Thursday November 7 2019, Weekly News Digest

Lending Club

News Comments Today’s main news: Prosper launches HELOCs with BBVA. LendingClub beats profit estimates. Pennsylvania fines SoFi subsidiary $110,000. Kabbage partners with GoDaddy. Zopa makes banking debut. RateSetter rolls out investor self-certification. Today’s main analysis: LendingClub Q3 earnings. International P2P lending volumes. Today’s thought-provoking articles: The hot stuff at Money 2020. China’s slowing economy. International […]

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

Lending Club

News Comments

United States

United Kingdom

China

Other

News Summary

United States

Prosper Officially Launches HELOCs with First Bank Partner BBVA (Lend Academy), Rated: AAA

It was last November when we first heard that Prosper had plans to expand their offerings from personal loans into HELOCs.  In 2018 David Kimball noted that they would be partnering with banks on the new product and loans would be available both directly through Prosper.com and also as a white-labeled offering. Now we know their first bank partner is BBVA.

LendingClub beats profit estimates on higher fees, loans (Reuters), Rated: AAA

Online lending pioneer LendingClub Corp (LC.N) beat analysts’ estimates for third-quarter profit on Tuesday and forecast current-quarter largely above estimates, sending its shares up 4% in after-hours trading.

Transaction fees jumped 17% at the company, which helps connect customers looking for loans to individuals or institutional investors, such as banks, through its online marketplace.

Loan originations soared 16% to $3.35 billion in the third quarter, with total revenue rising 11% to $204.9 million.

LendingClub Q3 2019 Earnings Results Review (Lend Academy), Rated: AAA

Revenue also topped records at $204.9 million, up 11% year over year. Losses narrowed to a GAAP net loss of just $400,000 compared to the prior year period where they lost $22.8 million. Adjusted net income came in at $8 million, up from a loss of $7.3 million in the prior year period.

Source: Lending Club

Pennsylvania regulators hit SoFi with enforcement action (American Banker), Rated: AAA

A subsidiary of Social Finance Inc. has agreed to pay a $110,000 fine in Pennsylvania after operating as a mortgage servicer for nearly a year without the required state licensing.

SoFi Lending Corp. is one of several mortgage companies that has been hit recently with enforcement actions in Pennsylvania after a change in state law in December 2017.

The new law required mortgage servicers that were operating in Pennsylvania to be licensed. Companies had until June 30, 2018, to apply without being penalized for unlicensed activity.

SoFi vs. Prosper: Which Personal Loan Lender Is Right for You? (credible), Rated: A

SoFi and Prosper are two companies that offer personal loans with competitive interest rates and no prepayment penalties. However, there are some major differences between the companies that could affect your decision on which one to choose.

Money 2020 Highlights, Jobs Report, Markets Doubt Fed (PeerIQ), Rated: AAA

What’s Hot and What’s Not at Money 2020?

Attendance was at record levels. Here’s our view on the areas attracting the most attention at Money 2020:

  • Lending-as-a-Service: lenders that enable non-banks, banks and credit unions originate loans (e.g., loan origination software, digital experience, bank workflow software, etc.). Examples: Better, nCino, Happy Money (backed by CUNA Mutual), Alchemy, Splash Financial, Blend, Roostify
  • International Lending: Non-banks expanding access to credit, particularly in the LatAm markets. Examples: CrediJusto (Mexico SME), Addi (Colombia POS), Nova Credit
  • Underwriting infrastructure: Reducing OPEX or fraud risk thru automation. Examples: Ocrolus, Feedzai

The healthy Friday jobs report supports the ‘wait and see’ Fed view (although it is a backward looking indicator). The report indicated growth in employment of 128K in October and a tick-up in unemployment to 3.6%.

Source: WSJ, Labor Department, PeerIQ

Kabbage partners with GoDaddy to offer capital to entrepreneurs and SMBs (Tearsheet), Rated: AAA

The partnership: Kabbage’s online lending platform is now available to GoDaddy’s U.S. customers to access a business line of credit in minutes.

  • Customers can access flexible lines of credit of up to $250,000 in minutes after filling out a short application.
  • Existing GoDaddy customers can get $100 off their first month’s fees
  • “We know that a lack of capital for marketing and other core activities remains a major roadblock to accelerate growth. Our partnership with Kabbage is key in our ongoing mission to empower our customers and provide them with the resources they need to fuel their business needs,” said Melissa Schneider, GoDaddy’s vice president of global marketing operations.

Ron Suber Shares Perspective on Fintech (Crowdfund Insider), Rated: A

Ron Suber is one of the better-known names in the Fintech sector. Originally, Suber’s role as the President of the marketplace lending platform Prosper Marketplace brought Suber’s name to prominence as the Fintech emerged as an early leader in the US online lending market. Since departing Prosper’s management team several years ago, Suber has been associated with multiple Fintech’s as an investor, advisor or, perhaps, a board member. Today, Suber has invested in more than a dozen Fintech companies

Real estate crowdfunding startup CrowdStreet turns to its customers to raise $ 12M round (GeekWire), Rated: A

CrowdStreet, a Portland-based commercial real estate crowdfunding startup, has raised a big new funding round, with a twist. Instead of relying solely on venture capital investors, the startup turned to its own community of real estate investors and developers to raise the bulk of the money for its Series C round.

The result: CrowdStreet this morning announced it has raised $12 million, primarily from the users of its platform, bringing lifetime funding to $25 million.

CrowdStreet lands $ 12M in financing, hires execs (The Real Deal), Rated: B

Robert Stiles, former chief financial officer at LendingHome, joined as CFO/COO. Londa Quisling was named chief technology officer, after serving as chief product officer at Treehouse. And John Havens, previously of BNY Mellon, joined as vice president of capital markets.

Inside Affirm’s ID Verification And Fraud Prevention Techniques (PYMNTS), Rated: A

Many consumers do not have funds readily on hand to make big purchases like electronics or furniture and prefer turning to instant loan apps like Affirm, a point-of-sale installment lender established in 2013, rather than going into debt with a bank or credit card provider. Customers may feel thankful to be able to pay off a purchase over a year, but not at the cost of losing their identities to fraudsters or scammers.

Max Levchin backs digital banking startup built to reward savers (Finextra), Rated: A

A new digital banking platform promising to help reward people for positive financial behaviour has closed a $3.5 million seed round led by Accomplice Ventures and Walkabout Ventures nd joined by PayPal founder Max Levchin’s startup studio.

According to Moody Analytics, an average person under the age of 35 saves -1.8% of their income. HMBradley is promising to tackle this by increasing awareness and rewarding people for saving more.

LA is fast becoming a fintech hub as HMBradley launches another West Coast challenger bank (TechCrunch), Rated: B

Add HMBradley to the list of Los Angeles-based startups looking to shake up the world of high finance typically dominated by East Coast giants with names like JPMorgan Chase, Citigroup, Morgan Stanley and Goldman Sachs.

Building A Challenger Bank That Actually Challenges Traditional Banking (PYMNTS), Rated: A

Minus the CEOs at the top-10 largest banks in the U.S., whose main concern is probably figuring how to deal with their trillions of dollars’ worth of assets, nearly the entirety of bank CEOs outside that tier have one primary concern, according to Bruhnke: How do they grow deposits? Meanwhile, he noted, bank customers also have a singular desire: How do they make the most money on the funds they have deposited?

How Goldman Sachs plans to boost its reputation with online bank Marcus (Yahoo! Finance), Rated: A

Goldman Sachs’ upstart digital consumer bank, Marcus by Goldman Sachs, will help boost the reputation of its parent company, one of its leaders told Yahoo Finance recently.

The OCC Fintech Charter Is Down, but Maybe Not Out (Lexology), Rated: A

The Office of the Comptroller of the Currency (OCC) recently faced another setback in its attempt to issue a special purpose national bank charter tailored to fintech companies (fintech charter). A federal district court in New York held that the OCC does not have the authority to grant charters to companies that do not accept deposits. The ruling is a blow to the OCC’s efforts to provide new avenues for innovation in financial services. The fintech charter would allow fintech companies, which do not accept deposits like traditional banks, to benefit from the same preemption of state laws and licensing requirements as national banks.

Troubled Fintech Charter: How More Delays Impact Competitive Situation (The Financial Brand), Rated: A

The other is Varo, which initially considered going for an OCC special purpose charter but then decided to apply for a full-service charter. Varo has preliminary approval from OCC and awaits approval of its FDIC deposit insurance application. Below, we look at how Lending Club, the online marketplace consumer loan platform, is exploring chartering options.

Crypto APIs Launches Trading APIs, Allowing Users to Leverage Multiple Crypto Exchange Accounts (Cryptovest), Rated: A

The Trading APIs service provides one Unified API that has integrated multiple crypto exchanges. Thus, users will now be able to link multiple exchange accounts to their profile, collect data and execute their portfolio management trades from a single point.

Crypto APIs is used by thousands of developers to create products like Crypto exchanges, Crypto wallets, Trading bots, Crypto PSP, Arbitrage solutions, Crypto Lending solutions and many more.

Brex And Bank Of The West Team On Co-Branded Credit Card (Forbes), Rated: A

Brex, the fintech credit card startup, is teaming up with Bank of the West, the subsidiary of BNP Paribas, to roll out a co-branded credit card. It marks the first co-branded credit card to come out of Brex which caters to startups and entrepreneurs.

Washington flexes its muscles on small-business lending (American Banker), Rated: A

In one instance, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency angered borrower advocates by siding in court with a high-cost business lender. In the other, the Consumer Financial Protection Bureau signaled its intention to move forward with a small-business lending rule that has languished for nine years amid sharp disagreements over its proper scope.

USA Continues to be a Top Location for Fintech Events (Fintech News), Rated: A

On the global fintech scene, the US has been amongst the top leaders, accounting for 57% of the fintech market in 2018, according to a Mordor Intelligence research.

Fintech continues its momentum this year, with investment in US fintech companies surging to US$12.7 billion in the first half of 2019. That represents a 60% increase in value of deals and signals a trend of larger deals in already the world’s biggest and most active fintech market, according to data from Accenture.

Legitimate Shoppers Take Advantage of Deals, Outpacing Seasonal Growth in Fraudsters (Riskified Email), Rated: A

A new report from 

Elevate Credit to Attend the Stephens 2019 Investment Conference (BusinessWire), Rated: B

Elevate Credit, Inc. (NYSE: ELVT) today announced that its Interim Chief Executive Officer, Jason Harvison, and Chief Financial Officer, Chris Lutes, will attend the Stephens 2019 Nashville Investment Conference on November 14th at the Omni Nashville Hotel. Mr. Harvison and Mr. Lutes will be available for 1×1 meetings with investors.

Michigan AG sues online tribal lender (Lexology), Rated: B

On October 31, the Michigan attorney general announced it filed a lawsuit against an online lender alleging the lender violated the CFPA and Michigan…

United Kingdom

Peer-to-peer lender Zopa makes banking debut as pressure mounts (City A.M.), Rated: AAA

Zopa, one of the UK’s three largest names in peer-to-peer lending, is to launch its first foray into banking after receiving partial authorisation last year.

RateSetter begins roll-out of investor self-certification (P2P Finance News), Rated: AAA

RATESETTER has begun asking its customers to confirm their investor status ahead of the Financial Conduct Authority’s (FCA) new marketing and disclosure rules that come into effect on 9 December.

iwoca hits £1bn lending milestone as headcount soars (AltFi), Rated: A

UK business lender nearly doubled its lending last year to £330m, helping the startup announce it has now reached a cumulative lending milestone of over £1bn.

The news comes as iwoca’s headcount has jumped 50% in the last 12 months, boosted further by the £10m BCR grant which the company secured in August to further expand its customer base.

China

China has a steady hand on its slowing economy, but can it prevent a crash landing? (SCMP), Rated: AAA

Year-on-year growth has fallen by 0.2 percentage points per quarter this year, from 6.4 per cent in the first quarter to 6.2 per cent in the second quarter and to 6 per cent in the most recent quarter.

China to Transform Remaining P2P Platforms (Finews.Asia), Rated: A

Recent data showed that the number of online P2P platforms plummeted to just 427 – a 59 percent drop compared to 2018-end. The total outstanding loan value and the number of borrowers also dropped correspondingly by 49 percent and 55 percent, respectively.

China is making rapid inroads towards reducing peer-to-peer lending risk to meet the 2020 target deadline but expects to keep alive the few remaining with strong fintech expertise and shareholder support.

China warned to avoid P2P lending mistakes in blockchain push (Tech in Asia), Rated: A

China has been warned to avoid the same mistakes with blockchain that it made with its peer-to-peer lending, as the government vowed a “thorough revamping” of the controversial lending platforms as part of a continuing battle against financial risk amid the domestic economic slowdown and the trade war with the US.

Chinese fintech players want to do a Xiaomi in lending. Caution: regulatory glare ahead (India Times), Rated: A

From adopting unique business models to routing investments through Singapore, Chinese lenders are trying every trick in the book to win the Indian fintech-lending space. But getting money to India, deploying it, and dealing with stringent KYC norms is easier said than done.

Asset management arbitration cases in China (Vantage Asia), Rated: A

The wave of closures of P2P platforms in China in the summer of 2018 garnered national attention. The latest blacklist for P2P lending published by “P2PEYE.COM” ( shows that as of the end of March 2019, the number of problematic P2P platforms reached 5,388.

European Union

Marks & Spencer Buy Now, Pay Later Option (The National Law Review), Rated: AAA

Klarna, a popular BNPL provider used by over 4,000 UK retailers, offers three types of BNPL service:

  1. delayed payment up to 30 days after purchase. This incurs no interest or fees, providing the payment is made within the timeframe.
  2. instalment options whereby the purchaser can pay in three equal, interest-free payments every 30 days.
  3. flexible financing, which spreads the cost of larger purchases into manageable monthly payments. The term for this repayment option ranges from six to 36 months.

Upcoming maintenance affecting ability to view orders (Klarna), Rated: A

On Wednesday 6th November at 05:00 CEST, we will perform an important technical maintenance which will prevent customers from seeing some order details within the Klarna app for a short time. We expect this maintenance to take approximately 15 minutes, after which time full details of orders will become accessible again.

LendIt Fintech Europe 2019 Slide Presentations Now Live (LendIt), Rated: AAA

Below, you can find the presentations from keynote speakers at the event, as well as the different track presentations.

Lending Innovations

More presentations here.

International

Beijing may cull a stateside unicorn stampede (Reuters), Rated: AAA

Chinese firms have raised just $3 billion from American exchanges so far this year, less than a third of the 2018 total. In the last week of October, however, half a dozen companies filed for initial public offerings in New York, bringing the total backlog of Chinese floats to 24, according to data from Refinitiv. Rising trade uncertainties, tougher listing requirements on the NASDAQ and an upcoming U.S. presidential election have sparked fears that 2020 may prove even more volatile for debutants.

International P2P Lending Volumes October 2019 (P2P-Banking), Rated: AAA

Mintos leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces in the table adds up to 703 million Euro.

Milestones in cumulative volume lent crossed this month:

Asia

P2P lending platform Validus expands into Vietnam (Business Times), Rated: AAA

SMEs make up 97 per cent of Vietnam’s enterprises, but only account for 22 per cent of total bank lending. To meet a US$21 billion SME financing gap in the country, Validus Vietnam will partner corporates to provide SME growth financing to their vendors and subcontractors.

How South Korea’s PeopleFund Is Shaking Up P2P Lending (Yahoo! Finance), Rated: A

Joey Kim, chief executive officer at PeopleFund, discusses what his company does, the growth drivers for his company, his latest funding round, P2P lending in South Korea, regulation, the possibility of consolidation in the industry and how the Korean economic headwinds are impacting his business. He speaks exclusively on “Bloomberg Daybreak: Asia.”

Vietnam’s IT Sector: 5 Industries to Watch (Vietnam Briefing), Rated: A

Vietnam’s fintech industry is expected to reach US$7.8 billion in revenue by 2020. A rising middle class, growing internet usage, and a young population present a great combination for the fintech sector to thrive. An estimated 120 companies and brands cover a wide range of services, from digital payments to wealth management and blockchain.

Fintech help banks broaden customer base (The Jakarta Post), Rated: A

Instead of competing against each other, banks and financial technology (fintech) companies are joining hands and combining their resources to tap into the country’s growing financial services market.In an effort to keep up-to-date with recent technology and stay relevant amid the latest changes in financial services, many banks have signed partnership deals or bought into nimble start-ups as an alternative to building costly technology projects.For the banks, the logic behind a partnership with fintech companies is simple: It gives them the opportunity to reach a wider customer base, unlock their technological capabilities without having to buy one of their own and penetrate the country’s unbanked population — all without having to spend too much money.“We are partnering with 12 fintech companies from peer-to-peer [P2P] lending and payment apps to SME [small, middle, enterprise]…

Latin America

Preview of LendIt Fintech’s inaugural LatAm conference (LendIt), Rated: AAA

Temenos’ report tags financial inclusion as LatAm bankers’ priority (IBS Intelligence), Rated: A

Temenos has concluded the LatAm results for its annual retail banking survey, conducted by the Economist Intelligence Unit (EIU). The survey titled ‘A whole new world: How technology is driving the evolution of intelligent banking in Latin America’ stated that 35% of retail bankers prioritize investments in digital technologies along with cost-cutting or margin improvement for furthering their financial inclusion goal.

Authors:

George Popescu
Allen Taylor

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

Thursday April 25 2019, Weekly News Digest

fintechs

News Comments Today’s main news: LendingClub restructures SME lending. Funding Circle lowers return projections. RateSetter receives Queen’s Award for Enterprise. SoFi could get $500M funding from Qatar. Today’s main analysis: How personal loans impact credit scores a year into repayment. Today’s thought-provoking articles: Employer payday loans and continuous billing using today’s technology. Interview with Deserve’s […]

The post Thursday April 25 2019, Weekly News Digest appeared first on Lending Times.

fintechs

News Comments

United States

United Kingdom

European Union

International

India

Other

News Summary

United States

LendingClub shuts down SME lending arm (Banking Tech), Rated: AAA

US peer-to-peer lending pioneer Lending Club has closed the doors on its in-house small business lending operation, reports Julie Muhn at Finovate.

Opportunity Fund, a non-profit small business lender; Funding Circle, one of the largest alternative small business lending platforms in the US; and Lending Club have teamed up to offer Lending Club’s small business clients’ access to credit. Businesses can now borrow up to $300,000 for rates as low as 5%.

How Personal Loans Impact Debt and Credit Scores a Year Into Repayment (LendingTree), Rated: AAA

Key findings

  • One year after taking on a personal loan, 52% of borrowers owed less overall on credit cards and personal loans. These borrowers’ balances — the sum credit card and personal loan balances — fell $811 on average.
  • Among baby boomers who took out personal loans, 56% lowered their overall balances after their first year of repayment, compared with 52% of Generation X and 48% of millennials.
  • Boomers also lowered their balances by much larger amounts, owing an average $2,048 less after a year. Balance reductions of younger borrowers were more modest: Generation X lowered their overall balance by $338, and millennials reduced their overall balance $250.
  • A year into repaying a personal loan, credit scores declined slightly for all age groups. Boomers’ credit scores declined the least, with the median falling just 1 point from 669 to 668. The median score of Generation X personal loan borrowers fell 7 points, from 659 to 652. Millennial credit scores fell 10 points, dropping from 661 to 651.
  • Credit utilization rates — the ratio of the sum of credit card balances to the sum of credit card limits — show a similar trajectory. One month after taking a personal loan, the median utilization rate fell from 35% to 26%. But after the first month, utilization increased. The median utilization rate one year after taking a loan increases to 44%.

How To Get Your Paycheck Early (Forbes), Rated: AAA

Speaking of Walmart, the retailer has partnerships with two fintech startups–Even Responsible Finance and PayActiv–that enable its US workers get part of their salary paid before payday.

Employees can get up to eight drawdowns (called Instapays) on their salary ahead of scheduled payouts. The first eight drawdowns are free to the employees, and then in subsequent use, fees are levied across a personal finance app available through Even.

Continuous Billing

There’s no reason why billers can’t provide continuous information about what a customer owes, in real time, online or through mobile apps.

Deserve’s Kalpesh Kapadia: ‘We promise the best credit card for our customer’s profile and life stage’ (Tearsheet), Rated: AAA

The financial system has always struggled with young people. Because the system uses credit history, young people were frequently excluded from credit products because they’re new to the system. If you’re an immigrant or foreign student studying in the US, it’s way worse. Kalpesh Kapadia set out to change a system that was skewed against young people. He’s the co- founder and CEO of Deserve, which offers credit cards to college students at 2500 universities in the US.

To do this, he’s created an analytics-based lending platform that’s also branching out into powering credit cards as a service. We talk about how Deserve is able to underwrite credit-thin files and why he thinks his firm is at an advantage when it comes to competing against Marcus’s credit products and Apple’s new credit card.

Resolve Accelerates Shift to B2B eCommerce with Automated Net Payment Terms (GlobeNewswire), Rated: A

According to Forrester Research, business-to-business (B2B) eCommerce is poised to reach over $1.8 trillion by 2023. To help power this explosive growth, Resolve today announced that it has formally spun out of Affirm to launch an automated payments platform offering extended net terms. Early customers using Resolve’s payment automation technology have realized significant increases in B2B sales, growth in order size, and faster sales cycles.

Online Auto Loans: The Pros and Cons (U.S. News), Rated: A

Things are different now. Almost every financial institution has an online presence, and most offer information about car loans on their site. Most also provide an opportunity to apply for financing online, with a growing number able to take car buyers through the entire auto loan process without ever having to visit a bank or credit union branch.

It’s Not Easy Solving For $ 1.5 Trillion In Student Debt (PYMNTS), Rated: A

There is $1.5 trillion worth of student loan debt outstanding in the U.S. and it is creating problems.

Admittedly the plan is quite a bit more complex than that, as detailed by Sen. Warren in a Medium post that went live yesterday (April 22). In broad strokes, for students from families with less than $100,000 a year in annual income, $50,000 in student loan forgiveness would be available. The post also calls for “substantial debt cancellation for every person with household income between $100,000 and $250,000.” The Warren plan also calls for the elimination of tuition at all two-year and four-year public institutions of higher learning, and would create a fund of at least $50 billion specifically for historically black colleges and universities. Federals subsidies for for-profit colleges would be banned.

Would You Take a Job Just for the Fertility Insurance? (Glamour), Rated: AAA

The cost, however, put it out of reach. A single round of IVF rings in at about 

dv01 Launches Credit Risk Transfer Market Surveillance Offering (dv01 Email), Rated: A

dv01 today announces the launch of its Credit Risk Transfer (CRT) Market Surveillance offering, which will be showcased on April 25 at the 4th Annual Credit Risk Transfer Symposium in New York.

dv01’s latest offering adds $1.8 trillion of Freddie Mac (STACR) and Fannie Mae (CAS) CRT securitizations to dv01’s modern web-based data analytics platform, furthering their goal of bringing greater transparency to capital markets. Building on the success of dv01’s Market Surveillance offering for consumer loans (launched in 2017), the CRT offering will allow investors to analyze historical performance of CRT deals both individually or as combined deals, perform whole market analysis, and run cash flow scenarios.

Let’s give post offices another job (The Student Life), Rated: A

As of 2017, approximately 6.5% of households in the U.S., totaling more than eight million, don’t have an account open at an insured bank, according to the Federal Deposit Insurance Corporation. An additional 24.2 million households utilize non-traditional financial services that often make them vulnerable to usurious lending rates.

Americans utilizing alternative forms of credit spend nearly 10% of their salaries on fees alone. For a family making the average salary of $25,500 in 2012, those fees average out to $2,412.

The USPS has 59% of its locations in zip codes that have one or fewer banks, according to a 2011 government report. This could help people to overcome a geographic boundary.

Equifax acquires PayNet to help expand access to capital for small and mid-sized businesses (PR Newswire), Rated: A

Equifax Inc., a global data, analytics and technology company has acquired PayNet, a company that provides commercial credit risk underwriting and management solutions to online and alternative finance lenders, and commercial finance and leasing companies in the U.S. and Canadian markets.

Marketplace Lending Update #5: The Very Long Arm of Colorado Law (The National Law Review), Rated: A

Recently a state court in Colorado ruled that securitization trusts that acquire marketplace lender loans originated to Colorado consumers are subject to Colorado jurisdiction. The court’s ruling derailed the attempt by the securitization trusts to escape the ongoing battle between the State of Colorado and marketplace lenders over rates and fees that can be charged to Colorado residents.

Berman Tabacco Announces Major Win for Victims of Plain Green Online Lending Scheme (BusinessWire), Rated: A

In a long-awaited opinion, the U.S. Court of Appeals for the Second Circuit today ruled that borrowers who took out loans from the Native American-affiliated online lender Plain Green can proceed with their nationwide RICO class action in Vermont federal court. The Second Circuit affirmed a May 2016 ruling by District Judge Geoffrey W. Crawford and comes nearly two years after oral argument on Defendants’ appeals. Berman Tabacco and Gravel & Shea PC are Lead Counsel in the case, Gingras, et al. v. Rosette, et al., No. 5:15-cv-00101-gwc (D. Vt.).

2nd Circ. Says Tribal Officers Not Immune In Payday Loan Suit (Law360), Rated: B

The Second Circuit on Wednesday rejected a bid by officers of tribe-owned lending company Plain Green LLC to escape a suit claiming they charged exorbitant interest rates on so-called payday loans,…

White Oak Global Advisors Completes $ 30M Loan for Danimer Scientific Holdings (AP News), Rated: B

White Oak Global Advisors, LLC (“White Oak”) today announced it acted as sole lender and administrative agent to provide a $30 million senior credit facility to Danimer Scientific Holdings, LLC (“Danimer”), a manufacturer of specialty compostable and biodegradable plastics. This transaction expands on White Oak’s ESG-lending platform, which aims to finance small and medium-sized enterprises (“SMEs”) that are developing solutions to help address environmental and social issues around the world.

Online Lender Upgrade Recognized as Top Place to Work in San Francisco (Crowdfund Insider), Rated: B

Online Lender Upgrade, a Fintech serving the consumer credit market, has been named a “Best Place to Work in the Bay Area’”by the San Francisco Business Times and Silicon Valley Business Journal. Upgrade is the creation of  CEO Renaud Laplanche, the founder of publicly traded marketplace lending platform LendingClub. This is the second time Upgrade has been recognized as a nice place to work in the notoriously work focused bay area.

United Kingdom

Funding Circle lowers return projections (P2P Finance News), Rated: AAA

FUNDING Circle has revised down its annual return projections in the face of a weaker environment for consumer credit.

The peer-to-peer business lender now predicts investors in its Balanced portfolio will achieve a return of 4.5 to 6.5 per cent a year.

Investors in its Conservative portfolio, meanwhile, could achieve 4.3 to 4.7 per cent a year.

Peer to Peer Lender RateSetter Receives Queen’s Award for Enterprise (Crowdfund Insider), Rated: AAA

Peer-to-peer investment platform RateSetter has been recognized with a prestigious Queen’s Award for Enterprise for excellence in innovation.

Challenger bank Tandem to double headcount as CEO warns of Brexit brain drain (Yahoo! Finance), Rated: A

Tandem Bank said on Tuesday it had moved into a new 16,000 square foot office in London as part of plans to double headcount this year to 230 and grow to 300 people by the end of 2020.

“Last year we hit 500,000 customers when we had an expectation for 150,000,” Knox told Yahoo Finance UK.

Consumer P2P loans weigh on P2PGI fund returns (P2P Finance News), Rated: A

P2P Global Investments (P2PGI) has warned that its legacy peer-to-peer lending portfolio continues to be more volatile than expected despite posting an improved net asset value (NAV) return for 2018.

P2PGI – the world’s first P2P-focused investment trust – revealed in its annual report that its NAV for 2018 was 5.2 per cent, up from three per cent in 2017.

China

How Leverage Turns Market Corrections into Crashes (Yale Insights), Rated: AAA

Q: Is shadow borrowing unique to China?

It’s difficult to study the phenomenon very precisely. We do observe shadow lending in various forms growing throughout the world, including in the U.S., and, if left unregulated, this type of lending could mean that household and financial institution leverage keeps rising in a way that is both unregulated and undocumented.

Because the Chinese government believed that the shadow sector was partly responsible for the crash, it seized the data from some shadow lending platforms and allowed us to analyze it.

Q: Who’s providing the financing in these situations?

The exact sources of financing are not well known. Some of it could be other stock investors that have put up their own holdings as collateral and borrowed against it and then lend out the proceeds on the shadow market. It could also be peer-to-peer lending platforms. It’s also believed that some of the financial institutions and brokerage firms within China may have also lent out within the shadow sector.

Trade war with US could lead to economic ‘cold war’ for China, Beijing researchers say (SCMP), Rated: A

The tit-for-tat tariff war with the US and the broad hostility is seen as a major risk endangering China’s “economic security”, along with a property bubble, local debt, unemployment and online financing including peer-to-peer lending, according to the latest edition of China’s Economic Security Outlook.

European Union

French Lender Societe Generale Issues $ 112 Million Bond on Ethereum (CoinDesk), Rated: AAA

French financial services giant Societe Generale Group has issued about $112 million worth of bonds in the form of a security token on the public ethereum blockchain.

Announced today, a subsidiary called Societe Generale SFH used the OFH token (obligations de financement de l’habitat, or home financing obligations) to represent 100 million euros of covered bonds, a type of security that is backed by specific assets but remains on the issuer’s balance sheet.

The bond has a five-year maturity with a 12-month extension period, Moody’s said.

N26 opens tech hub in Vienna with a focus on security (TechCrunch), Rated: A

Fintech startup N26 is opening an office, its fourth, in Vienna. Eventually, the company plans to hire 300 software engineers, product managers and IT specialists.

API card platform Marqeta signs up three customers in Europe (Verdict), Rated: B

The platform has been signed up by French digital bank Morning, Swiss digital bank Yapeal, and Spanish POS lender Aplazame.

CoinLoan Plans IEO and Seeks Partners (Digital Journal), Rated: B

CoinLoan crypto-backed lending platform declares its intention to launch an Initial Exchange Offering and invites discussion with major crypto exchanges interested in the listing.

International

SoFi Is in Talks With Qatar for $ 500 Million Funding Round (Bloomberg), Rated: AAA

Fintech startup Social Finance Inc. is in the final stages of closing a funding round from the Qatar Investment Authority and others, according to four people familiar with the matter.

The new round, which could close as soon as this week, is said to value the startup at an amount similar to the $4.3 billion valuation of its 2017 funding round, led by Silver Lake. Two of the people said that in order to achieve the same valuation, investors were asking for more protections should the company raise money or sell itself for a lower price tag in the future. The terms of the deal have not been finalized and could still change, the people said. All of the people asked not to be identified because the discussions are private.

These are the top 10 hottest fintech startups and companies in the world (Business Insider), Rated: AAA

Fintech industry funding has already reached new highs globally in 2018, with overall funding hitting $32.6 billion at the end of Q3.

Brex

What it does: Brex is a US-based corporate credit card provider, which initially focused on serving startups.

Raisin

Why it’s hot in 2019: Raisin became a fintech unicorn after raising $114 million in January, and has since then formed partnerships with Commerzbank and ClearScore. Additionally, the startup partnered with Starling Bank in 2018 to launch bank accounts in the UK

SoFi

Why it’s hot in 2019: While the company previously focused on loans, including student loans, in 2019 it has made some significant moves into the wealth management space, and launched both free ETFs and an investment product, dubbed SoFi Invest. As it becomes a more rounded financial product, SoFi will be worth watching in the next few years.

Lending Express

What it does: Lending Express is a US-based lending platform, which focuses on SMBs, and helps them gain access to more funding by providing them with advice.

Volt Bank

Why it’s hot in 2019: In January, Volt became Australia’s first fully licensed neobank. The challenger bank will first offer a suite of retail banking products, as well as budgeting and account aggregation tools, and plans to enter the SMB banking sector in 2020.

U.K. fintech now has war chest to push stateside (American Banker), Rated: A

Fresh off a $100 million funding round last year, the British startup OakNorth is preparing to license its business lending technology to U.S. banks and beyond.

The 3-year-old small-business lender is entering the U.S. at a time when fintechs and banks have stepped up their digital business lending efforts. Though OakNorth has not announced any official partnerships in the U.S., CEO Rishi Khosla said there’s appetite for what the firm is offering.

BlockFi Is Now Paying Interest on $ 53 Million of Crypto Deposits (CoinDesk), Rated: A

Crypto lending startup BlockFi has gathered another $18 million of bitcoin and ether deposits since last month, bringing its total interest-earning accounts to $53 million.

The company also lowered its minimum balance to earn interest on bitcoin from 1 BTC to 0.5 BTC and expanded its operations to India, meaning its service is now available globally, except for territories sanctioned by the U.S., U.K. and E.U.

No crypto winter for BlockFi as client base reaches 50% (CoinGeek), Rated: B

Crypto lending startup BlockFi has been growing, and now claimed that it has grown its client base by 50% in just one month.

Funds at your disposal: Digital lending making inroads into traditional lending (Finextra), Rated: A

The penetration of the internet of things and devices such as smartphones has brought in many advancements. This has made economic activities available at the touch of a button. Among the various sectors, the digital world has evolved the way traditional banking processes are being carried out. A growing number of businesses and individuals are filling applications online for taking loans rather than getting into the lengthy lending process.

Microsoft Will Pay You To Develop… Ethereum? (CryptoBriefing), Rated: B

“[ConsenSys Labs] has put up a few bounties in the vein of rethinking the lending market, and thinking about a peer-to-peer lending and a decentralized credit score system,” explains ConsenSys’ Operations Lead Vivek Singh. Instead of relying on centralized credit agencies, such a system—if successful—could allow borrowers to leverage their social connections into a sort of decentralized credit score.

India

Indian lendtech ZestMoney raises $ 20m (Banking Tech), Rated: AAA

ZestMoney, a start-up that helps consumers with no credit history get loans to buy online, has raised a $20 million Series B.

‘Money Loji’ launches App that offers loans to salaried professionals within 5 Minutes (Business Standard), Rated: A

Money Loji, a modern money ending platform, has launched its App, which offers quickest and the most secure loans to salaried professionals for an immediate requirement with flexible repayment options starting from 7 days to a maximum of 90 days. They follow a unique three-step process – application, approval, disbursement which is carried out within 3-4 minutes. The eligibility criterion is a minimum in-hand of Rs 20,000/month and a minimum age of 23 years. The application requires the users to upload an identity proof, an address proof, last 3 alongside the slips.

Blockfi Launches High-Interest Crypto Lending Program in India (Bitcoin.com), Rated: A

New Jersey-based crypto startup Blockfi announced Tuesday that it has expanded service to users in India. Its flagship Blockfi Interest Account (BIA) for BTC and ETH is now available in 65 countries.

Asia

Nuo Network Crypto Lending Platform Becomes Asia’s Biggest with $ 2 Million in Reserves (Bitcoin Exchange Guide), Rated: AAA

ConsenSys ventures backed Nuo.Network, which is a non-custodial lending platform recently made it to the top 5, dollar Defi (Decentralized Finance) projects and it presently the largest lending platform based in Asia. In the past month, the value of loans given has doubled, this is partly due to the growth of DAI reserves, which is now about 500,000 USD and the surge in Maker stability fees.

Why China’s Ping An OneConnect picks Indonesia for expansion (The Asset), Rated: A

The archipelago is viewed as an ideal market to benefit from the services offered by the enterprise. According to the Ping An Group, Indonesia, at around US$27 billion in 2018, is the largest and fastest-growing internet economy in Southeast Asia.

MENA

Banks use fintech to make up for lost time on financial inclusion (Financial Times), Rated: AAA

It fell to a mobile phone company more than a decade ago to financially empower tens of millions of Africans who found themselves passed over by the traditional banking sector. Now, some 12 years after Vodafone co-founded M-Pesa, the mobile payments venture that took east Africa by storm, banks are upping their game to improve financial inclusion rates across Africa and the Middle East, as technology widens their ability to deliver banking services at lower costs.

Source: Financial Times

In east Africa, the Catalyst Fund has backed Sokowatch, a three-year-old Kenya-based fintech that enables small retailers to order goods from suppliers registered on the mobile-focused platform and receive same-day deliveries. It also offers access to credit. The platform has already expanded into Tanzania and Rwanda.

In the Middle East, Citigroup has given $5m to a microloans fund in Jordan that helps give women access to credit. The financial support will help provide loans to around 10,000 additional women.

Iraq’s financial inclusion drive boosted by homegrown fintech (Financial Times), Rated: A

Around 7m Iraqis are now receiving welfare benefits or public sector salaries electronically, as the government replaces cumbersome cash dispersals with biometric debit cards that can be used at ATMs and in shops.

Only 23 per cent of Iraqis aged 15 and over held an account with a financial institution in 2017, according to the World Bank — although that figure has doubled since 2011.

Source: Financial Times

YouHodler Cryptocurrency Lending Platform Adds Dash (Dash News), Rated: A

Users will now be able to borrow in EUR, USD, or Stablecoin against their Dash as well as use the site to covert Dash to any crypto or fiat on the platform and withdraw to their crypto or fiat wallet. If a user enters their credit/debit card on the platform then they can “convert DASH to fiat and instantly withdraw that amount onto their personal cards, adding a unique “real world” utility for crypto”.

Canada

7 ways emerging fintech hubs are taking on the giants (PaymentsSource), Rated: AAA

Toronto is another significant fintech force in North America, and the leading fintech zone in Canada, because of the high concentration of financial organizations and technology development in Ontario. Last year Toronto accounted for CA$221 million (US$165 million) in total fintech investments across 25 deals, according to a recent report from Toronto Financial International (TFI).

Toronto ranks ninth out of the top 15 global fintech hubs, according to TFI. Currently the region has more than 190 fintech companies and 20 incubator/accelerators in operation. Payments represent the single leading category of fintech investment in the Toronto area, and combined with lending and digital currencies/FX firms it accounts for half of all local fintech activity, according to TFI.
Source: PaymentsSource
Latin America

Brazilian Credit Marketplace FinanZero raises USD 11 Million in Series B Round (Yahoo! Finance), Rated: AAA

FinanZero, a Brazilian fintech that operates as a consumer loan broker, received a new round of investment, raising USD 11 millionfrom Atlant Fonder, Dunross & Co and Vostok Emerging Finance, among other investors.

Authors:

George Popescu
Allen Taylor

The post Thursday April 25 2019, Weekly News Digest appeared first on Lending Times.

Friday September 22 2017, Daily News Digest

APAC alternative finance

News Comments Today’s main news: SoFi hit with a new lawsuit. Former SoFi loan reviewer says company created a hostile work environment. LendingClub launches Android app for investors. ZhongAn prices Hong Kong IPO at HK$59.70, raises $1.5B. Australia passes Japan to become second largest alternative finance market in APAC. Today’s main analysis: APAC alternative finance report. Today’s thought-provoking […]

APAC alternative finance

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

APAC

South America

News Summary

United States

SoFi Condoned ‘Rampant Sexual Activity,’ Lawsuit Alleges (Bloomberg), Rated: AAA

A former loan reviewer at Social Finance Inc. claims in a lawsuit she was repeatedly sexually harassed while working there, ratcheting up pressure on the embattled fintech startup.

Sonoma County Superior Court court clerk confirmed by phone that the complaint was filed Thursday.

Top management indulged in the inappropriate behavior, which then trickled down through the ranks, according to the complaint. Cagney dated subordinates at SoFi’s San Francisco office — where his wife works as chief technology officer and vice president of engineering — and attended parties with SoFi’s Healdsburg staff while intoxicated, Zamora alleges.

SoFi Faces New Sexual Harassment Claim Days After CEO’s Departure (WSJ), Rated: AAA

Yulia Zamora, who worked as a loan reviewer at SoFi’s Healdsburg, Calif., office from October 2015 until October 2016, said in a complaint against the company that a manager had propositioned her for sex and retaliated against her when she refused.

She added that SoFi exhibited a “hostile work environment where sexually inappropriate behavior became widely accepted and laudable by upper management.”

In her complaint, Ms. Zamora said that a SoFi director of operations who had authority over promotions approached her during and after an office Christmas party in December 2015. The manager, Adam Cobb, told her that he was “intimidated by [her] beauty” and that he “want[ed] to do sexy things” to her, according to the complaint. She denied his advances, the complaint added.

In the weeks following those comments, Mr. Cobb refused to promote Ms. Zamora and refused to write her a letter of recommendation after she resigned from the company, according to the complaint. She raised the issue with supervisors just after the party, but said that they found the story “entertaining rather than upsetting.”

Why Startup Founders Should Be Required to Sign a ‘No Go, Bro’ Clause (Fortune), Rated: AAA

Startup CEOs like Cagney, Travis Kalanick at Uber, and Taylor Freeman at UploadVR—accused in a recent lawsuit of bragging with his co-founder Will Mason about how many girls they were going to have sex with at company parties, and designating a room at the office as a “kink room”—can destroy as well as create billions of dollars in value for their companies, all while creating toxic work environments.

Whether they resign like Cagney and Kalanick or remain with the company like Freeman and Mason, startup executives typically own a large percentage of company stock. That often leads investors and boards to treat them gently when it comes to sexual harassment allegations and other forms of misconduct—but it should not.

Before making a big investment in a startup, investors should use their power to require CEOs to sign a clause under which they forfeit a large proportion, or potentially all, of their stock, if fired for misconduct, including reasons such as sexual harassment and misrepresentations to investors.

 

 

 

LendingClub, a peer-to-peer loans platform, just launched its Android app for investors (Android Police), Rated: AAA

With the LendingClub Invest app, you can log in via your fingerprint, view information like your current value and return, as well as transfer money.

Keep in mind that this is for investors, not borrowers. It’s for those using the service who want to manage their accounts and view the details of their current investments. Borrowers using LendingClub don’t have an app just yet.

The full log for this initial release is below:

WHAT’S NEW

Access your LendingClub investor account through a convenient experience optimized for your mobile device.
In this initial version you can:
– Log in to your account with a touch of the finger (for Android 6.0 or above)
– View and manage your account
– See your Net Annualized Return (NAR)
– Invest in Notes
– Use your saved filters to find the Notes you want
– Set up and update automated investing
– Transfer money between your LendingClub account and your bank

Hackers Entered Equifax Systems in March (WSJ), Rated: AAA

Hackers roamed undetected in Equifax Inc.’s EFX +2.76% computer network for more than four months before its security team uncovered the massive data breach, the security firm FireEye Inc.FEYE +0.24% said this week in a confidential note Equifax sent to some of its customers.

FireEye’s Mandiant group, which has been hired by Equifax to investigate the breach, said the first evidence of hackers’ “interaction” with the company occurred on March 10, according to the Mandiant report, which was reviewed by The Wall Street Journal.

Equifax has said it didn’t discover the breach until July 29. Days later it called in Mandiant. Equifax didn’t disclose the breach until Sept. 7.

In a progress report that accompanied that announcement last Friday, Equifax said hackers accessed consumers’ data from May 13 through July 30. It didn’t mention in that report that the attack had begun at an earlier date.

Mandiant’s report this week noted the hackers accessed one of Equifax’s servers by taking advantage of a flaw in software called Apache Struts, used by many companies to build interactive websites.

Two days before the access occurred, on March 8, security researchers at Cisco Systems Inc. warned of the flaw in Struts and a patch was issued by the Apache Software Foundation. Equifax in its report last week said its security staff “took efforts” to fix the system, saying it understood the intense focus outside the company on patching efforts and that its review was ongoing.

After interacting with Equifax’s server in early March, the hackers then entered the computer command “Whoami,” Mandiant wrote. This command would have given the attackers the username of the computer account to which they had just gained access, an early step in a hacking attempt.

The Ultimate Anti-Competitive Mergers (Prospect), Rated: A

When you need a new mortgage in the future, will your only options be AmazonWellsFargo or AppleChase? The prospect of a mash-up of banking and commerce keeps people like George Washington University law professor Arthur Wilmarth up at night. “This would mean an end to healthy innovation and startups and competition,” said Wilmarth. “I think it is that dire.”

In principle, these maneuvers could inject competition into a banking industry controlled mostly by four Wall Street giants, making financial services more accessible and flexible to modern needs. But special charters also let fintech evade critical regulatory scrutiny. And the tentative steps by SoFi and Square seem like a dry run for the day Silicon Valley’s giants decide to get in the game, building sprawling businesses the government has aimed to prevent for decades.

Banks get all sorts of privileges from the government—and if banks can also function as ordinary commercial enterprises, they have unfair advantages against other businesses (who are also their clients).

Non-Prime Gen-Xers Lack Financial Stability According to New Research by Elevate’s Center for the New Middle Class (BusinessWire), Rated: A

Members of Generation X (those born between 1965 and 1980) now sit at the age where they anchor the country’s economic and social structure. Yet, new research from Elevate’s Center for the New Middle Class shows that Gen-Xers face a slew of economic challenges that perpetually keep them off balance. Worse still, that lack of balance means they can’t plan for the future or get back on track.

Non-prime Gen-Xers, in particular, lack stability – in their employment as well as their income. They have difficulty predicting their monthly income, and consequently act like cash accountants in managing their day-to-day finances. Non-prime Gen-Xers are thus the least likely generational cohort to be able to save money—an important aspect of financial planning. Compared to their prime counterparts, non-prime Gen-Xers are:

  • 4x as likely to be living paycheck to paycheck
  • 4.5x as likely to worry about meeting monthly expenses
  • 2x as likely to have been laid off in the past year, and almost 3x as likely to be laid off in the last 5 years
  • 5x as likely to feel “significant stress” over finances
  • 5x more likely to say that in the prior 12 months they were never able to plan for a major expense

The planning gap between prime and non-prime Gen-Xers is wider than any other generation, and 1 in 5 reports running out of money every month. When it comes time to pay for unplanned or unexpected expenses, such as medical bills or car repairs, only 13 percent feel confident they could come up with $1,200. This lack of confidence may be due to lack of reliable options. Though 80 percent of prime Gen-Xers have a solid option – savings, credit or turning to family/friends – only 44 percent of their non-prime counterparts have a solution for coming up with the funds.

3 Stocks With eBay-like Return Potential (The Motley Fool), Rated: A

Peer-to-peer lending platform Lending Club is finally starting to show signs of growth after several quarters of stagnant loan originations. With the stock down 74% since its first trading day in 2014, there’s certainly potential for a big investment win if things continue to go well.

For the second quarter of 2017, Lending Club’s loan originations grew by 10% year over year as well as sequentially, which came as a pleasant surprise to investors. Revenue grew by an impressive 35% from last year, and profit margins improved tremendously. What’s more, Lending Club’s CEO said that the company could approach GAAP profitability as we head into 2018, which would be a major improvement from the first half of the year.

Lending Club’s loan portfolio is currently about $11.1 billion in size, which may sound like a lot, but consider that the U.S. nonrevolving (loan) consumer lending market has more than $2.7 trillion in outstanding balances, not including mortgages, according to the Federal Reserve.

US auto-loan fintechs help incumbent lenders stay up to speed (Business Insider), Rated: A

Hyundai Capital America, the car maker’s US lending division, has partnered AutoGravity, a US-based digital car shopping and financing platform, to extend its loans more easily to consumers looking to buy a Hyundai, Kia, or Genesis vehicle.

Hyundai Capital will be one of several auto lenders that consumers can borrow from via the platform.

JPMorgan Chase partnered online car marketplace TrueCar in August 2016 to launch an end-to-end digital platform, Chase Auto Direct, for finding and financing a vehicle. Additionally, Ford Motor Credit Co., the car giant’s lending arm, started leveraging US marketplace lender AutoFi’s software in January to make it easier for customers to buy and finance a vehicle without going to showrooms.

The Saatva Company Partners with Payment Solutions Company Klarna (PR Newswire), Rated: A

The Saatva Company, the largest online luxury mattress retailer, has formed a strategic partnership to offer financing plans to its customers with Klarna, a global payment solutions company that works with other top U.S. brands like Microsoft and Taylormade.

Through this partnership, Saatva customers now have the option to “Slice Up Your Payment” through Klarna and spread the cost of purchases over time with convenient, stress-free low APR financing offers. It is available immediately under all three Saatva Company brands – Saatvamattress.com, Loomandleaf.com and Zenhaven.com.

After selecting the perfect mattress, customers can apply for Klarna financing at checkout through a simple three-step instant credit approval process. Customers are approved for an open line of credit that may also be used at any other merchant where Klarna is accepted.

Digital Lending Dramatically Cuts Down Closing Times (The M Report), Rated: A

In a recent sampling of 10,000 purchase loans from LendingTree, a leading online loan marketplace, the closing times on mortgages saw a sharp decrease thanks to more digital lending; approximately 74 percent on average from May 2016 to May 2017. According to the report, the average closing still takes roughly 72 days, but this rate is influenced by several other buying factors as well as digital integrations.

The study shows the average amount of days to close in Boston (79.5) strongly differs from the time spent in a city like Denver, (56.2); a 23.3 day difference.  New York closely followed Boston at 79.2 days and Cleveland at 71.5. Phoenix and Dallas barely ranked above Denver at 57.5 and 57.6 days respectively. The time to close also varies largely by state, with Montana measuring at 52.7 days until closing and New York at 91 days.

Activehours raises $ 39 million for its new take on cash advances (TechCrunch), Rated: A

Nine months after raising $22 million for its unique take on the cash-advance business, Activehours has gone back to the venture capital well and pulled out another $39 million in financing.

Led by Andreessen Horowitz, with participation from the company’s early-stage investors Matrix Partners, Ribbit Capital, and March Capital Partners, Activehours has managed to now raise nearly $65 million since its launch in 2013.

The Palo Alto-based company skirts regulation as a payday lender because it doesn’t charge interest on the cash that it fronts to customers. Instead, the company asks that users pay a small voluntary fee for access to their money ahead of their payday.

Tribal Lender Claims Immunity From Challenge To Immunity (Law360), Rated: A

An online lender accused of striking “rent-a-tribe” deals with a Native American tribe in order to benefit from tribal immunity urged a Virginia federal judge Tuesday to dismiss a proposed class action over its lending practices, saying it is, in fact, a sovereign arm of the Chippewa Cree tribe and therefore immune from the litigation alleging false immunity.

The Government Shouldn’t Collect Private Financial Information from America’s Poor (National Review), Rated: A

The CFPB, which was created under Dodd-Frank supposedly to protect consumers and prevent the next big financial crisis, is now being used to try to discourage payday lending, vehicle title, and certain high-cost installment loans.  The rule will require customers applying for a small-dollar loan – the average of which is $350 — to submit extensive personal financial information in support of their applications. In addition to determining a customer’s ability to repay the loan, the lenders will be required to share this information with each credit reporting agency (CRA) registered with the Bureau.

With this data all in one place, it will be vulnerable to a potential hack.

And just this week the SEC reported a hack.  Now government will have a new pool of data for hackers to try to infiltrate.

Embracing Blockchain Is in the ‘National Interest’ (Coindesk), Rated: B

Giancarlo continued:

“Everything we do has been digitized. The one thing that has not yet been digitized is regulation. We’re still very much an analog regulator of digital markets.”

And most importantly, Giancarlo stressed that it is imperative that U.S. regulatory structures catch up with the fast-moving digital economy.

eOriginal Announces Coluzzi as New Chief Financial Officer (Benzinga), Rated: B

eOriginal, Inc., today named Michael Coluzzi as Chief Financial Officer (CFO), another valuable addition to the executive team of the rapidly growing financial services technology firm.

Coluzzi is the third key addition to eOriginal’s leadership following a growth capital investment by LLR Partners. In addition to the new CFO, Brian Madocks joined as Chief Executive Officer in April 2017 followed by Timothy Wall as Chief Revenue Officer earlier this month. These hires and the existing eOriginal management team together will drive the business towards achieving full potential.

Veteran CFO Bruce Felt Joins Personal Capital’s Board of Directors (Business Insider), Rated: B

Personal Capital, the leading digital and professional advisor based wealth management firm, today announced that Bruce Felt, the Chief Financial Officer of DOMO, has joined Personal Capital’s Board of Directors and will chair the Audit Committee.

Felt is the CFO of DOMO, one of the fastest growing SaaS companies in the country. Previously, he was the CFO of SuccessFactors, where he guided the company through six acquisitions, a public offering and the sale of the business to SAP. Felt has spent 25 years managing financial operations for high-tech companies and serving on multiple boards of directors.

Form 8-K Elevate Credit, Inc. For: Sep 15 (StreetInsider.com), Rated: B

The Registered Office of the corporation in the State of Delaware is changed to 251 Little Falls Drive, in the City of Wilmington, DE, County of New Castle, Zip Code 19808. The name of the Registered Agent at such address upon whom process against this Corporation may be served is Corporation Service Company.

United Kingdom

Ex-Barclays CEO Antony Jenkins raised £34 million for his fintech startup (Business Insider), Rated: A

Former Barclays CEO Antony Jenkins has raised £34 million ($46 million) for his fintech startup 10X Future Technologies.

The Series A funding round was led by Chinese firm Ping An Insurance and consulting firm Oliver Wyman.

London-based 10X, which went public last October, will help banks and financial institutions modernize their back office technology.

Older people are underserved by financial services, says the City watchdog (City A.M.), Rated: A

In its Ageing Population Project, the FCA found that older people’s needs are not being fully met which may result in exclusion, poor customer outcomes and possibly even harm.

It has called on retail banks, advisors and the savings industry to think about the vulnerabilities which older people – defined as those who are aged 55-plus – may face.

Cautious investors blind to risks of alternative favourites (FT Adviser), Rated: A

The aftermath of the financial crisis has seen investors pour capital into income generating alternative assets perceived to be low risk but market watchers have warned the dangers won’t be evident until interest rates rise.

The AIC said 70 per cent of the investment trust launches over the past five years have been in the alternative income sector.

Jonathan Davis, who runs Jonathon Davis Wealth Management in Hertford, said he has been preparing his clients portfolios for higher inflation, and higher interest rates, and generally avoiding UK equities.

LendInvest hires Aldermore’s Boden (Mortgage Strategy), Rated: B

Aldermore head of commercial mortgages Ian Boden has joined specialist lender LendInvest.

Boden joins the group as sale director, after five years at Aldermore Bank.

He has previously worked at Lloyds Bank and HSBC and has an advanced diploma in financial planning from the CII.

In his new role, Boden will help grow the business development team at LendInvest. He will help the group expand to new markets.

Deadline nears for pub purchase (County Echo), Rated: B

THE 30 September deadline to secure the necessary funds to purchase the threatened Tafarn Sinc pub in Rosebush is fast approaching.

“The aim now is to see a sum of £200,000 in shares achieved by 1 October and also the committee has endorsed a special Peer to Peer (P2P) lending scheme where a four per cent gross interest rate is offered to individuals who can lend a £5,000 sum to the co-operative to secure the total funds.

“As a target for the P2P we have 20 lots of £5,000 loans we are seeking and then this will bring in the needed final sum to purchase the pub and ensure it is owned by local people.”

China

China online insurer ZhongAn prices HK IPO at top end, raises $ 1.5 bln (Kitco), Rated: AAA

ZhongAn Online Property & Casualty Insurance Co priced its IPO at the top of an indicated range, raising $1.5 billion in Hong Kong’s biggest ever financial technology stock offering, IFR reported on Friday.

China’s first internet-only insurer priced 199.3 million new shares at HK$59.70 ($7.65) each, the top of a HK$53.70-HK$59.70 range said IFR, a Thomson Reuters publication. It cited people close to the deal.

ZhongAn Online Property & Casualty Insurance Co priced its IPO at the top of an indicated range, raising $1.5 billion in Hong Kong’s biggest ever financial technology stock offering, IFR reported on Friday.

China’s first internet-only insurer priced 199.3 million new shares at HK$59.70 ($7.65) each, the top of a HK$53.70-HK$59.70 range said IFR, a Thomson Reuters publication. It cited people close to the deal.

China’s first Internet Insurance Company is set to list in Hong Kong on 28th Sep (Xing Ping She), Rated: A

Zhongan Insurance, which was co-founded by Jack Ma of Alibaba, Ma Mingzhe of PING AN and Pony Ma of Tencent, is the first internet insurance company in China. Because of its strong background, every move of Zhongan Insurance is closely concerned. On September 17, Zhongan Insurance revealed it would be listing in the main board of Hong Kong stock exchange. More details, the price range will be set at HK$53.7- 59.7, and the company plans to raise HK$10,948 million in total, it is scheduled to begin trading on the main board of the Hong Kong stock exchange on September 28. If the plan is implemented, Zhongan will become the first publicly listed fintech unit of China.

Chinese online stockbroker Tiger Brokers gets investment from US firm Interactive Brokers (SCMP), Rated: A

Tiger Brokers, a Chinese online securities brokerage start-up backed by Wall Street billionaire investor Jim Rogers, said on Thursday it has landed an investment from Interactive Brokers Group, one of the largest electronic brokers in the United States.

The Beijing-based Tiger Brokers, which offers an app to allow Chinese investors to trade on US stock markets and the Hong Kong exchanges and in Chinese A shares, did not disclose the size of the investment by Interactive Brokers.

The Top 10 Most Valuable Unicorns (Benzinga), Rated: B

The United States is home to the most unicorn companies in the world, with over 100 such companies, according to a new report by HowMuch.

8. Lu.com ($18.5 billion): China

Lu.com is an online finance marketplace which started as a peer-to-peer lending platform. Since 2011 it has service over $2.5 billion peer-to-peer loans.

 

European Union

EU’s new data privacy law creates headaches for U.S. banks (American Banker), Rated: AAA

What happens when a cookie of a Brit in London lands in the server of a community bank in the U.S. if, on an off-chance, the Brit browses the bank’s website?

It’s unclear, experts say, but U.S. banks — especially small and midsize banks — need to go find out because the European Union’s General Data Protection Regulation (GDPR) could affect them, unlike the EU privacy regulations before it.

The countdown is ticking on GDPR’s website. The law, approved by the European Parliament in April 2016, will take effect in late May 2018. It will apply to “all companies processing and holding the personal data of data subjects residing in the European Union, regardless of the company’s location,” the website said.

International

SoftBank’s Banker Stash (Bloomberg), Rated: AAA

Their presence begs a question of the Vision Fund, whose backersinclude Apple Inc. and Saudi Arabia. Is its long-term goal to get into everything from ride-hailing apps to indoor farming, or is it more about getting juicy returns?

One Fund to Rule Them All
SoftBank’s $93.2 billion Vision Fund is the world’s largest private equity fund.
Anshu Jain, Deutsche Bank’s former co-chief executive officer and key architect of its rapid growth in markets prior to the credit crunch, was an adviser at SoftBank-backed U.S. based online lender Social Finance Inc. until recently.

While SoftBank put in equity to the tune of $28 billion, its partners, including the government funds of Saudi Arabia and Abu Dhabi, hold part of their stakes via preferred instruments, also known as mezzanine capital. It means they’re owed yearly payouts, similar to a dividend.

Saudi Arabia’s Public Investment Fund, for instance, is injecting $45 billion, but only $18 billion of that is straight equity, the Wall Street Journal reported in May. The preferred units will earn about 7 percent interest annually over the life of the fund, expected to be 12 years.

Source: Bloomberg

Which banks are leading digital (and who are the laggards)? (The Finanser), Rated: A

Banks typically spend 80% of their IT budgets on legacy technology maintenance and a tier one bank could easily spend up to $300m a year on existing software which constantly needs expensive updates in order to meet regulatory requirements.

Why so much? Because most of those systems are written in programming languages that no one knows anymore. Anna Irrera writes on Reuters that 43 percent of US banks’ core systems are written in COBOL.

$3 trillion in daily commerce flows through COBOL systems. The language underpins deposit accounts, check-clearing services, card networks, ATMs, mortgage servicing, loan ledgers and other services.

In another report, Autonomous Research said the banks with the most potential to do better than analysts’ profit expectations because of digitisation were: JPMorgan Chase and SunTrust in the US, Spain’s CaixaBank, Lloyds Banking Group in the UK and KBC in Belgium.

Autonomous ranked the banks based on two criteria: their current level of digitisation and their transformation outlook. It assessed 18 attributes from customer ratings of mobile banking apps to IT expertise on the board of directors. Banks viewed as being behind on digitalisation included HSBC, BNP, Credit Suisse, Intesa Sanpaolo and Standard Chartered; the three biggest Japanese banks: MUFG, Mizuho and Sumitomo Mitsui Financial Group; and the four big Canadian banks: TD Bank, Royal Bank of Canada, Bank of Montreal and Bank of Nova Scotia.

Bitcoin’s connection to the real economy (Business Live), Rated: A

Among those leaving the building is Wayniloans (‘an online peer to peer lending platform based on bitcoin technology. Wayniloans INC was founded in 2015 and is based in Buenos Aires, Argentina’).

According to Juan Salviolo, Wayniloans co-founder:

On Wayniloans part of our business is achieved thanks to bitcoin, and in May we agreed to a sentence to reach consensus for the good of the ecosystem. This sentence was later changed to a longer agreement without our notice, and it was known as the New York Agreement (NYA). At the time we didn’t know that existing developers wouldn’t support it, or that most Latin American bitcoin users, our customers, would view it as a contentious proposal.

Which brings us back to Fickling’s point. The connection between Bitcoin and the real economy is sentiment and therefore, ipso facto, prima facie, mutatis mutandis, sentiment is the sole driver of value.

Australia

Australia ranked as the second largest alternative finance market in the Asia Pacific (Finextra), Rated: AAA

Findings from a joint study by KPMG, the Cambridge Centre for Alternative Finance and the Australian Centre for Financial Studies, released today, reveals that Australia’s alternative finance market size grew by 53 per cent from 2015 to 2016 and has now reached US $609.6 million.

According to the Second Asia Pacific Alternative Finance Industry Report, Australia has leap-frogged Japan to become the second largest alternative lending market (behind China) across the Asia-Pacific.

Outside of China, Australia now contributes 30.42% of the total market in Asia Pacific and stands well ahead of Japan (US $398.45 million) and South Korea (US $376.31 million) in terms of market size.

CCAF Asia-Pacific Report Shows Dramatic Rise for Alternative Finance in Australia (Crowdfund Insider), Rated: A

China is the biggest kid on the block when it comes to the emerging alternative finance market in the Asia Pacific region. In fact, China has the largest alternative finance market in the world driven by a fast growing economy, a highly connected population via mobile devices, and a need for access to capital not serviced by traditional state owned banks. But rapid alternative finance growth is not isolated to just China in the Asia Pacific region. Australia experienced growth of 53% from 2015 to 2016, according to the recent research report published by the Cambridge Centre for Alternative Finance. Australia’s alternative finance market has now reached US $609.6 million.

MoneyPlace CEO Stuart Stoyan echoes Bertoli’s sentiment regarding online lending;

“We have now moved on from being an ‘early stage’ and ‘cottage’ industry to be a legitimate source of funding for Australian borrowers,” he said.

Daniel Foggo, CEO of RateSetter Australia, explained that while trust and confidence in banks continues to erode, peer-to-peer lenders are building a sustainable, technology-led alternative to the bank model, offering better value to Australian investors and borrowers.

Trademarks and fin-tech (Lexology), Rated: A

Technology is an increasingly important aspect of the financial marketplace. With the rapid introduction of platforms such as crowdfunding, peer-to-peer lending and new crypto-currencies, it is important for fin-tech users and providers to protect their intellectual property (IP) from infringement and ensure they are not at risk of infringing the IP of another.

Businesses that provide fin-tech services are at risk of infringing the trademarks of other such providers. For instance, one European peer-to-peer facilitator attempted to register a trademark for their brand, only to be challenged by a similarly branded business. This resulted in an expensive negotiation that lasted for almost a year and a half.

India

RBI move on P2P lending companies may affect small players, say experts (The New Indian Express), Rated: AAA

While the recent Reserve Bank of India (RBI) notification treating all peer-to-peer (P2P) lending platforms as non-banking financial companies (NBFCs) is likely to bring some credibility to the business, experts say it’s a battle half won by the fintech firms.

The RBI proposal, they say, might cripple the operations of small players who won’t be able to comply with some of the new requirements such as keeping net available funds of Rs 2 crore.

APAC

Asia Pacific Alternative Finance Report “Cultivating Growth” Released (Lend Academy), Rated: AAA

The Cambridge Centre for Alternative Finance together with the Australian Centre for Financial Studies at Monash University and Tsinghua University today released their second annual alternative finance report.

Source: Lend Academy

Alternative finance volume totaled $245.28 billion in 2016, up from $103.31 billion in 2015. It’s amazing to see alternative finance continue to grow in the region. Not surprisingly, China is the main driver accounting for 99.2% of the total Asia Pacific market. China represented approximately 85% of the entire global market in 2016.

Other findings from the report include:

  • China continues to see “distinctively low levels” of institutional participation in alternative finance compared to other markets such as the US and UK, with only five per cent of peer-to-peer business lending coming from institutions in 2016.
  • In the Asia Pacific outside of China, about $1.5 billion was raised by businesses through alternative finance channels, up 72 per cent from the previous year, with an estimated 43,000 business entities utilising alternative channels of business finance.
  • In China, 72 per cent of peer-to-peer consumer lending platforms see cyber-attacks as the biggest threat to the industry, while more than 50 per cent across all platforms in China see current and proposed regulatory norms to be adequate.
  • Outside of China, 69 per cent of platforms in Japan see existing regulation as inadequate or too relaxed, while in Singapore, Australia, New Zealand and Malaysia around two thirds of platforms see current regulations as adequate.
Source: Lend Academy
South America

Venezuela Said to Be Late on $ 185 Million Sovereign Bond Payment (Bloomberg), Rated: A

The intermediaries tasked with passing along interest payments for the cash-strapped nation haven’t received the funds for an $185 million coupon that was due Sept. 15, according to people with knowledge of the matter. Investors interviewed by Bloomberg say they haven’t been paid, and brokers say their clients are still waiting on the cash.

The government has a 30-day grace period — now 25 days — to make good on the payment before triggering an event of default on the notes.

Authors:

George Popescu
Allen Taylor

Wednesday August 16 2017, Daily News Digest

unsecured personal loan market

News Comments Today’s main news: SoFi battles its first PR crisis. Small businesses braced for higher costs post-Brexit. ID Finance sees potential in Brazilian market, sees 82% revenue growth in 2017 first half. Today’s main analysis: Pullback in subprime loans. Prosper’s Q2 numbers. Today’s thought-provoking articles: New fintech lenders encroaching on business banking turf. Pullback on subprime loans. Hongling Capital […]

unsecured personal loan market

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

SoFi battles its first major PR crisis (Tearsheet), Rated: AAA

In a wrongful dismissal suit filed last week, a former employee reportedly claimed he was let go after he told management he had seen female employees subjected to lewd and inappropriate comments and that managers canceled loan applications when internal errors were made — a tactic to secure quarterly bonuses of up to $15,000. There’s also talk of a second class-action lawsuit alleging broader mistreatment of employees at the company.

But experts said the extent of the damage to the SoFi brand will center on whether other employees come forward to corroborate the allegations.

Jim Prosser, vp of communications and policy at SoFi, said the company carried out an internal investigation into the matter and challenged the notion that loan applications could be arbitrarily cancelled.

Based on sentiment expressed on Twitter, the lawsuit hasn’t made a big dent in SoFi’s brand reputation. Since the news broke Friday, 119 tweets mentioned the SoFi Twitter handle, 53 percent of which were positive and 47 percent were negative, according to Brandwatch. Compared to the past month, the SoFi handle attracted 920 mentions, 75 percent of which were positive. Still, Terry maintains that it’s not a massive conversation, and the news may have gotten less play with the violence in Charlottesville, Virginia, capturing headlines.

Start of a New Trend? Pullback in Subprime Loans Observed (GlobeNewswire), Rated: AAA

For the first time since 2012, originations to subprime consumers declined year-over-year for a number of major credit products, according to TransUnion’s (NYSE:TRUQ2 2017 Industry Insights Report. The report, powered by PramaSM analytics, found that 4.63 million subprime consumers originated an auto loan or lease, personal loan or credit card in Q1 2017. Comparatively, 4.89 million subprime consumers originated one of these products in Q1 2016.

In Q1 2017, subprime personal loan originations declined 10.6% year-over-year, compared to a positive annual growth rate of 11.0% in Q1 2016. This marks three straight quarters of year-over-year declines in originations. More than 100,000 fewer subprime consumers opened a personal loan in Q1 2017 than in Q1 2016.

In fact, personal loan originations declined for all risk tiers, but at lower rates than for subprime originations. Total originations dropped 6.9% from 2.99 million in Q1 2016 to 2.78 million in Q1 2017.

In the credit card market, subprime originations declined by 1.8% to start 2017, the second consecutive quarter of decline. Since 2014, subprime originations had increased at a rapid rate, averaging growth of 29.2% in the first quarters of 2014, 2015 and 2016. In Q1 2017, subprime originations declined at nearly the same rate as total originations (down 1.9%).

As subprime consumers gained access to credit cards, lenders kept subprime credit lines low. In Q1 2017, subprime consumers held just 2.6% of total credit lines.

Auto loan originations declined 8.9% year-over-year from Q1 2016 to Q1 2017. Originations to subprime consumers dropped to 1.10 million in Q1 2017, down from 1.20 million in the first quarter of 2016. At the same time, total originations declined just 2.9% to 6.73 million in Q1 2017.

Source: TransUnion

Mortgage Delinquency Rate Drops to New Low since Recession

The mortgage delinquency rate reached the lowest level since the recession in the second quarter of 2017, dropping below 2% for the first time in almost 10 years. The mortgage delinquency rate was 1.92% in Q2 2017, down 16.5% from 2.30% in Q2 2016.

Viewed one quarter in arrears, mortgage originations remained relatively steady year-over-year in the first quarter of 2017. Up slightly from 1.46 million in Q1 2016, mortgage originations reached 1.49 million in Q1 2017. Largely due to the rise in interest rates, originations declined 28.3% between Q4 2016 and Q1 2017. A year prior, originations only declined 9.4% between Q4 2015 and Q1 2016.

More than 83% of mortgage originations were in the prime and above risk tiers in the first quarter of 2017. Market share of prime and above risk tiers has remained roughly in that range since Q4 2013.

The average new account balance, also viewed one quarter in arrears, declined 1.6% from $223,262 in Q1 2016 to $219,743 in Q1 2017.

Source: TransUnion

Total Credit Card Balances Rise Following Rich Credit Offers in 2016

The latest TransUnion Industry Insights report found that total credit card balances continued their steady year-over-year increase in the second quarter of 2017. Total card balances reached nearly $714 billion, up 7.8% from $662 billion in Q2 2016. The average balance per consumer grew 3.3% to $5,422, up from $5,247 in Q2 2016.

The credit card delinquency rate reached 1.46% in Q2 2017, up 13.2% from 1.29% in Q2 2016. This brings the card delinquency rate above the average Q2 delinquency reading of 1.27% for the last three years.

Source: TransUnion

Auto Delinquency Rate Rises after Years of Non-prime Origination Growth

TransUnion’s latest Industry Insights Report found that the auto delinquency rate reached 1.23% in Q2 2017, an increase of 10.8% from 1.11% Q2 2016.

Viewed one quarter in arrears, auto originations declined to 6.73 million in Q1 2017, down 2.9% from 6.93 million in Q1 2016. This marks the third consecutive quarter of year-over-year declines in auto originations and the first decline in origination growth in any first quarter since 2010.

Total auto balances achieved a new high in Q1 2017, reaching $1.145 trillion. The total balance was up 6.9% from $1.072 trillion in Q1 2016.

Source: TransUnion

Personal Loans Reach New Milestones as Balances Grow and Delinquencies Drop

In the second quarter of 2017, the personal loan delinquency rate declined to the lowest level since 2009. The delinquency rate was 3.02% in Q2 2017, an 8.5% decline from 3.30% in Q2 2016.

Personal loan balances achieved a new milestone of nearly $107 billion in Q2 2017, growing 10.8% over Q2 2016, when total balances were $96 billion. While balances increased, the growth rate was lower than the average Q2 growth rate of 24.7% for the past three years. The average balance per consumer also reached a new high at $7,781 in the second quarter, up slightly from $7,745 in Q2 2016.

Personal loan originations, viewed one quarter in arrears, declined 6.9% to 2.78 million in Q2 2017, compared to 2.99 million in Q2 2016.

Source: TransUnion

Please visit  more charts and details about TransUnion’s Q2 2017 Industry Insights Report or to register for TransUnion’s Q2 2017 Industry Insights Webinar.

Prosper Reports Strong Q2 Numbers – Is Cash Flow Positive Again (Lend Academy), Rated: AAA

Source: Lend Academy

As you can see in the graphic above Prosper had a rocky 2016. They went from a quarterly origination high of over $1.1 billion in Q4 2015 to a low of $312 million in Q3 2016. Since that time they have shown some solid growth with originations in Q2 2017 coming in at $775 million up from $586 million in Q1. They still have a long way to go before they reach record levels but growth has returned to the first US marketplace lender.

  • Total originations from inception through June 30, 2017 was $9.7 billion.
  • Transaction fee revenue rose to $35.4 million, up 32% quarter-over-quarter and 84% year-over-year.
  • Whole loans represented 94% of total loan volume in Q2.
  • Adjusted EBITDA was $6.7 million up from a loss of $11.6 million in Q2 2016.
Source: Lend Academy

New Fintech Lenders Encroaching On Business Banking Turf (The Financial Brand), Rated: AAA

Small and micro businesses struggle to get the cash they need. According to the Federal Reserve’s small business credit survey, 60% of applicants obtained less financing than they needed.

And they need money. The top challenge facing small businesses, says the Fed, is credit availability or securing funds for expansion (44%), followed by paying operating expenses (36%), making payments on debt (25%), and purchasing inventory or supplies to fulfill contracts (17%).

Unfortunately, size makes these loans unattractive to many banking providers. More than half (55%) of small businesses needed $100,000 or less and three-quarters sought $250,000 or less.



Can Smaller Banks and Credit Unions Compete? And Should They?

First, while online lender websites may be alluring, small business owners are still concerned about data security and privacy — particularly with these neo-lender startups. Second, the product features among fintechs are not always clearly stated, making it difficult to compare product offerings and costs.

These issues mean many small businesses still prefer to get a loan from a bank. Half (50%) seek financing from a large bank, and 21% from online lenders. And their preference is for loans not credit cards; 86% say they applied for a loan or a line of credit vs. only 31% who just applied for a credit card.

Smaller loans can be profitable, if you approach them in new ways using new tools.

  1. Reengineer the Process with Big Data. With so much data available on small business owners and more computing power, banks can use big data in innovative ways to decision loans. No longer limited to a credit score, big data can analyze the behavior of the business and predict its ability to pay back the loan. Big data also means that fewer applications must be sent to a human for decisioning. Real-time decisioning cuts costs for the bank and since so much customer data is already digitized, there’s less need to require borrowers to submit reams of documentation.
  2. Partner with Fintech. Rather than try to compete with online alternative lenders, consider joining them. IN 2015, J.P. Morgan Chase & Co. announced a partnership with On Deck Capital to create online small business loans. Called Chase Business Quick Capital, it provides Chase customers with faster access to cash than a traditional bank loan. Chase states that the capital can be available in the same day. In the past, a small business loan could take weeks to decision and then fund.

Goldman Tops Banks Betting on a New Type of Hedging (Bloomberg), Rated: A

Goldman Sachs Group Inc. and JPMorgan Chase & Co. are leading big banks in plowing record funds into outside ventures trying to disrupt their industry, a role typically dominated by venture capital firms, according to a report from Opimas, a management consultancy.

Goldman Sachs has invested in about 15 so-called fintech firms focusing on capital markets businesses this year, while JPMorgan has bet on nine, the report shows. Altogether, banks and other established companies will probably pump a record $1.7 billion into the sector through 44 deals in 2017, Opimas estimated.

A hot fintech startup has amassed nearly $ 5 billion from people willing to hand over their bank logins (Business Insider), Rated: A

  • Personal Capital is a startup known for its free platform, which allows people to plug in their bank and investment accounts to see all their financials at once.
  • CEO Jay Shah says Personal Capital has been monetizing the business by getting richer clients to pay for financial advice.
  • The startup recently raised an additional $40 million in outside funding.

The company is managing assets for Americans worth about $4.9 billion, and increasingly the customers are more affluent, Personal Capital’s CEO, Jay Shah, told Business Insider in a recent interview.

Shah declined to say how many of the company’s estimated 1.5 million free users convert to paying for financial advice from the free platform.

What you need to know about financial services fraud (Tearsheet), Rated: A

In finance, there are three distinct patterns of fraud: transaction fraud, application fraud and account takeover fraud.

Card issuers lost $15.72 billion (72 percent) in gross fraud losses in 2015 and merchants and acquirers lost the remaining $6.12 billion (28 percent), according to the Nilson Report.

Application fraud is the fastest-growing type of fraud in financial services and happens when a fraudster actually pretends to be you using actual account credentials to open new lines of credit. We can break it down even further into three types:

  • Third party fraud: when someone gets enough of someone’s personal information from a compromised data set to go to a bank and pretend to be that person to apply or a loan or credit card
  • First party fraud: when the person coming to the bank (or other service) really is the person he or she claims to be but intends to not pay back the loan or credit card; in instances of first party fraud, the bank or business is the victim, not the customer
  • Synthetic fraud: when someone creates a persona using fake or borrowed information, like a social security number, and adds other, made-up elements of personally identifiable information like a name, address or date or birth

Account takeover fraud is the final type of fraud (for the purposes of this primer, at least). It happens to people when fraudsters obtain their various user IDs and passwords to be able to access other accounts that involve financial transactions.

Did those new chip cards I got help?
Kind of! Account takeover incidents increased 61 percent to $2.3 billion from 2015 to 2016, according to research by Javelin published in February. Victims pay an average of $263 out of pocket and spent 20.7 million hours to resolve it in 2016 – six million hours more than in 2015.

Community banks stand to gain from blockchain — if they work together (American Banker), Rated: A

Blockchain is most widely known as the platform to house virtual currencies such as bitcoin,ethereum and litecoin. But the uses for blockchain are going well beyond virtual currencies. The Republic of Georgia, for example, voted in April 2016 to implement a land ownership registry that relies on blockchain to verify ownership of property. If the United States did something similar with blockchain, banks could close real estate loans more quickly. Think about a world where ownership interests in real estate can be verified immediately and with certainty.

In this world, the expansive role of the title agent would essentially dissipate (or be greatly minimized), the time taken to verify title would be eliminated and, most important, the cost associated with confirming a title interest through title insurance would be dramatically reduced. All of these results would improve the closing process, both from an efficiency standpoint for banks and from a cost standpoint for the customer.

Technologists are also using blockchain to try to replace our needlessly difficult residential mortgage loan origination processes so that the process, from application to closing, can be reduced from a few weeks to a few days.

To realize these kinds of opportunities, community banks in a region should collaborate on strategies to bring blockchain into the banking industry.

Top and The Best Peer-To-Peer (P2P) Lending Sites For Online Loans (FX Daily Report), Rated: A

A PriceWaterhouseCoopers report noted that though the P2P industry is in its infancy loans to the tune of $5.5 billion have been disbursed by the P2P websites in the U.S. in 2014 alone. According to PriceWaterhouseCoopers, P2P lending could be more than $150 billion by 2025.

#1: Funding Circle

Funding Circle has disbursed more than $1 billion in loans to over 8,000 businesses in the world. Along with the growth in terms of the number of businesses borrowing from the company, Funding Circle has seen a substantial growth in the number of investors too. In fact, Funding Circle’s investor base includes banks, other financial institutions, and more than 40,000 retail investors. Even the U.K. government is an investor.

#2: Lending Club

As leading online lending marketplace, the company that connects borrowers and lenders has disbursed loans to the tune of $11,167,217,348 as of mid-2015.

#3: Upstart

The minimum amount you can borrow is $3,000 and the maximum is $35,000. The annual percentage rate or APR starts at 4.7 percent. They offer loans for just about everything.

#4: CircleBack Lending

Loans are offered by CircleBack Lending for tenures of 3 or 5 years and amounts ranging from $3,001 to $35,000. The APR ranges from 6.63 percent to 36 percent.

#5: Prosper Marketplace

The company has registered tremendous growth since its inception and currently has a client base of more than 250,000. Prosper has disbursed loans worth more than $4 billion so far.

#6: Peerform

This popular lending marketplace offers 3-year loans ranging from $1,000 to $25,000 with an APR of 7.12 percent to 29.99 percent. Peerform does not look at the FICO score alone in order to measure the risk of lending. The company’s Loan Analyzer carries out the evaluation on a case to case basis. According to Peerform, the Loan Analyzer was developed in consultation with leading economists and it follows a differentiated method for determining the creditworthiness of each borrower. As a result, even individuals whose credit scores are in the range of 600 may be able to secure loans.

#7: SoFi

SoFi’s offers loans starting from $5,000 and up to $100,000, which is higher compared to the standard amount of $35,000 offered by many other players in the peer-to-peer marketplace.

CFPB Says Tribal Online Lender Case Belongs In Illinois (Law360), Rated: A

The Consumer Financial Protection Bureau urged an Illinois federal judge Monday not to transfer a suit claiming four Native American tribe-owned companies charged excessively high interest for online loans, saying there’s much more reason to keep the suit in Illinois than to move it to the companies’ preferred Kansas venue.

Golden Valley Lending Inc. and three other online lenders owned by the California-based Habematolel Pomo of Upper Lake Tribe had asked U.S. District Judge Thomas M. Durkin in June to transfer the CFPB’s suit to Kansas,….

Why fintech startups love advertising on the New York City subway (Tearsheet), Rated: A

For a consumer fintech startup, it’s the perfect place to put some advertising dollars. TransferWise has built its business around the ability to let people send money overseas at a low cost. Sixty percent of its users are immigrants; 40 percent are American-born. Its employees represent more than 50 countries. Its user base and prospective customer pool looks a lot like the people of New York.

Even if they’re American-born, theres still a chance they moved to New York from someplace else. TransferWise wants to send the message that it celebrates that diversity.

The subway is a hot destination for startups in general, looking to stretch their marketing budgets. E-commerce startups like Thinx and Casper both love advertising on the subway, calling them “conversation starters” and a way to be in a city where “trends are set.” They’re also effective, say these companies: David Zhang, Casper’s CMO, told Tearsheet’s sister site, Digiday that subway ads are highly effective to target local audience because when riders get stuck on the train, they have nowhere to look except at those ads.

Three years ago Venmo ran an ad campaign around the New York subway featuring an everyday millennial called “Lucas” (who, it turns out, was a Venmo engineer). Venmo’s message to subway riders was the same (although less nostalgic and bittersweet): we do the same things you do, we understand you. The campaign sparked a lot of frustration and confusion for consumers — but the company was engaging with them.

Charlotte fintech startup targets couples who don’t merge finances (Charlotte Agenda), Rated: A

Couples today are getting married later.

And when they do get hitched, they’re much less likely to combine their finances. Only one-third of millennial couples are putting everything in a joint bank account and fully merging their money. That’s down from about half of couples overall, according to research from TD Bank.

Honeyfi, an app planning a formal beta launch later this week, is designed to allow couples to blend finances to the extent they’re willing to — and figure out how to manage things accordingly.

Both sides load in all their financial accounts but can choose what’s visible to their significant other — both at the account level and at the individual transaction level. If you want to keep your shopping spree under wraps, you can do that with Honeyfi.

Small banks’ fintech efforts held back by Volcker Rule (American Banker), Rated: A

The Dodd-Frank Act’s Volcker Rule was meant to protect the financial system by prohibiting banks from engaging in certain risky activities. But it may also be stopping community banks from being able to reap significant benefits from the fintech revolution.

I bought a new Surface with the Surface Plus program (onmsft.com), Rated: A

Here’s a couple of things to note: In order to be considered for the Surface Plus Program, you are required to purchase Microsoft Complete and you will be required to do a credit check through KLARNA. KLARNA handles the financing and you will have to make your monthly payments through KLARNA and NOT Microsoft. After choosing the Surface Pro (fan-less Intel Kaby Lake i5 processor, 8 GB RAM, 256 SSD)I found that my 24-month payment plan is similar to a AT&T phone payment plan.

I have not started making payments yet, but my payments will be about $63 a month, with an option to upgrade after 18 months.

 

It takes about a week. I placed my order on August 1, got order on August 8. It is annoying that there is no tracking, but they don’t next-day a device to you when you order online through KLARNA. It can be frustrating I know, I checked my status every day freaking out. Going to a Microsoft Store is a better option.

Alan Gellman Joins Credible as Chief Marketing Officer (PR Web), Rated: B

In the latest move to capitalize on its expanded offerings and accelerate recent growth, personal finance marketplace Credible.com today announced that former Esurance CMO Alan Gellman is joining Credible as its first chief marketing officer.

Gellman who, prior to Esurance, led digital marketing at Wells Fargo, said joining Credible will allow him to pursue his goal of helping a consumer-centric growth-stage company realize its potential.

After launching as the first personal finance marketplace to provide instant, personalized offers for student loans, Credible expanded its offerings to include personal loans, and this month announced the pilot of its credit card marketplace. In the first half of 2017, more than 80,000 people qualified for loan offers through the Credible marketplace.

In his most recent position as chief marketing officer at Esurance, a leader in the self-directed insurance market, Gellman was named one of “The 50 Most Innovative CMOs in the World” by Business Insider. His appointment follows an announcement earlier this month that Ron Suber joined Credible as executive vice-chairman and a member of the board of directors.

New Leaf Communities, in Partnership With RealtyeVest, to Build 35 Unit Townhome Project Near Amazon Fulfillment Center (GlobeNewswire), Rated: B

New Leaf Communities, in partnership with RealtyeVest, announced plans today to raise capital for the new construction of Camden Crossing, a 35-unit townhouse development located in thriving northeast Jacksonville, FL. Online retail giant, Amazon, has plans to open a fulfillment center which will add approximately 1,200 new jobs located less than 2 miles away from the planned property. Additionally, Camden Crossing will be located less than 2 miles from River City Marketplace (a large, bustling outdoor shopping center) and Jacksonville International Airport (JIA). Forbes named Jacksonville one of America’s fastest growing cities in 2017. The 1,495 square foot townhouses will have 3 bedrooms, 2.5 baths, single car garages, and will be located on 6.15 acres.

According to Lee Arsenault of New Leaf Communities, Camden Crossing will offer investors an opportunity to earn an above market return while being secured in a hard asset like real estate.

RealtyeVest was chosen exclusively to raise capital for this project due to their powerful real estate crowdfunding platform, which allows individuals to review and invest in real estate online.

United Kingdom

Funding Circle: Small businesses braced for higher costs after Brexit (P2P Finance News), Rated: AAA

MORE THAN two thirds of small businesses that import goods and services expect costs to increase when Britain leaves the European Union, Funding Circle claims.

A poll of 1,325 small business borrowers by the peer-to-peer platform found 69 per cent of firms expect their average costs to increase by £5,300 per month resulting in £60,000 per year of extra spending.

Businesses were also deflated by the overall result of the general election with only 12 per cent stating that they feel positive about the outcome, while 41 per cent were concerned.

Buy-to-let property platform hits £50m milestone (Property Industry Eye), Rated: A

Founded in 2012 with an initial focus on Manchester, the House Crowd claims to offer investors returns of 8-10% to fund property projects, known as peer-to-peer (P2P) lending.

There have been 307 projects funded so far, all of which are secured on the underlying property.

 

4thWay Criticizes Competitors: “Comparison Websites Display Wildly Inaccurate Information About Peer-to-Peer Lending” (Crowdfund Insider), Rated: A

The worst inaccuracies were found to be:

  • Five of the six are presenting peer-to-peer lending as “savings” rather than “investing” a year after the Financial Conduct Authority expressed well-founded concerns about this practice.
  • The two money sites that compare P2P investments in their comparison tables include P2P lending in savings account comparison tables rather than separate investment comparison tables.
  • Risk of fraud and negligence were not mentioned by any of the money sites.
  • Just one of the six mentioned the risks to investors of concentrating their pots on just one P2P lending platform.
  • Risks identified in behavioral investing theory (such as poor investing results from those who are too greedy or fearful) were not mentioned by any of the sites.
  • None of the six explained the full costs to investors of using P2P services, typically covering just a smaller part of the costs (the lending fee), while sometimes leaving the impression that lending is completely free. (It is never free for investors due to hidden costs.)
  • No money sites made clear the vast difference in risks between the various P2P lending platforms.
  • Just one generic money site explains that bad debts might be higher in a financial downturn.
  • While all showed the risk of losses if a P2P lending platform goes out of business, five did not explain that you could experience delays in getting your money back.
  • Five out of six relied heavily on provision funds and on the level of interest rates to assess whether a P2P lending platform is safe, assuming safety is always correlated. (Interest rates are an unreliable measure of risk and provision funds are a secondary risk-control or risk-measurement devices. Much more important factors include such things as solid underwriting and credit-risk models, good security and low bad debt history.)
  • Some of the money sites did not explain that provision funds might not always be sufficient to cover losses.
  • All six fail to mention that you might not in all circumstances be able to get your money back as soon as you expect, even if there is an option to sell your loans and exit early.

The Start Up Loans Company and NatWest to help UK firms access alternative finance (Startups.co.uk), Rated: A

The Start Ups Loans Company, headline sponsor of the Startups Awards 2017, has announced a partnership with NatWest to help UK businesses access alternative sources of funding.

The government-backed Start Up Loans Company joins six other finance providers on the Capital Connections scheme including Seedrs, Funding Circle, Assetz Capital, iwoca, Together and NatWest Social & Community Capital.

Robo roundtable: Restricted advice like buying an ill-fitting suit (Citywire), Rated: A

New Model Adviser® sat down with the heads of three robo firms, or ‘digital wealth managers’.

  • Adam French, chief executive, Scalable Capital
  • Johann Bornman, director of product, ETFmatic
  • Giovanni Dapra, chief executive, Moneyfarm