News Comments Today’s main news: China Rapid Finance issues regulatory report, board change. H&M invests in Klarna. Tencent drops $180M into Nubank. KKR, Tencent lead $175M investment into Voyager. Today’s main analysis: Gen Z is more optimistic than millennials about home ownership. Today’s thought-provoking articles: The cities in America with the biggest houses. Inside Ameritrade’s integration with WeChat. Unemployment rate […]
Unemployment at 48-year low. A PeerIQ analysis that includes growth of POS lending and the performance of LendingClub’s 36-month loans. A great read.
LendingTree reports on biggest, smallest houses in America. Three of the top five markets are in Texas. The midwest dominates the smallest houses list. This isn’t too surprising when you consider that older cities also have older houses, which tend to be smaller in size while the south, which is largely spread out–especially Texas–has room for larger houses. But how can online lenders use this information?
Point-of-Sale lending continues to grow, with Square now providing instalment loans of up to $10,000 to shoppers who purchase big-ticket items from Square’s merchants. Borrowers can repay in fixed monthly payments over a period of 3, 6, and 12 months with interest rates ranging from0% to 24%. The move puts Square in direct competition with other POS lending services – Affirm, Klarna, Greensky and more.
This week we look at the performance of LendingClub’s 36-month loans. Over the life of the loans, borrowers with verified income have 140 bps higher losses. This is due to a “selection effect” – namely, LendingClub applies an extra layer of income verification high credit risk borrowers.
LendingTree compared home sizes across the country, but first, let’s look at some national data. The Census Bureau reports that the median size of new homes completed in the second quarter was 2,412 square feet. Home sizes have leveled off the past few years from a peak of 2,488 square feet in the third quarter of 2015, though homes sizes are generally larger today than they were for previous generations. Because only a small proportion of the housing stock is new each year, the median size of all homes is lower given a median house age of 37 years.
Everything is bigger in Texas. Whoever coined this phrase must have been thinking about real estate. Houston leads the list, with Austin and Dallas also in the top five. Besides having a lot of space, Texas has been adding new residents at a steady pace, with the nation’s largest annual population growth between 2010 and 2016. More new homes means larger homes.
South equals size. Other Southern cities dominate the top 10, with Atlanta, known for its sprawl, at No. 2.
Money talks. The Washington, D.C., area, whose suburbs includes the three wealthiest counties in the country, comes in third. Boston, another wealthy city, shows up at ninth.
Show me? The Midwest lives up to its unpretentious reputation by having the most cities with the smallest houses. Missouri’s Show Me State nickname clearly does not refer to houses, with its two largest cities both in the bottom 10.
Older is smaller. Cities with older housing stock have smaller houses, including Detroit at No. 45 on our list.
Gen Z has its eye on homeownership, with 83% planning on buying a home within the next 5 years
College debt is the #1 obstacle towards homeownership for Millennials and Gen Z
Gen X chooses intergenerational living to care for relatives more often than any other generation
Gen Z is willing to compromise on almost anything to keep costs down – but dreams of lots of space and amenities
Gen Z to pose serious competition to Millennials on the real estate market
Millennials are more realistic about their means, and the most pessimistic about the prospect of homeownership
Whatever they may see as the most significant hurdle towards homeownership, more than 80% of respondents from all three generations expect to buy a home in the next 5 years. Part of more established family units and with stabilized careers, Gen Xers are the least likely to buy homes in the near future, while Millennials are the most likely – 87% of Millennial respondents expect to enter homeownership within 5 years.
Considering that the oldest of Gen Z are barely 23, it is noteworthy that a whopping 83% see themselves entering the real estate market within 5 years.
B+E (Brokers+Engineers), the first brokerage firm and trading platform for net lease (NNN) real estate, today announced the sale of property that is leased long-term to TD Bank in Darien, Connecticut.
Located at 55 Boston Post Road, the +/- 4,380SF location was sold for $6,900,000 at a 5.1% cap rate. The property has +/- 7 years remaining on the lease and was sold to a 1031 exchanger. B+E represented the seller, Chimblo Family Real Estate, LLC.
Landis, a NYC-based marketplace for institutional real estate investing, raised $2M in funding.
The round was led by Signia Venture Partners with participation from Red Swan Ventures, Graph Ventures, and Kima Ventures, as well as the founders of RealtyShares (Nav Athwal), Compass, Floored, Tango, Rypple, and Stanford professor and JetBlue Chairman Joel Peterson.
A new study released Thursday bolsters the case for lenders to use borrowers’ digital footprints in assessing their creditworthiness.
The paper, released by the Federal Deposit Insurance Corp.’s Center for Financial Research, said the data trails people leave online — even down to what brand of smartphone they use — are useful at predicting default rates.
For a regulator grappling with what is the right balance in big-bank supervision, the Federal Reserve is also trying to drill down on industry trends at the most micro levels.
The Fed’s top regulatory official, Vice Chairman of Supervision Randal Quarles, gave wide-ranging remarks Thursday on the central bank’s efforts to gather and understand data about the community banking sector.
American Financial Resources, Inc. (AFR) is pleased to announce two key executive promotions. Laura Brandao has been promoted to President and Bill Packer is now Chief Operating Officer of the NJ-based leading niche lender.
Established to match UK and overseas investors with hand-selected investment opportunities, we offer UK-wide investment advice and property sourcing through our 34-strong network of franchises. This guarantees the same level of local knowledge and off-market opportunities, anywhere in the country.
Since we started in October 2017 our network has grown from one to 34 offices, we have launched a new peer-to-peer (P2P) lending platform and we’re building on our current position as the country’s largest property investment platform and network of property sourcers. We’re also the first company to provide a free online training platform that gives investors of all levels of experience, the skills, knowledge and support they need to grow their portfolios.
Peer to peer lending – you may have heard of popular companies in this investment sector such as Funding Circle. With peer to peer lending, you lend money to business start-ups to help them become established. When they are profitable you get your money back with any agreed interest.
China Rapid Finance Limited (NYSE: XRF) announced last week that it submitted its P2P Compliance Self-Inspection Report to its local P2P regulatory office. According to the online lender, this new report is considered the first of three steps mandated in the inspection process, a key element in demonstrating compliance with industry reforms being promulgated by the National P2P Rectification Office.
China Rapid Finance then explained it is focused on the next two process steps:
A self-disciplinary inspection conducted by NIFA and regional regulatory authorities
verification of inspection results by the regional P2P Rectification Office to conduct on field inspections
According to data from Bloomberg, China’s total balance of non-performing loans (NPLs) reached 1.96 trillion yuan ($285 billion) at the end of June 2018. To help lower this figure, China has been pawning off toxic loans onto foreign investors and unsuspecting pensioners.
Oaktree Capital Management in September acquired 115 NPLs for 2.4 billion yuan ($350 million) from one of China’s “bad banks” China Huarong Asset Management Co., according to Bloomberg.
There’s a legitimate concern that the change that’s happened in Chinese society since 2014 with regard to rapid conversion from cash and cards to mobile payments has been too fast for some. What happens to those left behind in the digital economy？
MINTOS, Europe’s largest peer-to-peer marketplace, has partnered with payments company Trustly to offer its customers the option to transfer funds in real-time from bank accounts across Europe.
Mintos said the collaboration with Swedish e-payments company Trustly will allow investors using its platform to transfer money in real-time from bank accounts across 29 European countries. This strips out the usual waiting time that is associated with conventional clearing systems.
Since taking charge of ING Group in 2013, Chief Executive Officer Ralph Hamers has labored to make it the most digitally advanced lender in Europe. His motto: disrupt yourself before a competitor does it first.
It’s safe to say the tumult at ING during the last few weeks isn’t what Hamers had in mind.
Anaxago is launching an asset management firm, Anaxago Capital, to attract more institutional investors and ready itself to fund larger projects. With this, Anaxago expects to double its outstanding investments by 2020.
Chinese gaming and social media firm Tencent Holdings Ltd (0700.HK) paid $180 million for an undisclosed minority stake in Brazilian financial technology company Nu Pagamentos SA, both companies said on Monday.
Celsius, a recently established cryptocurrency lending firm, has announced that it offers interest to thousands of users who deposit Bitcoin and Ether with its wallet application. Celsius claims to have won over 10,000 users since its mobile app was launched on June 29, with an average deposit of 0.5 BTC or 5.50 Ether earning as much as 6.7% per annum. Celsius generates the interest income by lending the crypto to hedge funds which open short position in the crypto market.
News Comments Today’s main news: College Ave completes $161M securitization of private student loans.Marlette Funding prepares new deal.SoFi’s latest student loan securitization sees strong demand.Zopa closing in on completing the opening of new bank.Mintos exceeds 35K investors.JD Finance launches bank deposit product with yield rate up to 5%.SocietyOne hits $350M in total loan originations.Crisil withdraws […]
Only three years after its inception, a major student loan marketplace lender, College Ave Student Loans, announced the completion of its first securitization of private student loans. The $161 million transaction got an ”A” rating from DBRS and a ”BBB” rating from S&P according to College Ave. The sole underwriter of the deal completed earlier in the summer was Barclays.
Online lender Marlette Funding is marketing a securitization this week, as the wider marketplace lending industry gears up for an important fourth quarter.
Goldman Sachs, Deutsche Bank and Citi are joint lead managers on the $312m deal, according to a source briefed on the matter. The deal is backed by unsecured consumer loans, which the company originates through Cross River Bank (CRB), and then repurchases before selling to third party loan ….
Credit rating agencies aren’t overly concerned about recent management changes at Social Finance, and it appears that investors feel the same way. The company’s latest student loan securitization attracted strong interest, and priced at levels similar to or better to its previous transaction, completed in July.
Fintech is growing up: Financial institutions are increasingly viewing these disruptors as partners while startups are learning that they need the scale and regulatory expertise of the incumbents. Both sides have a lot to learn, and benefit, from each other, according to speakers at the recent “Fintech: The Impact on Consumers, Banking, and Regulatory Policy” conference at the Federal Reserve Bank of Philadelphia.
“We are actively seeking startups for our members to partner with,” said Robert Nichols, president of the nearly 6,000-member American Banking Association (ABA).
Capital One has integrated its services with Amazon’s Alexa digital assistant and its video-enabled device, Echo Show. Consumers can ask Alexa for their account balance, request that it track their spending or even make a payment. Bank of America is set to debut its chatbot Erica on the bank’s mobile app to help customers with personal finance decisions. Also, more than 30 banks are using Zelle, a service that lets people send money to each other in minutes. It started in 2011 as a collaboration among Bank of America, Wells Fargo and JPMorgan Chase.
The Federal Reserve Bank of San Francisco launched a fintech portal in May to help companies navigate the regulatory system and show them where to go for further assistance, said Tracy Basinger, its director of financial institution supervision and credit.
One example of alternative data used by online lender the LendingClub is the internet footprint of a customer. It doesn’t use social media information due to privacy concerns. Rather, the company uses things like a geocode IP address for fraud detection.
Retail giant Overstock.com is to launch its new regulated token exchange with its own initial coin offering (ICO), according to a news report.
The token sale will be the inaugural event for the new exchange, which is set to be the first marketplace specifically for trading tokens classed as securities in the U.S. The service is being launched under the umbrella of Overstock’s capital markets arm, tØ.
The company expects to raise $200 million to $500 million “easily” via the ICO, Byrne said.
This system created a culture of ‘buy now, pay later’, something that came to a grinding halt with the financial crash of 2008. Suddenly, credit was not so easy to come by and the world stopped turning.
Of all disruptions often mentioned in the tech world, the financial crisis was the greatest of them all.
Cash is dying out, digital money and remittances have been completely disrupted and even credit card providers are losing business.
So, step forward, Celsius, an ethereum-member based lending platform that wants to disrupt the consumer credit industry by enabling quick and easy peer-to-peer loans.
These loans will pay higher interest to lenders and charge lower interest to borrowers by splitting the bank profits between the members of the community.
In the US, an astonishing $ 1 trillion, more than 50% of all the consumer credit issued worldwide,is currently controlled by six of the largest US banks. Centralized financial institutions like to offer credit to many of their richest clients – those who have well-established and pristine credit histories, but ignore ‘riskier’ millennials.
In the U.S., $1.1 trillion, one-half of all the consumer credit issued, is currently controlled by six of the largest banks.
Celsius, an ethereum-based lending platform, announces today its plans to disrupt the consumer credit industry by enabling quick and easy peer-to-peer loans, swapping out big banks and their exorbitant fees for colleagues, friends or other Ethereum token holders. Celsius will focus its efforts on supporting millennials, the generation that often suffers the most at the hands of credit lending services—a phenomenon we’ve seen recently with the rise of the student and consumer debt in the U.S. Celsius is building the future of consumer credit by migrating credit scores and legacy data to the blockchain and incentivizing millennials to build a new digital identity and credit score that includes their social and digital footprint. This process encourages the creation of a community of lenders and borrowers with lower loss factors and higher on-time payments, enabling greater credit limits at lower interest rates.
Celsius will hold an ICO for its Degree token in January, but the company just initiated its presale of $30 million from accredited investors. Celsius has added many notable names to its advisory, partner and investor groups including serial entrepreneur Jeff Pulver, co-founder of Vonage and VoIP Pioneer; Chris Dannen, founder and partner of Iterative Capital Management; Ismail Malik, founder of BlockchainLabs; Lou Kerner, top blogger on Medium; and Miko Matsumura, founder of Evercoin.
Celsius offers its users a variety of features, including:
Digital credit score: Celsius will issue each user a credit score based on their digital identity and any other user uploaded data including FICO credit scores and past transaction history on websites such as Amazon and eBay.
Insuring the credit: Celsius provides insurance so that if the borrower defaults, Celsius covers the portion of the principal loan amount for the lender and is responsible to recover the money owed to the lenders.
Companies that offer personal loans (even enterprise-level banking institutions) charge exorbitant fees, and often require you to ‘sign in blood’ for the loan. In fact, much of the consumer credit market is held by just a few major banking institutions.
Nowhere is this situation more critical than among millennials.
The marketplace lending industry, particularly in the US, has always sat in a transient grey area between banking and tech firm, providing lending services while also preaching ‘disruption’, as Silicon Valley firms are fond of doing.
While the industry’s image as the ethical and trendy alternative to banking was a great route to publicity in the industry’s infancy, marketplace lending ought to be well enough established for platforms to sell themselves on their core lending business.
Ken Rees, Chief Executive Officer at Elevate, a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, will keynote at the LEND360 conference on October 11, sharing his insights on innovation and the needs of non-prime Americans. Rees will highlight Elevate’s Center for the New Middle Class, its mission, and the company’s commitment to innovating for their customers. His talk will shed light on the realities of being non-prime in America, and help audience members discover new ways to serve this group. Elevate is an online lender that has originated $4.5 billion in credit to more than 1.7 million non-prime consumers.
LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com, the nation’s leading online loan marketplace, today announced that it will release its fiscal third quarter 2017 results on Thursday, October 26, 2017, and the company will hold a conference call at 9:00am ET.
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Davis & Gilbert partner Joseph Cioffi, a widely-respected authority on loan and securitization markets, has found that credit enhancements supporting subprime auto asset-backed securities (ABS) do not necessarily provide the same level of protection as credit enhancements supporting pre-financial crisis era subprime residential mortgage-backed securities (RMBS), leaving them more vulnerable to market shifts and shocks than many realize.
These observations were made on a newly launched blog, the Credit Chronometer, in which Mr. Cioffi and team will be analyzing economic, market and political events that shape the legal landscape, and impact loan and structured credit markets, including those for auto loans, marketplace lending (peer-to-peer), student loans, mortgage loans and Property Assessed Clean Energy (PACE) financing.
Based on the indicators of crisis that foretold the subprime mortgage crisis – within the areas of lending practices, ABS practices and the underlying market for autos – the Credit Chronometer presents the “Subprime Auto Loan Crisis Chronometer” to depict the risk of a crisis, which Mr. Cioffi defines as a “battle over loss allocation.” As events impact the subprime auto market, the Subprime Auto Loan Crisis Chronometer’s bright yellow gauges will show the current level of risk. As of today, the Subprime Auto Loan Crisis Chronometer is set at:
Splash Financial in Cleveland has focused on relieving the burden of student debt since the company was founded in 2013. But according to founder and CEO Steven Muszynski, it wasn’t until recently the company turned its sights to the medical community.
“We’re an online lender that helps doctors refinance their student loans,” he said. “The majority of people financing their student loans graduate with an average of $200,000 in debt. We’re the only company in the country that allows lenders to pay only $1 a month for trainees.”
The hysteria in Washington around the release of the Consumer Financial Protection Bureau’s final short-term, small-dollar loan rule has been immense as of late. With the final rule issued late last week, it largely lived up to the hype.
The content of a federal rulemaking, while devastating for the payday loan industry, wasn’t all that was at stake. The CFPB’s Director Richard Cordray has long been expected to run for Governor of Ohio once the rule was finalized. With reports flowing in that Cordray plans to make the announcement any day now, the speculation is well-founded.
But the crux of the final rule remains the same. It will force lenders to conduct an “ability to repay” assessment of customers to ensure that borrowers can repay the loans and fees within two weeks, it will cap the amount of times a customer can roll over a loan at three, and it will prevent lenders from charging a customer’s checking account after two unsuccessful attempts.
This makes the impact of the rule devastating. The CFPB’s own impact analysis found that the rule would reduce industry revenue by approximately 75 percent. This is in essence a death warrant to at least three-quarters of the 20,000 payday loan shops that service some 12 million Americans annually.
There are multiple surveys confirming that the users of payday loans widely approve of the option.
Republicans should waste no time in using the Congressional Review Act to overturn this devastating regulation.
The Consumer Financial Protection Bureau (CFPB) published its final rule addressing so-called payday loans as well as certain other extensions of credit to consumers on Thursday. These loans are usually small, very short-term (often just a few weeks) and carry a very high effective interest rate after all fees are taken into account.
The rule applies to three types of “covered short-term loans:”
Short-term loans maturing in 45 days or less
Longer-term (more than 45 days) balloon-payment loans; that is, the loan is paid in full when it comes due or the loan agreement requires at least one substantial down payment of the loan.
Longer-term loans with a cost of credit exceeding 36 percent that either have a balloon-payment feature or the lender is authorized to obtain repayment by initiating a transfer of funds from the borrower’s bank account.
Of course, everyone is not happy about the changes, which won’t take effect until July 2019.
Here are three ways the new payday lending rules will help consumers
Prevent overborrowing: Once a consumer has borrowed three times in a 30-day period, a mandatory 30-day “cooling off period” kicks in. During this time, the consumer won’t be allowed to borrow unless at least a third of the previous outstanding loan has been satisfied.
Mandate income verification: Believe it or not, many payday lenders don’t check to see what a borrower’s monthly income is — they don’t have an incentive to. If you don’t pay up, your collateral — in many cases, your car — will become theirs. With the new rules, lenders must verify the consumer’s net monthly income and the amount of payments required for the consumer’s debt to be paid.
Control payment withdrawals: Gone will be the days when a lender can continue to hit up your zero-balance account, triggering those insufficient funds charges. The new rules state that lenders must provide a written notice before a first attempt to withdraw payments for a loan from a consumer’s account. When two consecutive withdrawal attempts fail, the lender must get permission again from the borrower to attempt another withdrawal from the same account.
Lenders avoided the law’s 28 percent interest rate cap by registering as mortgage lenders or credit-service organizations. That has allowed them to charge an average 591 percent annual interest rate on the short-term loans, watchdogs contend.
According to Pew Charitable Trust, Ohioans who borrow $300 from a payday lender are charged, on average, $680 in interest and fees over a five-month period — the typical payoff for what is supposed to be a two-week loan.
A bill awaiting action in the Ohio House would allow lenders to charge interest rates up to 28 percent plus a monthly 5 percent fee on the first $400 loaned — a $20 maximum rate.
By the CFPB’s own estimates, the regulations will reduce the number of short-term loans in the U.S. by more than half.
Industry estimates project a drop in loan volume that will close the doors of more than 80 percent of short-term lenders in the U.S., most of which are smaller “mom and pop” operations.
A Brief History of Small Banks, DAPs, the CFPB and the OCC
Until around 2013, DAPs were offered as a mainstream banking competitor to payday loans. Their main competitive advantage was twofold: They were faster, and one’s bank could instantly verify those direct deposits. But in 2013, the CFPB released a whitepaper that said DAP loans were so similar to their payday cousins as to have all of the flaws normally associated with such lending products.
The CFPB Has a Change of Heart about DAP
A funny thing happened to the CFPB on its way to publishing those draft regulations on short-term lending: It seems to have had a change of heart about bank-based, short-term lending. In fact, when announcing the short-term lending rules, CFPB executive director Richard Cordray called out a special carve-out for community banks and credit unions, provided they make fewer than 2,500 short-term loans each year and collectively account for less than 10 percent of total lending revenue.
Follow the bouncing regs. The new CFPB rules, released last week, have a carve-out for small banks to pick up some of the short-term lending needs of consumers.
An attorney defending himself against charges he helped operate a $2 billion criminal payday-loan empire told a Manhattan federal jury Tuesday that he viewed tribal involvement in the enterprise as a legitimate legal shield and asserted that he had “panicked” when he faked a signature on a legal document.
In May, when an Australian real estate mogul suggested posited the somewhat insulting theory that millennials aren’t able to buy homes because they’re spending too much on discretionary items like avocado toast, SoFi COO Joanne Bradford tapped into that controversy as a way to connect with the company’s millennial customer base: the online lender offered a month of free avocado toast to everyone who got a mortgage through the company. More than a hundred a media outlets jumped on the story and SoFi had three of its greatest months ever.
CleanCapital announced that Matt Eastwick has joined the company to structure and execute capital markets transactions. As Head of Capital Markets, Eastwick will bring an innovative approach to securing the optimal structures and investors for CleanCapital’s various and growing capital needs. Eastwick’s hire comes after a successful Series A equity raise this past summer, as CleanCapital continues to scale operations, while expanding opportunities for clean energy investing.
Chicago Mayor Rahm Emanuel cut the ribbon at the new OppLoansheadquarters in downtown Chicago this week. OppLoans, the nation’s leading socially responsible online lender, has more than tripled its employee-count in the past two years and expanded their operations in One Prudential Plaza. In 2017, the firm was named the 14th fastest-growing company in Illinois and the 219th nationally.
Last year, real estate crowdfunding sites topped the $3 billion mark and crowdfunding overall is expected to grow into a$300 billion industry in less than a decade. Fewer than 10% of Americans are accredited investors yet make up 70% of the wealthiest individuals in the U.S. Many retirees qualify as accredited, and we can expect many more crowdfunding sites to embrace the average individual investor by lowering the barrier to entry.
Online lender Zopa is close to finishing building the tech it needs to launch a full bank, according to its CEO.
Janardana said he couldn’t comment on Zopa’s progress in getting fully regulated as a bank but said the shortest time it has taken a new bank to be regulated is around two years, suggesting Zopa is still a way off from launch.
‘We’re in close communication with Monzo, Starling, Tandem’
Janardana, who was speaking to BI at LendIt Europe conference in London, said Zopa is working closely with other startup banks in Britain.
During his presentation at LendIt Europe, Janardana said Zopa’s new bank initially plans to launch savings and credit cards. He said the bank will take a customer-focused approach, shunning 0% balance transfers on credit cards in favour of consistent low rates and rejecting teaser rates on savings accounts.
ZOPA’S chief product officer Andrew Lawson has heralded the move towards open banking as “a really exciting opportunity” that could potentially broaden the peer-to-peer lender’s product offering.
Late last year, Zopa unveiled plans to launch a digital bank that would sit alongside its P2P operations. Lawson re-affirmed that this would enable Zopa to service a wider set of customers with a wider set of products. Revolving credit, credit cards and longer mortgages would not be possible with P2P, he argued.
Speaking at the LendIt Europe conference this morning, Zopa CEO Jaidev Janardana (pictured) issued a stinging critique of the traditional banking model, which he says is set up to “take advantage of customer inertia”. He went further, describing old school banking as a zero-sum game, in which wins for the bank will always be to the detriment of customers, and vice versa.
Mintos marketplace for loans has reached a new milestone – 35 000 registered investors from 64 countries.
About 2 000 new investors join Mintos each month. This has allowed for loans worth more than EUR 325 million to be funded through Mintos in two years since its establishment. More than EUR 200 million has been funded in 2017 alone, making Mints a clear market leader in continental Europe with a 40% market share, according to AltFi Data.
As of September 2017, about EUR 1 million is invested in loans through Mintos daily, which is three times more than just a year ago.
On the supply side of the marketplace, there are 27 loan originators from 13 countries.
Digital micro-lender, Oakam has provided over 420,000 loans totalling over £320 million to consumers overlooked by mainstream financial institutions since 2006. Alternative data is enabling Oakam to employ new methods in underwriting and risk management to expand credit access for financially excluded consumers in the U.K., while maintaining robust lending standards.
Data from FICO shows that 60-75% of traditionally un-scorable consumers could be assigned a more meaningful credit score using alternative data. For Oakam, supplementing traditional methods of underwriting, such as the analysis of credit bureau data with alternative approaches has enabled Oakam to evaluate a high volume of applications since inception.
Oakam’s use of alternative data has also yielded positive repayment behaviour among customers. 70% of new customers made on-time repayments, despite previous challenges accessing credit due to their income levels; court judgements on prior loan defaults; status as a new resident of the UK; the absence of credit history or low credit scores; or some combination thereof. This is according to a study of 15,000 first-time Oakam customers between January 2015 and July 2016.
Oakam uses the following alternative sources for its underwriting:
Network associations: Similar to the use of relationship mapping on LinkedIn, Oakam assesses the connections between borrowers and applicants, based on social network data, geographic proximity, and referrals to study patterns that detect fraud or surface certain risk attributes. Data from Oakam showed that customers who were referred by other customers were 20% less likely to default than customers outside of any network.
Reaction data from nudges: In addition to predicting risk, Oakam uses gamification to influence it. Through its gamified mobile app, customers are financially incentivised to repay their loans. Oakam has seen a 25% improvement in on-time repayment since April 2017 as a result. Gamification also provides access to behavioural data to strengthen Oakam’s future underwriting decisions.
Unstructured data from online conversations: Oakam uses natural language processing and machine learning to analyse the conversations between potential customers and Oakam Digital Agents via its website, and to detect default risk or fraudulent intent.
Esme, RBS’s online lending pilot for small businesses, went live in February of this year. 30-year RBS veteran Richard Kerton leads the project. This morning, he told the LendIt audience that Esme could approve and fund business loans in as little as 25 minutes, with broader risk parameters than its parent bank.
Desai dismissed the idea that P2P lenders are overly-reliant on brokers as a “myth”, pointing out that 75 per cent of Funding Circle’s borrowers come directly to the platform, and highlighting the simplicity of the platform as a big part of the reason.
A British “neobank” called Revolut is working on letting its customers convert and hold bitcoin and other cryptocurrencies directly in their accounts.
The firm will let users buy, sell, and hold three cryptocurrencies: bitcoin, litecoin, and ethereum. Users will also be able to transfer cryptocurrencies to other Revolut account holders. The big thing here is Revolut’s promise to allow “instant” conversion of fiat money to cryptocurrencies within its app, potentially removing the currently troublesome process of signing up on crypto exchanges, or peer-to-peer platforms, or going to a bitcoin ATM, to acquire or dispose of funds.
JD Finance, a third-party finance platform in China, recently launched several BaoShang Bank deposit products. The one-year yield of the product is as high as 5%, rising by as much as 230% compared with the benchmark interest rate for Banks.
The product description shows that the maturity of this series including 1 year, 6 months and 3 months, correspond the savings deposit rate of 5 %, 3.5% and 3.3%, and the minimum deposit amount of 50000, 100 and 100 RMB. In terms of security, as deposits, the product series guaranteed income. As for liquidity, it can be taken at any time. In procedures, it can be purchased directly without evaluation.
A number of bank retails said that the deposits on individuals always have been conducted through their own channels, and they have never take deposits through a third party platform. It also reflects that the competition of bank deposit market becomes more and more fierce.
However, JD Finance explained that they just play the role of information display platform for the bank deposit product, rather than commission sale. Both product and service are supplied by the bank itself.
Zhongan Insurance (06060.HK) has been known as The First Stock in Fintech. After three days of rising in a row, its stock price hit a new high of HK $97.8 and closed at HK $90.8 on October 9th. So far, the market value of Zhongan Insurance reached to HK $130.7 billion.
WIND data shows that the stock has risen 52.09% in six trading days since listed, with a turnover rate of 59. 62%, and the interval volume is 2.62 billion shares, the transaction amount reached to 20 billion RMB.
“Now there is no other pure insurance technology company in Hong Kong stock market. The listing of Zhongan Insurance brings the opportunity for investors to participate in the field of insurance technology. In addition to foreign investment in the stock, mainland funds are also very fond of the unit”, a Hong Kong investment analyst said.
CreditEase, a Beijing-based financial technology conglomerate with a robust online platform and a broad offline network, announced it recently hosted a FinTech conference, “2017 Silicon Valley – Beijing Dialogue” themed “The Power of Innovation: Driving Forces behind the FinTech Age 3.0″, in San Francisco.
The city’s ranking in the Global Innovation Index has fallen in the last two years. And this slide has been accompanied by another trend: the rise of China in the table.
With more than 600 million people in China participating in the sharing economy, it’s expected that it will account for 10 per cent of China’s gross domestic product by 2020, according to their State Information Centre.
today at the Lendit Europe gathering of over 1,000 fintech and lending executives in London, creditshelf announced that, according to the study “Industrial SMEs and Financing 4.0”, nine out of ten medium-sized industrial enterprises in Germany would provide lenders with real-time production data to either convince them of the value of making an investment, or to enable them – during the credit term – to check on the performance of a facility already arranged.
Panellists at LendIt Europe on Monday said that there may be more to Europe’s marketplace loan ABS market than meets the eye, with a number of platforms issuing deals under the radar.
Citi’s Sebastian Walf said that the two public ABS deals, which were sold last year from Funding Circle and Zopa, were just the “tip of the iceberg”, with a number of other online lending platforms issuing private securitizations to meet their funding needs.
Trustly, the European payments company, and Nordic software provider Emric, part of Tieto, are delighted to announce a new strategic partnership which will provide Emric’s business customers access to Trustly’s online banking payments technology across Europe.
During the ICO last month, Suretly secured its minimum funding requirements in just a few hours. It raised $2.8m. Before the ICO, the first version of the Suretly app was successfully tested. A beta version of it will be released on the market within several weeks from the ICO. Upon release of the app, the system will already be populated with borrowers.
Suretly is an international project. The company has legally set up in the following initial countries: Russia, Kazakhstan, and the USA.
CFTE is pleased to announce the worldwide release of Around Fintech in 8 Hours. The Fintech foundation course has been designed to give professionals working in the finance industry a solid understanding of how technology is redefining the provision of financial services.
4 senior lecturers and 16 industry experts who are Fintech CEOs, investors and heads of innovation will provide participants with a 360 perspective on Fintech disruption.
16 guest experts such as Rob Frohwein, CEO of Kabbage and Anne Boden, CEO of Starling Bank, will support the lecturers by providing first hand insights into how the structure of the FS industry is being transformed by technology and what this means for professionals.
The Centre for Finance, Technology and Entrepreneurship (CFTE) is launching their first online Fintech course which will open to the public soon. If you are interested, you may enroll here. The course is described as “Around Fintech in Eight Hours.”
A statement released by ESC says that it is participating at GITEX 2017 to provide Indian IT companies opportunities to exploit the burgeoning Middle East ICT market. It is the largest participation by India, under the Council’s banner.
Meanwhile ESC Chairman Prasad Garapathi said that Indian IT exporters will continue to look into the whole Middle East and MENA region through this important gateway of Dubai.
Export of software and related services to the Middle East has reached $2bn in 2016-17 while India’s total export of electronics hardware during 2016-17 is estimated at $5.685bn.
The Middle East nation is keen to elevate disruptive Indian fintech startups by providing them an international platform and financial support.
The two sides also signed 14 agreements whereby the UAE vowed it would invest $75 billion in India.
The two countries also set a target of 60 percent increase in bilateral trade in the next five years.
Australia-based online lender SocietyOne announced on Tuesday it has secured $350 million in total originations. This news comes less than two months after the lending platform celebrated its fifth birthday. According to SocietyOne, the company topping $350 million as the current loan book also reached $200 million for the first time in the lender’s history.
Pay Later, better known as Afterpay, is an easy-to-use payment process allows shoppers to buy their product today and pay it off in 4 equal fortnightly instalments.
Airwallex was founded in 2015 by a team of entrepreneurs who developed a technology that uses machine learning to determine the most cost-effective way of settling every payment that comes through the platform.
CoinJar provides simple tools to manage digital currencies.
Data Republic was founded to empower the liquidity of data by delivering technology which offers best-practice security, privacy compliance and governance controls for organizations looking to safely exchange data.
Harmoney is NZ’s leading peer-to-peer money marketplace – where everyday people borrow money from (and lend money to) other everyday people. Hence the term ‘peer’ to ‘peer.’
HashChing is Australia’s first online marketplace allowing consumers to access great home loan deals without having to shop around.
identitii allows banks to move away from customer level information to detailed information about each and every transaction.
Prospa is Australia’s online small business lender committed to helping small businesses access the funds they need to grow.
SocietyOne is radically changing the landscape of financial services in Australia. Since our foundation almost five years ago, we have gone from a standing start to providing more than $300 million in loans to customers.
Xero is one of the fastest growing software as a service companies globally.
Bank of Queensland has topped the list as Australia’s worst offender for disputes with home loan customers, according to the financial ombudsman.
It is the fourth year in a row the bank has headed the list, with the number of disputes per 100,000 customers barely improving in the past two years, although the numbers have trended downward since 2014.
For every 100,000 home loan customers, BoQ was involved in 79 disputes during the year. Of those, 40 per cent were resolved by agreement, with 29 per cent in BoQ’s favour, according to the Financial Ombudsman Service.
Home loans accounted for 10 per cent of all disputes FOS accepted in the year, while credit cards accounted for 14 per cent and personal loans 8 per cent.
Ratings agency Crisil has withdrawn proposal to enter into peer-to-peer lending platform business while the government has approved Rs 85.45 crore foreign direct investment (FDI) proposals in September from four companies, the Finance Ministry said on Tuesday.
Crisil’s majority shareholder is international ratings agency Standard and Poor’s, an American corporation.
After the Reserve Bank of India (RBI) released guidelines for entities engaged in peer-to-peer (P2P) lending last week, an association of such entities is planning to ask the central bank to clarify whether institutions will be allowed to lend through P2P platforms.
A top executive with one of the five P2P lending platforms told FE that the industry is unsure of whether ‘participant’ covers only individuals or institutions as well.
BankBazaar is the world’s first neutral online marketplace that helps people compare and choose financial products such as loans, insurance, credit cards, fixed deposits, saving accounts, mutual funds etc., – over a highly secure, user friendly, and intuitive platform.
Capital Float is an online platform that provides working capital finance to SMEs in India.
FreeCharge is India’s No.1 payments app.
Lendingkart Technologies Private Limited is a fin-tech startup in the working capital space.
MobiKwik is India’s largest independent mobile payments network connecting 55 million users with more than 1,500,000 retailers.
Mswipe is India’s largest independent mobile POS merchant acquirer & network provider.
Paytm is India’s largest mobile payments and commerce platform.
Policybazaar is an Indian online life insurance and general insurance comparison portal.
Razorpay aims to revolutionize online payments by providing clean, developer-friendly APIs and hassle-free integration.
Rubique (Rubik + Unique) aims to mine every possibilty to offer a unique solution to our customers’ complex financing problems through advanced technologies and data science.
India Money Mart (IMM), a digital lending marketplace, has launched its app to allow lenders and borrowers to carry out Peer-to-Peer (P2P) lending a week after the RBI released detailed guidelines for this platform.
The app is useful for people seeking alternative sources of funding to meet emergency requirements, not serviced by banks and other traditional lenders, it said.
In Mongolia, where the average monthly income is $390, informal loans between friends or family members are commonplace as credit and small bank loans are hard to get. On the other hand, small informal loans are almost expected to not be paid back.
“There is no leverage system for people to repay, so in the worst case they lose their friends,” says Anar Chinbaatar, 35, CEO of fintech startup AND Global.
His startup, which launched the mobile app LendMN, introduced mobile-based microlending to the North Asian country where borrowers are blacklisted from significant financial services such as mortgages if they default on a small loan from the bank.
After raising $1 million in seed funding in April 2016, the company received another $4 million with a $30.8 million valuation in August from influential backers in Mongolia and Japan including former Japanese parliament member Takami Yuichi, investor Satoshi Matsumoto and his wife Yasuyo Matsumoto. It is also advised by Oko Davaasuren, an influential Mongolian investor from TechStars.
The company, which has issued over $1.9 million in loans as of this month, plans to use the new investment to fuel expansion into the Philippines and Japan and develop new technology such as a blockchain project while preparing for an initial coin offering in December.
Malaysia was the first country to regulate the growing industry to support new ideas by providing a funding mechanism. Its Securities Commission (SC) has approved a total of 12 crowdfunding platforms – six equity-based and six peer-to-peer (P2P) lending – and, though there are strict guidelines for operation, the market is creating new avenues for entrepreneurs.
Growing regulation of the crowdfunding industry is not putting off investors; Malaysia as a whole is one of the least complex jurisdictions in Asia, according to TMF Group’s inaugural Financial Complexity Index.
The ranking of 94 jurisdictions across the world resulted in three top-10 spots for Asia Pacific: Vietnam ranked 5th most complex for compliance, followed by China at 7 and India at 10.
But there was a large chunk of southeast Asia which ranked on the less complex side of the table, including Malaysia (59), the first country in Asia to regulate crowdfunding.
Inspeer, one of the few players to recognize the need for revolutionary technology in the financial services industry has opted to introduce additional utilities backed by cryptocurrencies and their underlying blockchain technology. The platform, designed to use cryptocurrency alongside fiat currency for the purpose of peer to peer lending has announced the launch of its upcoming crowdsale campaign.
With their primary operations located in Russia under the LightFin.ru brand, more than 200,000 loans applications were processed within the first year of platform deployment.
Inspeer’s platform uses loan pipelines and scoring algorithms which consist of the InsCore system and OLAF algorithms. Together, these two components help to effectively execute an assessment of the borrower’s likelihood of repayment as based on more than 20,000 predictors.
SoFi to add 400 Delaware workers by 2018. AT: “If the majority of the openings will be call center jobs, this makes me wonder whether the expansion is related to the Zenbanx acquisition. We know that SoFi is positioning itself to compete more directly with banks, so it will be interesting to see how these assets are utilized.”
TransferWise CEO says there is a fight for the fintech capital of the world. GP:”Fintech is one of the fields where there is no clear winner yet between San Francisco, New York and London. London doesn’t have the size in it’s favor. New York doesn’t have the innovation. San Francisco lacks the established financial markets connections.”AT: “I still see London winning out in the near-term. Long-term, it’s anyone’s guess. There are a lot of contenders. This article could have explored that topic much more in depthly.”
SoFi, an online provider of personal loans, will add 400 workers to its Claymont office by the end of 2018.
SoFi entered Delaware in February when it acquired Claymont-based Zenbanx for an undisclosed sum. The Zenbanx purchase bolstered SoFi’s portfolio of online personal finance offerings. Among the former Zenbanx products that now belong to SoFi are software that enables customers to transfer international currency through mobile devices and an app that allows users to transfer money through the sound of their voice.
SoFi has vowed to ramp up the former Zenbanx office with an aggressive hiring plan that will see it add 100 workers by August, 200 workers by the end of the year and 400 employees by the end of 2018.
The majority of the openings are call center jobs, but SoFi is also looking to fill IT, business development and management positions. Of the first 200 openings, 130 will be call center positions, 30 will be mortgage operations jobs and the remaining 40 will be IT, business development and office staff.
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Upstart Securitization Trust 2017-1 (“UPST 2017-1”). This is a $163.107 million consumer loan ABS transaction that is expected to close on June 21, 2017.
This transaction is Upstart Network, Inc.’s (“Upstart” or the “Company”) first securitization of prime and near prime unsecured consumer loans. The loans are facilitated by Upstart’s proprietary models supporting an online marketplace that connects borrowers and investors by offering consumer loans originated by Cross River Bank (“CRB”) through the platform, www.upstart.com (the “Upstart Platform” or the “Platform”).
RentRange, one of the premier providers of market data and analytics for the housing industry, today released data ranking the top 25 U.S. metropolitan statistical areas (MSAs) by highest average gross yield for single–family1 homes during the first quarter (Q1) of 2017. The data analysis also identified the average rental rate increase between the first quarter (Q1) of 2017 and the same quarter in 2016, average vacancy rate in Q1 2017 and investor purchases over the past 12 months.
The Q1 2017 RentRange® data shows that the highest yielding markets are dominated by older metro areas in the Midwest and Northeast.
Analyzing the average vacancy rates, which is the percentage of rental properties that are vacant or unoccupied at a particular time, the lowest rates from the list are in Pittsburgh, Indianapolis, St. Louis, Oklahoma City and Canton. Lower vacancy rates generally mean properties stay vacant for less time, limiting the loss of rent.
As financial institutions seek to improve customer experiences online, TransUnion (NYSE:TRU) today announced the launch of Find My Offer to help lenders deliver relevant credit offers to consumers online. Find My Offer is a set of configurable white-label web screens that support a lender’s consumer prequalification and digital prescreen initiatives.
Lenders can use Find My Offer to acquire new customers and expand existing relationships online. The site automatically integrates with TransUnion’s DecisionEdge suite, allowing lenders to use their existing underwriting criteria for their online marketing.
A top 20 national bank recently utilized Find My Offer to increase online acquisitions. Its IT team estimated a six month development cycle to build a customer-facing site to initiate credit offers online. Using Find My Offer, the bank saved more than 40% in development costs and was able to present relevant, tailored offers to consumers within three weeks – approximately 20 weeks earlier than what was projected using internal IT resources.
Sharestates, an online real estate investment marketplace, announced today the launch of its new Auto-Invest tool, a feature that will maximize the investor’s chances of investing in the platform’s highly sought after real estate debt opportunities. The new feature will allow investors to choose from multiple strategies, including a custom investment strategy that includes 12 underwriting filters to choose from. The launch of this new tool coincides with the company reaching a major milestone of $500 million in loan volume.
With the Auto-Invest tool, the investor will have the ability to increase the frequency at which their funds are deployed. These automatic investments will give the investor a better chance of eliminating “cash drag,” which occurs when the investor does not have a chance to log in, review the new loan and manually make their investment before the loan sells-out.
The interface provides a user-friendly and client-focused tool, making investing in real estate loans hassle-free. Additionally, after every auto-invest transaction, the investor will receive a confirmation email with loan and investment details, where they will then have a 24-hour window to opt out or increase participation.
In order to tailor the best possible loan selection for each individual, Sharestates uses a multitude of adjustable measurements for each investor to meet their investment goals. These measurements include; investment totals per loan, maximum investment frequency and limit, interest rate requirements, risk ratings, property types and more.
Sharestates continues to outperform the online real estate lending industry with originations exceeding $500 million since inception in 2014. Current run rates have Sharestates exceeding $1 billion in total originations before the end of 2017, with current monthly totals hovering around $60 million. Sharestates has funded more than 520 individual loans, providing an average return on investment of 10.62%.
Kuber Inc, a Southern California based Fintech company, has launched it’s personal finance product targeting the more than 22 million university students in United States. Fluid App is now live on Apple iTunes store and free to download. This is first of its kind finance product is designed specifically to build credit for college students in America.
Using the app, users may borrow up to $500 dollars interest free and without and other associated fees. The lending and repayment activities are then reported to major U.S. credit bureaus to start building credit from day one.
Direct lenders have streamlined their rules and regulations to help those typically overlooked by conventional lenders. They still review you application carefully, but they don’t necessarily use subprime credit scores to reject your application. If you speak with the representatives at MoneyKey, they’ll you know what you need to provide. These reps may review your rating through other channels, but it’s not the only way they’ll determine your candidacy. It’s just one number amongst many factors they use to review your application.
They also don’t rely on in-person meetings to determine your candidacy, as they do most of their business online. All they require is basic contact and financial information submitted in an online application, and they’ll notify you if you qualify within minutes. For those that do, you’ll receive a phone call from a representative to verify the information that you supplied. If everything checks out, direct payday lenders like MoneyKey deposit your approved short term loan into the account that you supplied on your application. In some cases, you’ll receive your cash in as little as one business day.
At some point, bank is one of the most reputable lenders. Banks usually have lower interest rates and the credit duration may be longer. However, large banks usually have more requirements and slower process.
These banks may have slightly higher interest rates. However, local community banks offer simpler procedures, as they always want to be the partners for small business. Local banks commonly offers shorter credit period.
They are the most welcoming partners for quick loan. Direct online lenders usually apply a relatively easy loan process. They are also supported by reputable lenders. Another advantage is that the lenders may not require you to provide collateral. Some lenders do not even check your credit record before making approval. Some lenders even offer overnight credit process. Once you send the application today, you will get the money in your account tomorrow.
The disadvantages include higher interest rates, shorter duration, and lower credit limit. Direct online lenders can be easily found on internet. Some of them have only online presence, but some are online divisions of a conventional lending agency.
They also have online presence. However, peer-to-peer lending sites are not the true lenders. Instead, they act as the middlemen between the clients and the lenders.
Joe DePaulo, CEO and co-founder of College Ave Student Loans, had this advice for grads starting a job on how to ease the burden of the ball and chain of college debt weighing on their finances:
1. Organize all your student loans to make sure you know when your monthly payments start, the amount due for each one and your various due dates so you don’t accidentally miss any payments or pay late.
2. Get to know your loan servicers — the companies handling the billing and payment services for your loans — and make sure each of them have your current contact information, including both your e-mail and mailing address.
3. Consider signing up for auto-pay for each loan through your student loan servicers. You’ll often get a discount on your interest rate when you’re making automatic payments, and you’ll know that your payments are being made on time each month. It’s a great way to save money and build good credit.
4. Know your grace period for your student loans, or how long you can wait after leaving school before you have to make your first payment. This can vary by loan depending which types of loans you have. The grace period is usually six or nine months, and it’s designed to give you time after you graduate to find a job and get on your feet before payments are due. Interest continues to accrue during the grace period on most loans though, so if you have the ability to start making payments before the grace period ends, you should. This will help you save money in the long run.
5. Pay attention to the interest rate on each loan. When you can afford to pay a little extra, you’ll usually save the most money by paying down the loan with the highest interest rate first.
RATESETTER, MarketInvoice and LendInvest have made this year’s Fintech50 list, while Funding Circle and Zopa have been awarded a place in the Fintech50 Hall of Fame.
The annual Fintech50 list, which was first launched in 2013, selects the 50 European fintechs that are transforming financial services and recognises innovation rather than revenue. The companies are selected by a panel of more than 60 industry experts, following extensive year-round research from the Fintech50 team.
This year’s list, unveiled at a launch event at Silicon Valley Bank in London on Tuesday night, was chosen out of 1,500 companies. As well as an impressive presence from a raft of UK peer-to-peer lenders, the list includes business finance provider Iwoca, crowdfunding platform Seedrs, challenger lender Atom Bank and cryptocurrency Ethereum.
Efforts to clean up China’s scandal-plagued peer-to-peer (P2P) lending sector are taking another step forward with a pilot program that imposes tighter information disclosure requirements to protect customers from being swindled, Caixin reports. Under an initiative announced on Monday, companies will have to give people who use their P2P platforms a range of information including their registration address, shareholders, who provides custodian services, how many investors they have, their bad loan ratio and their outstanding loans. Altogether 47 separate pieces of information will need to be disclosed, 32 of which are mandatory, according to the National Internet Finance Association of China (NIFA), which is in charge of the pilot.
Chinese banks have been increasing their offshore lending volume in Asia-Pacific, outside of Japan, since 2014. Based on the pro-rata mandated lead arranger (MLA) role, China’s offshore lending amounted to US$70.5 billion via 300 deals in 2016, or nearly double the 2015 figure of US$36.3 billion, and nearly three times the 2014 volume of US$24 billion in 2014.
Figures released by Thomson Reuters on June 5 show that the bulk of China’s offshore lending has been concentrated in Northeast Asia. In 2016, Chinese banks accounted for US$52.7 billion through 172 transactions on a pro-rata basis at the MLA lender level, representing an increase of 83% from 2015.
On the majority of p2p lending marketplaces that accept non-resident international investors, the necessary process to comply with ‘Know Your Customer’ (KYC) rules involves multiple manual steps both on the side of the investor and on the side of the marketplace. After filling in details in forms the investor typically needs to submit scans (or photos) of an ID or a passport. As an investor I balk at the very few marketplaces that ask me to submit these via unsecured email. The better ones offer an upload inside the SSL secured website after login. The British marketplace typically also require a recent utility bill to confirm address.
In continental Europe a few marketplaces are doing video ident. Recently when I registered at Paskoluklubas, aside from entering details in forms I needed to schedule a Skype video call in which I answered several questions and had to show my ID live. While it was straightforward, it is not more time efficient (both for investor and for marketplace). And I was lost for words for a split second when asked for my zodiac. How many non-native-english speakers can answer that question without hesitating for the right word (luckily mine is easy to translate).
Another example of outsoucing is the process Lenndy uses. When registering, all an investor is asked by Lenndy is his email address, nothing else. Then the investor is required to link an Paysera account with at least level 3.
Last week British Relendex moved from a manual document upload process to an automated process for investors of 7 countries; Australia, Canada, Denmark, Germany, Sweden, Switzerland. Relendex uses the Call Validate solution and checks (in case of Germany) first , middle, last name, gender, phone, address, city and postal code with the data coming from three different data sources and which Relendex says has high match accuracy. Relendex’s criteria was that the data available should be of equal quality and accuracy to that of the UK database.
Dublin-based financial payments start-up Plynk has raised €25 million in a Series A fundraising round as it looks to roll out its money-messaging app globally.
The investment, which has been led by Swiss Privee, is one of the largest-ever Irish Series A rounds.
The company has also announced plans to increase headcount from eight to 28 over the next 12 to 18 months as the number of users it has in Ireland this week reached 6,000, easily surpassing its initial target of 4,000.
Plynk has a licence to operate across the European Economic Area, which includes the EU along with Iceland, Liechtenstein and Norway. While only available in Ireland, the start-up intends to roll out its app in Spain over the summer with Portugal to follow shortly after.
The German fintech startup Fincompare has raised €2.5 million in seed financing. The funding comes from the VC Speedinvest and Uniqa insurance, both from Austria. Several business angels from Berlin also participated in the round.
The Fincompare platform allows SMEs to receive and compare various offers for loans – anywhere from €10,000 to €5 million.
A new real estate crowdfunding platform has launched in Germany. Grundag GmbH & Co., a wholly-owned subsidiary of CrowdDesk, has launched to provide debt based crowdfunding for German real estate projects. CrowdDesk is a white label crowdfunding platform that powers several well established platforms in Germany. The new site was launched in partnership with ERGE Miet- & Finanzvermittlung GmbH & Co. KG.
There are indications the Fintech revolution has stalled. It promised to change market structure, to radically improve products and services, and to save the incumbent banking sector from a slow slide to invisible utility status.
But these promises are yet to come to pass. Yet the revolution could still be completed – the underlying technologies are real and, deployed in the right way, they can still have a transformative effect on the financial services industry.
How can investors navigate this next chapter in FinTech? In a recent global collaborative report, “FinTech: A Gauntlet to Riches,” Faucette and his colleagues offer an investment framework for understanding where FinTech companies are likely to disrupt—and where established players are poised to get ahead.
Indeed, the pace of venture capital funding in FinTechs has slowed recently, suggesting that early-stage investors are coming to grips with the challenges of this space, and that established financial services firms are likely to take a more meaningful role in funding and developing new technology.
To understand which trends favor startups and which bode well for incumbents, investors should ask some key questions:
What is the existing infrastructure? Innovators have the best shot at success in areas that lack established infrastructure. One area that is particularly poised for growth is B2B payments, a large and underserved corner of the market, with roughly 50% of payments still made via checks.
Is consumer behavior changing? Early adopters in a nascent market tend to be more receptive to a new technology or provider, giving innovators a first-mover advantage. This bodes well for FinTech disruptors focused on small-business insurance (a.k.a. InsurTech).
Does government help or hinder innovation?
How important is access to data? Investors should take note of the role of data, which can limit a small firm’s ability to scale without partnering with a data owner.
Does success hinge on collaboration?
How important is access to capital markets? Companies that require continuous access to capital markets are subject to a high degree of market volatility, which can put an entire business model in jeopardy if still early in its formation, says Faucette. For fledgling U.S. marketplace lenders (a.k.a. peer-to-peer lending) and mortgage originators, access to capital markets could be a limiting factor, especially now that established players are investing in the space.
Excitement over fintech remains high even though investor enthusiasm has been curbing in recent months. According to a KPMG report, the flow of investments has started to ease. Global investments dropped to $3.2 billion in Q1 of 2017 from $4.15 billion in Q4 of the previous year. Indeed, investors seem to have made their wagers and are now more focused on ensuring that existing fintech companies start delivering.
More mature segments, such as payments, are also seeing saturation, as new competitors seek to maximize opportunities in markets keen on going cashless.
Having processed a whopping €3.2 billion in transactions in 2016, payment startup Trustly has recently emerged as a leader in the global fintech scene. Based in Stockholm, Trustly offers a fresh perspective on payments by putting the bank account at the center of digital payments instead of credit cards. The company is now used in 29 European countries, enabling merchants to perform cross-border business easily.
Berglund: We aren’t really going head to head against big banks. We see the bank account as the hub of people’s financial lives, and it’s what most other payment methods depend on. Trustly’s service is built around the relevance of the bank account and as such around the relevance of banks.
In Europe banks focused on the online channel are at the forefront of the adoption of new technology and I believe more banks will no doubt make use of our services going forward.
Berglund: Credit cards were invented to make payments easier in the physical world, but they may not have the same raison d’être as people move to online and mobile platforms. The truth is, it’s a pain to dig for your credit card and key in a long string of numbers, especially if you’re on the go and trying to make a purchase from a tiny smartphone screen. With Trustly, users can make a payment in just a few steps using only information they know top of mind. And our product is optimized for mobile and other devices to make it even more convenient. So while credit cards won’t be going anywhere for a while, it’s important to offer other user-friendly alternatives too.
The year 2016 registered an impressive impact on the Indian economy and therefore was a landmark year for fintech and banking industries. This year, 2017 started out to be an exciting one for Financial Technology which will spell out a future of continued scale and disruption for the industry, especially after India’s digitalisation movement. With the proliferation of cloud and mobile technologies advancing and customer demand for better digital banking experiences growing, Fintech firms will continue to innovate faster and offer new services with richer user experiences.
Top 5 Trends to watch out for:
Chatbots, machine learning & AI
Banks & Fintech firms to partner: According to a recent Business Insider report, 87% of banks that have partnered with financial service providers (fintech companies) have been able to cut costs. Additionally, the same study found that 54% of partnerships increased revenue.
Blockchain moves out of the labs into the real world
Reforming Digital Leadership: CIOs will no longer be the most influential technology decision makers. With the continued rise of the Chief Digital Officer and in many cases the Chief Marketing Officer will help financial institutions usurp the IT team in implementing ‘digital’ throughout the organisation.
FinMomenta founders believe that they are the Next Moment in FinTech industry. With their latest product TachyLoans, they plan to build a digital lending marketplace that connects people (Investors/Lenders) who wants to invest/lend their incomes, with people (Borrowers) who are looking to borrow funds to meet their financial requirements. The platform caters to both Individuals and Small & Medium Enterprises (SMEs).
How does the platform FinMomenta work?
Investors can earn returns as high as 25% per annum and borrowers can avail loan at lower interest rates starting from 11.5% per annum. Interest rates are charged based on borrower’s creditworthiness. Lenders and borrowers can negotiate on the loan amount, interest rates and loan tenor through a two-way bidding process available on their dashboard.
Please elaborate key features/services of Tachyloans?
The platform uses a unique proprietary credit scoring model enabled by Artificial Intelligence and Big Data to assess the creditworthiness of applicants. It also uses e-KYC and Aadhaar for verification of the borrowers that helps lenders to automatically invest in the recommended list of borrowers.
Tachyloans not just focuses on cutting down the transaction time for lenders and borrowers but also reduces the overhead costs associated with the traditional lending process and enables us to pass on the cost savings to lenders in the form of higher returns and to borrowers in the form of lower interest rates. Lenders and borrowers can negotiate on the interest rates through Tachyloans platform.
What is the Monetization model of FinMomenta?
FinMomenta charges a service fee to both lenders and borrowers for having loans enabled on the platform.
What is the market size and opportunities for companies operating in Fintech industry in India?
Consumer credit market in India is currently at $300bn out of which $98bn is the personal loans market. The market is currently growing at 14% year on year. The SME business loan market is currently at $600bn and is expected to grow to $3.4 trillion by 2022. In terms of the population, out of 1.2bn population only 150mn population has their history in credit bureaus and 20mn has scores acceptable to banks. There is a very small population that is being serviced by the banks. Around 10mn citizens are entering jobs every year and with more than 55% less than 45 years, the population would have huge aspiration to grow in life which would require access to credit for them.
Aztec Exchange, a global supplier of invoice finance products and services, and Canadian EDI provider EDI Gateway today announced a partnership to deliver Aztec’s breakthrough early e-invoice payment service PayMe (payme.cloud) to EDI Gateway’s (edigateway.com) Canadian supplier and corporate clients.
PayMe is unique in the early payment market because, unlike with factoring firms, creditworthiness is based on that of the buyer, not the supplier. There is complete pricing transparency, meaning there are no hidden fees or interest charges. Suppliers are only required to pay a minimal invoice discount charge and a standard transaction fee. For customers on the EDI Gateway platform using PayMe, this means they’ll typically receive payment within 24 hours. Furthermore, because it’s entirely online, they can submit for early payment any time from any internet-connected device. There are also no restrictive long-term contracts and suppliers can sell as many approved invoices as they want.
This partnership with EDI Gateway is the latest for PayMe, which launched in May 2016. Over the course of the past year, PayMe has had tremendous growth and is now available to more than 100,000 SMEs globally via e-invoice providers as a white label solution for traditional banks. It will soon be launched directly through corporates. For EDI Gateway, PayMe complements their existing e-invoicing solution, enabling them to offer an integrated payment and financing service. The firm looks to continue this approach going forward to attract and retain their retail and vendor clients.
News Comments Today’s main news: OnDeck reports Q1 2017 results. dv01 partners with SoFi. Elevate Credit announces Q1 2017 results. SoFi lets employees sell 20% of vested stock. Crowd2Fund announces new venture debt product. Klarna, Trustly fight EBA on bar screen scraping. Today’s main analysis: LC may have hit a dead end. The real returns for Prosper investors. Today’s thought-provoking articles: […]
OnDeck reports Q1 results. AT: “Things aren’t looking so good at OnDeck these days. Originations are up from a year ago, but net revenue is down. Gross revenue is up 48%. Cost of Funds Rate is up, operating expenses are up, and Total Funding Debt is up 69%. Gain on Sale is way down. Something is going on internally.”
Lending Club keeps pushing its comeback. AT: “They’re not the only ones. I do see them climbing out the hole, albeit a little slowly. On the other hand, it’s only been a year since the boat was rocked. That’s a short time frame in business.”
OnDeck® (NYSE: ONDK) today announced first quarter 2017 financial results, additional planned cost savings, and a target to achieve GAAP profitability in the second half of 2017.
Loans Under Management increased to $1.2 billion, up 25% from the comparable prior year period, driven primarily by the growth of originations over the period. In the first quarter of 2017, originations were $573 million, up 1% from the prior year period, primarily reflecting the impact of credit tightening implemented during the quarter.
Gross revenue increased to $92.9 million during the first quarter of 2017, up 48% from the comparable prior year period. The increase in gross revenue was primarily driven by higher interest income, partially offset by lower gain on sale revenue. Interest income increased to $87.1 million during the quarter, up 63% from the comparable prior year period, and primarily reflected the growth of average loans, which increased 66% versus the comparable prior year period. The Effective Interest Yield for the first quarter of 2017 was 33.9%, down from 34.5% in the comparable prior year period, primarily reflecting changes in portfolio mix over the period, partially offset by recent price increases.
Gain on sale was $1.5 million during the first quarter of 2017, down 79% from the comparable prior year period. The decline primarily reflected a lower Gain on Sale Rate during the quarter and the decision to reduce the amount of loans sold through OnDeck Marketplace. OnDeck sold $42.0 million1 of loans through OnDeck Marketplace at a 3.5% Gain on Sale Rate during the first quarter of 2017, compared to $123.7 million1 of loans at a 5.7% Gain on Sale Rate in the first quarter of 2016. Loans sold or designated as held for sale through OnDeck Marketplace represented 9.0% of term loan originations in the first quarter of 2017 compared to 25.9% of term loan originations in the comparable prior year period. To optimize long-term financial performance, OnDeck plans to reduce the percentage of term loan originations sold through OnDeck Marketplace to less than 5% for the remainder of 2017.
Net revenue was $35.4 million during the first quarter of 2017, down 13% versus the comparable prior year period. The decline in net revenue reflected the reduction of OnDeck Marketplace sales, which led to lower gain on sale revenue, and higher provision expense in the first quarter of 2017 versus the prior year period.
Provision for loan losses during the first quarter of 2017 increased to $46.2 million, up from $25.4 million in the comparable prior year period. The increase in provision expense primarily reflected a 20% increase in originations of loans designated as held for investment in the period and the comparatively lower original loss estimate for loans originated in the prior year period. The Provision Rate in the first quarter of 2017 was 8.7% compared to 5.8% in the prior year period, reflecting that the credit tightening in the first quarter of 2017 was not in effect for the full quarter and the previously mentioned lower loss estimates in the prior year period. The Provision Rate decreased sequentially from 10.2% in the fourth quarter of 2016. OnDeck expects the Provision Rate for the remainder of 2017, taken as a whole, to be approximately 7%.
The 15+ Day Delinquency Ratio increased to 7.8% in the first quarter of 2017 from 5.7% in the prior year period and from 6.6% in the fourth quarter of 2016 due primarily to the continued seasoning of the portfolio. At the end of the first quarter of 2017, the average term loan age in OnDeck’s portfolio was 4.5 months, up from 3.3 months in the prior year period and 3.9 months in the fourth quarter of 2016. The Net Charge-off rate increased to 14.9% in the first quarter of 2017 from 11.2% in the prior year period and increased sequentially from 14.2%.
The Cost of Funds Rate during the first quarter of 2017 increased to 5.9% from 5.5% in the prior year period primarily due to the increase in short-term rates.
Operating expense was $46.7 million during the first quarter of 2017, up 5% over the comparable prior year period. Operating expense in the first quarter of 2017 was favorably impacted by the company’s previously announced cost rationalization plan which is expected to produce approximately $20 million of annual savings relative to its 2016 exit operating expense run rate. Additionally, operating expense in the first quarter of 2016 benefited from a $1 million release in the reserve for unfunded loan commitments and a $1 million gain related to changes in foreign currency values. Without these benefits, operating expense between the two periods would have been relatively flat. The company is implementing an additional $25 million of operating expense run rate savings compared to OnDeck’s 2016 exit run rate, the majority of which will be implemented over the remainder of 2017. The savings are focused on the company’s U.S. lending operations and will be achieved primarily through a workforce reduction to be implemented in the second quarter of 2017. Combined with the company’s prior workforce reduction, total headcount at the end of the second quarter of 2017 is expected to be approximately 27% lower than December 31, 2016 levels, due to both involuntary terminations and actual and scheduled attrition.
GAAP net loss attributable to On Deck Capital, Inc. common stockholders was $11.1 million, or $0.15 per basic and diluted share, for the quarter, which compares to GAAP net loss attributable to On Deck Capital, Inc. common stockholders of $12.6 million, or $0.18 per basic and diluted share, in the comparable prior year period.
Adjusted EBITDA* was negative $5.2 million for the quarter, versus negative $7.3 million in the comparable prior year period. Adjusted Net Loss* was $7.6 million, or $0.11 per basic and per diluted share for the quarter versus Adjusted Net Loss of $8.8 million, or $0.13 per basic and per diluted share, in the comparable prior year period.
Unpaid Principal Balance was $1.03 billion at the end of the first quarter, up 57% over the prior year period. The increase primarily reflected originations growth over the year and OnDeck’s decision to retain more loans on its balance sheet in connection with reducing OnDeck Marketplace loan sales.
Total Funding Debt at the end of the first quarter of 2017 was $788 million, up 69% over the prior year period, which primarily reflected the growth of Unpaid Principal Balance as well as the increased utilization of debt facilities during the period. OnDeck continued to expand its funding capacity in 2017. During the first quarter of 2017, OnDeck extended the maturity date of its asset-backed revolving debt facility with Deutsche Bank to March 2019 and increased the facility’s borrowing capacity to approximately $214 million. During the first week of May 2017, OnDeck extended the maturity date of its asset-backed debt facility that finances OnDeck’s line of credit offering to May 2019, increased the facility’s borrowing capacity to $100 million, and decreased the funding costs by 200 basis points.
At the end of the first quarter of 2017, cash and cash equivalents were $73 million, as compared to $80 million at December 31, 2016.
Guidance for Second Quarter and Full Year 2017
Second Quarter 2017
Gross revenue between $85 million and $89 million.
Adjusted EBITDA between negative $3 million and positive $1 million.
Full Year 2017
Gross revenue between $342 million and $352 million.
Adjusted EBITDA between positive $5 million and $15 million.
Adjusted EBITDA guidance for the second quarter and full year 2017 includes an approximately $3.5 million charge to be recognized in the second quarter of 2017 associated with the planned workforce reduction.
The online lender said Monday that it would put a renewed focus on achieving profitability by slowing growth and cutting costs. Shares fell by nearly 7% in response. Fundamentally, investors are finally waking up to the fact that On Deck is more of a niche financial company than a revolutionary technology platform.
Loan originations may decline by a fifth next quarter, and total originations will be lower this year than last.
If these sound like the business objectives for an ordinary bank, that’s no coincidence. The company plans to sell less than 5% of its loans through its online marketplace this year, Chief Financial Officer Howard Katzenberg said, down from 18% in 2016 and 34% in 2015. Of the rest, some will be securitized, but most will be held on its balance sheet.
On Deck’s shares are down 79% from their initial public offering in December 2014. At 1.2 times book value, it is now valued like a financial company and roughly in line with the average bank. This still looks a bit rich because it has no profits.
The last 12 months have undoubtedly been a difficult period for marketplace lending pioneer Lending Club.
But, as Q1 earnings hit last week, it seems clear that progress is happening — albeit at a fairly slow pace.
Retail investors also expanded, though more slightly — reaching 15 percent, up from 13 percent in the prior quarter.
Lending Club also announced $2 billion originations, surpassing $26 billion in total loans since inception almost ten years ago and 2 million total consumers served on its platform.
Moreover, investing in marketplace lending is not so profitable as it has been in the recent past, and returns to investors have dropped sharply. Competition has forced down interest rates in the marketplaces to attract consumers with cheaper underwriting, and charge-offs have risen.
According to data from Orchard, a technology provider to the industry, total returns from an index of U.S. consumer loans came to 3.95 per cent last year, down from 8.71 per cent in 2014.
Lending Club’s stock performance has been flat over most of the last year, though it has lost roughly 60 percent of its stock value.
The firm has also seen a massive change-over in its staffing and leadership since its more scandalous days a year ago. CEO Scott Sanborn cut and rehired 179 jobs and brought on a new CFO, COO, general counsel and chief capital officer.
dv01, the reporting and analytics platform that brings transparency to lending markets, today announced a reporting partnership with SoFi, a modern finance company taking an unprecedented approach to lending and wealth management. Institutional investors who use dv01 to conduct analysis on consumer loans and bonds will now have access to all SoFi securitizations, including student and personal loans.
Under the first phase of the partnership, dv01 will receive securitization data directly from SoFi, which it will normalize, format, and roll up for monthly level reporting. The data, which includes 23 historical deals, will be available through the Securitization Explorer, dv01’s online reporting and analytics portal for consumer securitizations.
Investors who have been approved to view SoFi data will have 24/7 access to updated loan level performance and composition details, as well as a suite of reporting and analytics tools. dv01 will be responsible for updating deal collateral data monthly, so investors can continue to track the evolution of a pool over time, even after the deal has closed.
dv01 has provided similar reporting services for several other online lenders, overseeing an aggregate securitized collateral balance in excess of $7 billion. The company launched its dedicated Securitization Explorer tool in February, and since then has also announced its role as Loan Data Agent for the Prosper Marketplace loan purchase consortium led by Jefferies LLC, Soros Fund Management, Third Point LLC, and New Residential Investment Corp, a Fortress Investment Group REIT.
Elevate Credit, Inc. (NYSE:ELVT) (“Elevate” or the “Company”) today announced results for the first quarter ended March 31, 2017.
First Quarter 2017 Financial Highlights
20% year-over-year revenue growth: Revenues totaled $156.4 million, a 19.6% increase from $130.7 million for the prior-year period.
Nearly 40% year-over-year growth in loans receivable: Combined loans receivable – principal, were $444.5 million, a 38.6% increase from $320.7 million for the prior-year period.
Stable credit quality: Loan loss provision was 52.9% of revenues and within our targeted range of 45%-55%. The ending combined loan loss reserve, as a percentage of combined loans receivable, was 15.7%, slightly lower than the 16.3% we reported for the prior-year period.
Record low customer acquisition costs: The total number of new customer loans for the first quarter of 2017 was approximately 53,000 with an average customer acquisition cost of $198, compared to approximately 41,000 customer loans and an average customer acquisition cost of $235 for the prior-year period.
Positive net income: Net income of $1.7 million, or $0.06 per pro forma diluted share, which was based on a 2.5 to 1 stock split and all preferred stock converting into common stock upon the IPO but it excludes the 14.3 million common shares issued in the IPO since this happened after quarter end.
Continued improvement in Adjusted EBITDA margin: Adjusted EBITDA was $24.9 million and the resulting Adjusted EBITDA margin was 15.9%.
For the full year 2017, the Company expects total revenue of $680 million to $720 million, net income of $13 million to $19 million and Adjusted EBITDA of $95 million to $105 million.
Online lender SoFi is letting employees cash out a portion of their holdings to give them liquidity as the company waits to go public.
Last month, SoFi employees and ex-employees were permitted to sell 20 percent of their vested options in a secondary share sale that totaled $336.5 million, according to sources familiar with the matter. The offering priced the shares at $16.30, said one source, who asked not to be named because the deal was confidential.
The prepaid card isn’t linked to your bank account, but instead to the Square Cash app. That means you can only use it to spend money that you are holding in your Square Cash account.
A Square spokesperson said these signatures are screened before printing to prevent inappropriate words and drawings from making their way onto the cards. But there is obviously wiggle room to include your Twitter handle, if you want to be like Jack, or just a first name, too. The cardholder’s first and last names are printed on the back of the card.
Creating a deeper relationship with Square Cash customers might also open up other business opportunities in personal finance for the $7 billion payments company. Lending, anyone?
AI is also second only to blockchain technology as the most overused and overhyped term referring to technologies that are taking over banking and finance, particularly in credit decisions.
The reality is AI will make lending more consistent and efficient; however, it remains to be seen if it will make lending safer.
How will regulators ever know if the AI algorithms are performing in a nonbiased way? Humans are the programmers of the algorithms, and therefore human biases and tendencies cannot but leak into the overall decision process.
We know the saying “bad data in means bad data out.” AI should help to solve that challenge as it more accurately identifies the “bad” or not useful elements. However, the challenge with AI may not be with “bad data” but rather a lack of necessary data as the economic environment changes.
To this end, neural networks, which are self-learning and so complex that the humans who create them are unable to describe them, also present a number of problems. The foremost problem is: If you don’t know how the decision is made, you cannot be confident that the decision is being made correctly. Yes, you can judge by credit performance. But when a lender runs afoul of a regulation, the regulators won’t accept “We just don’t know how it works” as an excuse.
Affirm, the lending startup that provides loans at the POS, is looking into launching everyday-use virtual credit cards, Bank Innovation has learned.
The company, launched by a PayPal cofounder Max Levchin, provides point-of-sale loans that allow customers, particularly millennials, to finance purchases with participating merchants. Once approved, consumers receive a one-time use virtual card via Affirm’s app, which they can use for the purchase. Then, depending on individual consumers, Affirm splits the bill into monthly payments.
Scanning the news in the payments world this week was an interesting exercise because the two standout themes are very much aligned with what we do here at WePay and with the future of digital payments. The first theme is around the future of Fintech and where the nascent industry is headed and the second is around the huge impact of delivering payments as a an integrated part of a solution rather than as an afterthought.
David Dunn, of Braintree Europe, has a piece in ITProPortal about why payments are more than plumbing. It’s a good piece and makes a great case for integrating payments. He says that you can help your business by making it easier for your customers to get to a checkout and by making it easier to scale. We would argue that a SaaS business can go even further by using payments to better retain existing customers and help them grow, better adding new customers by scaling as Dunn mentions and also by optimizing revenue for the platform itself. The way to achieve these goals is via white-label payments.
When you consider the recent milestones Kabbage has achieved it makes it difficult to think of the fintech lender as a startup. In recent weeks Kabbage surpassed a couple of major milestones comprised of extending $3 billion in funding to 100,000-plus small businesses. More than half of those loans were directed toward existing credit lines. Kabbage also recently priced a $525 million private securitization, which tips the company’s hand on strategy.
Kabbage is pursuing its growth plans all while performing a confidential search for a new chief technology officer, details for which are expected to unfold in the coming months.
At the LendIt USA 2017 event, Kabbage co-founder & CEO Rob Frohwein alluded to the online lender’s plans to reach new territories, details for which were scarce. Treyger shared, however, that Kabbage’s global growth plans are somewhat tied to the company’s pipeline of banking partnerships.
Kabbage already counts as partners household names including Santander, ScotiaBank, and ING, all of which license software from Kabbage. Meanwhile, as big banks are accessing smaller businesses, Kabbage’s growth blueprint includes serving larger ones.
With less than $1 million in total funding, fintech startup Elsen may not have much by way of investments, but a recent partnership with Thomas Reuters should bring some star power to the burgeoning company.
Founded in 2013 by three Northeastern grads, Elsen is a platform-as-a-service company that enables anyone at large financial institutions to harness massive quantities of data for better decision making and problem solving.
Besides offering data storage to some of the largest vendors in the world, Elsen’s product uses machine learning and AI to speed up the testing of financial algorithms by way of backtesting, a process that sifts through historical financial data to see how an algorithm would perform at tasks like automatically picking stocks, for example.
One thing that Keith Noreika, the new acting head of the Office of the Comptroller of the Currency, could tick off of his to-do list is to pause the OCC’s efforts to develop a fintech charter. Noreika should then take some time to assess whether the charter is developing in a way that best serves the public.
Former Comptroller Thomas Curry deserves major credit for getting the OCC to think about how to encourage innovation in the banking sector. The fintech charter is an important piece of this effort. Unfortunately, based on the most recent information put out by the OCC, it appears that the previous leadership wasn’t thinking sufficiently outside of the box. The charter is shaping up to needlessly mimic many of the requirements of traditional depository institutions, even though those requirements do not make sense in the nondepository context.
For example, requiring firms to get OCC permission to change business plans, and to convince the agency that the firm will not fail, are not necessary.
However, the OCC should not press pause on its response to the lawsuit filed by the Conference of State Bank Supervisors challenging the charter.
ANTHONY JABBOUR: When Apple Pay came out, banks weren’t running to Apple Pay because they thought it would drive new streams of revenue for them. A lot of them did it because they were afraid the bank across the street would offer it and they would suffer by not offering it.
One thing we’re trying to do that’s a little different is, if we believe there’s value for our customers, we want to have the disruptor connect to the FIS network and have our banks connect to it from the FIS network, so we can leverage our banks’ negotiating power with the fintech.
What are some of the types of companies you’re thinking of—alternative lenders, PFM app providers, billing companies?
JABBOUR: Payments would be one. The banks that I speak to look at lending and they say banks lost the lending franchise and exclusivity and other companies popped up over the years and took a major portion of that. And they look at payments right now and they feel strongly they can’t lose the payments franchise.
Do you think that banks can take back market share in U.S. person-to-person payments with Zelle?
JABBOUR: We think that has a lot of potential. We offer Zelle to our clients. I believe we can create a capability for P-to-P for our banks that would be better than any fintech’s because we could make it real-time and it would be accessible from an ATM. I could send you money and you can go to an ATM with your mobile phone and withdraw the cash without having a bank account. We could also tie it with prepaid cards, so instead of me sending you $500, I could send you a $500 Home Depot gift card as a housewarming gift. It’s P-to-P, but it’s more thoughtful because we’re integrating it with prepaid.
What does it take for a payment platform to work? It takes brand recognition so people know it exists, and it needs ubiquity, it needs to work in every place you would want it to work. It’s never about the technology. I like with Zelle that banks said look we have to find a way to solve the brand issue, and if we all use the brand Zelle, that’s going to help. And I think it will.
I could see that argument, but you could argue that banks are late to this P-to-P payment party and that PayPal’s Venmo is the clear leader. Do you think the Zelle brand can win hearts and minds?
JABBOUR: Without question, banks are late to a number of capabilities. When you look at P-to-P, Venmo is the brand, it’s a verb. Whether or not banks can catch up with Venmo comes down to how compelling they make the offer, what else they can wrap around it, how much do they ultimately invest in it. What I know is, if they hadn’t pursued Zelle, they would have fallen further behind.
Have you ever wanted to own a skyscraper? How about an entire apartment complex? Well, good news, now you can! And, you don’t have to meet “accredited investor” requirements. How? It’s called crowdfunding!
According to the University of Cambridge Judge Business School, in 2015 crowdfunding real estate transactions topped $1.2 billion; over three times the amount in 2014.
Research the Crowdfunding Platform: Currently, more than 125 crowdfunding platforms exist. According to Jason Best, a partner at Crowdfund Capital Advisors, you’ll want to consider comparing associated fees, the quality of property management, and the sustainability of the platform. As with any new industry, it’s safer to choose among the larger more-established companies such as Realty Mogul, Realty Shares, and iFunding, to name a few.
If you’re interested in learning more about this topic, I suggest you listen to podcast Episode #108, “Investing in Real Estate Via Crowdfunding Platforms,” on J. David Stein’s website, Money for the Rest of Us.
What if a visit to the financial adviser was more like an impromptu coffee grab than a dental checkup?
Instead of a boring annual visit, imagine a quick call from you adviser in which he makes a couple simple suggestions to keep your portfolio on track.
That’s the future, according to Michael Kitces, research director for Pinnacle Advisory Group in Columbia, Maryland. Speaking to financial advisers attending last month’s Morningstar Investment Conference in Chicago, Kitces tried to reassure them that investors, rather than turning their money over to automated investment platforms, will continue to pay for advice if it’s relevant and timely.
In a future aided by software tracking customer portfolios and everyday spending, advisers will already know their clients’ problems and will use more frequent chats to figure out fixes, he said.
A (hypothetical) documentary titled “Software has been eating the world” about Microsoft, would have to cover the first decade (‘75-‘86) before the company went public and the stunning and difficult to replicate nowadays fact that about 12,000 Microsoft employees became millionaires, in addition to the 3 billionaires.
So, when Bill Gates spoke in February about the idea of “the robot that takes your job should pay taxes”, the world reacted.
In financial services, there were no such issues raised when ATMs, online brokerage and e-banking transformed the financial industry.
In this second wave that follows the accelerated pace of tech innovation of other sectors, we all agree that we don’t want a world in which no bank submits candidacy for the Global Finance awards Call For Entries: Digital Bank Awards 2017. Or a world that has an increased tax for the winner and those shortlisted in the Euromoney Best Digital bank awards: for 2016, Singapore’s DBS Bank, and the short list included BBVA, Citi, and ING. Or a world that taxes more startups providing the “picks and shovels” for the future of Invisible Finance, like:
– Cloud banking platforms offering Banking as a Service, like Mambu
– Cloud based investment financial app stores, like Investcloud
Billionaire venture capitalist Tim Draper soon plans to take a step that even he, a long-time bitcoin aficionado, has eschewed to now: buying a new digital currency offered by a technology startup.
Draper, an early supporter of bitcoin and its underlying blockchain financial ledger technology, told Reuters in an interview he will for the first time participate in a so-called “initial coin offering” (ICO) of Tezos slated later this month.
Tezos, a new blockchain platform launched by a husband and wife team with extensive Wall Street and in hedge fund backgrounds, will launch the ICO on May 22. Draper will also invest in U.S.-based Dynamic Ledger Solutions Inc, the creator of Tezos, but did not disclose details.
CVC Credit Partners (“CVC”) announced today that CVC’s U.S. Middle Market Private Debt business acted as Administrative Agent on a first lien senior secured debt facility provided to Wastewater Specialities, LLC (“WWS”). The proceeds were used to refinance existing debt and support future growth through equipment purchases.
On Friday, crowdfunding platform Crowd2Fund announced the launch of its new venture debt product, which is targeted towards early stage businesses that have a short term requirement to access cash to facilitate growth. The funding portal noted that the interest rates for the product’s loans range from 10% to 15%, with a borrow time period of normally no more than 12-18 months.
Crowd2Fund also noted those businesses that are suitable for the venture debt will be able to increase their value during the loan duration.
Furthermore, the size of the opportunity has been boosted by the greater availability of fingerprint sensors. According to the new research, around 60% of smartphone models are expected to ship with such sensors this year, with many Chinese vendors incorporating them into mid-range models.
The research emphasised the increasing momentum behind alternative biometric solutions. It recognised Mastercard as an early leader in this space through its Identity Check Mobile capability, due to go live later this year. Informally known as “selfie pay”, this allows users to scan their fingerprints and/or take selfies to validate their identities and thereby make payments.
In a bid to expand its footprint in the rapidly growing digital and technology-led innovation space, PwC, one of the major players in the field, has in recent weeks appointed a number of new senior technology positions in the UK wing of their group.
In another appointment aimed at driving growth in technology and financial technology (FinTech), Zubin Randeria, a PwC partner for 23 years non-consecutively, was unveiled as the new lead for around 200 cyber security experts in the UK, as the firm continue to focus on advising companies how to resist digital threats; a key concern of modern business.
Mark Leaver, PwC’s head of Financial Services Consulting since 2015, will meanwhile expand his existing role to include the multi-billion pound FinTech market in his scope. The FinTech space is growing fast, withinterest in services particularly high among younger tech savvy users, and on the back of the spike global investments in FinTech companies grew to $25 billion last year, according to data from KPMG.
The Bank of England has come under fire for working with a fintech startup that was fined $700,000 by a US regulator for breaking banking secrecy laws.
Players in the fintech field have accused the central bank of appearing not to have conducted proper due diligence when selecting its partners after it emerged that Ripple, the startup chosen by the Bank of England to help research new blockchain technology, was fined for “willfully violating” several requirements of the Bank Secrecy Act.
Of the 1.4 billion people in China, only about 300 million are in the national credit bureau, which means that more than a billion people have no credit profile. Hundreds of millions of Chinese “unbanked” consumers are middle class, have high discretionary income, and would be considered prime or super prime borrowers. On top of that, the large Chinese banks have no history in making consumer and small business loans and were never designed for that purpose (they make infrastructure and commercial real estate loans).
We are seeing the leading Chinese companies from a diverse set of industries muscle their way into the fintech sector. This article highlights some of the key players that have made the horizontal jump into fintech.
Ant Financial Services Group is owned by Alibaba Group, the largest e-commerce firm in the world. Ant Financial is focused on serving small and micro enterprises as well as consumers. Ant Financial is the largest fintech company in the world.
JD Finance Group operates seven lines of business: supply chain finance, consumer finance, crowdfunding, wealth management, payment services, insurance and securities trading. JingBaobei is their microlending platform and Baitiao is their crowdfunding platform.
Baidu Jinrong is focused on many different verticals under different brands including consumer finance (Baidu Umoney), wealth and fund management (8 Baidu), payments (Baidu Wallet) and financial asset transaction platform services.
Greenland Group (Stock Code: 337.HK) is one of the world’s largest publicly traded real estate development companies with more than 15 million clients. They are the largest Chinese developer in the US. Greenland Financial was formed in December 2015 and it includes three main business sectors: an online wealth management platform for individual investors; a professional asset allocation and wealth management service for middle-class clients; and a cloud platform to provide internet technology and data analysis services.
Wanda Internet Finance Group leverages Wanda’s offline commercial platform to form a business division comprising of four activities: data application, credit service, online lending and payment, and creating an innovative financial offline-to-online model.
Lufax Holdings is one of the world’s largest and most successful fintech firms. It is owned by Chinese insurance giant Ping An Group. The business consists of three divisions: Shanghai Lujiazui International Financial Assets Commodity Exchange Co (Lufax), Shenzhen Qianhai Financial Asset Exchange Company Ltd (QEX), and Puhui Financial. Lufax offers wealth management and insurance services to its 23 million registered users, QEX focuses on institutional business and cross-border business, and Puhui Financial provides loans to consumers and micro-businesses.
Zhong An is China’s first Internet-based insurance company utilizing Big Data analytics.
Tencent has recently created Tencent FiT (Financial Technology Group), which includes TenPay (payments), WeChat Pay, Mobile QQ Wallet, Tencent Credit Services, and Tencent Licaitong, its money market fund and wealth management platform.
Tencent also launched WeBank, the first online-only bank in China, a joint venture that also includes Shenzhen Baiyeyuan Investment and Shenzhen Li Ye Group.
SinaPay is a social payments solution. Weiquanbao is a social wallet focused on mobile payments. Weicaifu is their Internet financial services company with a focus on personal financial management.
Phoenix Finance is an online platform, established by Phoenix Satellite Television Holdings, to provide intelligent financial services for Chinese investors worldwide.
Do you remember the Ezubao Ponzi scheme that ended in the single largest peer to peer lending fraud of all time? Investors, saw approximately 50 billion CNY or about USD $7.2 billion flushed down the tube. Reportedly 900,000 investors were impacted as an astounding 95% of the loans listed on the P2P lender’s site were said to be totally bogus. Well process kicked off at the end of last year and according to a report from Xinhua, 26 Ezubao executives are now on trial. Proceedings are taking place in No. 1 Intermediate People’s Court in Beijing. Ezubao executives Anhui Yucheng and Yucheng Global and 10 company executives, including Yucheng chairman Ding Ning, have been charged with fraud.
A coalition of 62 financial technology (fintech) firms including Klarna and Trustly and lobbying organizations such as the European Fintech Alliance (EFA) are fighting plans by the European Banking Authority (EBA) to ban screen scraping of customer data from online banking interfaces.
The screen scraping ban would come into force as part of the draft regulatory technical standards (RTS) rule under the European Union’s (EU) revised Payment Services Directive (PSD2) regulation.
Screen scraping is the process of collecting screen display data from one application and translating it so that another application can display it. This is normally done to capture data from a legacy application, such as an IBM mainframe computer for instance, in order to display it using a more modern user interface such as a PC or mobile. However, it can also be used to steal data or, depending on your point of view, legitimately gather business intelligence.
The EBA proposals are meeting fierce resistance from European fintechs that have signed a manifesto to fight the plan.
One of the biggest advantages of using an online P2P lending platform is that the loans are usually cheaper as the platforms operate with lower overheads and software powered automation. The P2P lenders charge money for the platform and doing credit checks for borrowers.
So, if a platform decides the unit note to be valued at $10 and an investor decides to invest $10,000 she’ll end up with 1000 notes to invest in borrowers.
One loan is typically funded by multiple investors. An investor willing to invest 1000 notes can choose to fund 10 different loans with 100 notes each or can mix and match the amount with loans.
According to a PwC report, the P2P lending platforms in the United States issued loans worth $ 5.5 Billion approximately. The global P2P market was estimated at $26.16 Billion in the year 2015. Transparency Market Research predicts the market to grow by CAGR of 48.2% year on year, reaching a whopping $897.85 Billion by the year 2024. Research and Markets expects the P2P market to grow at a CAGR of 53.06% between the years 2016 and 2020. Morgan Stanely predicts the market to be valued at $490 Billion by 2020.
Globally, fintech funding was US$5.5 billion since 11 years ago and can be up to US$78.6 billion now.
According to TechinAsia, the reasons why consumers can adopt fintech are because of it is easy for them to set up an account, in fact, rates and fees that fintech offered are more attractive and cheap. On the other hand, fintech helps SMEs to acquire some funds.
Banks provide many services such as savings, loans, transfer of funds and much more. Some said that banks would disappear in the future. However, as long as bank dominates on lending, investing and deposits, they will sustain in the market. Banks basically will keep the customer’s information and will not easily give it to other parties. So the customer will feel more secure and safe doing the transaction with the bank.
When Prime Minister Narendra Modi announced on November 8 that over 80% of our paper currency would be obsolete thereon, most of the country was left spell bound. While this was a move to discourage and partially halt the flow of counterfeit currency in a supposedly invisible economy, also crippling most industries and investors, there was one industrial sector that sat by the side and smirked – FinTech.
While the ripples of the move are still being felt every now and then, the financial climate is much more stable now than it was 5 months ago.
The first challenge, aided in part by the recent Demonetisation announcement, is that of making the population aware of the ease and comfort associated with online banking and cashless transactions. Not only does this involve an ideological shift, it also requires the population to cross a mental barrier – security.
Looking at it through this lens, it comes as no surprise that a report by Finextra Research Ltd. states that 69% of existing FinTech firms plan on raising their expenditures on content marketing. The scope of development for an online app of such a sort can be exponential, as has been witnessed by the growing popularity of Paytm!
In fact, certain projections point to a 30% decrease in banking employment over the next decade, as the concentration of delivering banking services in person decline with time.
While we have always been used to being dependent on our banking corporations to provide the chunk of capital services that we have always required, over time, it will be these fintech apps that will do the job, with banks holding safe, liquid assets and deposits. The borrowers and savers will now all be available on your smartphone.
While the landscape of lending and borrowing might change when it comes to user experience, the degree and scope of investments will only increase. However, the way we read and process it may change over time. As cryptocurrencies becomes easier to process and handle worldwide, other technologies supporting the development of transactions in such currencies will develop.
As innovation takes the lead while the scope of integration broadens, startups can create a real impact in society through different mediums like the P2P marketplace.
Take Kiva, for example, a wonderful peer-to-peer micro finance website that aims to alleviate poverty by allowing everyday people in developed nations to finance budding entrepreneurs in developing nations. Kiva allows you to make a loan to an entrepreneur across the globe for as little as $25. It is one of the world’s first online lending platform connecting online lenders to entrepreneurs across the globe.
PayActiv is another app that encourages better ways and modes of saving regularly, thereby increasing the independence of many of its users over time.
Banks do not give unsecured loans like personal loans as easily as they do secured loans like home loan or auto loan. They take various parameters into consideration and not everyone can pass the stringent eligibility criteria. Credit score is where most applicants lose out on, especially when half of them have no idea what credit score is in the first place. Lenders are totally dependent on CIBIL (country’s biggest credit bureau) among others to understand customers’ past credit behavior and hence, credit worthiness.
Meanwhile, here are ways to get personal loans despite having low credit score:
Approaching non-traditional or alternate lenders – Qbera offers one such personal loan product that is specifically designed for salaried employees above age 23 with high earning potentials. They offer emergency loans if your CIBIL score is 625 and above.
Having a good salary at present
Getting the help of spouse or other close family member or friend
Applying with the same lender
Applying to lenders that caters to people with low CIBIL Scores – Many online lenders understand that a low credit score doesn’t necessarily translate to low credit worthiness. There could be plenty of reasons for a less-than-ideal score due to technicalities.
P2P lending for personal loans – Quite a popular lending trend in developed countries is peer-to-peer lending, it is not that common in India. Customers haven’t taken to it because the loan amount offered is small while the rates are high.
Work on improving your credit score
Mixing it up wisely – If you have taken more loans, please ensure that you have a wise mix of secured and unsecured loans rather than having only one kind.
Home Capital Group Inc on Monday suspended its dividend, tapped its credit line and added new directors, the latest attempts from Canada’s biggest non-bank lender to restore investor confidence and stem the flow of customer withdrawals.
The company also estimated that the balance in its high-interest savings accounts (HISA) halved in the past week and said it has withdrawn from its C$2 billion ($1.5 billion) credit line for the second time. Home Capital said the balance in its HISAs is expected to slump to about C$192 million on Monday, down 50 percent from a week ago.
News Comments Today’s main news: Wela pairs AI with financial advisors in mobile app. KBRA assigns prelim ratings to Avant Funding Trust 2017-A. Assetz Capital to launch property-only, longer-term accounts. Mint Bridging ups development as FC exits market. China Creation Ventures leads $16M IceKredit round. Today’s main analysis: Affordability of houses in U.S. cities relative to income. Today’s thought-provoking […]
Wela launches mobile app pairing AI with real financial advisors. GP:”In online lending the equivalent would be mixing AI underwriting and human underwriting. “AT: “It won’t be long before everyone is managing their finances with mobile apps: Household income, investments, savings, college education expenses, you name it. Artificial intelligence will be a major part of that movement.”
Affordability of houses in major U.S. cities relative to income. GP:”Afforability of housing, as it is the largest budget item in most people’s budget, is correlated with all kind of useful parameters like affordability,etc. However, the correlation is not always in the direction one would expect: if housing is cheap it could mean people have no credit/only expensive credit options/no good income , etc. “AT: “While interesting data, this says nothing about whether these markets are good investment markets for real estate. Rather, its says a lot more about whether John Q. Homeowner can afford to buy a home in these markets. Looking at median incomes, I’d say the majority of income earners all across the country would have a difficult time buying a home in most of these markets. But the data can also be misleading. For instance, in Dallas, the median house value is $162,300, but the average middle-class home purchaser can get a home for half that. Medians don’t give a realistic view of on-the-ground reality, in my opinion.”
Upgrade to hire up to 300 in Phoenix. GP:”Renaud Laplanche is hiring up to 300 people after barely opening doors. Lending Club I believe has about 1,000 employees. In my personal experience in growing companies I made the mistake of hiring too many too fast and I now prefer to see what I can do with as few people as possible.” AT: “Upgrade is expanding fast. I wonder why they chose Phoenix.”
RIP MPL? AT: “This is an apologia for Misys, which I think is trying too hard to convince people that banks can compete with fintech companies on technology. One problem: They haven’t proven it yet, and it doesn’t appear as if they are working at it real hard. In order for the premise to be true, community banks will have to follow the larger banks in adopting emerging technologies, and very few of them are. I don’t even think it’s on their radars.”
Banks to overhaul their technology. AT: “There are some valiant efforts here, but big banks are not agile. I don’t see these changes happening as rapidly as their digital competitors in fintech can operate.”
Mint Bridging ups development lending as FC exits. GP:”Funding Circle most likely exited the market due to bad performance of the product. I hope Mint Briging has considered this and is using a very strong underwriting and anti fraud model built on reliable large amounts of data. “AT: “I see more companies filling the gap with FC’s absence.”
China Creation Ventures leads $16M round for IceKredit. GP:”IceKredit applies machine learning algorithms and big data related technologies to make all-rounded credit evaluations for individuals and SMEs in China. The interesting part is that it’s hard to underwrite SMEs and individuals in a market like China. “
Dianrong prepares full blockchain integration. GP:”Keep in mind that Dianrong’s founder and CEO is a co-founder of Lending Club and an advisor of Renaud Laplanche’s Upgrade which is already using Blockchain for internal controls. “AT: “I’ll be anxious to see how this works out.”
P2P lending news in China. GP:”We are not publishing part of our Chinese news in English and in Chinese. Today’s news: P2P lending fair in Chengdu, P2Ps may acquire bank like license in the future, cahs loans over 600bil RMB. “AT: “In English and Chinese.”
Mapping robo-advisors around the globe. GP:”Robos market is well correlated with online lending.” AT: “That the wealthiest nation in the world would lead in WealthTech funding is not surprising. But this is about investment. U.S. consumers have not adopted robo-advice as quickly as consumers in other nations, especially Asia.”
Fintech patents jump, U.S. leads. GP:”I am surprised China comes in as #2.” AT: “I think U.S. creators care more about protecting their intellectual property than creators in other parts of the world, or it could be that the U.S. mechanism for protecting patents is much more sophisticated and effective than in other parts of the world. Either way, you can’t judge the size of the fintech sector by patents alone. Otherwise, the UK would be way down the list.”
Wela today announces its free mobile app changing the way financial advice is delivered by pairing real financial advisors with Artificial Intelligence (AI) through the personification of its digital advising algorithm, Benjamin. The first true digital advisor, Benjamin utilizes AI to track users’ daily, weekly and monthly spending habits and provides personalized advice based on their financial needs and goals. Unlike other free consumer finance apps on the market, Wela pairs AI capabilities with a human touch, offering access to real financial advisors via phone, video chat or in-person at no additional cost.
The Wela iOS app enables users to track all their financial accounts in one place, protecting user privacy by leveraging bank-level security, as well as 256-bit SSL encryption and two forms of secure authentication. Capable of aggregating data from more than 13,000 financial institutions, Wela’s digital advising algorithm, Benjamin, uses linked account information to run a complete analysis, helping users take steps toward financial health based on three main pillars: creating an emergency reserve, paying off debt, and implementing an investment strategy. In addition to Benjamin’s foundational metrics, the algorithm delivers custom insights on demand, helping users stay on track to reach their short- and long-term goals.
Wela’s in-app budgeting tool, Benjamin, makes budgeting tangible and prevalent on a day-to-day basis. Once Benjamin is activated, the onboarding process begins with the creation of a personalized ‘Daily Spend Limit’. Benjamin then compares that number to actual daily spending and other transactions so users can understand how they are progressing toward the customizable goals they have set for themselves within the app. With real-time analysis of daily spending, rather than an end-of-month review, users are empowered with a better budgeting method and reassurance in their progress.
“Wela is the first free app to give comprehensive financial advice in real time in real-world scenarios personalized for you,” said Matt Reiner, Wela CEO and co-founder.
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Avant Loans Funding Trust 2017-A (“AVNT 2017-A”). This is a $192.6 million consumer loan ABS transaction that is expected to close on May 4, 2017.
This transaction represents Avant, Inc.’s (“Avant”, the “Servicer” or the “Company”) fourth rated securitization collateralized by a trust certificate backed by unsecured consumer loans originated through its online marketplace lending platform (“Avant Platform”). There have been four prior unrated securitizations, in which Avant or Avant’s institutional investors were the sponsors and the collateral was unsecured consumer loans originated under the Avant Platform.
Avant has a strategic partnership with WebBank, whereby WebBank, a Utah chartered industrial bank, originates loans through the Avant Platform. Avant utilizes technology and customized scoring models to assign credit grades. The Avant website is designed to provide customers with an easy interface and quick online loan decisions at competitive rates compared to traditional lending platforms.
Avant retains a portion of loans originated through the Avant Platform. Avant does not fund loans through a peer-to-peer platform, but instead partners exclusively with institutional investors for whole loan sales.
ReliaMax, the complete private student lending solutions provider for banks, credit unions and alternative lenders, says it services $275 million in loans, an increase of nearly 670 percent from the close of 2015, driven by portfolio conversions that helped banks, credit unions and alternative lenders enter the private student loan asset class.
The ReliaMax loan servicing platform was built with the latest technology and exclusively for private student loans, making it unencumbered by the infrastructure constraints facing other student loan servicers whose platforms were designed to principally serve federal student loans or other consumer loans.
Once banks master financial technology, the marketplace lending industry is in deep trouble, Jean-Cedric Jollant believes. And the bad news is that’s starting to happen.
“The (fintech) challengers made the move by trying to build a hybrid model where they may not own 100 per cent, 50 per cent or even zero per cent of a loan, but the need the technology to do that,” Mr. Jollant said. “They need new underwriting material and servicing software which they don’t necessarily have.”
Once more banks embrace new technology, they will be able to capitalize on a long list of advantages they have over marketplace lenders, Mr. Jollant said. Their abilities to process payments, service credit and onboard customers are superior. Close the technology gap and the banks can provide much better service at competitive rates.
“So (the marketplace lenders) are just intermediaries. Eventually they will not be able to compete with banks. The only difference between what the marketplace lenders are doing today and the banks really is the underwriting model and that gap will be breached really fast.”
Mr. Jollant believes the venture capital industry will soon begin to sour on marketplace lenders, possibly as soon as later this summer. Those surviving that will then have to withstand the next downturn, which many models have yet to be tested by.
B2B fintech firm Lending Technologies Corp, a pioneer in loan origination technology, announces Leads2Lend, its new marketing platform for alternative lenders. Produced in cooperation with Lead One Marketing, Inc. the Leads2Lend program provides alternative finance companies with an all-in-one digital solution to identify and engage with potential new customers—ultimately leading to a stronger bottom line.
The Leads2Lend platform combines Lending Technologies Corp’s white-label customer acquisition management (CAM) technology with a digital marketing program that connects alternative finance firms with new clients. Using Lending Technologies Corp’s proprietary digital onboarding and loan building tools, designated agents can individually download leads and create bespoke lending solutions for the clients. Other functionalities include tools to expedite credit decisions and facilitate loan package construction.
Lending Technologies Corp’s white-labeled CAM technology, serving customers in the U.S. and Switzerland, provides a fully digital, mobile-responsive, end-to-end process for banks and alternative finance companies that allows lenders to save time and money while reducing the risk associated with underwriting loans to small- and medium-sized enterprises. Lending Technologies Corp provides a seamless, paperless solution to all users and gives loan officers the latest digital tools for lenders to issue credit decisions—all with a comprehensive back end.
U.S. Bank and Bank of Montreal have begun multiyear overhauls of their websites, mobile apps, call centers and ATMs.
Fix what’s broken. Both U.S. Bank and Toronto-based BMO are starting with the “dissatisfiers” — the things that vex customers or make them give up on one channel (say, mobile) and switch to another (such as the call center). JPMorgan also made this part of its approach when it rewrote its mobile app last year.
Make incremental enhancements.
U.S. Bank’s mobile app was improved 27 times in the past two years, with the help of so-called agile development methods.
BMO also has adopted agile development. “Gone are the days when our tech people took months and months and built detailed requirements,” Badarinath said.
Create a “unified customer experience.” For years, banks have talked about having a consistent experience across mobile apps, websites, branches, ATMs, video kiosks, call centers and text messages. Yet you would not want to talk with a teller the same way you tap on a mobile app or withdraw cash from an ATM.
This fits with recent Javelin research that found most consumers would prefer to apply for credit cards in digital channels: 48% said online, 13% mobile, and 34% said they would prefer a branch. For a checking account it was 41% online, 8% mobile and 49% in a branch.
Today, only 8% of successful applications start and finish in a smartphone or tablet.
Establish an innovation team.
BMO has a group whose job is to look for interesting fintechs the bank can partner with to augment his group’s work.
Test emerging technologies.
And it is exploring options for using chatbots to let people use text messages to request and perform transactions.
Gaston envisions using augmented reality to help customers who want to purchase a car, a house or a boat understand their options.
He foresees using machine learning in the bank’s decisions about online accounts.
NREI recently spoke with Frank Muhlon, head of transactions at CrediFi Corp., to hear more about what’s ahead for this segment of the market.
Frank Muhlon: For sales and financing, technology allows for faster and broader market reach, meaning you have the ability to get to multitudes of investors and lenders. Being able to get to those people faster is really helping to drive the business.
The other area is risk mitigation and the opportunity to reduce your risk, which goes hand-in-hand with more transparency and more information.
Frank Muhlon: At its heart, it has always been a people business and I really don’t foresee that changing. But tech and innovation have been a hallmark of commercial real estate for some time. Eight to 10 years ago we went through a significant and humbling downturn and going through that adversity brought innovation and numerous opportunities. Institutional capital, debt and equity capital got reshuffled, and it presented some opportunities in the marketplace.
I think there is a segment of our industry that is not completely convinced that tech is necessarily disrupting our business in the way that it is disrupting other industries.
Frank Muhlon: In the last five years, the crowdfunding space has grown. There were fewer than 10 pioneering real estate platforms focusing mostly on equity investment. Now there are arguably over 100 sites covering the entire capital stack.
Five years ago, crowdfunding as a whole was a few billion [dollars] in activity globally. In 2016, it was well over $50 billion. Real estate is a more modest piece of that, but it has grown substantially as well. There was about $3.5 billion in activity on real estate crowdfunding sites in 2016. That has been a tremendous growth market, and alternative financing and lending is seeing similar trends.
The online lending industry was about $40 billion last year and it could be upwards of $1 trillion in the next five years.
Frank Muhlon: CredifX is the first cloud-based and data-driven commercial real estate financing marketplace for borrowers, brokers and lenders. The platform focuses on loans of $1 million and up across all major property types nationally. We leverage technology to match loan applicants with financing based on their criteria and the extensive loan product offerings in our lender network.
One reason to invest in REITs is the favorable tax treatment and dividend payouts. Unlike investing in businesses where you expect to see increasing profits from continued growth, 90% of the profits have to be issued in dividends from investments in REITs. Instead of waiting for a business venture to show profits before receiving a dividend, investors get their share quarterly or annually in regular dividend checks.
With Marketplace lending, investors can expect to receive monthly disbursements throughout the lifetime of the loan. Principal investments are typically returned to investors between 6 months to 24 months, depending on loan payoff dates and loan extensions. Servicing fees vary by marketplace lending platform, but typically range from 1% – 3%, compared to REIT management and servicing fees from 3% – 15%.
Finally, REITs instantly diversify your portfolio resulting in better returns. In one REIT you may be invested in a commercial building, an apartment building, and a couple of warehouse distribution centers. The more diverse the portfolio, the better the returns, and the better the hedge against volatility.
While this style of diversification may work to the benefit of experienced REIT investors. marketplace lending allows portfolio diversification controlled by the investor.
Roostify, a provider of automated mortgage transaction technology, today announced it has named Frank Gelbart as Chief Revenue Officer. Frank will be responsible for driving new and existing revenue streams as well as managing partner relationships for Roostify.
ASSETZ Capital is launching two new investment accounts to capitalise on the surge of demand it has experienced on both the investor and the borrower side.
The peer-to-peer lending platform is expanding its account range to seven offerings, adding a longer-term and a purely property-backed account to its existing 30-day access, quick-access, green-energy, “great British business” and manual loan accounts, it told Peer-to-Peer Finance News.
The longer-term account will offer investors an interest rate of about 4.75 per cent over one-year investments, while the new specialist account, which caters for investors who want to focus exclusively on loans secured against property rather than other assets, will target returns of around five per cent.
P2P GLOBAL Investments (P2PGI) continued to shore up its finances in March, posting a 0.55 per cent increase in net asset value, from 0.38 per cent in February, which brings first-quarter growth to 1.17 per cent.
The P2P investor’s shift away from US and unsecured assets, as well as a share buyback last month, was the main driver of the improvement.
US consumer assets now dropped to 45.1 per cent of the London-listed fund’s portfolio, down from 46 per cent a month earlier and 48.4 per cent at the start of the year.
The firm is targeting a further reduction to 30 per cent of total investment, to boost its focus on UK property and asset-backed products, where it said new origination from partnering with P2P lenders has increased significantly in the last quarter
Peer to peer lender Growth Street is reporting solid growth. The online lender said it has captured over 600 investors since platform launch at the end of 2016. Growth Street is a platform that provides online financing options for UK SMEs. The company also touted its review on 4thWay that categorized the P2P lender as one of the lowest risk platforms in the industry.
The demand for robo-advice rises with income, despite it being widely seen as a low-cost financial advice solution, according to Deloitte, the business advisory firm.
Deloitte’s research shows over half (51%) of people earning £45,000 to £70,000 would use a robo-adviser for investments, compared with just 30% of those on incomes under £15,000.
Demand is highest amongst millennials, but the research suggests other age brackets could be interested in using robo-advice. Over two-fifths (43%) of 35-44 year old workers with a pension would use robo-advice on pensions, as would one-quarter (24%) for the 45-54 year olds and a fifth (21%) of those aged 55 and above. Also, 35% of defined contribution pension holders – more than three million people – would be willing to pay for robo-advice to invest their pension pots, with demand highest (45%) among those with the smallest pensions pots, many of whom cannot afford traditional advice.
When Niels Turfboer enrolled in the MBA program at IE Business School in Madrid, he looked beyond a traditional career in banking. He decided to join the fast-growing fintech industry instead.
Having worked at institutional lenders for over a decade, his MBA training enabled him to spot an opportunity in the business banking space. Four years after graduation, he joined fintech startup Spotcap as managing director.
Spotcap offers working capital lines of credit — up to £250,000 — to small and medium-sized companies online. Spotcap has a run rate of £100 million in loans per year. The company operates in Spain, the Netherlands and Australia. Spotcap also opened a branch in the UK last year, despite Brexit. The business employs 100 people and has raised €75 million in venture capital.
Q. Did you know you wanted to work in fintech before the MBA?
I’m a traditional banker. I worked for over a decade in the banking industry. But I wanted to be more entrepreneurial. There were opportunities to be entrepreneurial in banking, but after the crisis, this was gone. I chose a very particular school — IE — because it is known for having a strong focus on innovation and for being entrepreneurial. A large part of the MBA course is focused on teaching people to build and run a company.
Q. You’ve launched in the UK. After the Brexit uncertainty, are you reconsidering?
No. We moved in after Brexit. We were surprised at the result, but having analysed the situation, we concluded it’s not a negative. I see downsides, but not for our business model. We know there will be two years of deal making and uncertainty over trade barriers and freedom of movement. It tends to be bad for the economy, and this has had an impact. But we already had this knowledge moving into the market. We might be able to be more selective about lending to companies in industries that are hit hardest by the uncertainty. We are not going to do cherry picking, but we might take precautions in lending money. At the same time, during uncertainty banks are risk-averse and take a step back, and that opens up opportunities for the alternative finance sector to fill that gap.
Q. Is the MBA curriculum relevant to entrepreneurs?
Yes, at least the MBA I’ve done. At IE, 30% of the courses I did had an entrepreneurial focus.
Manchester property crowdfunding, the House Crowd, is celebrating five years of operations having raised more than £44 million since it launched it 2012. According to the platform, the House Crowd now serves over 15,000 investors who have received over £9 million in returns. The House Crowd received the ‘Crowdfunding Platform of the Year’ award at this year’s inaugural Property Wire Awards, in recognition of its position in the alternative finance industry.
The Kuflink Group is offering investors an opportunity to earn up to 6% a year through its peer-to-peer (P2P) lending platform, while also providing short-term finance for those looking to invest in property.
When it comes to the option to lend against various properties on Kuflink’s P2P platform and earn up to 6% gross pa for short-terms, up to 12 months usually, interest is paid monthly.
Secondly, Kuflink offer short-term lending against property for business purposes for terms of up to 24 months.
China Creation Ventures, a newly founded venture firm established by several former KPCB executives, has led a RMB110 million (US$16 million) series A round in IceKredit Inc., a Shanghai-based credit assessment service provider catering to small and medium-sized enterprises (SMEs).
Founded in 2015, IceKredit applies machine learning algorithms and big data related technologies to make all-rounded credit evaluations for individuals and SMEs in China.
Its products include an SMEs credit evaluation system and an individual credit assessment system, which consists of an anti-fraud engine, personal credit portrait and missing customer contact information restoration.
Chinese authorities vowed on Tuesday to step up a crackdown on illegal funding scams, after reporting 5,197 new criminal cases last year involving 251.1 billion yuan ($36.5 billion), state-run Shanghai Securities News reported.
More than 30 percent of illegal fundraising cases were related to private investment and financial intermediaries, including unlicensed investment advisers and providers of third-party wealth management products, the report said.
Moreover, financial fraud spread last year from China’s east to rural areas, where funds approached unsophisticated Chinese farmers, the office of the joint meeting said.
Last year China approved the arrest of 9,441 people on suspicion of illegal soliciting public deposits and prosecuted 14,745, according to a separate Shanghai Securities News report on Tuesday.
Already, Dianrong has co-founded a blockchain lending platform called Chained Finance; now, less than a week after the firm hired IPO expert Yawen Cui, he has revealed comprehensive plans to swap over much of the startup’s services to a blockchain.
By January of this year, Dianrong had released a statement showing that 3.62 million investors had originated a total of ¥16.2bn in loans last year alone, a 148% increase over the previous year, and its fourth year of growth.
Then, last month the firm revealed it had joined Taiwan-based Foxconn to launch Chained Finance, a blockchain trade finance platform built using technology from the Linux Foundation-led Hyperledger Project.
P2P Lending News (Xing Ping She Email), Rated: A
P2P Lending Funds Depository Cooperation Fair was held in Chengdu
On 24th April, “P2P Lending Funds Depository Cooperation Fair”was held in Chengdu by NIFA. The Fair is aiming at building bridges between P2P Lending institutions and banks.
Owing to the Fair, over 11 commercial banks, including Xingwang Bank, Ping An Bank, Beijing Bank, Shanghai Bank, Baoshang Bank, etc., reached agreements with over 50 P2P Lending institutions and five fintech companies. Officials from People’s Bank of China (Chengdu branch), Bureau of Finance of Sichuan Province, Chengdu financial services office and other relevant departments attended the Fair, with nearly 170 participants. Chinese：
P2P Lending industry may acquire a bank-like license in the future
On April 22nd, China Fintech 50 Forum(CFT50) was found in Beijing. According to Yang Dong, the vice president of Renmin University Of China Law School and the director of Fintech and Internet Security Research Center（FTCS）, who involved in making CBRC Regulations on P2P lending industry, revealed that although P2P is currently playing the role of Internet information intermediary, it may develop to a bank-like institution acquiring a new type of license and the industry also has huge space in the future. Chinese：
The scale of cash loan over 600billion RMB, who will be knocked down by regulations?
Due to the low threshold, lacking of supervision and disorderly development, problems such as violent collection, high commissions and usury, etc., cast a shadow on cash loan.
According to the instructions of the State Council and the requirements of Internet Financial Risk Special Rectification Office, cash loan has been incorporated into the rectification work of controlling Internet financial risk. In addition, Notice on carrying out the rectification work of “cash loan” business activities and its supplementary documents have been issued. Regulators also began to start the cash loan risk investigation. Chinese：
A half-hearted crackdown dents the investment case for Chinese peer-to-peer lending. While P2P lender China Rapid Finance is set for a $100 million initial public offering in New York, the timing looks bad. Sector heavyweight Lufax, last valued at $18.5 billion, is unlikely to list soon.
Instead, lending has accelerated and there are still more than 2,000 online platforms in operation, according to industry tracker Wangdaizhijia. Loan volumes in March hit a new record of 251 billion yuan ($36 billion), bringing the total outstanding to 921 billion yuan – up 83 percent in a year.
Shoddy local enforcement is the obvious culprit. Provinces and cities interpret the rules differently, according to an industry insider.
Investors are cautious too. China’s only U.S.-listed lender, Yirendai <YRD.N>, trades at just above 6 times forward earnings, down from more than 15 times last summer.
E.Sun Bank’s (玉山銀行) AI Chatbot (玉山小i) is the latest artificial intelligence financial advisor that Taiwan-based banks have launched to assist locals with any finance-related issues.
The AI Chatbot utilizes the IBM Watson Conversation Service to interpret commands and generate responses, local media reported.
At this stage, the AI Chatbot’s responses are limited to inquiries regarding exchange rates, mortgage assessments, and credit card recommendations. It has yet to acquire the knowledge to answer questions regarding personal financing.
Since 2012, private robo-advisors have raised over $1.32B globally across 119 equity investments. Robo-advisors make up the largest sub-category of companies in wealth tech and account for roughly 30% of total funding.
Three of the earliest robo-advisors firms and largest in terms of total funding are Betterment, Personal Capital, and Wealthfront. Though they lead in the US, expanding internationally is a challenge because of the complex international regulatory environment, differing investment practices, and other barriers to entry.
US-based robo-advisors have received 57% of the global deal share since 2012. Germany took second with 9%, followed by the United Kingdom, and China.
The two largest robo-advisor deals outside the US went to Wacai, a robo-advisor and personal wealth management technology company based in China.
The third and fourth biggest deals went to UK-based Nutmeg, with a $37.5M Series C in Q4’16 preceded by a $32M Series B in Q2’14 that included Armada Investment Group, Balderton Capital, Pentech Ventures, and other investors.
Global fintech patents have grown by 49 per cent in the past five years, reaching 9,545 in 2016 according to official global filings.
The US led the way in terms of numbers of fintech patents with 4,523, more than double the number of the next country, China. The UK boasted more fintech patents than any other country in Europe, ranking seventh with 89 patents, in areas such as banking, exchanges, investment, insurance and payments architecture.
The rush to judgment about the disruptive power of fintech is premature, given it’s not even clear which part of the financial services value chain will be most affected.
Also, no matter how you cut it, the fact remains that by the end of last year there were 39 fintech companies around the world with valuations in excess of $US1bn, including Xero, which offers cloud-based accounting software for small and medium-sized businesses and is the sole Australasian representative.
Not surprisingly, the dominant vertical where 16 of the 39 companies with valuations in excess of $US1bn ply their trade, is so-called alternative finance, which includes marketplace lending and crowd-funding.
“Consumer lending in the US is a $US1.5 trillion opportunity, and in Australia it’s $100bn and the leading players are yet to crack $1bn.
News Comments Today’s main news: The FTC explores the future of FinTech, P2P payments. Today’s main analysis : Can P2P lending be saved by auto refinancing? Why investment trusts are back into fashion. Today’s thought-provoking articles: What happens when Millennials are denied credit. Chinese shadow lending takes over the economy. Worldwide, corporate treasurers are increasing FinTech investments. United […]
FTC Forum explores the future of FinTech and P2P payments. AT: “This isn’t CFPB. If the FTC starts overseeing FinTech, you could see some diminishing of growth in the U.S. as, depending on the level of involvement, it could lead to increased costs for startups, making it more prohibitive for some.”
Why LendingClub is looking at auto refinancing. AT: “Considering LendingClub’s woes, I think this is a good move. Not only can it lead to a rebound for LC, but it may also create a whole new FinTech niche with followers get into the pool very quickly.”
Yesterday the Federal Trade Commission (FTC) hosted a forum – the second in its FinTech series – on peer-to-peer payment systems.
The forum panel discussion was labeled: Peer-to-Peer Payments – Their Emergence and Path Ahead. Participating in the panel were the following individuals: Jo Ann Barefoot, Matt Van Buskirk, Beth Chun, Patrick Eagan-Van Meter, Brian Peters, Duane Pozza, and Christina Tetreault. Their bios and backgrounds can be found on the FTC website for the forum.
Though the event was produced by the FTC, not the Consumer Financial Protection Bureau (CFPB), it has become abundantly clear through rulemaking proposals to date (both at the CFPB and state and levels) that technology advancements are going to be essential to the success of those organizations that engage in debt collection (whether creditor, agency, law firm, or debt buyer). Those who run sophisticated companies need to engage in regular research and education about current developments in FinTech.
After initial introductions the panel discussed the benefits of peer-to-peer payment systems to the consumer. The benefits identified included:
Speed of transactions
Members of the panel all agreed that the consumer’s cost to use these payment systems was a significant benefit. They discussed how historically, it was very expensive for a consumer to use services such as Western Union or MoneyGram or to use some expedited mail or delivery service to send funds quickly. Several panel members highlighted how speed of a transaction was critical to the underserved or underbanked segment of the population. These products can process a transaction in seconds.
The panel members also discussed who was currently using these products. To the surprise of nobody, Millennials are currently the largest market segment.
The discussion then moved to how the products were being utilized. Currently 3 types of use were the most predominant; gifts, bill payments, and entertainment. These 3 categories were well over 90% of total usage.
The group then moved onto a discussion of legal issues surrounding the products. The most obvious concern, money laundering, actually had only a token mention from the group.
The biggest legal issue facing the developers of these products was – to no surprise, the various state and federal consumer protection statutes, with particular emphasis on state Deceptive Trade Practices.
The reason consumer protection statutes were of such concern was a simple statement made during the discussion: “The consumers that use these products may be very tech savvy, but they also tend to be very unsophisticated.”
The panel next turned its attention to some of the risks in this market. The risk of fraud exists on three fronts. First, international criminal and sophisticated hackers have and are likely to continue targeting companies in this space. That creates exposure. Second, as many of these products are utilized on a handheld device (i.e. a smartphone) the risk of fraud exists if that device is not secure and is lost or stolen. Third, old scams that have existed forever have simply moved their scam to this new platform. A scam that previously involved a stolen checkbook and forged signature has just moved from paper to the digital world.
Top peer-to-peer lender LendingClub (NYSE:LC) hasn’t exactly delivered great performance to its stockholders in its short history as a publicly traded company. In an effort to grow the company’s customer base, LendingClub recently announced that it intends to get into a booming $1.2 trillion industry: auto lending.
Since going public in Dec. 2014 for $15 per share, LendingClub’s stock has lost more than two-thirds of its value. The main reason for the decline is a lending scandal that led to CEO Renaud Leplanche’s departure, but there have been questions about the long-term viability of the peer-to-peer lending business for some time now.
In order to refinance through LendingClub, applicants will need to meet the following qualifications:
FICO credit score of at least 640.
At least three consecutive on-time payments must have been made on the current loan.
Vehicle must be less than seven years old and have less than 80,000 miles.
Loans will come with interest rates ranging from 2.49% to 19.99%, depending on the borrower’s qualifications. It’s fair to assume that a borderline applicant (credit score just over 640, a few late vehicle payments, and a vehicle that barely meets the standards) would fall on the upper end of the range. However, since the average car loan has an interest rate between 4% and 5% depending on the terms, I’m assuming that the majority of refinancers will be toward the lower end, if LendingClub’s savings claim is accurate.
There is approximately $1.2 trillion in outstanding auto debt in the United States, and only about $40 billion of that, or 3.3%, is refinanced every year, so there’s clearly a large market to be addressed. In fact, LendingClub believes that the refinancing volume could double if the process were a little easier. In other words, there is an immediately addressable market for an easy-to-use auto loan refinancing platform.
Picker has developed dozens of buildings in blighted neighborhoods around the city (through companies no wall productions and we do property management), founded a non-profit called cityLAB, built Pittsburgh’s first tiny house, organized a speaker series and a creative school, launched a Pittsburgh e-zine called Pop City, and established downtown Pittsburgh’s first co-working space.
Eve: We don’t believe we can make Reg Crowdfunding work, we KNOW we can make it work. Real estate has proven itself to be a frontrunner when it comes to crowdfunding investment opportunities. We are certain that this will play out for Regulation Crowdfunding as well. Funding portals are going to provide a very necessary, and highly desirable financing tool for the right sort of projects. And everyday investors are going to be excited to invest both locally and nationally in projects they are interested in. That’s a perfect match.
Eve: We’ve nearly 8000 followers across the country, growing at 20% per quarter through all of our communications channels, and out of those, we’ve heard from a quite a few real estate developers looking at this as a tool to catalyze projects – and we anticipate hearing from many more. Developers are attracted to our mission of making cities better and offering people the opportunity to directly participate.
Eve: Regulation CF is a thoughtful first foray into the world of securities for everyone – it is altogether groundbreaking. While there may be some shortcomings, there is plenty to work with immediately and that is evidenced by the funding portals that already have a plethora of offerings available.
Eve: We’ve heard the complaints loud and clear, but there is plenty to work with today. We think Reg CF is a great start. The SEC intended for the first three years to be a trial run so we are going to use the time for that – a trial run! We’re going to take it slow and steady, and inch into bigger raises. There is plenty to understand and plenty to get efficient at before we want or need to offer a $5M raise. Today, we can already let everyone over the age of 18 participate in a completely new way of investing. And we can help developers tap into a completely new pool of investor funds.
Apptrade, a US start-up based in California, has revealed to potential investors attending the CoinAgenda bitcoin and cryptocurrency conference in Las Vegas that is creating and cooking up what the fledgling fintech describes as the ‘Stockmarket of Apps’, complete with “regulatory tools and compliance” mechanisms.
The aim of Apptrade is to create what is touted as a ‘Stockmarket of Apps’, whereby developers can raise money with “regulation-compliant” blockchain tokens. Investors will be able to trade these assets, backed by app revenue streams, on the ecosystem of OpenLedger, a decentralized conglomerate(DC).
The start-up will offer its own token for their ICO, which entitles investors to 10% of the net market value and revenue of the Apptrade portfolio ecosystem.
Investors poured $22.3 billion into fintech startups around the world in 2015, up 75 percent from the year before, according to the Information Technology & Innovation Foundation.The industry has been hailed for its potential to help communities that are underserved by traditional lending institutions.
But fintech has also attracted scam artists interested in a new mode to prey on consumers. And it’s raised questions about where to—and who should—draw the line between a self-stated developer who clearly never intended to spend donated funds on a promised project and a dreamer whose plans just never panned out. Industry oversight remains a fuzzy area for regulators, with states’ attorneys general, the IRS, the U.S. Securities and Exchange Commission and the FTC having roles in various areas. The FTC is holding a series of public panels on the topic, including Wednesday’s meeting in Washington, D.C.
The industry has urged regulators to take a targeted and light touch with any new rules.
ID Analytics’ research shows that the most common consequence for an enterprise declining a millennial applicant is that the consumer walks away for at least a year—both from the enterprise and from credit/ service seeking altogether.
Over 6 out of 10 declined millennials are not seen applying again within the ID Network that year—for anything. Of the millennials who continue to apply, only 2 out of 10 continue to seek the same service, with 8 of 10 seeking an entirely different product or service.
While the impact of declining credit to millennial consumers is harmful to the longterm success of entire industries, common questions are, “How often are they actually being declined?”, and “is the issue confined to young millennials”? To answer these questions, ID Analytics segmented millennials into three age groups and measured how often they were declined for credit in a given year.
The recommended path forward is safe engagement of this burgeoning demographic—an approach which requires thoughtful strategies and an expanded view of applicant credit risk which goes beyond traditional credit bureaus. One way to accomplish this is leveraging alternative credit data solutions like ID Analytics’ Credit Optics, which captures fundamental millennial credit behaviors that are missing from most credit scores. It offers risk managers a way to identify “low score” and “no score” consumers of acceptable risk, and break through the myths dragging down the competition.
It is no coincidence that as part of his fightback against the asset management “system”, Daniel Godfrey — the ousted chief executive of the UK’s asset management trade body — will launch an investment trust.
Years of quantitative easing and the prospect of rising inflation have boosted the appeal of infrastructure and property, and investment trusts have provided a liquid wrapper for these sectors. Numis, the broker, estimates that 80 per cent of investment trust share issuances in the three years have been in alternative asset classes — including property, private equity, infrastructure, asset-backed leasing and peer-to-peer lending.
Although questions about the quality of the underlying credit-writing remain, the asset class has so far delivered good returns to those investing directly in the loans, — its total return over 3 years has been of 15.86 per cent, according to the Liberum Altfi Index. For investors who are prepared to stomach the risks, the remaining catch is the illiquidity — but this is where investment trusts have stepped in. While no asset manager has invested in peer-to-peer loans directly, plenty have bought shares in the investment trusts. Asset managers including BlackRock, Invesco Perpetual, BNY Mellon and Baillie Gifford have all bought shares in the handful of investment trusts buying peer-to-peer loans.
Another criticism of peer-to-peer lenders is that — for the most part — they do not actually do any lending. Some argue that without so-called “skin in the game”, the lenders are not incentivised to make sure the loan is good.
It is no secret that various European governments have seen the UK’s decision to opt for Brexit as an opportunity to lure businesses away from London and to the continent. Bespoke marketing campaigns with offers of tailored assistance directed at UK firms could well accelerate the flight of capital, talent and business following the vote.
The sweeteners on offer could be highly tempting for financial services firms and fintechs, which fear the loss of their ‘passporting’ rights. Current rules mean that any company which is given a licence to conduct regulated activities by UK authorities can, ipso facto, conduct such activity anywhere in the EU without the need for further regulatory authority and without having to establish a base elsewhere. The loss of these rights could significantly damage the UK’s status as a gateway to Europe for big international financial service firms.
Despite the uncertainty surrounding the UK’s financial passporting status and the need in future to reconcile competing data regimes, the UK Government remains steadfast in its optimistic outlook for the UK’s burgeoning fintech industry and related sectors.
Earlier this week, peer-to-peer lender Zopa announced it will be hosting Zopathon16, which is described as a 24-hour opportunity to developers, product people, and designers to present their fintech ideas.
The event will be held on November 18th-19th on the first floor of the Cottons Center in London. The 18th’s schedule is:
5-6pm: Introduction and Inspiration (APIs etc)
6-7pm: Meet your team, brainstorming and dinner
7-8pm: Pitching ideas
8pm onwards: All hands on deck
On the 19th presentations and prizes will happen from 5 to 7pm. To register for the event, click here.
Trustly’s troubles in Norway started already in 2014, when they launched in the country. According to the CEO of Trustly, an important certficate for verification, Bank-id, was revoked for those who used Trustly.
Things have gotten so bad that Trustly has fielded a complaint with the Norwegian competition authority.
Few topics get business schoolers’ pulses racing like financial technology — from blockchain and cryptocurrencies to artificial intelligence, the fintech revolution has already made its way into a suite of MBA degrees.
And according to one top French business school, fintech start-ups like TransferWise or GoCardless now vie with investment banks and traditional financial services companies for digitally skilled, entrepreneurial recruits.
Spreadsheet-savvy MBAs may not seem like the type for fast-paced tech firms, but their growing appetite for MBAs was on full display at HEC Paris’ second annual Fintech Talent Fair this month. From start-ups like Blockchain and PayinTech to larger financial institutions such as Bloomberg and BNP Paribas, companies representing the full fintech spectrum were out in force.
Why should business students consider a career in fintech?
For a lot of reasons actually. First, fintech is probably one of the hottest and most dynamic sectors in tech today. It’s attracting a lot of interest and funding. Second, working in fintech gives you the opportunity to have a real impact on the day to day life of a very large number of people. Lastly, fintech start-ups deal with a fairly complex environment and designing simple products in that environment is a real challenge, and therefore intellectually stimulating. It requires knowledge of a broad array of topics — perfect for business students.
Advisors may have the ability to offer clients direct online investing in mortgages within five years.
That’s the hope of Lending Loop chief executive Cato Pastoll, who expects peer-to-peer lending in Canada to expand quickly into consumer lending like mortgages after such an evolution of the sector in the U.K. and U.S.
In what’s been called the “Uberization” of lending, California’s Lending Club, the world’s biggest peer-to-peer lender, has plans to move into auto loans and mortgages after American online lender SoFi started offering residential mortgages about a year ago. U.K. peer-to-peer platform Landbay also allows retail and institutional investors to get into the country’s buy-to-let mortgage market.
In a move that changes the traditional process for applying for a loan, CIBC (TSX: CM) (NYSE: CM) announced today it is partnering with Borrowell to offer “one-click” online lending for clients. A first in Canada, the new partnership allows CIBC to leverage the fintech’s unique technology and underwriting approach to adjudicate loans for existing clients online in real time, with funds typically issued the next business day directly into a client’s CIBC account.
The technology allows clients to apply for a loan of up to $35K using a simplified application process, with the ability to securely upload documents online for verification. Future plans to extend the borrowing platform to a wider client base will be based on client experience feedback and input from this first phase.
The annual FinTech 100 list has listed nine Australian FinTech companies among the world’s leaders in the sector, according to a report by StartupSmart, an Australian publication for the startup community.
Compiled by H2 Ventures and KPMG FinTech, it listed Prospa, Tyro, and Society One within the top 50 established leaders category, and HashChing, Afterpay, Brighte, Data Republic, Identitii, and Spriggy within the top 50 emerging firms.
China’s shadow bank lending has grown to more than 80 per cent of the economy, fuelled partly by off-balance-sheet lending originating from lightly-regulated fintech platforms, prompting warnings from analysts of potential risks arising from insufficient supervision.
Moody’s research released on Thursday showed that lending via the shadow banking system grew by 19 per cent annualised in the first half to reach 58 trillion yuan (HK$66.37 trillion), or a 82 per cent of GDP.
Leverage continues to increase throughout the Chinese economy. Total social financing (TSF), a measure of broad credit, has risen to an estimated 220 per cent of GDP at the end of the third quarter, up from 206 per cent of GDP at the start of year, Moody’s said.
Chinese financial website Caixin reported on Tuesday that some financial insiders believe the People’s Bank of China may soon require commercial banks to incorporate off-balance-sheet wealth-management products into the Macro Prudential Assessment (MPA) system, as a way to improve oversight of shadow lending.
Early stage fund India Quotient as a part of its third fund, plans to raise $60 million by January/February 2017. The firm aims to spend 30% of the funds on fintech players within lending, insurance and investment sectors. The remaining portion of the funds will be spent on gaming, media, health and education.
Within fintech the fund is interested in the peer-to-peer lending model as well as online NBFC’s similar to the likes of Capital Float and Lendingkart. India Quotient recently invested $500,000 in CreditMate, a lending startup that focuses on lending to individuals looking to purchase used two wheelers.
Digital payments and blockchain startup Coins announced that it has raised a new US$5 million round of funding to further its mission of expanding access to basic financial services to unbanked individuals in the Philippines and throughout Southeast Asia.
The Series A funding round was led by the Accion Frontier Inclusion Fund, managed by Quona Capital, and also includes a number of notable investors such as: Eric Schmidt’s Innovation Endeavors, Pantera Capital, Digital Currency Group, Wavemaker Labs, Global Brain, BeeNext, and Rebright Partners. Amongst the company’s investors are also Kickstart Ventures and Ideaspace Foundation, the investment arms of Globe Telecom and Smart Communications, respectively, the Philippines’ biggest telecommunications companies.
Founded in early 2014, Coins is a mobile-first, branchless, blockchain-based platform that provides consumers with direct access to basic financial services such as remittances, bill payments, and mobile airtime. To provide these services, Coins has partnered with a multitude of banks, financial institutions and last-mile retail outlets, spanning a network of over 22,000 cash disbursement and collection locations in the Philippines alone.
More than 60% of Southeast Asia’s population of 600 million remains unbanked, and less than 5% have a credit card. At the same time, mobile internet penetration is rapidly increasing and bringing millions of people online every month. Coins has been able to capitalize on this technological shift by delivering everyday financial services through its mobile platform. To date, the company has signed up over 500,000 users.
Leveraging the blockchain has enabled Coins to connect its services to partners with a presence in over 40 countries.
Business research firm East & Partners has found corporate treasurers in the UK, Asia and Australia are ramping up their fintech investments. The results came from the Treasury Fintech Index, developed by East & Partners and Contentive Media, and is based on direct interviews with corporate treasurers in eight key global markets.
In the UK, treasurers are forecasting a 14.5% increase in their fintech spend for the coming year, while Australia and Singapore are following closely behind with a planned 12.2% increase.
The Index also found that corporate treasurers are reporting that their companies are directly investing in fintech, with Asia leading in these numbers. Nearly one-third of treasurers in China report their company has already invested in fintech, while over 40% are exploring fintech investment opportunities.
In Australia, 17.6% of corporate treasurers have directly invested in fintechs, while 24.2% are looking at opportunities for investment in the fintech space.
In a quiet neighborhood in the Turkish city of Trabzon, local residents buy most of their daily necessities at Ergan’s, a family-run supermarket established in 1987 that employs six people. But for a long time, there was one item they couldn’t get: meat.
That changed when the owner, Mehmet Turan Ergan, learned he could apply for a loan from ING using his smartphone. He wanted to create a new butcher section and needed 30,000 Turkish lira (around EUR 9,000) to bMultiplying that kind of job creation using the latest financial technology, or fintech, has great potential to reduce extreme poverty in the developing world, according to ING’s latest ‘A Billion to Gain’ report.uy a glass counter to display the different meat cuts, an extra refrigerator, and a machine to make ground beef.
Within minutes of sending an SMS with his tax number, he received a positive answer. Today his customers have more choice. But more importantly, he created a new job.
Multiplying that kind of job creation using the latest financial technology, or fintech, has great potential to reduce extreme poverty in the developing world, according to ING’s latest ‘A Billion to Gain’ report.
To finance the growth of 1 billion new jobs for the poorest in Asia and Africa, ING estimates that the number of micro, small and medium-sized companies (MSME) must grow by a third (from currently 400 million enterprises to 530 million) and the loan portfolio to this segment by 80% (around USD 5.5 trillion). Traditional banking won’t be able to close this huge credit gap because it’s too costly to maintain a wide branch network, especially in rural areas.
A race is under way. Spurred by the initiatives of the UK’s Financial Conduct Authority, countries are embarking on missions to establish themselves as the preeminent jurisdiction for all things fintech.
In recent months, countries such Abu Dhabi, Australia, Hong Kong and Singapore have all announced intentions to launch one. Though specifics vary, the programs share a common theme of promoting the growth of fintech within their borders.
The allure of the sandbox is clear. From a global perspective, program adopters demonstrate their commitment to innovation and developing a local fintech ecosystem. Similarly, participants have the opportunity to test and fine tune their ideas in forgiving environments.
This may also encourage them to push the boundaries of innovation. Consumers ultimately benefit through new financial products offering greater choice and competition between incumbents and startups.
The proliferation of these programs presents challenges and opportunities. Firstly, a degree of cooperation among regulators is advisable in order to avoid jurisdictional arbitrage. For instance, a startup refused entry into one sandbox may attempt to participate in another by taking advantage of differing admission requirements.
Between the rise of blockchain technology, the market debuts of faster payments initiatives and the advancements in virtual card capabilities, small businesses have more choice and power when it comes to their payments needs. But B2B payment habits continue to stifle suppliers’ growth plans across the globe, found the latest Working Capital Outlook Survey released by C2FO this month.
In the U.S., there is evidence that B2B payment practices are improving. Just 14 percent of U.S. SMEs told C2FO that their corporate payers are paying late, down from 20 percent last year. But the U.S. experience is not universal: In the U.K., for instance, 20 percent of suppliers reported having to deal with late payments, up from 11 percent last year.
Italy has the highest rate of late B2B payments, with 50 percent of small businesses there reporting that they have been paid late. France also has a higher rate of late payments at 27 percent, while Germany came in at 18 percent.
Globally, three-quarters of small businesses surveyed said supplier-friendly payment options that support faster payments are important to them. Again, the importance of faster supplier payment options has also increased in the U.S., from 56 percent reporting demand last year to 77 percent this year.
What all of this means, C2FO concluded, is that small businesses need to get creative — and diverse — when it comes to accessing working capital.