News Comments Today’s main news: LendingPoint closes $178M personal loans securitization. OnDeck hits $879M in online financing in Texas alone. RateSetter adds three products. Funding Circle lenders face longer cash out waits. Yirendai files Form 6-K. Today’s main analysis: International P2P lending volumes for August 2019. Today’s thought-provoking articles: Silicon Valley is building a social […]
LendingPoint, the company revolutionizing and democratizing commerce, announced today that it closed its inaugural securitization of consumer loans. LendingPoint Receivables Trust 2019-1 (“LDPT 2019-1”) issued $177.85 million of notes backed by a pool of $187.22 million of direct-to-consumer loans originated on the LendingPoint platform.
The LendingPoint Receivables Trust securitization was rated by Kroll Bond Rating Agency, Inc. and includes $117.76 million of Class A notes rated “A-“, $24.74 million of Class B notes rated “BBB-“, $23.68 million of Class C notes rated “BB-” and $10.67 million of Class D notes rated “B-.” The notes priced at a blended yield of 4.05% per annum and provided for a 95% advance rate. The transaction has a 5% overcollateralization Deposit and a 5% overcollateralization Target. The risk adjusted yield of the receivables securing the notes is expected to be 13.14% per annum.
OnDeck today announced that TyMac Electric of Plano, Texas is its Small Business of the Month for August, 2019. The 30-person company serves the Dallas-Fort Worth area with high-quality, professionally managed electrical services.
Over the last two years, OnDeck has provided additional financing to TyMac Electric as the business grew to meet demand in the Dallas-Fort Worth commercial marketplace.
Overall, OnDeck has provided more than $879 million in financing online to small business owners in the State of Texas.
Have you heard about China’s social credit system? It’s a technology-enabled, surveillance-based nationwide program designed to nudge citizens toward better behavior. The ultimate goal is to “allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step,” according to the Chinese government.
Many Westerners are disturbed by what they read about China’s social credit system. But such systems, it turns out, are not unique to China. A parallel system is developing in the United States, in part as the result of Silicon Valley and technology-industry user policies, and in part by surveillance of social media activity by private companies.
Real estate investment platform Fundrise has raised over $22 million for their Opportunity Fund. The information was revealed in a recent Form D 5o6c filing with the Securities and Exchange Commission (SEC).
Data is the new oil, as the saying goes, and today Kabbage — a fintech startup backed by SoftBank that has built a business around lending up to $250,000 to small and medium enterprises, using AI-based algorithms to help determine the terms of the loan — is picking up an asset to expand its own data trove as it looks to expand into further SMB financial services. The company has acquired Radius Intelligence, the marketing technology firm that has built a database of information on some 20 million small and medium businesses in the U.S.
Nonbanks and alternative lenders have garnered attention in the banking industry due to their ability to partner with legacy banks and utilize technology to make financial transactions more efficient and convenient for users.
Challenger bank Chime has reached 5 million customers in the U.S. The San Francisco-based startup is creating an FDIC-insured mobile bank without any physical branch. The company also promises fewer fees.
Back in March, Chime said it had 3 million customers when it announced its $200 million Series D round. So that’s 2 million additional customers in roughly 5 months.
Even Financial, a four-year-old New York-based provider of APIs for financial services search, acquisition, and monetization, today announced that it’s raised $25 million in a strategic round of investment co-led by Citi Ventures and MassMutual Ventures, with additional participation from LendingClub. Existing backers American Express Ventures, Canaan Partners, F-Prime Capital, GreatPoint Ventures, and Goldman Sachs also participated in the round, which brings the company’s total raised to $50 million.
Credit Sesame — which lets consumers check their credit scores and evaluate options to rebalance existing debts and loans to improve that score and thus their overall “financial health,” in the words of CEO and founder Adrian Nazari — has raised $43 million. With the company already profitable and growing revenues 90% each year for the last five, Nazari said that this round is likely to be the last round the company raises before it goes public.
Household debt in the U.S. continues to rise and as of this year now stands at nearly $14 trillion.
CrowdBureau Corporation, a fintech startup and index provider, has closed $1.1 million Series A equity funding to expand its series of benchmarks and launch a pilot program for its patent-pending regulatory technology product. The round, which values the company at $9.7 million, was led by Clydagh Limited, Estuary Holdings Ltd. and Alpama Limited along with existing investors.
A growing number of companies are helping workers gain access to payroll advances and loans, reflecting concern over the impact money problems are having on productivity levels and worker retention.
Employers including Walmart Inc. and Pima County, Ariz., have recently added these services. The aim is to help cash-strapped employees, many with damaged credit, cover unexpected expenses without resorting to high-cost debt.
Lendingblock, the regulated, open exchange for institutional borrowing and lending of digital assets, today announces the launch of its institutional lending platform on September 3, 2019. The lending product, which is a reinvented version of securities lending from traditional capital markets, is the first exchange fully dedicated to pure crypto lending and aims to support the needs of the broader cryptocurrency market by providing a secure and liquid venue for lending and borrowing needs of institutional market participants.
Upon launch, Lendingblock platform users will be able to borrow and lend BTC, ETH, PAX and USDT on a fully collateralized basis, for loan terms of 1, 7, 14 and 30 days, with a minimum trade size of $100,000 equivalent of a specified digital asset.
News Comments Today’s main news: Better.com raises $160M. Funding Circle passes $10B in global small business lending. Numbrs Personal Finance achieves unicorn status. Tala raises $110M, expanding into India. LendingKart raises $2.95M. Today’s main analysis: LendingTree Personal Loan Report–July 2019. Today’s thought-provoking articles: Slack’s direct listing and the future of security tokens. Is Funding Circle […]
Better.com, one of the fastest-growing homeownership platforms in the country, today closed its Series C fundraise at $160 million, bringing the company’s total funding to $254 million to date. Activant Capital, Ping An Global Voyager Fund, Ally Financial, Citi, AGNC, Healthcare of Ontario Pension Plan (HOOPP) and American Express Ventures joined existing shareholders Goldman Sachs, Pine Brook, and Kleiner Perkins in the round.
The new investment round comes amid a period of tremendous growth for the fin-tech disruptor: Better.com has grown 3x year-over-year and is currently funding $375 million in mortgages a month. This puts the company on track to lend over $4 billion in 2019. Better.com also funded $1 billion of loans in Q2 of this year alone, more than in all of 2016 and 2017 combined.
Removing the middleman through security tokenization also means democratizing access to investment opportunities. By breaking up large assets into individual tokens, exclusive investment opportunities that would otherwise be reserved for the super-rich are opened up. Essentially, security tokenization is doing to private investments what peer-to-peer lending has done to private lending by removing the lock-up, liquidity, and the lower minimum investment involved in traditional venture capital and private equity investing.
Elevate Credit (NYSE:ELVT) released its quarterly earnings results on Monday, July 29th. The company reported $0.13 earnings per share for the quarter, beating analysts’ consensus estimates of $0.07 by $0.06, Briefing.com reports. The business had revenue of $177.76 million for the quarter, compared to the consensus estimate of $187.48 million. Elevate Credit had a net margin of 2.45% and a return on equity of 19.19%. Elevate Credit’s revenue for the quarter was down 3.6% on a year-over-year basis. During the same quarter last year, the firm earned $0.07 EPS. Elevate Credit updated its FY 2019 guidance to $0.55-0.65 EPS and its FY19 guidance to $0.55-0.65 EPS.
Today, Inc. magazine revealed that Reliant Funding is number 3,838 on its annual Inc. 5000 list, the most prestigious ranking of the nation’s fastest-growing private companies. The list represents a unique look at the most successful companies within the American economy’s most dynamic segment—its independent small businesses. This is Reliant Funding’s seventh consecutive year the Inc. 5000.
A year ago the prevailing view was the era of low rates was over. We find ourselves now testing record low 30-year US Treasury yields, and potential issuance of 50-year and 100-year bonds. Mohammed El-Erian is raising the concern that with the panic headlines we might be talking ourselves into a recession.
Steve Eisman, famed for shorting subprime mortgages, took a direct shot at Zillow’s new business model. We highlight the excerpt of Steve’s comments, particularly as a number of FinTechs are entering the market for intermediating residential homes:
Zillow has one of the most flawed business models I’ve seen in a very, very long time.
The part of it I find the most problematic is what they call, I believe, their iHome business, their internet buying business, where they actually go out and buy homes and flip them. I actually think the company doesn’t understand the real risks of this business, which are massive.
“It’s not only about access, but also the size of some of these transactions. The average consumer can’t buy a $10 million building, however they can take on a $100 share of it.”
What it costs to make money with real estate investing
For example, CrowdStreet requires a minimum investment of $10,000 for a minimum 36 months, but doesn’t charge account fees. Fundrise lets you get started with $500, but charges a fee of 1% per year, which is relatively steep compared to fees for roboadvisors, which tend to be around 0.25% to 0.60%.
Joseph Hogue of My Stock Market Basics examined average returns on real estate crowdfunding platforms: Open investments had a return of around 14.7%, with completed deals averaging 14.6%.
Fund That Flip, an award-winning fintech platform and marketplace lender of residential real estate loans, today announced a raise of $11 million from Princeton, NJ.-based growth equity firm Edison Partners.
After origination, Fund That Flip offers accredited and institutional investors the opportunity to purchase fractional shares of the loan and earn an 8%-9% annualized yield.
3G Capital Advisors, LLC, a boutique real estate advisory firm focused on developing creative capital solutions for its partners, announced today the closing of $179.2 million in permanent financing for Watermark J&L Partners, LLC originated through Greystone and provided by Freddie Mac. The loans will refinance a portfolio of four multifamily communities with a total of 1,188 units in Arkansas, Colorado and Texas.
To take a look at how expensive town life can get, LendingTree, the nation’s largest online loan marketplace, ranked the 50 towns in the United States with the most expensive median home values. Our study also looks at the median income in these towns to determine how attainable homeownership is for the average person living there. What we found: The towns with the most expensive home prices are unaffordable to median income earners who live in those areas.
Vineyard Haven, Mass., Summit Park, Utah, and Breckenridge, Colo., are the three most expensive towns in the country. Each of these towns is known for its proximity to natural features like mountain ranges or the ocean. While high levels of wealth tend to pool in these towns, the majority from these areas make an income well under the national household average.
The majority of the towns featured in this study are unaffordable for the median income earner living in them. Both renting and owning a home are out of reach for median income earners in 42 of the 50 towns looked at in this study. This suggests that many people who work in the towns featured in these studies don’t necessarily live there, and instead commute.
As our study makes clear, living in a small town does not necessarily make the cost of living more affordable. Many people living in the towns featured in our study would have an easier time affording a home in a major metropolitan area than in their current area. That being said, some of these towns are still relatively affordable like Los Alamos, N.M. or Gillette, Wyo.
But that’s also the Apple Card’s biggest hindrance. Sure, having a credit card that lives on your phone in a digital wallet is ideal for convenience and security. Yet it also makes the experience of using the Apple Card more limiting than other options, especially when it comes to paying your balance, managing your card, and the rewards you get.
Silvergate is the leading financial services provider for top Crypto exchange companies such as Xapo, Bitstamp, and Coinbase. The latest report indicates that the bank intends to roll out Crypto lending services.
Three blockbuster deals for financial-technology companies pushed takeover spending to a record $120 billion in the first half of the year as bidders targeted payments firms, according to research from consulting firm Hampleton Partners.
Welcome to Ohio, where the average student debt is $28,947, according to a new study by LendEDU, an online student loans marketplace. Ohio’s average student loan debt is smack dab in the middle of the state-by-state rankings, with average student debt ranging from $19,742 in Utah to $38,776 in Connecticut.
About 58 percent of all students graduating from a four-year college or university in Ohio and the U.S. received a student loan to finance their education.
Capital Trading Group, LP (“CTG”), an investment firm specializing in execution and account management for commodity trading advisors, has announced the release of its new Managed Futures Podcast hosted by firm principal and alternative investments specialist, Nell Sloane.
Funding Circle, the leading small business loans platform in the UK, US, Germany and the Netherlands, today announced that investors have lent more than $10 billion to small businesses globally through its platform. Achieving this milestone in less than a decade, Funding Circle has proven that its model has become the preferred option for small business funding that fuels economic growth — with every $1 lent to a small business through Funding Circle in 2018 contributing $2 to GDP, according to Oxford Economics.
The image below, which you can click on for greater detail, shows that at June 2019 Funding Circle Holdings had debt of UK£146.8m, up from none in one year. But it also has UK£449.9m in cash to offset that, meaning it has UK£303.1m net cash.
Zooming in on the latest balance sheet data, we can see that Funding Circle Holdings had liabilities of UK£180.2m due within 12 months and liabilities of UK£19.3m due beyond that. On the other hand, it had cash of UK£449.9m and UK£14.9m worth of receivables due within a year. So it actually has UK£265.3m more liquid assets than total liabilities.
UK-based private asset infrastructure service, Delio, has secured £3.3 million in an equity investment round led by Maven Capital Partners, which will purport the company into markets across Asia, the Middle East and North America.
If an industry as new as P2P can have legacy issues, there’s clearly a ‘second move advantage’ for new potential entrants who have an opportunity to build systems and processes ready for the new Financial Conduct Authority (FCA) rules:
SMCR – the new governance rules are not just about assigning responsibility to individuals.
Three lines of defence – will you need a dedicated compliance function? risk? internal audit?
Recovery and resolution plans – we’re in discussions with a number of potential new entrants who are at the very early stages of their IT planning.
Appropriateness tests – whilst incumbent firms are progressing with their plans to comply with the requirements, it is far easier to build the process from scratch – and price it in to the strategy.
Existing players continue to hit new milestones (such as Funding Circle’s $10bn announced this month), and secure increased funding.
In the UK, the new revenue potential generated through open banking-enabled small- and medium-sized business and retail customer propositions was £500 million ($700 million) in 2018, per PwC — and Business Insider Intelligence expects that to grow at a 25% compound annual growth rate to reach £1.9 billion ($2 billion) by 2024.
Numbrs Personal Finance raised $40 million to bring the total capital invested to almost $200 million, Chief Executive Officer Martin Saidler said in an interview. Numbrs offers an app that enables users to manage their existing bank accounts in one place and to buy financial products.
Brocc, a Swedish company specialized in P2P Consumer Lending, has raised funding from Goldman Sachs Private Capital (“Goldman Sachs”). Brocc intends to use this financing to issue consumer loans, allowing consumers to consolidate existing debts at lower rates.
To help over three billion underbanked adults have a chance at a loan, Tala has raised $110 million in a Series D round led by RPS.
The company currently has 500 employees across locations in Southern California, Kenya, Mexico, the Philippines, and India. The new money will be used to expand its India presence, as well offer new services. To date, Tala has raised $219.4 million in funding from investors like Revolution, Institutional Venture Partners, and PayPal Ventures.
Australasia’s largest marketplace lender is meeting a rapid pace of growth by ushering financial services leader David Stevens into the business from September 1, 2019. Stevens steps into the CEO role in early 2020, a transition that will free Harmoney’s founder and current CEO Neil Roberts to focus on strategy and product as the platform continues to innovate and lead across both markets.
Indian startup Lendingkart announced that it has raised $2.95 million in new funding from Sistema Asia Fund.
The investment comes days after the company raised $30 million in a Series D financing round led by existing investors including Fullerton Financial Holdings, Bertelsmann India Investments and India Quotient. The total funds raised by LendkingKart is now at $146 million.
More than 500 Lakhs MSMEs exist currently and over the last 5 decades in India. This SME sector has grown dynamically contributing 45 percent of India’s GDP according to ‘Micro Merchant Market Sizing and Profiling Report’ which also shows it provides employment to around 46 crores people in India and is growing at a fast rate of 11.5 percent every year.
There are many aspects of the business that needs to be handled by a small business owner when he runs a business. As a small business owner, he doesn’t have resources to waste. But he needs to the optimal performance of every resource/department, so that cost of production is kept at a minimal level. And the profits are also enhanced. But when an individual multi-tasks and handles various functions all by himself, there are chances that some aspects of the business may miss his attention.
A recent study by the Singapore Fintech Association (SFA) and PwC said that 94% of fintech companies are eyeing workforce expansions over the next 12 months, with 28% expecting to double their employee numbers in the next three years.
Notable Singaporean fintech firms include digital insurer Singapore Life, remittance company InstaRem, and peer-to-peer lending platform Validus. The latter two companies are backed by Vertex Ventures, a venture capital firm under Temasek Holdings, Singapore’s sovereign wealth fund.
The Israeli Capital Market Authority is seeking to make changes to its licensing regime in order to encourage competition and grow the financial technology (fintech) industry in the country. According to a report by local daily Calcalist, the regulator has established dedicated teams that will specialize in blockchain and other emerging financial technology.
News Comments Today’s main news: FDIC opens comments on Special Purpose National Bank charters. Plaid raises $250M. P2PFA member lending exceeds 10B GBP. ThinCats raise 200M GBP. Bondora originates almost 8M euro in loans in November. Klarna joins Shopify Plus Partner Program. Nubank launches debit card. Today’s main analysis: Trends in credit card debt. Today’s thought-provoking articles: Consumer credit market poised […]
FDIC seeks comments on fintech bank charters. The Trump Administration may have just opened the door wide for OCC bank charters. They want to encourage more bank startups, which is good if they are the right bank startups. More of the same won’t cut it.
Formation of new banks post-crisis is historically low. More banks have failed since 2009 than have new banks opened.This trend could leave some communities severely underbanked.
The FDIC wants to encourage new banks to startup and wants innovative FinTech firms to be part of that process. The agency wants to streamline its application process and is seeking comments on how that can be done.
The company is today announcing a $250 million Series C investment led by famed venture capitalist and the author of the Internet Trends reportMary Meeker, who will join its board of directors as part of the deal. The funds were raised at a valuation of $2.65 billion, according to sources close to the company. Capital from Meeker’s investment came from Kleiner Perkins’ growth fund — where Meeker has been a partner since 2010 — not from the reported billion-dollar-plus solo fund she’s in the process of raising.
New investors Andreessen Horowitz, Index Ventures, Norwest Venture Partners and Coatue Management also participated, as did existing investors Goldman Sachs, NEA and Spark Capital.
Low unemployment rates and continued positive growth in both GDP and real disposable income are among the key drivers that will propel the U.S. consumer credit market in 2019. Partly due to the strong performance of these economic indicators, TransUnion’s (NYSE: TRU) 2019 consumer credit forecast found that originations and consumer balances are expected to increase for most credit products, while serious delinquency rates will likely decline or remain steady.
A few outliers in the forecast come by way of serious credit card delinquency rates and originations as well as mortgage originations. Credit card delinquency rates are expected to rise from 1.94% in Q4 2018 to 2.04% in Q4 2019 as a shift toward more non-prime consumers with access to credit cards will likely negatively impact originations and consequently the serious delinquency rate.
TransUnion Forecast: Top Consumer Credit Trends for ‘19
Trend #1: There’s Room for Growth in Personal Loans
Personal loans continue to display signs of strength, and total balances are expected to climb 20% to an all-time high of 156.3 billion by the end of 2019.
Trend #2: Affordability May Impact the Auto Industry
It’s also worth noting that the number of auto loan originations is expected to end 2018 at 28.5 million and grow to 29.4 million in 2019. This is a significant increase from recent years (27.5 million in 2017, 28.3 million in 2016, 28.0 million in 2015). This growth is expected to be driven from both ends of the risk spectrum. Yet as the growth continues, the serious delinquency rate is anticipated to remain muted, ticking up to 1.44% in Q4 2019, an increase from the expected 1.43% in Q4 2018 and the 1.43% mark observed in Q4 2017.
Trend #3: Homes Becoming More Expensive, but Home Equity Increases Could Be a Boon to Consumers
Mortgage originations have declined the past several quarters, a trend that is expected to continue into 2019. Rising interest rates, increasing home prices, and supply constraints are driving lower origination numbers. Average balances will continue to trend upward in 2019, growing from an anticipated $208,831 at the end of Q4 of this year to $218,490 by the end of Q4 2019, a 4.6% increase.
Trend #4: More Near Prime Consumers will Carry a Credit Card
Near prime consumers are expected to increase their origination share to 19.1% in 2019, up from 18.3% in 2018.
Americans repaid $40.8 billion in credit card debt during Q1 2018 – the second-largest quarterly payoff ever. But we added almost $38 billion back to our tab in Q3 and Q2 2018. We also began the year owing more than $1 trillion in credit card debt for the first time ever, after adding $87.3 billion to our tab in 2017.
Single women own considerably more homes than single men do. On average, single women own around 22% of homes, while single men own less than 13% of homes.
Oklahoma City was the metropolitan area where single men own the largest share of owner-occupied homes, at 16%. Even though single men own a greater proportion of homes in Oklahoma City than they do elsewhere in the country, they still own fewer homes than single women, who own 24% of residential properties in the area.
New Orleans was the metropolitan area where single women own the largest share of owner-occupied homes. In this area, single women own nearly twice as many homes than single men do: 27% compared with 15%.
The OCC’s quarterly metrics report, released Tuesday, showed continued improvements in credit quality of mortgage loans at banks. But it also noted that the report is based on $3.26 trillion in principal balances, representing 32% of all mortgages in the U.S. Ten years ago, that figure was $6.1 trillion in mortgage balances, representing 60% of all outstanding mortgages.
Subprime personal loan balances have been climbing since 2014 and are forecast to increase 20% next year, to a record $156.3 billion, according to credit-scoring firm TransUnion. The last three months of this year will be the biggest quarter ever for origination, accounting for some 5 million loans.
San Francisco-based Affirm, founded by PayPal co-founder Max Levchin, is one of the leaders in point-of-sale loans and is available at more than 1,200 US retailers. The company says its lending process allows it to approve far more applicants across the credit spectrum than traditional lenders.
Payday lending has also increased. These days, this type of high-interest, short-term debt often takes place online through installment loans. San Francisco-based LendUp is an example of the new breed of payday lenders, charging annual percentage rates that can range from 30% to more than 1,300% depending on the type of loan, according to a report by NerdWallet.
Digital banking platform Good Money just raised $30 million in a Series A funding round to continue developing its app.
Led by Michael Novogratz’s Galaxy Digital (via its Galaxy EOS VC Fund), participants in the funding round included Breyer Capital, Blocktower Capital, Boost VC, Ken Howery, BlockChange Ventures, Cross Culture Capital, Troy Carter, Mitch Kapor, Peter Diamandis Blake Mycoskie and Justin Rosenstein, among others.
Personal safety is a real concern Americans have about the sharing economy, according to a new survey commissioned by insurance company Lloyd’s.
The sharing economy includes companies that use data and develop platforms to connect people, including ride-sharing services like Uber and Lyft, apartment and home lending sites like Airbnb and VRBO, as well as peer-to-peer lending, reselling, co-working, and freelancing sites, per Forbes.
The analysis showed that 60 percent of American consumers believe they are putting their personal safety at risk by using sharing services because it means interacting with strangers, and 58 percent think that the risks outweigh the benefits.
Admiral Realty Capital’s new private placement, Fund V, is engaged in providing financing to Puainako Heights Land Investment, the master-developer of a subdivision on the Big Island with over 330 single-family homesites. The offering is featured on the Boston-based crowdfunding platform Investors’ Harbour.
Different than most existing crowdfunding platforms, Investors’ Harbour does not feature an avalanche of small “fix-and-flip” projects handled by real estate enthusiasts. With a very low acceptance rate, Harbour only hosts larger-scale construction programs, conducted by commercial development firms with admirable track record.
Bloqboard – a non-custodial digital asset lending platform for collateralized loans originated, settled, serviced, and managed on the Ethereum network and powered by Dharma and Compound – has today announced the release of a new feature they call ‘Offers to Lend’. This provides lenders with the ability to offer prospective borrowers their cryptoassets for peer-to-peer loans issued on the Dharma protocol.
Blockchain enabled payments company Wyre today announced a partnership with bZx, the protocol that powers decentralized margin lending. bZx will incorporate Wyre’s KYC/AML solution for DEXs to offer compliant trading.
Digital business bank Tide has reached 56,000 SME customers, accounting for one per cent the UK’s 5.6m SMEs. The bank has more than doubled the number of customers using its services in the last 12 months.
OakNorth – the bank for entrepreneurs, by entrepreneurs – has today announced that it will be expanding its lending operations to Manchester to deal with increasing demand for its loans across the North of England.
Founded in 2015 with £1m in funding, Onedox helps people manage household bills and expenses by allowing them to connect their different accounts including gas, electric, internet, mobile, and insurance. The service – which is free of charge – allows users to stay on top of their bills while receiving personalized recommendations for saving money by switching to new providers.
China Lending Corporation has announced the launch of its new supply chain financing services, which include a business factoring program.
In addition, China Lending has acquired 98.04 percent equity interest in Hangzhou Zeshi Investment Partners, which will enable China Lending to launch its new supply chain financing services in the near future, including financing products design, related corporate financing solutions, investments and asset management, and more.
China’s financial technology, or fintech, sector, has suffered this year due to a slowing economy and stricter financial regulation. In the peer to peer lending sector, hundreds of firms have shut down due to inability to comply with regulations or insolvency. So, what can we expect from this industry in the near future?
The company offers the highest loan-to-value ratio in the entire industry – up to 80%. And, unlike its competitors, it accepts five of the top cryptocurrencies as collateral, including Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Ripple. Short-term loans are available at a low interest rate of just 2.5%.
THE ability for small businesses in Northern Ireland to access alternative forms of finance has become a vital factor in their successful growth, the head of a Belfast accountancy firm insists.
Since the financial crash and credit crunch, the funding void left by traditional lenders has been filled by boutique funders and alternative finance, which can allow SMEs to access finance for a variety of different needs, from long term investment through to funding for short term working capital.
Klarna announced today that they are among the first payment service providers to join the Shopify Plus Technology Partner Program, focusing on high-growth and high-volume merchants. This integration will allow merchants in Germany, the UK and the US to easily implement Klarna’s smoooth payment suite and offer a superior customer experience and thereby unlock additional growth potential.
In a press release on Tuesday (Dec. 11), Cred revealed the rollout of its developer platform CredX (not to be confused with the new credit card accounts payable solution recently launched by Finexio). The Crypto-Lending-as-a-Service (CLaaS) solution enables other crypto companies — including exchanges, crypto wallets or mining services — to integrate Cred’s lending functionality into their own solutions. Its set of application program interfaces (APIs) enable businesses to use crypto as collateral to access corporate financing products.
Communication and Informatics (Kominfo) Minister Rudiantara said the ministry had shut down 400 financial technologies (fintech), consisted of sites and applications, related to fraud cases on online loan services that are recently rampant in Indonesia.
The Indonesian Fintech Joint Funding Association (AFPI) asked the Jakarta Legal Aid Institute (LBH) to open the identities of 25 peer to peer (P2P) lending organizers or registered online loan services that are said to have made violation.
South Korean fintech Toss has raised an $80 million funding round led by US-based firms Kleiner Perkins and Ribbit Capital, with participation from Altos Ventures, Bessemer Venture Partners, PayPal, and Qualcomm Ventures, among others. This brings Toss’ valuation to $1.2 billion, making it the latest fintech unicorn globally, and Korea’s first.
Toss started out offering peer-to-peer (P2P) payments, but has since added other services —including insurance, investments, savings accounts, credit score management, and a financial dashboard that allows users to see all of their finances in one place — by partnering with third parties. Toss already has 10 million registered users, meaning it reaches around 20% of Korea’s population with its services.
“A lot of the traditional models are not applicable to onboard those people into financial systems,” says Sarah Zhang, co-founder of Singapore-based Points.
That’s where Points – also called PTS – picks up the slack. Founded last year, the blockchain-powered startup uses AI and big data to assess factors like an individual’s occupation, bill payments, and shopping activities to calculate a credit score.
Brazilian fintech Nubank has launched a debit function for its card offering as well as the ability to withdraw cash from ATMs, in a move that aims to extend its reach to as many as 120 million customers.
The startup created in 2013 and valued at over $4 billion
News Comments Today’s main news: Prosper qualifies borrowers up to $40K. GreenSky completes largest fintech IPO of the year. RateSetter hits $2.5B in lending. Lebashe increases RainFin stakes to 75%. Today’s main analysis: Peter Renton’s quarterly MPL results. Today’s thought-provoking articles: Alternative loan customers may perform well on traditional credit products. Banks, credit unions, and alternative lenders. How Ashton Kutcher […]
Prosper raises loan limits to $40,000 per borrower. AT: “Previously, Prosper loaned up to $35,000. While this isn’t a big leap, it does increase the size of Prosper’s target market, and with increased competitiveness in this arena, that’s important.”
There is a lot that sets GreenSky apart from many of the fintech companies that exist today. The biggest differentiator is that the company is profitable and runs a high margin business. In fact, the company has been profitable for the last five years. They reported $139 million in net income on revenues of $326 million last year. They also have a highly differentiated, boots on the ground model to originating loans, empowering contractors to offer financing to homeowners at the point of sale. They also partner with other types of merchants to offer financing. GreenSky only holds a small portion of loans on their own balance sheet with most loans being funded through around 15 bank partners.
Two-thirds of consumers active in the alternative loan market fall in the subprime risk category, the riskiest of all credit tiers. Yet, a new TransUnion (NYSE:TRU) study found that many of these consumers perform well when opening traditional credit products such as credit cards, auto and personal loans.
TransUnion studied over five million consumers who originated a traditional credit product between Q2 2015 and Q1 2016 and measured their performance 12 months after originating the loan. Of the over five million consumers, approximately 450,000 (or 8%) were present in TransUnion’s alternative lending database. TransUnion then compared the performance of the alternative loan population to those consumers who were not seeking or did not possess an alternative loan product.
The study corroborated that many alternative loan borrowers do present greater risks on traditional loans. However, there is a material subset of this population that would present reasonable risks on an auto loan or credit card, among other traditional products.
For instance, in the near prime risk tier (consumers with a VantageScore 3.0 credit score of 601-660):
Approximately 14% of those borrowers who possessed only one short-term loan went 90 or more days past due on a traditional account 12 months later.
The delinquency level declined to less than 12% when a consumer possessed two alternative loans.
The delinquency figure dropped even further to around 9% when a consumer had eight or more alternative loans over the course of seven years.
Near Prime Consumers with Strong Alternative Loan Payment History Perform Better on Traditional Loans
Due in 12
Comparing Origination Activity of Alternative Loan Borrowers to the Rest of the Population
Approximately 26% of alternative loan borrowers who originated a traditional loan product in the study opened an auto loan and 50% took out either a personal loan or auto loan. This latter statistic compares favorably to the 37% origination rate for the rest of the population in the study.
From a supply perspective, traditional finance companies are providing by far the most loans to alternative lending consumers, with a market share of 59%. However, credit unions (9%) and FinTechs (3%) supply about 12% of such loans to this credit population.
FIS found that more than one-quarter (27%) of small businesses in the U.S. are using alternative lenders like these. Among Millennial business owners, that percentage is double (48%). And yet only 7% say they are using these platforms for lower interest rates; in most cases, banks and credit unions offer better rates. FIS also found that small businesses have been turning to non-bank financial apps to make B2B payments.
In research conducted by ath Power Consulting, two-thirds of small business owners said they would consider switching to a competing banking provider if it offered products and services to help them better manage and grow their business, and over half (54%) would consider switching to a non-bank alternative for the same reasons.
San Francisco startup Seed is a free mobile-only banking service for small businesses, who can get a checking account and a debit card through Seed’s partnership with The Bancorp and have access to bill payment, mobile check deposit and ACH and wire transfers. Seed is sort of like Mint and QuickBooks except that Seed directly partners with a FDIC-insured bank (like how Simple started out). There’s not a physical checkbook in sight.
My preliminary return of 4.70% is close to where it was last quarter but still down. I don’t expect my final Lend Academy P2P Fund return to increase this number so I am still stuck in the downward trend of returns.
My six original accounts at Lending Club and Prosper have all been open for at least six years so they are very mature accounts that have experienced several turns of capital as I have kept reinvesting over the years. The returns for the past year are still bad at 2.34% as I continue to pay for poor underwriting performance in 2015 and 2016 at both companies. When you see today that you can get 3% on a 10-year Treasury Note a sub 3% return is just not acceptable for an unsecured consumer loan.
San Francisco-based SoFi said a downtown San Francisco office it picked up this year through an acquisition is paying an unexpected dividend: greater interest from engineers that the fintech wants to hire.
SoFi has 44 engineers at the company’s downtown San Francisco office at 222 Sutter St, consisting of almost 15,000 square feet on one floor. Another 40 or so employees float between SoFi’s downtown office and Presidio headquarters.
A lot of venture funds try to optimize for returns. They run complex ratio economic models to determine what their diluted value will be at the end of the life cycle of the optimal and non-optimal case of every given company.
What I look for in founders
I don’t have a magic formula, but there are four important factors that must all check out for me to invest in a founder.
Fed Vice Chairman Randal Quarles, the U.S.’s most influential banking watchdog, is monitoring the potential for disruption to the industry and has expressed concern about how tech companies could provide financial services outside of regulators’ oversight, according to people who’ve spoken with him privately. Quarles hasn’t yet made any moves to intervene and the Fed’s influence would be limited.
Should the Fed get involved in the debate, it could be welcome news for traditional banks, who view Amazon and other technology companies as potential threats that enjoy fewer regulatory constraints. The companies are increasingly encroaching on lenders’ business, as evidenced by Amazon’s recent interest in offering a product akin to checking accounts.
Securing vehicle financing in advance can save car buyers both time and money on their car-shopping journey. With this in mind, Autotrader and Kelley Blue Book, both Cox Automotive companies, have teamed with LendingTree. LendingTree’s auto finance marketplace provides each site’s visitors simple and easy online financing that can be used for new and used cars and trucks, anywhere in the United States.
When Liz Pagel and Matt Komos began analyzing a slew of alternative credit data gathered by FactorTrust, an alternative credit bureau TransUnion acquired last year, they sought to understand the behavior of consumers who use payday loans, pawnshop loans, auto title loans, rent-to-own arrangements and “buy here, pay here” credit.
But 12% turned out to be prime and super prime. Only 3% were unscored.
The researchers then looked at what other credit these short-term borrowers have and found 75% have traditional credit, too.
New legislation passed by the House of Representatives would relax restrictions on thousands of smaller lenders, potentially opening up the spigot for developers seeking commercial loans. The bill, which is awaiting President Trump’s signature, would remove provisions of the 2010 Dodd-Frank Act that many community and regional banks had deemed too costly and unfairly burdensome.
OppLoans is an online lender that uses a data-driven credit-scoring algorithm to provide loans to consumers who can’t access credit from traditional institutions. OppLoans is one of the fastest-growing tech companies in Chicago and has been named to the Inc. 500 two years in a row.
Today Fundbox, a leader in credit and payments for small businesses serving other businesses (SMB2B), announced that it has been selected as winner of the “Best Overall Business Lending Company” award by FinTech Breakthrough, an independent organization that recognizes the top companies, technologies and products in the global FinTech market today.
“We are delighted to recognize Fundbox for one of our program’s marquee awards, the Best Overall Business Lending Company award, an uber-competitive award category for our program with many compelling companies nominated,” said James Johnson, Managing Director, FinTech Breakthrough. “Fundbox stood out from the competition with its artificial intelligence-based underwriting platform. By fully automating the underwriting process with a data-driven risk model, Fundbox promises to underwrite faster, more cost-effectively and with greater accuracy than many other lenders – opening up lending possibilities for more customers. Congratulations to the entire Fundbox team for their industry recognition with our 2018 FinTech Breakthrough Award distinction.”
ArchOver, the peer-to-peer (P2P) business lending platform, is helping British investors make the most of their annual tax-free allowance with the launch of its Innovative Finance ISA (IFISA). ArchOver’s IFISA service offers investors premium credit control and security, proven by ArchOver’s no-loss rate. It allows investors to invest directly in successful businesses, earning tax-free interest of up to 10% p.a. – far more than the average return on a cash ISA.
PEER-TO-PEER lending platform ThinCats has appointed two new sales and marketing executives, as its hiring spree continues.
The alternative finance specialist has named Tony Smedley (pictured) as head of sales operations, and Richard Wilson as head of marketing, as part of a new push to “ramp up the provision of vital funding for small- and medium-sized enterprises (SMEs).”
China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE:XRF), operator of one of China’s largest consumer lending marketplaces, today disclosed preliminary financial results for the first quarter of 2018.
The Company expects to report a net loss in the range of $25 to $30 million, the majority of which consists of approximately $16 million of one-time expenses: 1) non-recurring expenses associated with preparing for registration; 2) write-offs related to receivables and amortizations; 3) non-cash accounting charges related to adoption of the new GAAP standard for revenue recognition (ASC 606); and 4) one-time costs associated with a pilot funding program that was discontinued due to regulatory changes.
In the first quarter of 2018, Yirendai facilitated RMB11,956.7 million (US$1,906.2 million) of loans to 174,128 qualified individual borrowers through its online marketplace, representing a year-over-year growth of 65%; 23.1% of loan volume were generated by repeat borrowers who have successfully borrowed on Yirendai’s platform before; 72.5% of the borrowers were acquired from online channels; 100% of the loan volume originated from online channels was facilitated through mobile.
In the first quarter of 2018, Yirendai facilitated 214,231 investors with total investment amount of RMB11,427.6 million(US$1,821.8 million), 100% of which was facilitated through its online platform and 95% of which was facilitated through its mobile application.
In the first quarter of 2018, total net revenue was RMB1,592.7 million (US$253.9 million), an increase of 56% from prior year; net income was RMB278.9 million (US$44.5 million), a decrease of 21% from prior year and adjusted net income in the first quarter of 2018 was RMB668.5 million (US$106.6 million), an increase of 91% from prior year.
A financial planning manager in a major Shanghai bank branch points to a flickering computer screen displaying a list of wealth management products for customers wanting a higher yield to normal deposits.
For a deposit of 100,000 yuan ($20,600), he recommends a “low risk” product with an interest rate of 4.25 per cent over one year. Alternatively, the customer can opt for a riskier 4.75 per cent yield but there is no guarantee they will get any of their money bank. The customer is advised to act fast as yields are falling rapidly following closer government scrutiny of China’s savings products since March.
Robo.cash’s research shows that Millennials are steadily taking over the leading position from the older generation of investors. Six months ago, the average age of investors of the platform was 38 years, and the age groups were distributed as follows: Silent generation (73-90) — 0.8%; Baby boomers (54-72) — 9.5%; Generation X (38-53) — 38.6%; Millennials (22-37) — 50.3% and Generation Z (18-21) — 0.8%. Today, the typical investor has grown younger to 37 years old due to the increased share of Millennials — 53.9% and Generation Z — 1.8%.
Future Finance, a Dublin-founded student loan specialist that recently secured €40 million in funding, has signed a £100 million (€114 million) debt facility.
The deal with alternative asset management firm, Waterfall Asset Management, which includes an option to participate in a further £150 million (€171 million) extension, will enable the company to grow its student lending business further.
Business financing has always been a thorny issue for many small and medium-sized businesses (SMBs), and is often cited as one of the reasons behind the morbid failure rates for new businesses. One report found that about 29 percent of failed businesses identified the lack of working capital as a major reason for failure, second only to the lack of market demand for their products or services.
Here are a few specific ways the blockchain can be used to bolster funding for SMBs.
1. P2P lending
The blossoming crypto market is also helping fan the flames of disruption for P2P business lending. Earlier this month, Ripple, the company behind the third-largest cryptocurrency, XRP, announced plans to push the use of XRP into other industry segments outside of P2P payments and banking, including the P2P lending industry.
2. Using blockchain and big data to improve existing systems
Wish Finance, a blockchain-based lending platform for SMBs, is using the blockchain to help improve traditional risk scoring systems while providing a simple platform for repayments.
3. ICOs and SMB funding
But as investors become wiser and as trust becomes a permanent feature of the blockchain, there’s a growing opportunity for SMBs with solid business models to cash in.
Johannesburg-based Lebashe will boost its holdings in RainFin by 24% to 75% for an undisclosed sum, the company said in an emailed statement on Thursday. RainFin, the largest peer-to-peer lender in South Africa, bought back the 49% held by Barclays’s South African unit, with Lebashe acquiring its 51% stake in February last year.
Singapore’s sovereign wealth fund GIC completed at least 11 private equity deals in the first quarter of this year, making the $344-billion fund the most active Asian PE investor during the period.
GIC joined other investors in sealing two of the biggest investments of the quarter, according to a PitchBook report. It participated in the $5.5-billion buyout of Denmark’s Nets A/S by partnering with private equity firm Hellman & Friedman, and in the $2.5-billion investment in FirstEnergy in January.
News Comments Today’s main news: How Funding Circle wants to fix the financial system. VPC Specialty Lending, Ranger Direct see dividends move up. Klarna triples net profit, mainly in Nordic countries. Today’s main analysis: International P2P lending volumes. Today’s thought-provoking articles: Can Seed solve banks’ digital onboarding issues? How banking institutions can decentralize (The best read of the day). Institutional […]
Seed wants to solve banks’ digital onboarding issues. AT: “I doubt that Seed, or any neobank, can save brick-and-mortar banks. This is an issue that traditional banks have to solve for themselves. Of course, the solution may be to partner with a tech company like Seed that can provide for banks what they can’t provide for themselves.”
International P2P lending volumes for February 2018. AT: “The big growth this month came to Landbay, Lendix, Mintos, Toborrow (229% and 245% vs. previous month and last year’s month, respectively), and MytripleA. Big losers include ArchOver, Loanbook Capital, MoneyThing, ThinCats, and Proplend (100% and 100%).”
Since 2014 the neobank Seed has been reimagining one of the sleepier areas of banking: deposit accounts for small businesses.
Rather than walk into a branch — Seed, of course, has none — yoga instructors, food truck owners and other would-be customers can apply for accounts in less than five minutes on the startup’s web or mobile app. If approved, they receive a business debit card in the mail.
Now Seed, led by veterans of the fintech Simple, is selling banks software to help them solve one of their most pressing problems: finding a way to open accounts online as branch transactions continue to decline.
Since its launch in January 2016, Sacramento-based startup Magilla Loans says it’s originated more than $5 billion in loans and is changing the way lenders connect with borrowers. The platform can shrink into a few days what can often be a weeks- or months-long process of loan applications, data submissions and waiting just to get a loan term sheet.
Validus Specialty Underwriting Services, Inc. (Validus Specialty) announced on Thursday a comprehensive package policy specifically designed for private U.S. fintech companies. According to the company, the solution is designed to address Fintech’s complex risk management needs, which are traditionally underserved by incompatible and inadequate policy forms.
Last year, marketplace lenders learned that maintaining diverse sources of funding is just as important as managing the credit risk in their loans.
LendingClub, Marlette Funding and others developed their own securitization platforms, rather than relying on whole-loan sales to large investors. They also invited some of these investors to contribute seasoned loans to collateral pools for these in-house deals.
Geopolitical events are the most worrisome prospect on the minds of the decision makers at institutions looking ahead to 2018. The percentage of respondents who believe such events will have a negative impact this year is at 74%. The second most worrisome? Asset bubbles (65%).
More than three fifths (63%) of those surveyed said that the growth of passive investing has increased systemic valuation risk: 59% believe that flows into passive strategies artificially suppress volatility.
In 2015, Natixis found that 64% of institutions said they were upping their investments with active managers. In 2016, that number rose to 67%. In the latest survey it rose again, to 68%.
But Square Pie had sold bonds on the Crowdcube platform, offering lenders 8% a year. It illustrates why so many people are suspicious of mini-bonds (debt issued by small, retail-orientated firms). Anyone thinking of lending to just the one relatively new business has to be aware of the risks – and then ask: is 8% enough?
A more diversified option
The latest offering in this category comes from a platform called Goji, which aggregates a variety of direct-lending and peer-to-peer (P2P) platforms. It has just brought out a Renewables Lending Bond, which pays out anything from 5.5% for a three-year term (with regular income) to 7.6% over five years, where the interest is rolled up at repayment. The underlying assets are provided by a direct lender called Prestige Group, which lends to clean-energy projects.
The book of loans – around 39 – has an average duration of four years, with a typical loan-to-value ratio of between 70% and 80%.
More than half (58 percent) of homeowners are planning to spend money on home improvement projects in 2018, according to the fifth annual LightStream Home Improvement Survey. LightStream is the national online lending division of SunTrust Banks, Inc. (NYSE: STI). Budgets for renovations are on the rise: among homeowners planning renovations, 45 percent will spend $5,000 or more — an all-time survey high. Those planning to spend $35,000 or more doubled from 2017.
The survey shows robust enthusiasm for renovation, as well as a thoughtful desire to balance a home’s needs and the homeowners’ budget, so they have the financial confidence to move forward. Specifically, the survey revealed the following trends:
Home “Sweat” Home The majority of homeowners plan to invest sweat equity, as 65 percent say they’ll do at least some of the work themselves. The 18-34 group is particularly fond of do-it-yourself projects, with 70 percent planning to work on at least a portion of their renovation.
Staying — and Aging — in Place Only seven percent of homeowners are renovating to prepare their homes to be sold, the lowest percentage since 2015. Instead, 14 percent of homeowners across all age groups — not just baby boomers — are citing “aging in place” as a reason for making a home improvement. Even respondents aged 18 to 34 (11 percent) and 35 to 44 (10 percent) say they’re renovating “to prepare my home so I can stay in it as I get older.”
Tax Reform Boosting Budgets With recent passage of tax reform, homeowners have already begun calculating how the changes might affect what they spend on home improvements. One in four homeowners who have set a budget for renovation projects stated that tax reform has had an impact, with 18 percent increasing their budget and seven percent decreasing it.
Paying for Projects
The majority of homeowners (62 percent) plan to pay for projects, at least in part, by using savings. Additional payment strategies were further revealed. Intent to fund through home equity lines of credit (HELOC) jumped from 10 to 13 percent. “U.S. economic growth and limited housing inventory have contributed to healthy home equity gains,” said Ellen Koebler, SunTrust head of consumer solutions. “HELOCs can offer a financial solution for many homeowners, as accrued value may be available to tap for renovations.”
At the same time, the percentage of people intending to use a home improvement loan has grown 29 percent from 2017 with 54 percent more 18- to 34-year-olds planning to fund projects through home improvement financing.
To help identify FinTech products that may improve the financial health of underserved populations in the U.S., the Financial Solutions Lab (FinLab) launched its fourth annual $3 million challenge. The lab focuses on products that meet the financial needs of overlooked populations, JPMorgan Chase said in an announcement.
Kwittken signs up Laurel Road, online lender of student loans, personal loans and mortgages. Aaron Kwittken’s firm will be responsible for raising awareness of the company’s products through content marketing, brand activations, thought leadership and traditional media relations. Laurel Road, which is part of Darien Rowayton Bank, recently surpassed $3 billion in student loan originations.
“When we think about the people we hire, it’s all about energy,” says Funding Circle co-founder James Meekings. “We want staff to share their excitement about what they do with others in the office – even if they’re talking about tax.”
“Even though we now have 800 employees, we still feel like a small business. We still push for opportunity and for people to be creative.”
Innovative finance Isas (IF Isas) offer the promise of a good return, sheltered from tax, to investors willing to take on the higher risks of the peer to peer (P2P) finance market.
The market has taken longer than expected to ignite, however, as providers struggle to match growing demand with limited supply. Many new investors will find the door shut, at least for now.
Growing consumer indebtedness in the UK combined with the prospect of rising interest rates could push up default rates on loans, sharpening the dangers for those invested in the highest-risk P2P products.
For the tax year 2017-18, the maximum amount you can pay into one – or a combination – of Isas held in your name, is £20,000.
Once the new tax year for 2018-19 begins on 6 April, your allowance resets – once again to £20,000.
There are five main types of Isas. The current annual limits are as follows:
Help to Buy Isa: Money can only be used to buy your first home, and savings receive a government bonus of 25%. You can save £1,200 in the first month, then £200 per month thereafter. Therefore, in the first year you will have a limit of £3,400. In the following years the limit will be £2,400.
Lifetime Isa: Expressly for first-time buyers or to be used in retirement once the account holder has reached the age of 60. There’s a 25% government bonus on savings up until the account holder is 50 years old. You can pay in up to £4,000 per year.
Cash Isa: A traditional savings account – money you pay in grows with the provider’s interest rate. You can pay in up to £20,000.
Stocks & shares Isa: Money you deposit is invested in stocks & shares by the provider. Returns can be higher, but so is the risk that you may end up with less money than you paid in. There will also usually be fees involved for managing your investments. You can pay in up to £20,000.
Innovative finance Isa: Money paid in is invested in Peer-to-Peer (P2P) lending platforms, and you receive the interest when this loan is repaid. There is also some risk involved. You can pay in up to £20,000.
The Swedish group posted a 27 per cent increase in revenues to SKr4.53bn ($546m) while net profit more than tripled to SKr346m. Klarna processed about €18bn in online transactions last year, an increase of 42 per cent.
As a result, 89,000 retailers globally now use Klarna products, this represents a 20% growth compared to the previous year. Available in 14 countries, retailers are increasingly adopting Klarna solutions which makes the payment processes as smooth as possible for consumers. As a result of the surge in retailer adoption, Klarna now handles 10% of all online payments in Northern Europe.
Decentralized banking is a term that has been construed in the wake of the cryptocurrency boom.
Cryptobanks are decentralized platforms that provide the usual services that centralized banks provide, primarily lending services and credit scoring, but essentially cuts out all of the middlemen that a centralized bank uses. The people needed in a bank to approve loans and structure financial data are replaced in a crypto banking ecosystem by smart contracts and p2p, peer-to-peer, services.
What kind of technologies do crypto banks use?
P2P, Blockchain, cryptocurrencies, Machine Learning, Big Data and smart contracts are used in crypto banking.
Machine Learning Big Data.These technologies help to automate the lending process and cut through bureaucracy. AI can work 24/7 and match lenders with borrowers.
Do crypto banks have their own native currency?
Yes. Native cryptocurrencies help make the bank global.
Datarius, the first social p2p crypto bank, for instance, uses their own native token DTRC for all transactions. This helps create a standard for a global payment system within the p2p lending process.
What is social lending?
Thanks to Big Data and AI, crypto banks can see beyond a borrower’s credit score to identify their level of trust. Listings can include Trust Limit, Trust Management and User Ratings which helps AI decide if the participant is justified in borrowing from a specific lender.
The entrepreneur’s strategy for achieving this can be summarized in three stages. The first consisted of bypassing the banking monopoly on his platform using “cash vouchers,” a tool dating from 1937 that had long been forgotten. They allow personal loans to be made without a bank as intermediary. Secondly, by collaborating with future competitors, the public authorities and the sector’s regulators(2), the entrepreneur contributed to the development of a long-term crowdlending regulation in France. This collaboration relies on the creation of a meta-organization(3) called “Financement Participatif France” (FPF), which worked to define the status of “Intermédiaire en Financement Participatif” (IFP, equivalent to “crowdlending financing intermediary” in English), which regulates this new market.
Smartag International, Inc. entered into a joint venture agreement with PT. Supratama Makmur Sejahtera (“PTSMS”), an Indonesian Fintech company to form a Joint Venture Indonesian PMA company in which Smartag will own 51% equity and PTSMS will own 49%. This follows an earlier MOU signed on October 12, 2017 between PTSMS and PT Rijan Dinamis Selaras (“RDS”) representing Pondok Pesantren Riyadhul Jannah Pacer Mojokerjo, founder of Consultative Assembly of Indonesian Boarding Schools which has a network of 28,000 boarding schools to undertake a Fintech project (the “Indonesian Project”).
News Comments Today’s main news: SoFi Professional Loan Program hits $720M on first offering. Roofstock reaches $1B in transactions. When Zopa will open to new investors. PPDai to invest in research. Linked Finance sees profitability. Revolut launches geolocation-powered travel insurance. Harmoney partners with DataRobot. Today’s main analysis: The most and least competitive homebuyer markets. Fundrise or Vanguard: Which is the better investment? […]
Why open banking, cybersecurity need each other. AT: “This could not have been better stated. In the U.S., Europe, or anywhere in the world, if banks are to use APIs to share data with other financial service providers, cybersecurity has to be concern No. 1.”
In this latest program, three portions of senior Class A notes worth $677.3 million will be issued. Of that figure, one $55 million Class A-1 portion is mostly secured by floating-rate loans, and it has a variable-rate interest rate, which will be calculated based on one-month Intercontinental Exchange London Interbank Offered Rate (LIBOR).
Fixed-rate student loans will mostly back the $358.5 million in Class A-2A notes, as well as the $236.8 million in Class A-2 notes.
The industry’s desire for greater security and protection of customer data seems at odds with its desire for more open banking; by definition, open banking requires banks to share data with third party service providers.
“2017 has seen a resurgence in investor growth and confidence in online lending. ABS issuance is up about 83%. Execution spreads have tightened substantially. This performance is all on the ABS loan side but has not translated yet into the equity valuations. “
He added that he expects to see continued attention on credit performance in 2018 as they are still seeing normalization of credit performance.
He expects 30% growth in ABS issuance for next year while adding that PeerIQ underestimated the growth for 2017.
LendingTree, the nation’s leading online loan marketplace, has released the findings of its study on where homebuyers will face the fiercest competition to achieve their dream of homeownership in 2018.
LendingTree looked at 1.5 million purchase mortgage loan requests that came through the LendingTree marketplace in the 100 largest cities in 2017. The study ranks cities using three criteria:
The share of buyers shopping for a mortgage before identifying the house they want. Buyers with financing in place are more appealing to sellers and can compete with cash buyers.
Average down payment percentage. Having a higher amount of money saved for a down payment can enable you to borrow more money or be offered a lower interest rate, allowing you to make a stronger offer.
Percentage of buyers who have prime credit (above 680). Borrowers with higher scores have more financing options to make more competitive offers. The cities/markets below are ranked for 2018 using the criteria noted above, including the relative data used to determine the ranking along with the market’s overall rank from the prior year.
California markets dominate the top 10.
Six of the top 10 most competitive housing markets are in California. San Francisco and San Jose lead the rankings in 2018, with a vast number of credit-worthy and well-heeled borrowers making it one of the most challenging markets for prospective home shoppers.
Roofstock announced Thursday that the venture capital arm of Silicon Valley Bank had joined its latest funding round, bringing the property investing startup’s funding total to $42 million.
Gary Beasley, CEO: Roofstock is the first online marketplace created exclusively for buyers and sellers of cash-flowing, single-family rental homes that already have tenants.
Who are your investors, if any?
Roofstock has raised $68,250,000 to date, with a recent $35M Series C investment led by Canvas Ventures in October 2017. Other investors since Roofstock’s launch include Lightspeed Ventures, Bain Capital Ventures, Khosla Ventures, Hone Capital, QED Investors, Nyca Partners, and several angel investors.
We often get the question, “What makes a Fundrise eREIT worth investing in over the Vanguard REIT ETF?” It’s a fair question that we expected when we created the eREIT. The short answer is that Fundrise eREIT investments are lower in cost for investors than those of the Vanguard REIT ETF and also come with the potential for better returns — how our costs are lower than Vanguard requires a longer answer.
Some of the largest REITs in which the Vanguard REIT ETF owns shares are Simon Property Group(shopping malls, worth approximately $50 billion), Equinix (office buildings, worth approximately $34 billion), and AvalonBay Communities (apartment buildings, worth $25 billion).
Where public market investments rely on several financial organizations to perform various services from acquisition and development to offering diversified portfolios of REITs, Fundrise uses technology to consolidate these functions and reduce the number of intermediaries in the value chain.
The real estate investment trust designation of the eREIT does not equate the services or value creation offered by the eREIT with that of a public REIT — it simply allows Fundrise to pass at least 90% of the eREIT’s earned income to investors without paying taxes at the corporate level.
Fundrise investors can invest directly into an eREIT and only pay an 0.85% asset management fee at the eREIT level. Investors who want to diversify across multiple Fundrise investments, including eFunds, can do so through one of the investment portfolios. For example, rather than choosing one eREIT or more, investors can invest in the Starter Portfolio with a minimum investment of $500. For this service, investors are charged an investment advisory fee.
Chase, the US consumer and commercial banking business of JPMorgan Chase & Co, has become the first US national bank to partner with fintech company AutoFi to help customers select and finance vehicles through dealers’ websites.
The move comes after the bank’s research showed that nearly half of consumers would purchase and finance vehicles online if they had the opportunity.
ForUsAll, the technology-driven 401(k) advisor to small and mid-sized businesses, today announced it has reached $500m in retirement assets under management and secured $21 million in second round financing led by Ribbit Capital, a leading global investor in financial technology. Existing investor Foundation Capital joined the round, bringing the company’s total funding to $34 million. ForUsAll will use the funds to grow the company’s customer base, accelerate technology development and hire additional staff.
The Consumer Financial Protection Bureau is dropping a lawsuit against a group of payday lenders associated with an American Indian tribe in a sign the regulator is changing direction under Mick Mulvaney, the acting director appointed by the Trump administration.
The agency had accused the lenders of deceiving consumers and failing to disclose the true cost of the loans, which carried interest rates as high as 950 percent a year. The agency asked for the case in federal court in Kansas to be dismissed in a court filing on Thursday, giving no details about its reasoning.
The CFPB lawsuit had targeted four companies owned by the Habematolel Pomo of Upper Lake tribe.
Three leading South Florida real estate-related companies with robust real estate experience, deep capital markets relationships, and a proven track record of originating and servicing end-user loans have joined forces to provide senior mortgage loans to non-traditional real estate buyers. The joint venture, named Pebb Yale Truss Lending, (“PYT Lending”) is comprised of Pebb Capital, GPC Truss, and Yale Mortgage. Already the enterprise has commenced loan closings for approximately 20% of the units at Echo Brickell, a luxury condominium development by Property Markets Group (“PMG”) in Miami, FL.
Reality Shares Advisors and Amplify Trust ETF launched the first blockchain-based exchange-traded funds (ETFs) on Nasdaq and the New York Stock Exchange Arca today.
Both funds went live on their respective exchanges at 9:30 a.m. EST. Reality Shares’ Nasdaq NextGen Economy ETF (BLCN) opened at $24.20, while Amplify’s Transformational Data Sharing ETF (BLOK) started closer to $20.
Peer-to-peer lending – People who are risking to lend out money to strangers can create loan portfolios.
Equity crowdfunding – Equity crowdfunding has the most room for change in terms of how people invest their money.
Real estate crowdfunding
Human capital – If investors want to put in money on top athletes, there are crowdfunding available for this purpose. For instance, Fantex said it would offer an IPO on investments that track the brand value of top sports stars. Another crowdfunding site named Upstart provides money for college without piling on debt.
Here’s what Chicago’s fintech leaders are watching in 2018.
Which emerging technologies will have the biggest impact on the industry in 2018?
Security technologies around encryption and voice will start to take shape. Investor and consumer trust in the markets, credit and technology suggest people aren’t satisfied with the norm. There aren’t enough heuristics used to encrypt data at rest and in transit, and the emergence of unique voice pattern activation — led by Amazon and Google — will start to drive changes in the industry.
Which emerging technologies will have the biggest impact on the industry in 2018?
AI and machine learning continue to grab headlines, and for good reason: they have the potential to improve every aspect of business.
Which emerging technologies will have the biggest impact on the industry in 2018?
Luke Peeler, software engineer: Blockchain technology.
Traditional services used by the underbanked include check cashing, cash advance loans, and money transfers. Many view these services as overly expensive and behind the times, and an emerging ecosystem is leveraging fintech innovation to provide improved offerings. However, there’s a strong case made by industry researchers that the traditional, non-bank financial providers remain attractive to their customers, especially compared to the costs of a using a bank account.
Guidewire Software, Inc. (NYSE: GWRE), a provider of software products to Property and Casualty (P&C) insurers, today announced it has joined Plug and Play’s ecosystem to advance P&C insurance innovation and collaboration. Plug and Play is a global startup ecosystem and venture fund specializing in the development of early-to-growth stage technology startups in 12 verticals. Guidewire joins as a Corporate Partner focused on the Insurance vertical.
Victory Park Capital (VPC), an investment firm focused on middle-market debt and equity investments, announced today that Todd Kushman joins as a principal and head of capital markets. Kushman is based in New York.
Kushman will lead the firm’s capital markets initiatives, which includes optimizing and identifying new alternative investment product offerings.
BB&T, a US-based bank holding company, has decided to set aside $50m to invest in or buy emerging digital technology firms as part of its strategy to boost its competitive profile and trim operational expenses.
There was extensive media coverage in October of last year surrounding Zopa, the largest consumer-focused peer to peer lender in the UK, and when it will re-open its doors to new investors who have been waiting in the Zopa lending queue – some since early 2017. It’s the turn of 2018, and some members in the queue may be seeing signs of promise.
There are 26,000 people in the Zopa “wait list” (as of 9th January). With approximately 60,000 active customers, this influx will represent a 43% increase in lenders at the platform; impressive, given the time it’s taken the platform which was founded in 2005 to acquire its existing customer-base.
A new competition has been launched to get innovative startups using technology to help renters use this payments history as a record of credit worthiness. The idea is that a tool or service can be used by lenders and credit reference agencies as part of an assessment for a mortgage.
First announced in the Autumn Budget, the Rent Recognition Challenge is now open for entries, with a potential prize of £2m for fintechs working on this idea.
Six proposals will get £100,000 each to get started on a prototype between March and October, after which that will be narrowed down to three by a panel of judges with more cash up for grabs.
IFA firm Symphony is offering a white-label version of provider FinchTech’s non-advised robo-service to allow its clients to invest through its website without having to pay for advice.
For a platform fee of 0.25 per cent, investors are given access to four mainstream investment portfolios and four socially responsible investment portfolios via FinchTech, with equity/non-equity weightings ranging from a ‘cautious’ 35/65 split to the ‘adventurous’ 85/15.
Ignition Wealth Ireland is the European subsidiary of Australia’s leading digital financial advice provider Ignition Wealth. We assist large financial institutions integrating new technology into their current processes and systems and we help them to reimagine how their customers navigate the financial advice experience.
PPDai, China’s first online P2P (peer-to-peer) lending platform listed in the US market, said yesterday that it will invest 1 billion yuan (US$156 million) within three years to set up a new research institute.
The money invested in the new PPDai Smart Finance Institute will be used to fund artificial intelligence, blockchain, finance cloud and Big Data sectors, said Zhang Jun, co-founder and chief executive of Shanghai-based PPDai.
Linked Finance, the peer-to-peer (P2P) lending platform which has signed over 1,200 loans for Irish businesses, has said it is on track to be profitable this year.
The company, which is seeking to become the biggest non-bank lender to SMEs in Ireland, recorded a €1.1 million net loss in the 12 months to the end of April 2017, compared to a €1.2 million loss in the previous year.
Shareholders’ deficit amounted to €2.7 million at the end of the reporting period, as against €1.7 million a year earlier as accumulated losses increased from €2.2 million to €3.3 million.
As one Swiss economics journal put it, the most contentious conflicts (and partnerships) will be between “startups that are completely reengineering decades-old practices, traditional power players who are furiously trying to adapt with their own innovations and total disruption of established technology & processes”. That is to say:
Traditional Retail Banks vs. Online-Only Banks: Traditional retail banks will always retain the cachet of security and stability. Online-only banks, however, are asserting themselves more aggressively in claiming to offer the same services with higher rates and lower fees.
Traditional Lenders vs. Peer-to-Peer Marketplaces: P2P lending marketplaces are growing faster than traditional lenders—only time will tell if the banks strategy of creating their own small loan networks will be successful
Traditional Asset Managers vs. Robo-Advisors: Companies like Betterment feature robo-advisors offer lower fees and lower minimums; meanwhile, the larger traditional asset managers are creating their own robo-products while providing the kind of personalized attention for which high net worth clients are willing to pay quite generously.
Traditional Wealth Management vs. Automated Advice: a plethora of new software platforms and apps feature digital options, including mobile telephone payment services, automated wealth management advice, price comparison apps, tailored social media groups and crowdfunding systems. On the other side, the exclusivity of one-on-one attention is forever and very possibly will take on even more cachet as the somewhat sterile egalitarianism of digital banking erodes the cultural hierarchy of status.
Traditional Clearing Systems vs. Blockchain. This latter can store and distribute crypto-currencies (such as Bitcoin) and digital contracts (such as land deeds) without the need for banks or formal clearing systems. Proponents of Blockchain maintain that it promises “to reduce fees, improve security and bypass the volatility of central bank controlled fiat currencies”. Major technology firms such as Google, Amazon and Alibaba are also joining this trend.
Peer to peer fintech startup, CoinLoan, recently rolled out the first version of their peer-to-peer lending platform. Investors were thrilled with the results (try it for yourself here, and are eagerly awaiting the end of the ICO and listing on exchanges soon after.
CoinLoan has also recently enabled direct fiat investment in their ICO. This unique option enables investments of $5,000 or more in USD or EUR in exchange for CLT tokens.
CoinLoan has created a system of secured peer-to-peer lending, where borrowers deposit various crypto assets for a loan in their preferred fiat currency.
The Indian startup eco-system is looking forward to the union budget eagerly for addressing the tax dilemma. With high-quality entrepreneurs, good ideas and the very important funding ecosystem, startups have become an integral part of the India’s economic growth and job creation.
Both regulators and industry officials lack the right analytical and data skills to cope with the wave of disruption washing over the financial industry, according to the technology officers at leading financial companies at Thursday’s Nikkei Asia300 Summit in Singapore.
Jonathan Larsen, chief innovation officer of Ping An Insurance (Group) Company of China, said there are “definitely no” people with up-to-date skills among the regulators, which is slowing down the pace of change for traditional institutions.
News Comments Today’s main news: More LendingClub-IEG drama.Black Fish raises $145M.Moneygram partners with Ripple.Kreditech expands into India with Mambu. Today’s main analysis: JP Morgan Chase’s investments into digital technology.Is Yirendai undervalued? Today’s thought-provoking articles: Investors go into debt to buy bitcoin.Small business financing trends.How open banking could change how people manage money.Banks, trade finance, and […]
JP Morgan Chase teardown on digital technology. AT: “Besides Goldman Sachs and Citi, no other big bank is investing in digital technology like JP Morgan Chase. Whether their investments will make them a strong competitor in digital banking remains to be seen, but this is one area–at least, in the U.S.–that desires way more exploration and focus than it’s getting.”
Lending Club has all kinds of problems: a history of profit warnings, faint traces of scandal after a management upheaval almost two years ago, and a share price still more than 80 per cent adrift from its peak.
Add to that list: a bizarre, crypto-fuelled activist campaign waged by a Las Vegas-based payday lender called Paul Mathieson, who told authorities in his native Australia that he fled to America in 2008 because he feared being killed by a mobster.
Mathieson’s case for change at Lending Club, laid out in a letter to the company’s board on 2 January, is not a terrible one, on the face of it. He argues that the cost structure at the loss-making company, a pioneer in peer-to-peer lending, is “excessive,” noting fancy headquarters in San Francisco and “hundreds” of “excess” developers. He says that the board should consider a pivot to using its own balance sheet to lend, rather than acting as a broker, taking fees for matching borrowers with lenders. Underwriting has been sloppy, he says, resulting in sub-par returns to investors.
Mathieson is offering 13 shares in his own penny-stock company, IEG Holdings, for every share in Lending Club. At the time of the offer on Monday morning, that was a premium of 19 cents, or about 5 per cent.
IEG Holdings Corporation (OTCQB: IEGH) provides online unsecured consumer loans under the brand name “Mr. Amazing Loans” via its website, www.mramazingloans.com, in 20 US states. The company offers $5,000 and $10,000 personal loans over a five-year term at rates ranging from 19.9% to 29.9% APR. IEG Holdings plans future expansion to a total of 25 US states, which would cover 240mn people and represent approximately 75% of the US population.
Since 2013, IEGH has obtained additional state lending licenses, and they are licensed and originating direct consumer loans in 20 states including: Alabama, Arizona, California, Florida, Georgia, Illinois, Kentucky, Louisiana, Maryland, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon, Pennsylvania, Texas, Utah, Virginia, and Wisconsin. The Company was founded in 2010 and is headquartered in Las Vegas, Nevada.
IEG Holdings Plans to Create its own IEGH Crypto/Blockchain Currency Backed by Gold Metal and SEC Registration as a Security
IEGH announced that its wholly owned subsidiary, Investment Evolution Crypto, LLC (“Crypto”), is negotiating to purchase a gold project with gold metal in the ground and prospecting licenses. IEG Holdings plans to utilize a gold resource to investigate creating, through Crypto, and a joint venture with Investment Evolution Corporation, also a wholly owned subsidiary of IEG Holdings, its own gold metal-backed crypto/blockchain currency, and potentially offer loans and accept loan repayments in its own crypto/blockchain currency.
IEGH increases loan originations
The company stated that it provided $960,000 in new consumer loans through its online property mramazingloans.com, from the October 2017 to December 2017 period. This represented a 12.3% increase over its July to September 2017 operating period, during which the company’s new loan originations were $855,000.
Roughly 18 percent of people who buy bitcoin use a credit card to do so, according to a new survey by loan marketplace LendEDU. Of those, 20 percent have not paid off their balance. The phrase “buy bitcoin with credit” has been trending on Google for weeks.
Another problem with going into debt for cryptocurrencies is that people will have to pay back their debt before they see sufficient returns, said Erika Safran, founder of Safran Wealth Advisors. That may require tapping other resources, potentially creating further financial trouble.
Traditional bank loan rejections are notoriously high in all markets
Small Business Administration (and equivalent agencies) are nefarious for overextending the time-to-credit tolerances of small businesses
Volatility of markets, and exposure of almost all markets to disruption by startups could pose urgent cash needs for businesses, which are generally not considered for loan applications by traditional lenders.
Online Lending And Its Deepening Hold Over The Small Business Finance Market
In 2014, a Federal Reserve (US) survey concluded that one in five small business owners opted for loans from online lenders. Since then, the proliferation of online lending platforms has been on the surge, to the extent that traditional brick and mortar lending institutions have also had to move base to the online domain. In the coming years, multiple factors will result in the success and sustainability of online lending platforms. These include:
Growing confidence among small business owners to trust online lending platforms
Availability of cheaper, quicker, and more convenient loans
Options to truly personalize and customize the loan repayment terms to suit the business’ interests
The Call for Transparency in the Online Lending Market
Though the online lending market has been growing year on year, this doesn’t detract from the concerns around lack of transparency in the way some of these platforms operate. Some of the key concerns are around undisclosed APRs and hidden fees. In fact, some online lenders have been castigated for charging significantly high rates of interests from borrowers, often with service quality issues post-approval. Thankfully, there’s already some progress towards bringing a degree of regulation in place for online lending platforms to be at par with traditional lending regulations.
JPMorgan is making a bigger push into payments technology as digital banking becomes a strategic priority.
In 2016, the bank spent $9.5B on technology and Dimon has committed $300M alone to improve JPMorgan’s technology for its asset management products. Relative to its peer group, JPM claims the highest number of mobile banking customers and its Chase Mobile app currently sports a 4.7 (out of 5) rating in the App Store.
Earnings call analysis – Barclays, Bank of America, Morgan Stanley talking up digitization
JPM discussed continued digital consumer banking growth, which grew 6% in Q3’17.
Bank of America spent portions of its Q1’17 and Q3’17 talking about digital banking initiatives and technology investment. Specifically, CEO Brian Moynihan mentioned the bank spent $2.25B on technology initiatives in the first three quarters of 2017. The bank also now sees mobile devices account for 1 of every 5 deposit transactions.
On Morgan Stanley’s Q3’17 earnings call, Morgan Stanley CFO Jonathan Pruzan mentioned the bank is beta testing new customer-facing digital products it plans to launch, potentially in the robo-advisory space. Specifically, Pruzan noted: “When we think about our wealth business, it’s a business that’s built on scale. And it’s built on the fact that people with wealth want personal advice. So it’s going to be both a mix of technology and digital with the personal element of the advice channel. And we think that’s the winning formula going forward.”
Based on the data, JPMorgan ranks ahead of most bulge bracket banks when it comes to overall fintech investment since 2013, but behind its peers Goldman Sachs and Citi.
The Rise Fund, a private investment firm co-founded by the U2 lead singer, is making its first known bet on a fintech business by backing Acorns Grow Inc., said people familiar with the matter, who asked not to be identified because the details are private.
Oportun, a community development financial institution that provides small loans to individuals with little or no credit history, is planning to open 20 lending offices in Florida.
The Redwood City, Calif.-based lender said this week that it has already opened four offices in Miami and Hialeah and that it expects to add 16 more in the Sunshine State, primarily in South Florida, by the end of the year.
Convergence of Software and Financial Products One of the important lessons that Square taught the market is that bundles of software solutions (loyalty, POS, analytics, scheduling and many others) and lending are essential drivers in advancing growth of payment processing.
The Power of the Machines Companies like LendingClub are using machines to discover new relationships and patterns to introduce more tailored financial offers to their customers.
Emerging Economies Many growing companies in Africa, Asia, and Latin America are developing and adopting financial solutions, often faster and with more innovation than in developed economies.
The Internet giant is finally putting its many payments capabilities — Google Wallet, Android Pay and Pay with Google — under a single name, Google Pay, after lagging for years behind Apple Pay and Samsung Pay.
Fifth Third Bancorp has received top marks from the Federal Reserve on its most recent Community Reinvestment Act examination as expected.
Fifth Third announced the results on Wednesday, saying in a press release that the Fed gave it an “outstanding” rating on its most recent exam. The Cincinnati company had said in a regulatory filing last month that it expected to ace the test, which covered the period between Jan. 1, 2014, and June 30, 2016.
Roofstock (www.roofstock.com), the leading online marketplace for buying and selling leased single-family rental homes, today announced the strategic hire of Suresh Srinivasan as chief marketing officer. Srinivasan has 20 years’ experience leading marketing, product, and e-commerce functions at Fortune 500 and high-growth tech startups. Most recently serving as the SVP of Marketing for Xome, Srinivasan brings a deep understanding of the fast-growing real estate technology sector to Roofstock where he will be responsible for accelerating growth of Roofstock’s marketplace for single-family rental homes and developing the company’s partnership network.
Regulators in Europe and the UK are ordering banks and credit card companies to share customer data with other companies if their customers agree. The companies will also be able to carry out payments on a customers’ behalf.
Open Banking forces lenders to offer a digital “fire hose” of data that any third party can use to get standardised access — provided the startup is registered with the UK Financial Conduct Authority (FCA) and the customer agrees to share their data. They won’t have to negotiate deals with banks, just plug into their digital systems and go.
The aim of Opening Banking is to give customers greater control over their data and to encourage account switching.
ThinCats says 2018 is poised for growth. The online lender reports that December was a record month booking £12 million of funding listed on the platform followed the biggest-ever ThinCats-listed loan of £6.7 million to the Chelsea Yacht & Boat Company at the end of September.
Loan Store is the responsible lending hub that reveals to reduce the interest rates on instant cash loans for the UK people.
Hennery Dicosta, a senior adviser of Loan Store, has offered the complete details about this announcement. This is what he said- In a recent scenario, people usually try to borrow a small loan amount. That is why we have decided to provide the loans for bad credit people with no guarantor and no fees on an instant decision to resolve their short term emergencies. We never charge any processing fee and we are now providing these loans on quite low rates of interest. Besides, we do not judge the creditworthiness of the borrowers with their credit rating and give an instant decision on their loan request.
With that in mind, we asked three Motley Fool investors to each profile a company that has a low valuation now compared to its earnings-growth potential. They identified Yirendai (NYSE:YRD), Criteo S.A.(NASDAQ:CRTO), and Changyou.com (NASDAQ:CYOU) as strong contenders trading at attractive discounts.
China’s first P2P online lending platform
The Chinese P2P lending market blossomed in the late 2000s, catering to customers who were underserved by traditional banks, and is worth about $60 billion today.
Analysts expect Yirendai’s revenue and earnings to rise 74% and 14% respectively this year, followed by 43% revenue growth and 41% earnings growth next year. Yet the stock trades at just 14 times earnings, compared to an industry average of 26 for credit service providers. Based on those numbers, Yirendai looks likely an undervalued growth stock.
First, Yirendai is a subprime lender. Just 1.7% of its loans were rated as prime “Grade A” last quarter. Another 8.7% were Grade B, and 14.1% were Grade C — but 75.5% were rated Grade D. Yirendai collects higher fees from lower rated borrowers, but its business could collapse if its delinquency rates rise.
The company only discloses delinquency rates for loans past due by 15 to 89 days, and that rate came in at a low 1.8% last quarter. But it doesn’t report any data on loans delinquent for over 90 days.
Black Fish, a consumer finance platform based in China’s Nanjing region, has received $145 million in a series A round from a cluster of firms including Lightspeed China Partners and Shanghai and Kuala Lumpur based Gobi Partners.
Others who participated in the round include Morningside Venture Capital, JAFCO Asia, Fullcent Capital and Zhang Tao, founder of Dianping.com.
At this point, the average annual growth rate of consumer finance is 16.4 percent.
Renren holds a significant investment portfolio that is easily worth $12 per share. This value will likely be realized in the near term due to multiple catalysts.
The company has started to get involved with blockchain-related businesses, which potentially turns them into a “blockchain play”.
This situation leads to an asymmetrical payoff structure in which there is very little downside and significant upside. My target price is $18.
Renren was an early VC investor in Sofi, taking part in its seed round of financing as well as a later follow-on round. They currently hold a 13% stake in SoFi, having sold 14.1% of their holdings (representing 2% of SoFi) in April 2017 for $92 million.
Dianrong and the Dalian Finance Development Bureau and Dalian Finance Industry Investment Group (DFIIG) recently signed a strategic cooperation agreement to drive financial innovation in Dalian and across China. According to the agreement, Dianrong will develop a series of specific projects in partnership with the Dalian government, including:
Assist the Dalian Finance Development Bureau in creating a financial technology (fintech)cloud platform to provide fintech capabilities for small loan and guarantee companies, and other small and medium-sized financial institutions in the region and at large. Tools and services will include sophisticated fraud detection, big-data risk management tools, payment channel integration, and compliance reporting. The fintech cloud platform will also provide regulators with easier monitoring of local lending activities and trends in an ongoing and comprehensive way, helping them provide timely policy guidance and support on risk management.
Work with DFIIG to establish a special Internet finance investment fund for Dalian. The fund will focus on investment in fintech projects and startups with the potential to strengthen Dalian’s new economy and financial services industry.
Develop a supply-chain trading platform in Dalian utilizing advanced fintech and blockchain capabilities to help more small and medium-sized suppliers secure needed funding. Last year, Dianrong created the first blockchain platform for supply-chain finance with FoxConn Group, a global leader in consumer electronics.
Shanghai is one of China’s largest financial markets by market trading volume. In 2017, its trading volume was 1,438 trillion yuan ($220.9 trillion).
Shanghai has already launched a campaign against fraud and illegal behavior in financial consumer markets, such as internet-based peer-to-peer lending, cash loans to college students, and pay-day loans.
Germany’s Rocket Internet needs to hold on to its mountain of cash so it can compete with rivals from the United States and China and pounce when investment opportunities arise, the chief executive said in an interview.
Rocket is invested in more than 100 start-ups, including in financial and property tech, logistics and travel sites, with its stakes in the five biggest of them potentially worth more than 1 billion euros to Rocket, according to Berenberg bank.
Non-financial institution competitors are aggressively targeting this market, using innovations such as blockchain to develop products and tools that not only replace outdated paper and manual-based processes, but also deliver unprecedented levels of cybersecurity that are critical in today’s digital transaction space. The same ADB survey revealed more than $13 billion in venture capital was invested in FinTech trade finance in 2016 alone.
The recent Simmons & Simmons Hyperfinance studyof the world’s leading trade banks found that only 7% believe they are at the forefront of digital innovation in spite of the fact that 80% of innovation leaders report digitally-driven products and services introduced over the past three years have expanded revenue growth. This illustrates the reality that financial institutions recognize the importance of developing a digital strategy, but few are moving aggressively enough to take advantage of these new technologies.
The question before the house right now, though, is: what about the credit rating agencies? The question comes in three parts: there are the global CRAs; the smaller/regional CRAs in most of the world, and regional CRAs in the special case of China.
First, the global CRAs [there are just two of them, Moody’s and S&P] are making “strong efforts” to incorporate an understanding of ESG issues. They are hiring staff with ESG backgrounds, equipping their existing analysts with the relevant expertise, and drawing on third party providers.
Then there is China. Its CRAs include Dagong Global, China Chengxin, and Golden Credit Ratings. The idea of integrating ESG into their analyses is thus far limited to the issue of green bonds, that is, bonds issued for the development of brownfield sites. Government policy in China encourages green bonds and the CRAs have responded. The resulting assessments are focused on the “E,” not so much the “S” or the “G.” And their environmental assessments rely on measuring the impact of the project the bond aims to finance.
Research very generally supports the hypothesis that there exists a causal link between ESG factors and the credit worthiness of a borrower;
Academic research in limited in that it is too exclusively content to measure credit risk by credit ratings, rather than testing the ratings themselves against alternative measures;
But some research does employ the spread of credit default swaps as an independent measure of risk;
Anecdotal observation indicates a clear link between G and defaults, although the linkage between E and S and defaults is more difficult to pin down;
There is much evidence in the linkage of ESG to macroeconomic factors and potential growth, which in turn are important to sovereign risk in particular.
The asset-backed bond market is braced for a slew of new issues next week, with deal flow expected to be dominated by auto issuers including BMW and Mercedes.
Just two issuers sold deals this week – GM Financial and Consumer Portfolio Services – and both auto trades were met with strong demand from investors. One banker on the GM deal said the deal was over-subscribed across the capital stack.
The biggest tightening though was seen on the smallest and lower rated tranches. The 3.58-year Class B, rated Aa3/AA by Moody’s and Fitch, priced at 30bp over interpolated swaps versus guidance of 35-40bp and whispers of 45bp area.
The 3.58-year Class C, rated A1/A, priced at 50bp over interpolated swaps versus guidance of 55-60bp and whispers of 65bp area.
Currently, it represents only 1 percent of the global financial industry. By comparison, digital media accounts for 40 percent while eCommerce accounts for around 10 percent.
To give you a perspective, venture capitalists invested more than $13 billion across 840 different fintech holdings in 2016, according to a report by KPMG. This is 7 percent more than they invested in 2015.
According to the McKinsey report, five areas will see high growth over the next decade. They are consumer finance, mortgage, lending, retail payment, and wealth management.
PayPal handled $1.73 billion worth of transactions in the first quarter of 2017 alone, representing a 30 percent increase year-on-year.
Overstock’s blockchain-focused subsidiary, Medici Ventures, named its board of directors in 2017, and also saw a number of its portfolio companies continue to use blockchain to revolutionize industries including capital markets, money and banking, property registry, voting, identity, and underlying blockchain technology, including:
tZERO, the world’s first SEC approved, blockchain-based alternative trading system, launched its initial coin offering (ICO), which attracted over 10,000 subscribers and raised $100M in commitments in the first 12 hours of its pre-sale. A significant portion of the tZERO security tokens issued will be available to accredited investors in the public sale beginning in January, 2018.
DeSoto Inc., a joint venture between Overstock.com founder and CEO Patrick Byrne and world-renowned economist Hernando de Soto, was created to develop a global property registry system to surface the property rights of billions of people in the developing world.
Bitt, a Barbados-based financial technology company using blockchain to create central banking tools and mobile money applications, named Rawdon Adams, son of former Barbadian Prime Minister Tom Adams, as its CEO. Bitt also fully launched its new mMoney digital payment product, bringing to market a blockchain-based mobile wallet that allows users to participate in digital transactions on their smartphones without the need for a traditional bank account, helping to foster financial inclusion in the region.
South-American based Ripio (formally known as BitPagos), participated in an ICO that raised $37M to fund its Ethereum-based peer-to-peer lending platform, Ripio Credit Network.
Belgium-based SettleMint launched a token sale for its DataBroker DAO, a peer-to-peer marketplace created to provide Internet of Things (IoT) sensor-owners with a clear path to data monetization, and data consumers with a decentralized marketplace in order to buy IoT sensor data. SettleMint also signed an agreement with The Islamic Research and Training Institute, the research arm of the Islamic Development Bank Group, to work with local partner Ateon on developing blockchain-based financial products that can be used to support development and inclusion in IsDB member countries.
Zürich-based lender, TradePlus24, has selected Australian deep tech startup, Trade Ledger, as its global technology partner to roll out its new trade insurance wrapped lending product across their European lending network, and enter the Australian market.
According to IDC, only about a quarter of US bank technology budgets is spent on digital transformation, as opposed to business as usual. They expect this to grow to nearer 40 per cent in 2020.
Secondly, this spending could substantially boost banks’ productivity, and profits.
Banks will drive up the cost of customer acquisition for start-ups who will increasingly struggle unless they build network effects and scale very quickly. Roboadvisers and peer-to-peer lenders will be on heightened alert. Some start-ups will need to rethink their plans to disrupt and look to form partnerships instead.
Changes in financial regulation, such as a lighter touch fintech charter being examined in the US or the second payment services directive in Europe, could potentially make this more likely. The tech giants have the brands, customer reach, digital processes and flair to develop good products, and to take swift advantage of any regulatory changes.
A rising number of start-ups as well as small and medium enterprises (SMEs) are emerging in Myanmar as business opportunities rise. However, many companies fail to achieve their full potential and contribute substantially to the economy because capital assistance is lacking in the country.
A rising number of start-ups as well as small and medium enterprises (SMEs) are emerging in Myanmar as business opportunities rise. However, many companies fail to achieve their full potential and contribute substantially to the economy because capital assistance is lacking in the country.
Currently, local banks extend loans at interest rates ranging between 8.5 percent and 13pc. The local banks began offering SME loans at8.5pc interest in 2015. Since then, the Japan International Cooperation Agency (JICA) and KfW Development Bank from Germany have also launched SME loans.
To get around the financial constraints, borrowing from family members and peers is common.
In fact, a rising number of businesses have resorted to P2P lending for funds to build up their businesses. Without any guarantees of success though, many entrepreneurs ultimately end up in debt. Others fall prey to fraud. Last year, The Myanmar Times reported at least three cases of fraud involving fake promises of repayments with up to 30pc interest.
Cloud Lending Solutions was recognized as a “Top 25 FinTech Company for 2017” by APAC CIO Outlook Magazine. A panel of industrial experts and executives collaborated with the editorial board to curate the list with an aim to provide clarity into the ideal FinTech partners.
News Comments Today’s main news: Clarity Services integrates with Experian. Octopus Choice passes 100M GBP AUM. Funding Circle hits 100M Euro in German lending. Younited Credit tops 100K loans. Square Peg invests $8M in Airwallex. Silver Bullion hits $50M in loans. Today’s main analysis: The deteriorating auto loan quality. Today’s thought-provoking articles: China’s startup investors are a bunch of “cashed-up […]
America’s gig economy workers. AT: “This is very telling. More than a third of American workers are in the gig economy. Of course, most of them are part-time and/or earn less than $500/month. So the question is, are these workers prime targets for online lending products, and, if they’re entrenched in the gig economy, does that mean the way to reach them is through online channels?”
To its critics, though, Affirm, which recently raised $200 million in a growth round, is engaged in something sinister, luring people into a financial trap by enticing them to buy things they can’t afford. CEO Max Levchindoesn’t agree with that interpretation at all, but he does accept some of the blame for not creating a more accurate perception.
Here’s how Affirm works: You can borrow money to make a purchase at any store that integrates with Affirm (or any store at all if you use the mobile “virtual card”). If Affirm’s proprietary credit model judges that you’ll be able to pay back the sum, then you’re offered a loan. During the next several months — up to a year — you’re expected to make monthly payments, which include interest. The APRs range from 10 to 30 percent.
The key things that differentiate Affirm from other credit options are that you get all of the information up front, stated plainly, and the interest charged by the startup is simple rather than compounding. When you make the initial purchasing decision, you know exactly how much extra you will end up paying to buy the product right now, instead of saving up over several months. There are no additional fees.
The economy is expected to expand in 2018, with projections for stock market performance clocking in at 8% basis Goldman Sachs. But not all is well – a Moody’s report notes that specific asset sectors are struggling, particularly when it comes to car loan quality worsening.
Moody’s anticipates that US GDP growth will strengthen slightly to 2.3% in 2018 from 2.2% in 2017, with unemployment also continuing to move lower to 4.0% from 4.4%.
Auto loan quality is worst, but pockets of “challenged” loans exist across the board
Auto loan ABS issuers will likely securitize pools with attributes broadly similar overall to those in the pools backing their 2017 securitizations, even as a further decline in US auto sales pressures lenders to loosen underwriting to support volumes. We project sales will slip another 0.6% after an estimated 3.6% drop in 2017, following eight consecutive years of annual increases.
Auto loans appear to be on the front-lines of credit issues. Household debt, for instance, has increased to $13 trillion, with a significant part of that increase in auto loans. Sub-prime auto loans, in particular, are showing signs of weakness.
When looking at investment in asset-backed securities, the originator makes a difference. ABS backed by loans from online lenders such as SoFi, Lending Club Corporation, Prosper Marketplace Inc. and Marlette Funding have correlated with “prime credit quality.” But that is not the case across the board.
Square, the Silicon Valley payment processor that is at the center of the fight over the tech industry’s ambitions in banking, is firing back at its small-bank critics, while also taking steps to placate community activists.
Advocacy groups that once expressed concern about the adequacy of Square’s plan to satisfy its obligations to low- and middle-income customers are now sounding more supportive of the fintech’s bid to open a bank.
Traditional wealth managers are convinced the advent of robo-advisors and artificial intelligence threatens the jobs of financial services professionals, Wendy Spires writes on WealthBriefing. But the reality is that the high-touch business of financial advice stands to benefit from AI, as do its traditional practitioners, she writes.
For example, while 71% of wealth managers believe financial advice clients are prepared to accept advice from robo-advisors, the reality is different, she writes. Self-directed investing, for example, dropped from 45% in 2010 to 38% in 2016 — during a time when the number of robos and the services they offer expanded significantly, according to Spires.
“The gig economy … is now estimated to be about 34 percent of the workforce and is expected to be 43 percent by the year 2020,” notes Intuit CEO Brad Smith. “We think this points to a lot of growth as we look ahead.”
Based on the most recent demographic data available from the Bureau of Labor Statistics, it appears the gig workforce is fairly evenly distributed across the age spectrum, but the highest percentages are seen at opposite ends of the scale. Individuals 65 years and older had the highest level of self-employment at 24.1 percent, while those under 35 (the so-called millennial generation) made up 18 percent.
BLS data reveals a few more interesting statistics concerning the gig workforce:
Men are almost twice as likely as women to be self-employed.
More than 30 percent of gig workers possess professional or advanced degrees.
Whites and Asians are marginally more engaged in gig work than are other racial or ethic groups.
In fact, data crunched by online lender Earnest and reported by Priceonomics indicates that about 85 percent of gig workers make less than $500 per month.
A Nov. 20 hearing featured the Consumer Financial Protection Bureau calling CashCall a purveyor of “financial snake oil” and arguing the online lender should pay as much as $287 million because they deceived customers.
In order to build the best B2B customer experience, companies should focus their effort on four principles:
Invest in digital systems. Financial technology start-up Kabbage leverages new technology to approve small business loans in just seven minutes—a huge improvement over the 20 days it takes a typical bank. By simplifying the loan application process for web and mobile, Kabbage allows customers to apply for loans within minutes from anywhere in the world, which relieves a huge pain point for small businesses.
Customize the experience.
Use omnichannel to see the big picture. In fact, the average B2B customer uses six different channels as they make a decision. Customer experience happens in many places, which means companies need to create a consistent omnichannel experience.
Peer-to-peer (P2P) lending, also known as peer lending, crowdlending, or social lending, is essentially what it says on the tin: lending money to another in an unsecured loan.
Prosper, one of the bigger companies managing P2P lending, has seen a fairly consistent return of about 9 percent through 2014, with a dip to 6.6 percent in 2012. Lending Club has seen a rise from 4.9 percent in 2009 to about 8 percent in 2014. All told, not bad ROIs.
First, you must be at least 18 years old, with a Social Security number, and live in an eligible state to even consider investing. Then, some states require that you have a minimum $70,000 gross income ($85,000 for California), and a minimum net worth of $70,000. You may not be able to invest more than 10 percent of your net worth. However, if your net worth is at least $250,000, there is no minimum income requirement.
Cayan, a payment processing company that has been around the Boston fintech scene for the last 19 years, is in the process of getting acquired by Total System Services in an all-cash transaction valued at approximately $1.05 billion. The transaction is expected to close in the first quarter of 2018.
On Monday, online lending platform Assetz Capital announced it is doing away with the Great British Business Account (GBBA) and the Green Energy Account (GEA).
Assetz Capital also noted that in the general secured business loan market, it has targeted slightly lower risk and priced transactions and as a result have had to pass on slightly lower interest rates in order to compete effectively in the marketplace – this has cut off loan flow into the GBBA at its current 7% gross target payable rate.
Paul McMahon, former group marketing director of Aegon and UK CEO of FNZ, and Vincent Bordes, Founding Partner of Vestigo, the credit risk consultancy, will comprise the advisory board. Elizabeth McCallum joins as Goji’s Head of Marketing, David Beacham as our Head of Distribution, and Rehan Islam as Head of Investments.
In the first 11 months of this year, 3,418 new venture-capital and private-equity funds in China raised 1.6 trillion yuan ($241.76 billion), more than double the amount of 2015 and more than 10 times that of 2006, according to consultancy Zero2IPO Group. It estimates about 12,000 investment firms manage 8.5 trillion yuan in capital, an increase from 8,000 firms managing 5 trillion yuan in 2015.
Out of 221 unicorns in the world, 59 are in China, according to CB Insights. While that may lag behind the 127 from the U.S., it’s ahead of the U.K.’s 12 and India’s nine. Many Chinese investors want to invest in Silicon Valley because they think the valuations there are more reasonable.
Government agencies and local governments have announced 1,040 venture funds since 2015 aiming to raise about 8 trillion yuan, according to Zero2IPO. Much of the money is used to lure businesses to set up local offices, to help boost employment and tax revenues. The Hubei Province’s 200 billion yuan fund is believed to the largest of its kind.
In China, online lenders or peer-to-peer (P2P) platforms that only facilitate lending do not have full access to borrowers’ credit information as there is no such centralized platform that shares the data.
Some borrowers take advantage of this information asymmetry to apply for loans from multiple lenders so they can roll over previous debts elsewhere, or to take out cheaper loans to repay the ones that charge higher interest rates and profit from the difference, or even become lenders on other P2P platforms themselves, according to a study by the Beijing Internet Finance Industry Association.
The association’s recent report found that among the 61 online lenders surveyed, 44% of their customers on average had borrowed from multiple sources.
The survey found that nearly 500,000 borrowers tried to profit from arbitrage by taking advantage of the different interest rates charged by different online lenders. On average, each of them borrowed from 2.36 online lenders, the survey said.
China’s whac-a-mole approach to risk — hit it everywhere it pops up — is set to hand control of the surging US$121 billion technology-driven lending market to a small group of leaders such as Lufax Holding and the finance affiliate of Jack Ma’s Alibaba Group Holding Ltd.
Macquarie estimates credit extended by China’s fintech firms will jump more than seven-fold by 2022 to 6.2 trillion yuan (RM3.8 trillion) to pay for things like luxury and household goods or training and education. About half that market is micro-lending — typically small, short-term loans with high interest rates, Macquarie says.
China’s 10 biggest fintech companies account for 36 percent of all loans, said Dexter Hsu, a Taipeh-based Macquarie analyst. Tighter regulation could erode China’s more than 2,000 online micro-lenders and so-called P2P platforms, which directly match borrowers with investors, to less than 200, he said.
Newly listed Chinese FinTech companies in the U.S. are struggling on Wall Street, leaving investors with unexpected losses and posing as a setback to other Chinese firms hoping to go public.
“The quality of the businesses were either too early [to go public], untested or just poor,” said Anh Lu, an equities portfolio manager at T. Rowe Price in Hong Kong. “And they were asking for very high valuations on top of that.”
Younited Credit has just surpassed 100,000 in loans since platform inception. The Paris based online lender (formerly named Pret d’Union) reported an accelerating rate of loan originations as the number has doubled since September 2016 when total loans stood at 50,000. The platform provides loans from €1000 to € 40,000. To date, Younited Credit has originated over € 650 million in loans.
The chairman of a wholly-owned central bank subsidiary, Zhu Huanqi, has been appointed chairman of a planned national personal credit-information platform, Caixin has learned from sources familiar with the matter.
In the near future, online banking and payments will go through some fascinating changes beyond what has already happened over the past several years.
Advanced Mobile Payments
Today, there is increasing demand for biometric authentication apps. To ensure that consumers get what they want, MasterCard is going a step further by developing facial identification, voice recognition, and even cardiac rhythm programs. These innovative solutions will enhance the mobile payment experience for customers and retailers alike.
Growing Opportunities for Mobile Wallets
Back in 2014, Apple was the only real contender for mobile wallets. Within just one year, others followed their lead, including Samsung and Google. Then, in just a short amount of time, more big-name players joined in, such as Chase, Amazon, and Walmart. However, that was not the end. Even social media platforms started offering online payment options. With sites like Facebook that have mobile wallet solutions, people can send money and make payments.
Another prediction is that by 2025, 75 percent of all transactions will be made using mobile wallets rather than actual cash.
Greater Demand for Digital Remittances
For instance, a San Francisco-based company founded in 2001 called Xoom has experienced amazing growth because of digital remittances. In fact, it passed up MoneyGram, which speaks volumes.
Growth Potential with Peer-to-Peer Lending
For instance, having originated loans over $20 million since being founded, Lending Club ranks as one of the fiercest competitors in this arena.
In October of 2016, Bank of America unveiled Erica, their new AI chatbot. Available in the bank’s mobile app, Erica can work with voice and text commands.
Erica uses machine learning and specially-designed algorithms to provide Bank of America services that were typically reserved for the bank’s top-tier customers. As an example, it could recommend a way to pay down more on your credit card debt to save on interest payments. Or if your checking account is close to being overdrawn, it could contact you to recommend a transfer from your savings account.
Customers can access Nina from the bank’s website, and it can understand a wide range of text requests using specially designed Natural Language Understanding technology.
In the first three months after Nina’s release, the software was handling an average of 30,000 customer interactions per month. Of those early interactions, Nina was able to provide a resolution rate of 78%.
You can use this AI chatbot to check the balance on your accounts, see your available credit, track recent transactions, pay bills, and more.
The Wells Fargo virtual assistant is a chatbot that the bank recently released for use with Facebook Messenger. Once a customer enrolls their account, they can then use Messenger to contact the virtual assistant for basic tasks like tracking recent transactions, balance inquiries, and finding the nearest ATM.
A mortgage broking firm is offering an AI chatbot to help first-home buyers understand some of the basics – but an experiment shows you shouldn’t put too much faith in any online calculators’ estimates of how much you might be able to borrow.
Squirrel has launched Alan, an online tool that answers questions like “how much deposit do I need”, “what’s an auction” and “how much can I borrow?”
This amendment to the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 is a step towards standardisation and providing a visible digital identity, thereby promoting transparency in financial transactions. Another factor that is pushing financial transparency is the rise of Fintech and the subsequent new-age companies that are offering digital avenues for finance such as payment platforms, blockchain companies, alternative financers like P2P lenders and so on.
Consumer Lending Trends To Look Forward To In 2018
Alternative Lending Boom
New service providers will serve the underserved and unserved, meeting the unmet demand. We will continue to see the rise of direct lending as well as P2P lending, marketplaces, crowdfunding platforms etc.
Ease Of Access To Credit
Credit will continue to grow, thanks to the alternative lending boom. One such burgeoning space is the Line of Credit. It has gained momentum in 2017 with the metros being early adopters and is expected to expand into tier 2 & tier 3 cities in 2018.
The Rise Of InsurTech
Investment In Emerging Technologies
Blockchain will expand in putting together smart contracts, and digital identification. Already, FinTech investments in Asia increased to $5.4 billion in 2016, up 12.5% from $4.8 billion in 2015, driven mainly by China and India.
Silver Bullion, a peer to peer lending platform based in Singapore, has reached $50 million in loan originations. The unique platform that provides secured lending based off of bullion saw more than double the lending volume in 2017 versus year prior.
Amartha Founder & CEO, Garuda Typhoon Andi Putra recently commented;
“Since its establishment, Amartha has been committed to connecting the unbanked micro entrepreneurs, and investors who want to add this asset investment in a sector that is more profitable and socially valuable. The uniqueness lies in the micro-entrepreneurs or Amartha Partners, all of which are women. Today, more than 72,000 women micro entrepreneurs throughout Indonesia have enjoyed our services, with a total fund distributed more than 200 billion rupiah (US $ 15 million). “
KUALA LUMPUR: Affin Bank Bhd’s wholly owned subsidiary, Affin Islamic Bank Bhd, has today listed its latest sponsored venture with Segi Seri Sdn Bhd on Investment Account Platform (IAP), a shariah-compliant platform similar to crowdfunding and peer-to-peer lending platforms.
Affin Islamic said the venture plans to raise RM3.3 million on IAP to part-finance contract awarded to them recently, which is related to preparation and serving of dietetic food to an established government hospital in Malaysia for a duration of three years.
Another challenge is the new technology. Instant Financial Inc., a Vancouver-based startup, released an app this year that lets workers paid by the hour get their day’s earnings after a shift. It’s free for employees. Employers pay a fee. The focus so far is the hospitality industry, and includes companies such as McDonald’s and Outback Steakhouse in the United States. Instant has about 175,000 people on the service in the United States and about 5,000 in Canada. Wal-Mart has a similar product, which it sourced from another company.
Krispo, 40, is enrolled in GiveDirectly’s experiment in basic income, a system of wealth distribution in which people receive a standard salary just for being alive.
The money comes with no strings attached. Krispo and the other villagers have received $22 a month since October 2016, and they’ll continue getting it until October 2028.
Scattered around town are M-Pesa stands, outfitted with live agents who can dispense money — essentially an ATM with a human teller.
There is a small fee for each transaction. For the amount given to GiveDirectly recipients, this fee is 30 shillings. (GiveDirectly actually wires 2,280 shillings each month — 30 shillings above the 2,250 recipients can spend — to cover the cost.)
News Comments Today’s main news: Prosper’s top concern next year is liquidity. Affirm seeks new funding at $1.5B valuation. LendingHome surpasses $2B in loan originations. ThinCats delays IFIsa launch. Funding Circle hits 3B GBP in lending. Dianrong planning $500M IPO. Today’s main analysis: Acorns puts up a fight to upscale. Mobile credit and financial inclusion. Today’s thought-provoking articles: Is Lending Club […]
Prosper is concerned about liquidity. AT: “As Prosper grows, liquidity will become even more important. The risk is to go bell up or sink the company in debt, which could keep it tied away from expecting profits for years to come. I’d like to see the company hit the level of liquidity it expects.”
Affirm said to be raising funds at $1.5B valuation. AT: “Unicorn status is just a symbol. The real test of success is how the company is run, whether or not it is profitable, and whether it services customers’ expectations well. That said, Affirm has huge potential in the niche it is targeting. We’re just at the beginning stage of this boat ride.”
Acorns puts up a fight to go upmarket. AT: “A few years ago, while building a content marketing company, I discovered that there were two ways a business can pursue the success dragon. You can sell high-dollar products to raving fans and build upon reputation–like Apple–or you can target to the masses and make your profits on slim margins. The latter is the more difficult row to hoe, especially if there is a lot of competition at the price level. Acorns may have a lot of customers, but they can’t bank forever on slim margins. This is a great read.”
Marketplace lender Prosper will make liquidity a top priority as the company moves into 2018, company CEO David Kimball said during a lending conference that took place last week.
“Our main concern… it’s always liquidity, and I think most people in this room understand that the best way to get to liquidity is to have a lot of different options,” Kimball said to attendees of the Investors Conference in Marketplace Lending on Friday, December 1st. “And so I think you’ll see our toolkit expand [in 2018] versus where it is now.”
New retail investors interested in the Lending Club platform are greeted with a friendly statistic, that “99% of portfolios with 100+ Notes have seen positive returns.” That’s a slippery statement, which is probably why they footnoted it.
Affirm Inc., an online lender run by PayPal co-founder Max Levchin, is in advanced talks for a financing round that would earn it a place in the unicorn startup club.
The San Francisco-based startup is discussing an investment of about $150 million, said people familiar with the matter. The deal would value the company at $1.5 billion, about double the valuation from the last round in April 2016, said the people, who asked not to be identified because the terms aren’t finalized. Affirm declined to comment.
The micro-investing app has grown an of army of 2.2M accounts. But making money off these first-time, lower-income investors won’t be easy. To do so, Acorns is building out higher-tier investment services and moving into the highly saturated $40T retirement planning market.
With over 2.2M investment accounts in the US since launch, the company has proved there is a clear niche for its product. It is already the largest robo-advisor by client accounts.
Acorns’ service isn’t free, but it is cheap — the company charges $1 a month or .25% for accounts over $500. At $12 annually for many accounts, that’s not a lot of revenue.
Acorns is making a number of important moves:
It is launching its own retirement savings plan in 2018 called Acorns Later, which could help it reach new users and push up current users’ account size.
It has formed a strategic partnership with investor Paypal to extend its product to Paypal’s huge user base. In addition, its partnership with Paypal could ultimately help Acorns get into bank account services, a move similar to what low-income investing competitor Stash has done.
A B2B offering may also be in the works, based on recent acquisition activity. B2B products have helped other robo-advisors see big jumps in AUM.
Acorns manages approximately $528M in AUM and approximately $407 per account as of September 2017. Compare that to Betterment which manages approximately $28.5K per client account and Wealthfront which averages $42.3K.
On Monday, mortgage marketplace lender LendingHome announced it has originated more than $2 billion in mortgage loans for homeowners and real estate investors. The online lender revealed that the first billion of originations occurred over the course of 30 months, while it took just 12 months for the company to originate its second billion. In the process, LendingHome crossed the major milestone of financing more than 10,000 homes nationwide.
How and when employees get paid should be their choice, Isaacson said. The technology to make that happen is already in the market — Uber and Lyft drivers are taking advantage of it, for example — but the systems aren’t in place at most companies, and there’s a mental barrier for businesses to overcome to begin creating mobile payout experiences.
It’s also too inflexible for some businesses, like a restaurant or store that may need more or fewer cases of Coca Cola than the originally ordered 10. They need to be able to make adjustments like that in real time, Isaacson said. With a mobile device, people can manage and initiate payments in real time and remotely.
Cross River Bank is a business bank, whose clients are some of the biggest fintech companies. Behind the scenes, CRB has developed payments solutions for faster, more secure and lower-cost transfers that have been integrated by TransferWise and the bitcoin wallet Coinbase, as well as Google Wallet and Stripe — which counts Lyft as a customer.
The New York-based investment bank announced Monday the launch of Access Investing, an online roboadviser designed to capture a younger clientele.
The goal of Morgan Stanley’s new offering is to serve as a stepping stone, so to speak, for younger savers who one day might want to tap into the bank’s broader suite of wealth-management services when they are wealthier and older.
Wallet Fitness levels vary widely across the U.S. As we prepare to make resolutions for self-improvement, it’s fair to wonder who’s best positioned for financial success and who has the most work to do. To find out, we compared more than 180 U.S. cities based on 29 key indicators of Wallet Fitness.
Leading crowdfunding real estate investment platform, Rich Uncles, LLC, today announced the appointment of John H. Davis as its new chief financial officer and Jean Ho as its new chief operating officer and chief compliance officer.
Mr. Davis comes to Rich Uncles after more than four decades with KPMG LLP, one of the world’s four largest accounting firms, where he had served as a partner since 1988.
Ms. Ho joined Rich Uncles, LLC in 2016 as the company’s chief financial officer, where she has helped lead the acquisitions of 29 commercial properties across two Rich Uncles-sponsored REITs: Rich Uncles Real Estate Investment Trust I and Rich Uncles NNN REIT, Inc. Prior to joining Rich Uncles, LLC, Ms. Ho held positions as chief operating officer and chief financial officer of Soteira Capital, LLC, chief financial officer of MKA Capital Advisors, LLC, and with KPMG LLP, where she specialized in real estate, financial services, and high net wealth personal financial and estate planning.
Perkins Coie, a law firm that is very active in the Fintech / Blockchain space, has announced the hiring of a former SEC attorney. Michael S. Didiuk has joined the firm’s Investment Management practice group as a partner in the San Francisco office where he will represent clients on various federal securities laws and complex regulatory issues raised by Blockchain technology and with the emergence of digital asset sales and digital securities.
Barclaycard is rebranding itself to Barclays in the US as part of its retail digital banking strategy in 2018.
According to Tearsheet, Barclaycard says since last November it has been targeting prime and super-prime borrowers with an online personal loan offering on a test-and-learn basis to a small group of customers. Barclaycard plans to launch the same offering publicly by the middle of 2018.
Chris Stanley joins Atlantic Capital Bank as Vice President of Fintech Industry Banking, to lead Atlantic Capital’s Fintech Banking practice.
Expanding on a successful payments industry line of business, the new fintech banking practice will focus on emerging growth and growth-stage companies in this evolving technology segment. This will bolster Atlantic Capital’s core deposit gathering strategy.
Secret #1: Yes, You CAN Improve Your Personal Credit Score
Pay down your credit cards. As a yardstick, you’ll want all your cards under 50 percent of their limits. This means no more maxing out cards — for personal or business.
Lower your debt compared to your income. A good benchmark is keeping debt to 30 percent of less of your income. Rather than taking a second mortgage on your home and increasing your debt load, you might be better served to apply for a business loan.
Monitor your credit score. Errors are more common than most people realize. Besides you’ll learn which creditors report to credit agencies and what they report on.
Secret #2: Your Business Credit History May Be Incomplete, But It’s Not Hard to Change That
Establish free profiles with the three major business credit bureaus: D&B, Experian, Equifax
Apply for a business credit card and use it to establish a timely repayment history.
Do business with vendors (“trades”) that report to credit bureaus regularly.
Digital micro-lender, Oakam today announced that it has secured a £35 million debt investment from Victory Park Capital Advisors, LLC (VPC), an investment firm focused on private middle market debt and equity investments.
For years, there has been much talk about the impact of fintech startups like Mondo and Atom Bank on incumbent banks but little has been done to quantify the actual effects fintechs are having on big banks.
New data from The Bank of England (BoE), published as part of its 2017 stress test of the UK banking system, however, is shedding light on this subject.
Where they were then: Trussle, the online mortgage trading company, is a rising star in the fintech industry. The start-up company provides solutions and answers to those looking to invest with a hassle-free process.
Where they are now: Following their funding round in early February to raise £4.5m ($5.68m) backed by Orange and Growth Capital, and existing investors LocalGlobe, Zoopla and Seedcamp, Trussle went on to join forces with Revolut in April to give users direct access to their mortgage brokering services.
Total equity funding: $7.38m (now $7.6m) +2.98%*
Where they were then: Iwoca was created to help make credit and loans of up to £100,000 available to small businesses.
Where they are now: 8 days after the time of writing the previous bio, Iwoca partnered with NatWest through Capital Connections to provide SMB loans, a significant collaboration for the six year-old startup.
Total equity funding: $58.5m (now $90m) +54%*
Where they are now: They currently boast a 6.6% annual return for investors and have earned £156m in interest for investors. They’ve lent £3 billion to UK businesses in a total of 43,251 loans (since 2010).
Total equity funding: $373.2m (now flat) –%*
Where they were then: Crowdcube is an investment crowdfunding platform that lets customers hand pick the businesses they want to back and invest in.
Where they are now: In the third quarter of 2017, Crowdcube registered £1m in company revenue, with 70 pitches.
Funds raised to date: $18.69m (now $28.3m) +51.42%*
Where they were then: Based in the heart of the UK capital, LendInvest is the UK’s leading online property lending and investing businesses.
Where they are now: In September, LendInvest announced the strategic partnership with Clever Lending, a specialist lending solution.
Dianrong.com, a Chinese online lending platform started and run by a co-founder of LendingClubCorp. , is planning an initial public offering as soon as next year that could raise at least $500 million, according to people familiar with the matter.
China is set to implement a social credit system that will rate each of its citizens on a publicly available scale. Officially known as the Social Credit Score or SCS, the system is likely to be implemented by 2020.
It works by giving each citizen a score based on their daily interactions and financial decisions, the score can be affected by debt, spending habits and even social interactions. Obviously, to get this kind of score that will be somewhat compared to a person’s trustworthiness, there will need to be a huge amount of individual monitoring and data collection. The SCS is expected to be rolled out in 2020, but there will be a large scale trial period from now until then so the system can be at optimal functionality when it goes live on its 1.3 billion citizens.
China Rapid Finance will make any adjustments needed to its business practices and the fees it charges in response to Bejing’s new requirements to clean up fast-growing online micro-lenders, its chief executive Zane Wang said on Monday.
Online micro-lenders have come under scrutiny as “problems such as over-lending, repeat borrowing, improper collection, abnormally high interest rates, and privacy violations have become prominent”, Chinese financial regulators said last week.
With financial institutions increasingly employing roboadvisers, China’s central bank and financial regulators issued draft regulations for comment recently, requiring financial institutions to receive regulatory approval for offering such services.
The regulatory authorities said financial institutions should create rational investment strategies and algorithm models, as well as remind investors of the flaws and risks associated with algorithm-based robo-advisory models.
The project that Pinganfang.com was caught up in is a sharing working place project called Bar Works. Every work place was sold at $25,000 and the minimum purchase quota per investor was two each. The expected annual rate of return was between 12% to 15%.On June 30th 2017, the SEC charged Renwick Haddow (the planner of Bar Works project) with multiple counts, including illegal fundraising $36 million from the Bar Works investors.
On November 30th, JD Finance and China UnionPay co-launched a Blockchain-based risk information sharing mechanism.
On December 1st, Alibaba officially set up a poverty alleviation fund. As planned, the fund will invest 10-billion-yuan in the next five years to establish a comprehensive security system and help people fight against poverty. At the fund launch ceremony, Jack Ma, the executive chairman of Alibaba Group, told the media that Ant Financial would suspend plans for an initial public offering.
China has emerged as a leading fintech market globally, with analysts estimating the market size to have exceeded $243 billion by the end of last year, accounting for about 85 percent of the global market share.
The sector’s fast and furious growth was also illustrated by the surge of fintech investment in the country, which attracted capital of $8.8 billion between July 2015 to June 2016, equivalent to an increase of 252 percent since 2010, according to a report by Singaporean banking giant DBS Group and global accounting firm Ernst & Young.
Think for a moment of what your life would be like with no access to credit. Chances are you wouldn’t own a home or a car. Most of us could not have afforded our college education. The entrepreneurs among us would be hard-pressed to build successful businesses. And what about the ways we take advantage of credit cards – basically small-time loans that exist to allow us to pay for emergencies and unexpected expenses? Our financial identity is tied up in our access to these credit opportunities.
The good news, however, is that mobile devices – along with the existence of the cloud – are providing an entirely new landscape for the developing world. This landscape involves assigning a financial identity to those who have largely remained anonymous, reaching these populations through their smartphones. There are scores of creditworthy people on the planet, and we’ve proven before through data science that worthiness has little to do with income or wealth, but instead with the opportunity to demonstrate responsibility.
With this understanding in mind, we reviewed activity in the wake of recent hurricanes that rocked the Caribbean and observed a spike in prepaid mobile users topping up their phone allowances via on-demand credit extensions prior to hurricanes making landfall.
The following image shows the ratio of airtime credit extensions to cash top-ups as the eye of Hurricane Irma hit the Leeward Islands as well as Turks & Caicos.
As Irma made landfall, purchasing airtime from shops become extremely difficult, if not impossible. The graph above shows what happens when cash based-top ups are not possible.
For these reasons, creating a mobile financial identity in order to provide mobile credit remains the best place to start to address financial exclusion in many parts of the world and smartphones are the most logical vehicle for providing it. Nearly 80% of people all across the globe have prepaid phones, and there are nearly $1 trillion in transactions taking place every day.
A “flash crash” on the world’s biggest cryptocurrency exchange has left customers demanding answers and refunds, with many claiming to have lost thousands of dollars.
The price of cryptocurrencies NEO, OMG, and ETP crashed as much as 90% in minutes on the Bitfinex exchange on Wednesday before quickly bouncing back to former levels.
The price crash led Bitfinex, the world’s largest cryptocurrency exchange by daily volume, to close the positions of many traders who had placed leveraged bets on these digital currencies. Leveraged trading involves borrowing money to increase exposure.
Brett Kruger, a Bitfinex user affected by the “flash crash”, told Business Insider he is unhappy with Bitfinex because he claims the website was “lagging, unresponsive” at the time of the crash. He said he was also repeatedly logged out of the website, blaming recent DDoS attacks. Bitfinex announced last Sunday that it had been hit by a distributed denial of service (DDoS) attack, a malicious attack meant to bring down the service.
EthereCash, is a three prong financial platform, wants to eliminate borders, intermediaries and prejudices, providing access to bank services for everybody. It makes all the tedious and lengthy bank operations simple, transparent and secure.
IDFinance strengthens board with ex-CEO of 4finance (ID Finance Email), Rated: A
ID Finance, the emerging markets fintech company, has strengthened its board with the appointment of Kieran Donnelly, ex-CEO of, 4finance, as a board advisor. The appointment will support IDFinance as it continues rapid expansion and further diversification of its business.
Kieran Donnelly served as CEO at 4finance, the European online and mobile consumer lending group for three years. He brings over 30 years of management experience to IDFinance having also held senior roles at Standard Bank Group, MDM Bank and Renaissance Group.
Delhi-NCR-based lifestyle products rental portal Rentickle.com today announced it has raised $4 million in a fresh funding round. The fundraising is a combination of equity and debt.
The equity portion was led by Ajay Relan, Founder and Chairman, CX Partners, and ThinKuvate, a Singapore-based VC firm, with participation from existing investors.Delhi-based NBFC, DMI Finance Pvt Ltd, extended the company a debt line. Rentickle.com had raised $250,000 seed funding in early 2016.
‘P2P Easy’ is a recently founded online platform that works hand in hand with borrowers and lenders for fast loan processing & acceptance.
Although the idea of loaning money dates back to the time when the first bank was established, the core issues are more or less the same to date – i.e. 90% borrowers are rejected, and lenders are skeptic due to a lack of any reasonably acceptable guarantee.
Culum Capital, a Singapore-based receivables and supply chain financing provider, has launched a new investor platform, which is aimed at accredited and institutional investors around the globe, and provides invoice financing to SMEs as an alternative to traditional financing sources.
The platform uses its proprietary credit scoring and on-going risk measurement to identify optimum investment opportunities and provide transparency. The transactions carry a short tenor of maximum 120 days, with the average transaction at 70 days. Annualised gross returns are between 10 and 25 per cent, with a strong SME diversification.
Mobile phones have introduced a sea of opportunities in every sector imaginable, and that includes in finance. Today, anyone with a cellphone can engage in one form or another of cashless transaction, be it paying bills, sending phone credit, transferring cash, or buying goods and services — even in flea markets.
But what makes this a game changer in the financial sector is how it has penetrated different levels of society. This applies particularly to the unbanked, who are unable to access formal financial institutions and often borrow money from informal lenders who may charge high interest rates and where there is no guarantee of consumer protection.
In recent years, new technologies have emerged that are being used to complement and further what mobile money has achieved: machine learning, peer-to-peer lending, biometric technology, cloud computing, and blockchain, among others.
A conscious effort to ensure all these innovations work for the unbanked
But just because it’s fintech doesn’t necessarily mean it covers financial inclusion.
In fact, a number of the technologies being adopted in the sector are largely aimed at consumer convenience instead of the unbanked.
News Comments Today’s main news: Revolut sings 1 millionth customer. KBRA assigns preliminary ratings to Lending Club’s Consumer Loan Underlying Bond Credit Trust 2017-P2. Funding Circle to launch Isa. Orca is launching investment platform. Chinese regulators investigating potential Qudian data leak. China cracks down on shadow banking. China tells provincial goverments to halt microlender approvals. Swiss consortium adopts single digital identity for […]
Peter Renton’s MPL results for Q3. AT: “I wonder why Lending Club’s investments are struggling while Prosper’s are doing well. The interesting part of this read are the new investments for this quarter.”
Assault on microlenders threatens U.S. IPO listings. AT: “Chinese lenders need U.S. capital more than Wall Street needs Chinese companies. But if China wants to compete on the world stage for capital fundraising, they’ll need to consider the protection of consumer interests.”
As Goldman Sachs Group Inc. lends more money to Main Street, one question won’t go away: How many borrowers will pay them back?
A recent example it gave suggests the firm expects loan losses to be lower than what some rivals are seeing, and half of what many credit-card lenders experienced the last time the economy went south.
The bank is counting on its consumer push to deliver $1 billion in revenue growth over the next three years. While the firm looks to attract borrowers with better credit than many rivals, others think it may be underestimating the risks of a business where it’s the upstart.
If you have been reading these posts in the past year or so you will have noticed a steady decline in my returns, primarily caused by underperformance in my LendingClub accounts.
Earlier this year I adjusted my strategy and started investing across the entire risk spectrum but it is a bit like steering a battleship. Given my many thousands of notes it takes a while for any changes to show up in my portfolio returns.
My trailing 12 month returns for the year ended September 30, 2017 across all my accounts was 6.64%.
My main LendingClub account has performed poorly over the past 12 months. My TTM return is at a paltry 1.64%, my lowest return ever. All of my LendingClub accounts are below 5% and all have shown reduced returns over the past year.
Prosper continues to perform quite well. My three accounts are all returning between 7% and 8% which I consider quite respectable. My average interest rate of the loans I have invested in is just under 20% but returns have been quite consistent recently in the 7-8% range.
PeerStreet is a real estate platform focused on fix and flip properties. These are short term loans, typically between 6 and 24 months, and they are backed by the property. I use their automated investment tool to invest in only those loans that are paying 8% or more, up to a 75% LTV and a duration up to 24 months.
My first new entrant this quarter is AlphaFlow. They are a real estate platform that build diversified portfolios of fix and flip properties for you. What I like about AlphaFlow is that they deploy your money quickly, my entire investment was fully deployed in a matter of days. And they diversify across 75-100 properties, my own portfolio currently has 83 investments in 22 states with an average LTV of 68%.
Finally, as I do every quarter I want to end by highlighting the net interest number which for the last 12 months stands at $46,631.
Get the lowdown on the full range of Peter Renton investments here.
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2 (“CLUB 2017-P2”). This is a $330.0 million consumer loan ABS transaction that is expected to close December 6, 2017.
This transaction is LendingClub Corporation’s (“LendingClub” or the “Company”) third rated sponsored securitization and the second sponsored securitization consisting of “prime” unsecured consumer loans facilitated by LendingClub’s proprietary technology platform supporting an online marketplace that connects borrowers and investors by offering a variety of loan products originated by issuing banks through the platform, www.lendingclub.com (the “LendingClub Platform” or the “Platform”).
The transaction has initial credit enhancement levels of 35.45%, 26.05% and 10.83% for the Class A, Class B and Class C notes, respectively.
Chinese President Xi Jinping’s campaign to reduce risk in the financial system is being felt in New York. The assault on the sector threatens to stymie any new listings of such lenders on New York’s stock exchange — as well as spelling trouble for investors in the handful of companies that have already listed.
One-third of small business owners work at least three of the six major holidays in the US.
Kabbage’s new survey reveals several work/life balance issues related to the sacrifices small business owners are willing to make. The research involved surveying 400 small business owners, with 67 percent stating they expect to increase revenues by the end of the year. More than half of the small business owners interviewed said they anticipate an increase in revenue of 10 percent or higher.
The survey found that 60 percent of small business owners only take one full vacation a year, while 23 percent take less than two holidays off annually. Furthermore, when on holiday, 75 percent of small business owners continue working.
Vermont residents on Tuesday hit a hedge fund with a proposed class action in federal court alleging it helped concoct a sham tribal payday lending scheme meant to skirt laws preventing companies from charging consumers exorbitant interest rates while hiding behind tribal sovereign immunity.
Plaintiffs Jessica Gingras and Angela Given accused the firm, Victory Park Capital Advisors LLC, of striking a deal with payday lender Plain Green and the Chippewa-Cree Tribe of the Rocky Boy’s Reservation to use the tribe’s name in exchange for a small…
The same deception that hides the real cost of predatory, consumer loans is reflected in the title of pending legislation in both the House of Representatives and in the Senate. The Protecting Consumers’ Access to Credit Act of 2017 (H.R. 3299 and S. 1624) would allow payday lenders, high-cost online lenders, and other predatory lenders to partner with banks to make loans that surpass existing state interest rate limits.
The next Chairman of the Federal Reserve System (Fed) confronts a deep and growing problem: rising inequality. A new Fed Chair could combat this problem in an unexpected way by implementing real-time payments. The few days between checks clearing are a major driver of why it is so expensive to be poor. They are also unnecessary given technology and easily removable with some regulatory will. Real-time payments could save billions of dollars for American families living paycheck to paycheck.
The check casher costs $20, but two overdrafts cost $70. Check cashing is a $2 billion a year business and represents yet another cost born by those who have less.
The technology for real-time payments has been around for a long time. The United Kingdom adopted real-time payments in 2008. Japan, Poland, Mexico and South Africa all have the technology in place today. Financial technology (FinTech) firms like PayPal are offering real-time payments for customers who exist on both ends of their system. But unless your employer will migrate to using a FinTech for payroll, you need the banking system to modernize.
The Federal Reserve’s eggheads are usually a pretty reliable bunch. So when researchers at the central bank’s Cleveland branch recently published a study asserting that peer-to-peer loans were defaulting at rates reminiscent of subprime mortgages a decade ago, it seemed to confirm the worst fears about the budding online-lending market. But industry critics and academics questioned the researchers’ data, forcing the Fed to pull the paper.
It’s not easy to come by good data for this nascent field of finance, which makes the botched study all the more regrettable.
Duracell and personal finance company SoFi have “snapped up” some of the six-second spots Fox has set aside for its Thanksgiving broadcast of Vikings-Lions, while Disney will “air a mini trailer for ‘Star Wars: Episode VIII The Last Jedi,'” according to Anthony Crupi
Revolut, an app-based banking alternative which has over 50,000 customers in Ireland, has now signed up 1 million customers globally and claims it has saved users over £120 million (€134 million) in fees.
London-based Revolut said it is now signing up between 3,000 and 3,500 new users every day, an increase of 50 per cent growth from three months ago.
Users have now made over 42 million transactions since the company officially launched in July 2015 with a total transaction volume of $6.1 billion.
In an email to its customers seen by Moneywise and confirmed directly with Funding Circle, the provider says it will allow existing customers to invest in an Isa from Thursday 30 November.
It has yet to announce a launch date for new customers and says this is because it is anticipating strong demand for the product. For the same reason, customers will not be able to transfer existing Isas to Funding Circle when the product is launched.
Customers must deposit at least £1,000 to open an Isa.
MORE THAN half of small business owners want the UK to join the European Free Trade Agreement (EFTA) once Brexit is complete, Funding Circle research has found.
A survey of 1,254 borrowers on the peer-to-peer lending platform found 57 per cent would support EFTA, also known as the ‘Norway option,’ as it provides a regional free trade area comprising of Iceland, Liechtenstein, Norway, and Switzerland.
ThinCats unveiled a new brand last week at an event attended by more than 100 business leaders. The gathering took place at the National Space Centre in Leicester but the new branding will not be officially launched until mid-December.
Effectively, FG17/8 is the new bible for everyone interested in developing a new automated (digital /robo /telephone-based) advice solution. Or it is a checklist for those who have already trodden down this well-worn path.
Do note though – as if you did not already know – the paper “contains general guidance and is not binding”, is not “exhaustive”, must not be read in isolation of the handbook, and does not address any potential changes that might arise from the implementation of the Insurance Distribution Directive. (Heaven forbid anyone would actually take any accountability for what is between the covers).
Two years. Two years. To pull together in one document the working practices that professional firms already follow with their eyes closed?
New research shows that 78% of financial advisers are confident robo-advice offers no threat to their business, despite nearly half expecting more demand for robo-advice over the next 12 months.
The research from Aegon found that the degree of concern felt by advisers correlates to the typical size of their client portfolios, with advisers whose client portfolios are at the lower end of the scale more alert to the threat from the lower cost option of robo-advice.
For advisers with client portfolios of more than £200k, 88% feel it offers no threat to their business, and even for portfolios of up to £100k, the figure remains high at 73%.
While the majority of advisers believe robo-advice is no threat to their business, a third (31%) do point to robo-advice and similar digital services as one of the top challenges to the wider industry over the coming two years, a little behind Brexit (40%).
Chinese regulators and police are investigating a potential leak of data from online lender Qudian Inc., according to people with knowledge of the matter.
Officials are probing allegations that data from more than a million students who are clients of Beijing-based Qudian was leaked and possibly sold online, said the people, who asked not to be named discussing private information.
The probe’s initial findings show that at least part of the leaked data match information clients had provided to Qudian, the people said. Investigators are checking whether the data came from Qudian, if the company was aware of the breach, and whether it took necessary measures to ensure the safety of personal information it collects.
Chinese regulators introduced major rules on Nov. 17—the scale of which has been compared to the U.S. Dodd-Frank Act—to unify regulations for the asset managementindustry and curtail shadow banking activities.
The rules are broad-based, covering China’s $15 trillion of asset management products issued by all financial institutions.
For example, the rules will prohibit asset managers from promising guaranteed rates of return to investors, and require issuers to set aside 10 percent of their fees from managing client assets in escrow, to serve as a buffer against losses.
For publicly offered funds, total assets cannot exceed 140 percent of the funds’ net asset value. The same ratio is set at 200 percent for privately offered funds.
According to the International Financial News, China plans to purge the country’s 157 online micro-lenders, leaving only large state-owned companies and the biggest internet firms intact with licenses. Few of the existing lenders will survive, said the newspaper, which is managed by the official People’s Daily.
A comprehensive cleansing of the industry, which offers almost immediate unsecured loans over the Internet, often at high interest rates, would escalate earlier moves to crack down on the sector and its estimated $152 billion of loans. News that China has halted further approvals for online micro-lenders has already pummeled the New York shares of firms like Qudian Inc. and PPDAI Group Inc.
“It would seem to be an enormous, enormous risk to try an IPO with that hanging over your head,” said Christopher Balding, an associate professor at Peking University HSBC School of Business. “It would most likely put a halt to any IPO plans of these companies now.”
The listing of online lender Qudian at the New York Stock Exchange on Oct. 18 heralded the birth of a new China billionaire, 34-year-old chairman and CEO Luo Min. The stock rose by as much as 43% that day, giving Luo a fortune worth $2.2 billion amid optimism about industry prospects.
Five weeks later, more than half of Qudian’s value has been wiped out and he’s on the verge of dropping from the ranks of the world’s billionaires altogether. Qudian fell 16% last night and at yesterday’s closing price, Luo’s fortune (which he shares in a trust with family) was worth $1.02 billion. Investors in other China fintech stocks got socked yesterday, too. Jingpu Technology plunged 12.9% to $5.75, way below it IPO price of $8 from last week. China Rapid Finance fell 6% yesterday and PPDai fell a whopping 24%.
WeLab Ltd. has picked banks to advise on a Hong Kong initial public offering that could raise about $500 million, according to people with knowledge of the matter. The China-focused lender, whose backers also include billionaire Li Ka-shing, is aiming to list as soon as next year, the people said, asking not to be identified because the information is private.
Stop panicking about China’s online lenders. The real target of the crackdown is rogue local governments.
Financial News said government entities can’t issue new licenses for internet micro-lending beyond the 157 institutions that already have them. The consequences were immediate: Zhejiang Busen Garments Co., for one, said in a filing Thursday it’s terminating plans to set up an online lender.
As of September, there were 8,610 micro-lenders with 970 billion yuan ($147 billion) of loans outstanding. Many of those weren’t licensed by national regulators such as the People’s Bank of China or the China Banking Regulatory Commission, which have strict rules.
Rather, authorization was handed out by local governments, most of which have no fintech expertise, to companies claiming to be affiliated with state-owned enterprises.
Ant Financial, Alibaba’s financial affiliate, has announced that China now has more than 520m mobile payment users, reports state-owned news agency Xinhua.
A report released by the People’s Bank of China detailing the country’s payment system in the second quarter of 2017, notes that Chinese banks dealt with 8.6bn payments from mobile services during that period – up 33.84 percent from last year.
The combined value of mobile payments increased by 33.8 percent to 39.2tn yuan (around US$6tn).
IN China, an alternative capital market is taking shape with the rise of fintech companies, where fintechs are the intermediaries linking borrower and lenders. Moreover, fintechs are edging into the credit rating space, leveraging on their big data capabilities.
One core competence of fintech companies is their IT stability in the areas of payments and cloud computation. The strength of their IT infrastructure makes the technology players resilient under extreme conditions. During the recent Singles’ Day sale on November 11 – China’s online shopping bonanza equivalent to that of the US’ Black Friday – Alibaba’s Alipay processed a peak of 256,000 transactions per second and Alibaba Cloud processed as many as 42 million instructions per second.
A consortium of nine large companies — including UBS, Credit Suisse, Swisscom, Swiss Post, SIX, Raiffeisen, Swiss Railways, Zuercher Kantonalbank and Mobiliar — will enable Swiss consumers to use a single digital identity when making eCommerce purchases.
According to a report in Reuters, the idea behind the project is to get to a point where consumers can use one login to make purchases at shops, buy train tickets and engage in banking activities online. The group aims to create a joint venture in 2018.
Lendoit is a Decentralized P2P lending platform, which connects borrowers and lenders from all over the world in a trusted, fast and easy way using the advantages of Smart Contracts and the Blockchain technology.
What do you think is the biggest problem Lendoit will solve and why is it important?
The lending industry is not efficient because it’s controlled by centralized financial organizations that set the interest rates according to their own interest. It’s not fair that honest borrower from Brazil is paying 60% interest rate while borrower from Japan pays around 1%.
Lendoit uses three types of scoring:
Local rating provided by a local supplier from the borrower’s state. Lendoit is working to create cooperation with some entities in various countries to provide this service.
International scoring providers that are using innovative methods such as scanning social networks and scanning the borrower’s e-mail.
Lendoit is working to create cooperation with these International entities.We have already signed / in the process of signing with several companies in the scoring area, such as FriendlyScore, BLOOM, LENNO, and others, as noted in Lendoit’s WhitePaper.
In the Lendoit eco-system platform, there is a special Smart Contract: a Reputation contract that retroactively checks each borrower who takes a loan, and set reputation score according to his or her historical activities within the platform
5 years have passed since I first started to invest into p2p lending at Bondora in October 2012. I still have 604 loans in my Bondora portfolio with an outstanding principal of 7,467 Euro at an average interest rate of 23.78%. Of these 2,746 Euro are in current loans, 778 Euro in overdue loans and 3,941 Euro in 60+ days overdue loans.
Bondora shows a net return of 19.0% for my portfolio. In my own calculations, using XIRR in Excel, assuming that 30% of my 60+days overdue and 15% of my overdue loans will not be recovered, my ROI calculations result in 17.2% return. Even if I assume total loss on all outstanding loans that are 60+days overdue my ROI calculation results in 15.6%.
Banks – local banks, in particular – have traditionally been the main and sometimes the only source of external capital for SMEs. However, increasing regulatory requirements have lowered the probability for SMEs to obtain access to bank financing.
P2P lending is part of the wider universe of crowdfunding. This is a bigger market than many people expect. For example, a 2016 paper for the European Commission reported that crowdfunding expanded by 167pc in 2014 and reached $16.2bn. North America remains the largest market ($9.5bn), followed by Asia ($3.4bn) and Europe ($3.3bn). While there are no accurate figures on the Irish market, Orca Money reports that the UK P2P market had £9.6bn cumulative lending since 2010, £1bn of which was in Q1 2017. In 2016, Orca Money reported that the UK P2P market comprised 177,000 retail investors with consumer (46pc), business (35pc) and property (19pc) borrowers.
P2P platforms have been very cautious about the loans they offer to investors, with most of them being classified as low-risk. This has resulted in low default rates and acceptable positive returns for investors. The potential for positive returns has attracted institutional and professional investors (eg investment banks, venture capitalist etc) into the game and created a disproportionate capital supply and demand. Such a trend is particularly visible in the US and UK, the two largest P2P markets, but it has recently emerged in smaller markets like Australia and New Zealand and is likely to occur, to a greater or lesser extent, in all regulated markets, including Ireland.
The lack of a clear regulation has arguably prevented the growth of the Irish P2P lending market by discouraging both investors and small businesses to participate. A clear regulatory framework is necessary to ensure transparency and to increase investors’ confidence in P2P lending markets.
On 12 September 2017, FCA published a consumer warning on initial coin offerings (ICOs), stating that they are ‘very high-risk, speculative investments’, and that ‘there is a good chance of losing your whole stake’ as a purchaser.
Earlier in September, the People’s Bank of China had denounced ICOs as ‘illegal fundraising’ and issued a ban that caused the value of cryptocurrencies such as Bitcoin to plummet. The following day, Canadian regulators accepted a firm offering ICOs into its regulatory sandbox as part of its broad goal of supporting innovative fintech projects. The European Securities and Markets Authority has been the latest to denounce ICOs, echoing the FCA’s warning to consumers that ICOs are ‘very risky and highly speculative investments.’
By applying the conditions from SEC vs Howey, the US Supreme Court test for determining whether transactions qualify as investment contracts (and by extension, securities), the investigation found that the tokens emergent from the DAO’s ICO are securities and thus could fall within the US regulatory perimeter.
The SEC made the classification by fulfilling the following criteria from the Howey test:
The FintruX Network has been established to transform unsecured loans to highly secured loan without any hurdles to borrowers and investors. The platform has unique blockchain approach of global P2P lending highways which proposed to raise $30 million by selling digital tokens.
The FintruX Network aims to enhance credit enhancements by introducing cascading levels which involves:
It should not be a problem if the three judges have no background or experience in fintech, cryptocurrencies, blockchain, peer-to-peer lending, equity crowd funding and payment systems riding off messaging services such as those offered by WeChat, Facebook, Apple and Google.
After all, this is not about the future. This inquiry is about spending more than $200 million looking in the rear view mirror.
Futurist and chief executive of global consultancy firm Tomorrow, Mike Walsh, told the 2017 Financial Planning Association Professionals Congress that sweeping technological change driven by complex algorithms is nothing to fear as it’s simply “not unique.”
Walsh said financial planners’ fear-based thinking that technology will replace jobs must shift to ask how will jobs need to change.
INDIA’s fifth-largest private sector bank, YES Bank, is raising a total of US$400 million in two transactions in the offshore syndicated loan markets as it further diversifies its funding sources.
The first transaction is a five-year loan amounting to US$250 million raised from a group of Taiwanese banks, led by CTBC Bank, Bank of Taiwan, Mega International Commercial Bank and Land Bank of Taiwan. The deal was upsized from the initial target of US$200 million as YES Bank exercised the green shoe option following an oversubscription of US$355 million from 13 other banks.
Adhil Shetty, CEO of BankBazaar, was recognized by the India FinTech Awards 2017 earlier this month. Shetty was named Fintech Leader of the Year at the event, which featured more than 200 attendees, more than 40 speakers, and 20 shortlisted startups from six countries.
The migrant and their unbanked families in emerging and frontier markets have been suppressed for the longest time without any access to basic services, financial or otherwise. Approximately 2.4 billion people in poverty worldwide are often excluded from free movement or basic rights which often leads them to corruption and crime, including slavery, human trafficking and in extreme cases, death. Migrants far too often are denied basic financial tools.
LALA World (“LALA”) is a wholesome ecosystem for the unbanked, starting with the migrants and their families back home. The base of this ecosystem is the LALA Wallet platform. By creating a whole new peer-to-peer infrastructure, LALA aims to revolutionize the way individuals, small businesses and micro-entrepreneurs transact, make domestic and cross-border payments, borrow money and associated products like insurances, cards, wealth and other general banking products.
LALA World Products from their Ecosystem
LALA Transfer – A Peer-to-Peer local and global remittance backed by crypto as well as fiat. LALA Bill Pay – Local and International bill payments for you and your family. LALA Lends – Domestic and International peer-to-peer lending via crypto and fiat, individual and small businesses. LALA Card – Crypto and Fiat card synced to your Wallet and usable at millions of PoS globally. LALA Kit – Contains a mobile phone with pre-loaded LALA Wallet, LALA Insurance, LALA Card, partners’ products, etc.