn has been sent to more than 100 countries over the TransferMate platform.

TransferWise was founded in 2011 by Taavet Hinrikus and Kristo Käärmann, and provides international money transfer.

Wefox, also known as FinanceFox, is a next-generation insurance app built entirely on the Salesforce platform.

Younited Credit wants to build the biggest crowd-lending platform in continental Europe. Currently live in Spain, France and Italy, consumers can borrow between $1,200 and $48,000 without the need to talk to a bank. So far, it has managed more than $600m in loans. Founded by Charles Egly, Geoffroy Guigou and Thomas Beylot, Younited recently raised $47.8m in a Series F funding round led by Zencap Asset Management.

International

33 Strategies Banks and Credit Unions Must Implement in 2018 (The Financial Brand), Rated: AAA

Below are the top 10 trends identified in the Digital Banking Report entitled, “2018 Retail Banking Trends and Predictions,” sponsored by Kony, Inc.. The comprehensive 106-page report is now available here.

1. Improve the Consumer Experience

2. Expand Use of Data and Analytics

Immediate Strategies:

  1. Break down the barriers within your organization that perpetuate data silos. Only after silos are eliminated can advanced analytics be the most effective.
  2. Establish a data analytics function or partner with an outside organization to provide help in improving the actionability of your data.
  3. Replace timed marketing ‘programs’ with ongoing marketing ‘processes,’ leveraging real-time data to take advantage of immediate opportunities.
  4. Test the use of artificial intelligence (AI) and machine learning (ML) beyond risk and fraud analysis, including offer generation and bundling of services.

4. Embrace Open Banking

Immediate Strategies:

  1. Review existing data privacy mandates and potential changes, determining the risk/benefit appetite for new marketplace opportunities.
  2. Explore data-sharing possibility with fintech and non-financial services firms to be prepared for imminent changes.
  3. Build an API strategy for both third-party data access and potential service offerings outside traditional banking ecosystem.

5. Build Fintech Partnerships

Immediate Strategies:

  1. Foster a top-down culture of innovation, testing and understanding the digital consumer.
  2. Investigate partnerships and/or collaboration with fintech firms for products and processes not currently possible within the banking organization.
  3. Replace all or a portion of legacy systems, integrating new technologies while embracing an agile IT culture. This action step has been put on the back burner for years which is hurting many organizations.
  4. Consider having an online lender power the organization’s online loan application, to using an online lender’s credit model to better underwrite and service bank loan applications.

Marketplace Lending News Roundup – January 6 (Lend Academy), Rated: A

Funding Circle poised for £1bn float from Peer2Peer Finance News – We begin the year with news that Funding Circle is preparing to go public, possibly in Q3.

The Tech Majors are coming? Really? from AltFi – Interesting take from David Stevenson on why Amazon and Google may not come to dominate finance.

How Blockchain Will Revolutionize Invoice-Backed Financing from Let’s Talk Payments – We’re going to hear a lot about blockchain disrupting industries in 2018, here is a take on invoice finance.

Can blockchain technology revive peer-to-peer lending? from American Banker – Blockchain has given rise to a new breed of online lending platforms. Penny Crosman delves into this phenomenon.

VPC continues shift away from P2P with sale of Prosper loans from P2P Finance News – The publicly traded Victory Park fund in the UK has divested its portfolio of Prosper loans.

Finastra bolsters global capital markets team (Asset Servicing Times), Rated: B

Finastra has appointed Pedro Porfirio as global head of capital markets.

Pedro will be responsible for driving the growth of Finastra’s capital markets business line, focusing on treasury, capital markets, and investment management.

Australia/New Zealand

Would you take money advice from a computer? (NZ Herald), Rated: A

Kiwis are set to start getting financial “robo-advice” this year — a move tipped to help those on lower incomes but which some are warning comes with risks.

Investment watchdog the Financial Markets Authority is expected to open applications for exemptions to provide digital advice around KiwiSaver, insurance and mortgages early this year.

Research by the FMA has found most of those who get financial advice in New Zealand have assets of more than $200,000, raising concerns that people with lower incomes and assets are missing out.

India

Consumer loans marketplace Wishfin looks to raise up to $ 50m (Deal Street Asia), Rated: AAA

Online marketplace for consumer loans and other financial products Wishfin will raise up to $50 million in its next round of funding as it looks to make acquisitions in niche segments, a top company official said.

The company claims to have 9 million customers and $3 billion worth of disbursals to date.

Plan to save in 2018? Refer to these new age investment options (siasat.com), Rated: B

The quick returns that one gets through investments in cryptocurrencies have caught everyone’s attention.

Peer-to-peer (P2P) lending in India currently gives a net return of 18-22 percent to lenders.

People are becoming investors and expanding investment portfolio by investing small ticket size in different startups. Venture Catalysts, India’s first integrated incubator, emerging as largest investor of the year with closing 33 investment in this year.

APAC

PLDT’s fintech unit going beyond lending (Inquirer.net), Rated: AAA

FINTQ, the financial technology (fintech) arm of PLDT and Smart’s Voyager Innovations, disbursed more than P12 billion in new loans through its digital lending platform, Lendr, last year or nearly a third higher than the year-ago level.

With more than the P12 billion disbursed last year, total disbursement has reached about P27 billion since Lendr came to market in 2015, Villanueva said.

With Fintech, Pakistan set to dismantle barriers to branchless banking (Tribune), Rated: A

In an effort to promote fintech, the Pakistan Telecommunication Authority (PTA) – the telecom regulator – has decided to award Third Party Service Providers’ licences by June or July 2018, which will pave way for inter-operability between cellular mobile operators and ramp up financial inclusion all over the country.

At present, Telenor’s Easypaisa, Jazz’s Mobicash and United Bank Limited’s Omni are providing mobile-based branchless banking services. However, their customers cannot transfer money from one service to another.

The new platform will help dismantle existing barriers that prevent digital wallets (branchless bank account-holders) from sending money to different bank accounts. Users will be able to make transactions from wallet to wallet or wallet to the bank account.

Fintech firm Avaloq’s chairman streamlines his role to focus on China expansion and possible listing (SCMP), Rated: B

The chairman of Switzerland-based financial technology company Avaloq will focus on expanding business in China and Asia as well as preparing for a possible stock exchange listing, after handing over his chief executive duties.

Authors:

George Popescu
Allen Taylor

Wednesday December 6 2017, Daily News Digest

purchase apr

News Comments Today’s main news: Kabbage lends $4B to over 130K small businesses. RateSetter loses 23M GBP in ad investment. RateSetter to launch IFISA in February. Klarna, WorldPay partner on invoice and credit-based payments in Europe. Two new crypto-asset backed fiat loan platforms. Toss to expand into southeast Asia. Today’s main analysis: LendingTree’s monthly mortgage offer report. Today’s thought-provoking articles: […]

purchase apr

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Mexico

News Summary

United States

Kabbage Delivers $ 4 Billion to More Than 130,000 Small Businesses (Kabbage Email), Rated: AAA

Kabbage, Inc., a global financial services, technology and data platform serving small businesses, has extended over $4 billion to more than 130,000 small businesses, serving the largest customer base than any online small business lender. These landmarks represent an approximate 30-percent increase in total funding and total customers served since the company’s last milestone announcement in April 2017. With over 1.5 million live data connections with its customers, Kabbage’s high growth is attributed to its fully-automated lending technology as it continues to be a trusted lending partner to tens of thousands of small businesses across all industries in all 50 U.S. states.

Robert Sharpe also joined the company as its chief operating officer. Sharpe has more than 20 years of executive leadership in North America, Europe and Asia. He has successfully held various C-level positions, including president, chief executive officer and chief operating officer with multiple global consumer goods companies, each serving tens of thousands of customers and generating billions of dollars in revenue. With an additional ten years of commercial banking and corporate finance experience, Sharpe will be responsible for Kabbage’s continued growth and operational oversight as the company expands internationally and scales its services to serve more and larger small businesses.

During 2017, Kabbage reached major milestones, including:

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

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

Source: PRNewsfoto/LendingTree
  • November’s best offers for borrowers with the best profiles had an average APR of 3.75% for conforming 30-year fixed purchase loans, unchanged from October. Refinance loan offers were down 1 bps to 3.69%. Mortgage rates vary dependent upon parameters including credit score, loan-to-value, income and property type.
  • For the average borrower, purchase APRs for conforming 30-yr fixed loans offered on LendingTree’s platform were down 1 bps to 4.30%, the lowest since November 2016. In contrast, the loan note rate of 4.18% was unchanged from October when it reached the highest since July. We prefer to use the APR as lenders often make changes to other fees in response to changing interest rates.
  • Consumers with the highest credit scores (760+) saw offered APRs of 4.16% in November, vs 4.43% for consumers with scores of 680-719. The APR spread of 27 bps between these score ranges was 5 bps wider than in October and the widest since July 2016. The spread represents nearly $13,400 in additional costs for borrowers with lower credit scores over 30-years for the average purchase loan amount of $233,127. The additional costs are due to higher interest rates, larger fees or a combination of the two.
  • Refinance APRs for conforming 30-yr fixed loans were down 2 bps to 4.24%. The credit score bracket spread widened to 19 from 16 bps, amounting to $9,500 in extra costs over the life of the loan for lower credit score borrowers given an average refinance loan of $235,973.
  • Average proposed purchase down payments have been rising for 8 months and reached $62,409.
Source: PRNewsfoto/LendingTree

Learning About Machine Learning (PYMNTS), Rated: AAA

Certainly, the mountains of data are becoming larger by the day. Seven years ago, the total amount of information produced on a global scale passed one zettabyte. The scale shakes out thusly: If a single cup of coffee holds a gigabyte, then the Great Wall of China stores a zettabyte. In just three years, the tally will be 44 zettabytes, or 44 Great Walls of China, as estimated by global market intelligence firm IDC.

Along with the impressive growth in data created, stored and used on a global scale, so too is AI poised to grow in leaps and bounds. It will create nearly $37 billion in annual revenues for companies of all stripes, sizes and sectors, according to market intelligence firm Tractica.

Within that figure, machine learning is a sector that will see $15.3 billion in revenue in 2019, as noted by BCC Research and cited by business process outsourcing company TeleTech, with an average annual growth rate of 19.7 percent. The savings for U.S. companies could be as high as $60 billion in 2020, Forbes noted. In addition, AI is expected to add $8.3 trillion in economic activity for the U.S. by 2035, according to projections by business management consultancy Accenture.

Consider a financial institution processing credit card information. The transaction data is passed to the machine learning system as soon as it is entered at the terminal or point of sale, and the system then analyzes the transaction against the system on which it has been trained. The historical data offers a way to glean what “normal” behavior of a transaction looks like.

To combat a payments fraud adversary that is evermore fluid with bad actors’ tactics and operates in a card-not-present (CNP) world, the machine deployed by a financial institution must be able to “explain” what it is doing, Feedzai said. The “learning” should result in explaining the reasoning so the logic behind the decisions is transparent and meets compliance needs.

Banks Build Line of Defense for Doomsday Cyberattack (WSJ), Rated: AAA

U.S. banks have quietly launched a doomsday project they hope will prevent a run on the financial system should one of them suffer a debilitating cyberattack.

The effort, which went live earlier this year and is dubbed Sheltered Harbor, currently includes banks and credit unions that have roughly 400 million U.S. accounts.

While most people worry about their money being stolen in a hack, banks fear something more sinister: an attacker destroying, or even simply locking, data.

Such moves could cripple a bank, leaving it unable to operate for hours, days, or perhaps much longer.

Source: The Wall Street Journal

LendingClub Introduces New Certificate Investment Vehicle (Lend Academy), Rated: AAA

On Friday of last week, LendingClub announced that it closed a new kind of transaction. It was a whole loan transaction structured as a tradable pass through security called a CLUB Certificate.

This was an initiative that was investor led. Basically, they had a potential investor who did not want to invest in whole loans. They are not for everyone, given they are an illiquid investment that has a duration of several years. What this investor wanted was a security that acted like a whole loan but one that had liquidity.

While LendingClub would not share details of this deal we did learn that these were both three and five year loans of one particular loan grade. They customized this deal to meet the investors exact requirements.

LendingClub claimed that this was a first of its kind deal in marketplace lending but in my research I discovered this piece on Asset-Backed Alert from April 2016 that talked about a similar structure that Prosper was working on last year.

How Technology is Streamlining the US Lending Sector (NewsGram), Rated: A

However, when the lending process is digitized the amount of paperwork is reduced dramatically. This is because account activity, credit history, income history as well as tax compliance can be fed into the system with the click of a button. This has made the collection and verification of information quite easy. Besides streamlining the application process, the amount of time it takes to get a loan has also reduced.

In addition, some lenders have developed some innovative mobile solutions that enable customers to submit an application from anywhere. The most outstanding feature about mobile loans is that there is a constant interaction between the lender and the borrowers. This goes a long way in improving service delivery.

Courtesy of technology advancements, now it’s possible to view the status of your loan application as well as your account status with a lender. This helps borrowers to stay updated during the entire online installment loans process. In addition, you can get instant communication about any requests that a lender may have that is critical to the borrowing process.

Time to address banks’ skepticism about data sharing (American Banker), Rated: A

When bankers complain about the security risks of sharing data with fintechs, they get an eye roll. Such complaints tend to be regarded as a cover for an ulterior motive: unwillingness to give customer details to competitors.

But when Chair Sheila Bair, a former chairman of the Federal Deposit Insurance Corp., recently warned of the security risks of sharing customer data with third parties, it made some people stop and think.

Big banks hope early bet on Alexa will pay off (American Banker), Rated: A

After a number of months of testing and refining an alternative way to bank, Ally Bank launched Ally Skill. “It was ready for prime time,” said Diane Morais, president of consumer and commercial banking at Ally Bank. Since mid-November, a customer can ask Alexa — in their own words — what their balance is, what the price of something costs in hours worked, and notably, to move money.

Since Capital One announced its skill in March of 2016, U.S Bank, American Express and several credit unions announced Alexa skills in addition to Ally. Others have been testing Alexa, including bank innovator USAA. Even smaller banks are readying to launch skills. FIS, one of the biggest bank vendors that has been testing Alexa since 2016, said about a dozen of its thousands of bank customers are on track to roll out a bank skill for Alexa by Christmas. Most recently, Amazon announced Alexa for business, and Capital One is one of its launch partners.

Mortgage providers and wealth managers are also exploring ways to offer their services over such conversational devices.

A brand-new cybersecurity watchdog just shut down a $ 15 million cryptocurrency scam (Business Insider), Rated: A

US regulators appear to be paying more attention to the opaque world of initial coin offerings.

The Securities and Exchange Commission announced Monday it halted a fraudulent ICO “falsely promising” over 1,000% returns. The regulator said this was the first case filed by its brand-new cybersecurity unit, aptly named Cyber Unit.

Trump pick plans radical shake-up of consumer protection agency (Financial Times), Rated: A

US banks and other financial companies are preparing for a lightening of their compliance burden in areas from payday lending to mortgages as President Donald Trump tightens his grip on a powerful regulator set up to protect consumers.

“Virtually the entire range of regulations previously adopted by the CFPB could be subject to review,” says Quyen Truong, a former senior figure at the agency who is now a partner at law firm Stroock & Stroock & Lavan. “There’s no particular set of rules that would be considered sacrosanct.”

In an early sign of his intent, Mr Mulvaney instituted a 30-day freeze on new initiatives within hours of assuming office.

Reforms that Mr Cordray had yet to introduce that would extend the CFPB’s reach into new areas, including mooted restrictions on small business lending, are now unlikely to see the light of day.

Payday Lending And The New CFPB (PYMNTS), Rated: A

As we noted when we first covered the final draft of the payday lending rule, Congress retains the power to keep the rule from ever making it into the books, so to speak, through the power of the Congressional Review Act. The CRA not only would prevent the payday lending rule from going into effect, but it would also prevent any similar rule changes from being considered for the next five years.

After some dormancy on the issue, the House of Representatives passed a CRA resolution Friday that would effectively kill the payday lending rule in its cradle.

The move comes as a bi-partisan effort – somewhat surprising, given the general tenor of Congress at present, particularly when it comes to consumer protection issues – with three Republican and three Democrat co-sponsors.

Mulvaney has won the first round in court, as a U.S district judge rejected English’s request for a temporary restraining order to prevent Mulvaney from taking over. But English has said she intends to fight on and will seek a preliminary injunction against Mulvaney and the administration.

Congress has only 60 legislative days from the publication of the rule in the federal register to invoke the CRA, and the rule passed on Nov. 17.

Madden ruling was a step backward. Congress should fix it (American Banker), Rated: A

I have been, far more often than not, on the same side of policy issues as the leading consumer and civil rights groups. But I disagree here: Madden is not just legally wrong; it is also bad public policy, because it moves us further away from creating a more effective and inclusive financial system. Bipartisan, bicameral proposals have already been introduced in Congress to fix Madden. Congress should pass them.

U.S. News magazine cites LendingPoint in ‘Best Personal Loans’ list (LendingPoint), Rated: B

We’ve been named to the “The Best Personal Loans of 2017” list by the prestigious U.S. News and World Report.

U.S. News named LendingPoint best for “Fair to Good Credit With Merit-Based Qualifications.”

LendingTree Selects Gordian Knot Analytics Group’s Comprehensive Segmentation Subscription Service (Guru Focus), Rated: B

LendingTree (NASDAQ: TREE), the online loan marketplace, announced today that it has entered into a multi-year subscription for segmentation analysis and database scoring with Gordian Knot Analytics Group, utilizing their unique segmentation methodologies and proprietary machine learning toolset. Gordian Knot offers proprietary marketing analytics machine learning tools that help LendingTree more effectively target and engage with the right consumers to drive the business forward and maximize value for current and future customers.

FinTech Leader OppLoans Named 6th Best Place to Work Nationally (Daily Telescope), Rated: B

Socially responsible online lender OppLoans received top rankings in Glassdoor’s 2018 Best Places to Work award. The start-up was named the sixth-best place to work nationally for small- to medium-sized businesses.

The review-based rankings serve as a capstone to a stunning year of growth for OppLoans. Accolades include rising over 200 positions to reach number 219 on the Inc. 500 list, earning an A+ rating from the Better Business Bureau, being named the third-fastest growing technology company in Chicago by Built In Chicago and launching OppU, a free, standards-aligned online curriculum that teaches personal finance skills.

PeerStreet’s Brew Johnson Named 2017 HousingWire Vanguard Award Winner (BusinessWire), Rated: B

PeerStreet, a marketplace for investing in real estate backed loans, is honored to announce that its Co-Founder and CEO, Brew Johnson, has been named to HousingWire’s 2017 list of Vanguard Award winners. HousingWire’s 2017 Vanguard Award recognizes top leaders from all areas of the mortgage industry, including those in lending, real estate and investing.

Why Do I Have an Affirm Payment Due After I Returned a Phone? (Republic Wireless), Rated: B

If Affirm was used to finance a purchase from the Republic Online Store, all carted items, including shipping, must be financed through Affirm. Shipping charges are not refunded by Republic Wireless. This means that you will still be responsible to Affirm for any shipping costs you financed and interest that has accrued.

United Kingdom

Peer-to-peer lender Ratesetter loses £23m after ad investment flops (The Times), Rated: AAA

Ratesetter slumped to a £23 million loss for the year after a disastrous investment in an advertising business.

The loss was due in large part to a £14 million write-off on Adpod Limited, which the lender ended up owning after using its own capital to prevent a huge default on its peer-to-peer loan book from hitting investors.

The loss is sharply higher than the previous year’s figure of £5.3 million.

RateSetter to launch IFIsa in February (Bridging&Commercial), Rated: AAA

Peer-to-peer lending platform RateSetter expects to launch its Isa in February 2018.

Once the Isa launches, customers will have until 5th April 2018 to invest the 2016/17 Isa allowance of £20,000.

Lloyds Banking Group and Royal Bank of Scotland to close branches (Business Insider), Rated: AAA

Two of the UK’s largest banks, 

Source: Business Insider

Orca accepted into regulatory sandbox scheme (p2P Finance News), Rated: A

PEER-TO-PEER investment platform Orca is one of 18 firms that have been accepted into the third phase of the Financial Conduct Authority’s (FCA) regulatory sandbox scheme.

The FCA received 61 submissions for the third phase of the scheme, of which 18 met the eligibility criteria and were accepted to move towards testing.

One of the successful applicants is Orca, which is developing an intelligent peer-to-peer investment platform which lets users diversify across multiple P2P platforms, lending sub-sectors and borrowers.

Personal Finance App Squirrel Now Processes £1 Million A Month (Crowdfund Insider), Rated: A

Squirrel, a personal finance app designed to help users have more control over their money, announced this week that it now processes £1 million a month. The company reported that it processed its 10 million last week.

Squrriel is currently seeking £400,000 through its equity crowdfunding campaign on Crowdcube. Funds from the initiative will be used to continue the expansion of Squirrels platform.

How an MBA entrepreneur made his multiple-account bank card add up (Financial Times), Rated: A

Israeli Shachar Bialick spent the first decade of his working life founding and backing start-ups before he dropped everything to move overseas and take an MBA.

He started Curve, a fintech company, to simplify personal finances with a single bank card for multiple accounts from different providers.

“We have too many cards, too many accounts, and too many products and services we use to manage our money,” he adds. “Curve is my biggest, most ambitious business so far. We are aiming to create an entirely new category in the banking system.”

Curve has raised $12m in venture capital funding and added corporate partnerships to extend the services it offers, such as an expense filing system provided by Xero, the online accountancy service.

Aire partners with retailer N Brown as more retailers become lenders for shopping middle class (Aire Email), Rated: A

Aire, which provides a more accurate way for lenders to understand and score new applicants, today announces a first-of-its-kind partnership with online retailer N Brown, as research data reveals the ‘new norm’ of UK shoppers choosing to spread the cost for their retail purchases over time.

The new agreement will see Aire provide its augmented credit assessment technology to support N Brown, which operates online stores such as JD Williams, in analysing the full picture of online customers and the true benefits and risks that come with them. Aire combines technologies of Artificial Intelligence with data science and deep knowledge of credit, which will enable N Brown to reach a wider group of customers without increasing its risk. After recent announcements about new partnerships in the p2p lending and car finance spaces, Aire’s expansion into the retail sector means that it is adding another new market to its portfolio in under six months.

Key insight:

–          New partnership between Aire and online retailer N Brown for customers who choose to open a new credit account

–          Aire adds retail finance to its growing portfolio

–          New research finds that UK adults pay off on average of £40 per month for retail purchases

–          9% of UK adults increased their monthly commitments in the last two years

Research shows in-store crowds are biggest stress factor for christmas shoppers (DIY Week), Rated: A

The new research by Swedish payments provider Klarna delves into the views of more than 2,000 consumers, and reveals that Brits today are so stressed out in the extended run up to Christmas that they’re overwhelmed when the day itself arrives.

In-store crowds were the number one stress for a quarter of respondents, whilst finding the perfect gift was the biggest source of stress for 20% of those surveyed.

These pressures could have a big impact on the bottom line of merchants if they’re not addressed; more than a third of consumers have previously walked out of a shop in frustration as a result. This is not just a bricks and mortar issue – 1 in 10 respondents have abandoned their online basket in frustration when the process is too complex, suggesting there’s still work to be done to smooth the purchase process online.

FinTech Marketplace Wealth Migrate Continues Expansion with New UK Office (GlobeNewswire), Rated: B

Wealth Migrate, (KPMG Global Fintech Top 50), a global online real estate marketplace, today announced the opening of a new office in the U.K. and the appointment of a new country CEO, as the firm continues to build on its global presence as part of a strategy to meet growing demand from investors.

To better serve its community of investors in this region, Wealth Migrate has opened a new office in London.

Adding to the news of this expansion, Wealth Migrate additionally announced the opening of their U.A.E. office and the appointment of a new U.S. based CEO this week.

To head up the new office, Wealth Migrate has appointed Ken Williams as its CEO of Wealth Migrate, U.K.

China

Runaway borrowers the new face of China’s personal credit boom (SCMP), Rated: AAA

China’s online lending boom has sent a steady stream of new clients to Guangzhou lawyer Luo Aiping in recent months: the parents and siblings of young men trapped or ruined by usurious debts.

Zeng Hong, from Hunan province, is a typical client. She went to Luo for help because she had been harassed by calls from debt collectors for months after her 27-year-old brother ran away, leaving behind a two-year-old son and more than 300,000 yuan (US$45,400) in debts.

Zeng wanted to help repay her younger brother’s loans, but 300,000 yuan is a big sum for a poor family and her husband strongly opposed her plan. She approached Luo to ask whether the debts and interest her brother had incurred were legal.

China Launches Massive Debt Crackdown (ValueWalk), Rated: AAA

You see, in an effort to fuel economic growth over the past few years, China has taken on a lot of debt. Since 2008, China’s debt as a percentage of economic output has increased from around 160 percent to around 280 percent at the end of 2016. (By comparison, the total debt in the U.S. as a percent of economic output is upwards of 300 percent.)

Source: ValueWalk

Why it matters: China is BIG and getting bigger

With a GDP of US$11.2 trillion, China is already the world’s second-largest economy (it will soon be the largest), and it has the second-largest stock market. The country will also soon have the world’s biggest middle class, totalling over 550 million people by 2022. To put this in perspective: That’s 1.7 times the entire population of the U.S.

Consumer loans (such as peer-to-peer (P2P) lending and payday loans) have grown rapidly recently. For example, consumer loans jumped 300 percent compared to last year.

SoftBank’s Son Eases Lufax Peer Pressure (Bloomberg), Rated: AAA

Lufax, the online wealth manager that’s among the world’s biggest startups, has hired five banks to work on a Hong Kong initial public offering of as much as $5 billion, according to IFR.

Lufax is the world’s 10th-largest unicorn, or startup worth at least $1 billion.

Source: Bloomberg

Lufax had a loan balance as of Sept. 28 of more than 158 billion yuan ($24 billion), more than three times the 43 billion yuan held by China’s second-biggest P2P lender, New York-listed Yirendai Ltd., according to wdzj.com, a Chinese website that tracks online financiers.

DAILY BRIEFING (TechNode), Rated: B

What happened: The Ping An-backed online wealth management firm Lufax has hired five banks to work on an up to $5 billion Hong Kong IPO.

Why it’s important: A major player in China’s P2P lending market, Lufax will join a number of fintech companies that go public in recent months. It was eyeing an IPO as early as last year but later delayed the process due to market challenges and regulatory uncertainties, the CEO told Bloomberg last year. —Rita Liao

China’s Lufax picks banks for up to $5 bln Hong Kong IPO – Reuters

CreditEase Received Top Rankings in Global FinTech Investment by CB Insights and FT Partners (PR Newswire), Rated: A

CreditEase, a world-class financial technology conglomerate based in Beijing, China, specializing in inclusive finance and wealth management, announced today that its venture fund, CreditEase FinTech Investment Fund (“CEFIF”) has recently been ranked No. 7 by CB Insights as “Top 10 Most Active VC Investors in Global FinTech Companies” and No. 1 by FT Partners as “Most Active FinTech Investors (Corporate VC)”.

Source: CB Insights FinTech Report_Q3 (PRNewsfoto/CreditEase)

How This Chinese Fintech Company Is Innovating by Leasing Cows (Fortune), Rated: A

Particularly, Ning Tang, CEO of fintech firm CreditEase, is lending consumers cows in a bid to reach those living in rural areas who might have limited access to credit and financing.

The rural population accounts for 48% of China’s total, with agriculture accounting for about 8.6% of the the nation’s Gross Domestic Production in 2015, according to the World Bank. Income in rural China has also been on the rise, with urban income narrowing to 2.7 times that of rural income from 3.3 times in 2009. And though migration toward the city has been on the rise and the nation’s dependence on farming and livestock is on the slide, rural populations and agriculture are still a significant part of the country’s economy.

IN CHINA, THE CHARACTERS FROM THE SHOW APPEAR IN THE COMMERCIALS, TOO (AdAge), Rated: A

iQiyi, which is backed by Chinese internet giant Baidu, adopted the tactic first and developed it into a commercial product when it broadcast the 1930s tomb-raiding adventure tale “The Mystic Nine” last year. The first batch of advertisers ranged from iQianjin, a peer-to-peer lending app, to PepsiCo, which showed characters chowing down on Lay’s and gulping Pepsi.

The other major services, Alibaba Group’s Youku Tudou and Tencent Holdings‘ video platform, have embraced the tactic too. At iQiyi, the cost for embedding one such commercial in an episode ranges from $150,000 to $530,000, depending on projected viewership, Yuan says.

European Union

Worldpay Partners with Klarna to Launch Invoice and Credit Based Payments in 6 Key European Markets (PR Newswire), Rated: AAA

Worldpay, a global leader in payments, has announced that it will partner with Klarna, a leader in invoice and credit based payments, to further enhance its product portfolio. From today, Worldpay customers trading in AustriaFinlandGermanythe NetherlandsNorwaySweden and the United Kingdom, and wishing to accept payments on invoice or instalments, will be able to use Klarna’s invoice and credit based payments from Worldpay. This will help eCommerce businesses to improve conversion rates by up to 20% and provide a fast and smooth checkout process.

These new payment options will allow consumers to decide when to pay for the items once they have received their goods. Instead of a request for credit or debit card details at the point of checkout, consumers are prompted for their email address and postcode, ensuring a quicker checkout process and leading to lower cart abandonment. The solution allows consumers to manage the terms of their payment, be it 14-day payment by invoice, by fixed or flexible instalments, spreading the cost over several months.

The move into credit and invoicing payments follows demand from customers wanting to expand the breadth of payment methods offered. Worldpay is one of the first payments companies to deploy this new payment integration, providing superior market coverage as well as faster time to market since there is no need for a new plug-in when  legacy technology is updated.

Fintech deposit marketplace hits 100,000 customers (AltFi), Rated: A

Savings specialist Raisin continues to gain momentum. The savings account marketplace now has itself 100,000 customers. The company is also integrated with more than 40 banks, from across 18 European countries, including a number of challenger banks and even an online lender (Younited Credit). SolarisBank is its newest partner.

ConsenSys Ventures has made its first four investments (TechCrunch), Rated: B

But the companies the fund is backing come from some relatively seasoned entrepreneurs. BlockFi, the firm’s lending for liquidity startup, was founded by Zac Prince — a serial startup founder whose previous idea was the lending platform for the underbanked, Cognical.

Up to 5% Cashback On Long-Term Investments Offered by Mintos (P2P-Banking), Rated: B

Lativan p2p lending marketplace Mintos just launched a cashback campaign running for the remainder of December. Investors investing in new loans with a term of at least 24 months on the primary market will receive a cashback of 2% to 5% depending on term length. The cashback will be credited within 6 days says Mintos.

Important: To be eligable an investor needs to enroll once for the campaign by clicking on the promotion banner inside the Mintos dashboard.

International

Salt and Coinloan Promise Crypto-Asset Backed Fiat Loans (Bitcoin.com), Rated: AAA

Typically, when we think of taking a loan, we think of going to a bank, filling out a ton of paperwork and then getting denied the loan unless a guarantor or cosigner signs as well. However, blockchain banking startups like Salt and Coinloan aim to change this by creating a peer to peer lending platform on the blockchain. These platforms allow users to leverage their bitcoin and other cryptocurrencies as collateral for fiat loans.

Salt hails from the land of the free, a.k.a Denver, Colorado, USA.

On the other hand, Coinloan has Baltic roots and is headquartered in Estonia.

Salt will be starting straight out of Denver, Colorado and is set to launch their blockchain backed lending platform, BTC collateralized loans and loan fund by the end of 2017. In 2018, they will be launching ethereum collateralized loans in Q1, credit cards in Q2 and altcoin collateralized loans in Q3.

By contrast, Coinloan is still currently running their ICO. By 2018, they hope to obtain payment licences in Q2, develop mobile applications for IOS and android by Q3 and enter the Asian market in 2019.

Lendoit & RSK creates a decentralized BTC lending future together (Live Bitcoin News), Rated: A

In about 2 weeks, Lendoit will launch its official token Pre-sale, but it can’t wait to reveal the secret that will change the future of decentralized BTC lending, which the company has entered together with the largest and most promising blockchain-based project, The RSK Project.

Right from Argentina is Rootstock or popularly called RSK. This company is well-known for its open-source smart contract stage which has a 2-dimensional peg to Bitcoin. Amazingly, RSK uses merge-mining to reward bitcoin miners and give them the chance to be part of the smart contract ecosystem.

The Goal? To ensure that the highest level of functionality and value is added to the entire bitcoin ecosystem through the use of smart contracts, increased scalability, and near-instant payments.

Lendoit removes all intermediaries in the lending process, creates a trusted and secure platform for participants through the smart contract, and gives users a decentralized, anonymous platform where upscaling, lending, and borrowing are done hassle-free.

Source: Live Bitcoin News

PNC Live On New Real-Time Payments Network Using Finastra (Payment Week), Rated: A

PNC, a top-10 US bank by assets, is live on RTP, The Clearing House’s new US real-time payments system, using Finastra’s payment services hub, Fusion Payments.

“The ability to make an immediate payment at any time, on any day of the week, with a real-time confirmation of the payment significantly transforms the way businesses and consumers make payments in the United States. Emerging technologies such as RTP are creating opportunities for banks and clients to re-imagine our business models.”

Trulioo Recognized As a Global Leader in Digital Identity Verification (PRWeb), Rated: B

Trulioo, the global identity verification provider, is delighted to be recognized as the global identity verification leader in a recent comprehensive report published by Let’s Talk Payments (LTP).

India

Why America could miss out big time on India’s fintech revolution (TechCrunch), Rated: AAA

Morgan Stanley expects India’s digital payments penetration to increase from 5 percent today to 20 percent, and the e-commerce market to reach $200 billion, with 475 million e-commerce shoppers, adding up to a GDP upwards of $6 trillion — all by 2027.

India now has 800 million mobile phone users with 430 million having internet connectivity. According to Morgan Stanley, the number of internet users is expected to grow to 915 million by 2027.

Source: TechCrunch

In 2016, China’s digital payments were already 50 times America’s. Alibaba and Tencent understand ecosystems better than anyone else in the world, including American companies.

Asia

After success at home, Toss sets sights overseas (Korea JoongAng Daily), Rated: AAA

After emerging as one of the top fintech start-ups in Korea, Viva Republica, the company behind Korea’s top peer-to-peer transfer app Toss, is zeroing in on Southeast Asia as its next target market.

“While more than 70 percent of the population is using smartphones, their financial services are equivalent to that of Korea in the 1980’s. Our goal is to bring our story and product to Southeast Asian countries such as the Philippines and Vietnam and to improve the level of financial services in the market.”

As of November this year, the accumulated transactions through Toss reached 10 trillion won ($9.2 billion). In November alone, the platform handled more than one trillion won, a feat that comes just two and half a years since it launched in February 2015. The company said its annual sales will come to 20 billion won by the end of this year and reach the break-even point sometime next year.

M’sian regulators likely to enforce licensing for cryptocurrency exchanges (The Star), Rated: B

Malaysian regulators are looking to clamp down on initial coin offerings or ICOs by expanding the definition of “securities” in existing laws, according to industry sources.

The regulator is also likely to require some form of licensing for cryptocurrency exchanges to operate on Malaysian shores.

Mexico

Mexican Senate passes fintech law (Reuters), Rated: A

Mexico’s Senate on Tuesday approved a bill that would regulate its fast-growing financial technology sector, including crowdfunding and cryptocurrency firms, paving the way for a vote by the lower house.

The bill, which seeks to promote financial stability and defend against money laundering and financing of extremists, is expected to pass in a final lower house vote by Dec. 15, said three sources familiar with the measure.

Authors:

George Popescu
Allen Taylor

The Evolution of Credit: From Mesopotamia to Marketplace Lending

Backed credit

Lending is as old as civilization itself. Seven thousand years ago, in the Fertile Crescent known as Mesopotamia, Sargon the farmer had 100 apples. His friend, Hammurabi, had 10 bushels of wheat. They exchanged what they had and now Sargon has wheat and Hammurabi has apples. Everyone bartered to meet their needs. Then Sargon got […]

Backed credit

Lending is as old as civilization itself.

Seven thousand years ago, in the Fertile Crescent known as Mesopotamia, Sargon the farmer had 100 apples. His friend, Hammurabi, had 10 bushels of wheat. They exchanged what they had and now Sargon has wheat and Hammurabi has apples. Everyone bartered to meet their needs.

Then Sargon got a little creative.

He came to Hammurabi with a special offer: 60 apples in return for 10 bushels of wheat with the promise that at a future date, he will deliver another 60 apples to complete the deal. Now, Sargon has the wheat he needs, plus an additional 40 apples. With the extra fruit, he can take the seeds and plant more. In due time, he pays off his friend who is happy to see a 20% rise in income. Everybody benefits.

Thus, began the concept of credit.

It was only a matter of time before some other clever people decided to create a common medium of exchange to scale it up. Currency made it all easier. You could buy apples, wheat, and everything else with silver, gold, and eventually paper.

You could also borrow currency to create leverage. The credit system has underwritten prosperity from Mesopotamia, to the first paper currency minted in ancient China, the deposit and loan banking system which started in ancient Greece, the Renaissance fueled by the Italian Banking system, the first Credit Union in 1852, to the last time 1,000 Smartphones were shipped from Singapore to San Francisco backed by a letter of credit.

From then until now the process hasn’t changed. An individual goes to a lender asking for a loan. He fills out forms, provides information about his assets, income, and current debt levels. The lender reviews the information and makes a decision.

For the most part, lenders are financial institutions who take deposits, which they usually pay very little to depositors to hold, then lend out those deposits to borrowers paying them 10-20%. It has been great for the lenders, who haven’t had any incentive to change or innovate the process.

To pay back the loan plus interest, it’s the borrowers who must take risks. They are the innovators, so they produce. They are the ones forced to sweat.

Credit has propelled man forward from the stone age to the digital age.

The Revolution in Online Lending

The great advancements traditional lending financed came with a downside. The user experience was cumbersome, borrowers were limited to whom the lender decided was a worthwhile risk, and lenders benefited most. A lot of people were left out, and the lenders made huge margins loaning out other people’s money while the people who deposited the money saw very little of those returns.

The peer to peer lending model, launched by Prosper in 2006, introduced the most significant breakthrough in consumer lending. It transformed the lenders into innovators, reinventing the credit system to fix all of these imperfections.

Online lenders are productively disrupting the ancient credit model in 4 ways:

1. Utilize technology to give users a better experience.

An applicant for a loan no longer has to haul himself to a lending institution, wait on line, and fill out paperwork. Everything can be done in the comfort of the user’s home. The user can fill out forms online and submit them to an online lender in one click. The online lender can call information like credit scores and past income histories from its own computer, make a decision, and if approved, wire the loan directly to the borrower’s account.

2. Leverage new methods of gathering data to transform risk algorithms.

With vast amounts of data available at everyone’s fingertips, online lenders can now use new information to underwrite loans. Risk models can now be expanded to include new factors like social media, email histories, even mobile phone usage. Online lenders like Upstart have advanced lending models that go beyond credit scores to evaluate risk based on academic achievements. Cabbage underwrites businesses by looking at the lenders available Amazon information.

Expanding on the traditional credit score and debt to income models, online lenders are discovering a new class of prime lenders.

3. Diversifying sources of capital.

Traditional financial institutions are no longer the only business in town. Peer to peer lending lets individuals lend to other individuals. A borrower can now get money from multiple sources. Every lender is forced to be more competitive. Retail and individual investors can opt to invest in loans rather than put their money in a checking account. They can be just like any financial institution, making double digit returns on money originally designated for their checking account.

4. Increase profits for all stakeholders.

Automating more of the loan process requires less labor costs to service each loan. That creates productivity gains which translates to more profit for all parties involved.

For thousands of years human progress has marched forward under a credit system that benefits one party over the others. The emergence of a new system of credit that rewards all involved will propel the advancement of mankind to heights beyond our wildest imagination.

Sargon would be impressed.

Author:

Gilad Woltsovitch is the Co-Founder and CEO at Backed Inc., responsible for designing the company’s first-class platform, UX and UI. Before Backed, Gilad co-founded iAlbums, a semantic curation engine for media players in 2010 where he served as the company’s CEO from 2011-2014. In 2013, Gilad also served as the entrepreneur in residence for Cyhawk Ventures and joined the Ethereum project, establishing the Israeli Ethereum meet-up group. Gilad holds a Masters of Art Science and Bachelors in Sonology from the Royal Conservatory of The Netherlands in The Hague, University of Leiden.