Thursday November 21 2019, Weekly News Digest

LexinFintech Vintage Curve

News Comments Today’s main news: SoFi helps Pro.com make home improvement loans. BlueVine raises $102.5M. OCC, FDIC propose Madden fixes. Zopa gets banking license. Twino CEO stands down, platform hits 1B euro in loans issued. Today’s main analysis: LexinFintech lending business analysis (A MUST-READ). Today’s thought-provoking articles: Fed rate inversion. 10 cities that cost money […]

The post Thursday November 21 2019, Weekly News Digest appeared first on Lending Times.

LexinFintech Vintage Curve

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News Summary

United States

Pro.Com Partners with SoFi to Make Home Improvements Even Easier (PR Newswire), Rated: AAA

Pro.com, the premier digital platform focused exclusively on building custom homes and major remodels from start to finish, announced a new partnership Tuesday with online personal finance company SoFi, aimed at revolutionizing how homeowners finance and complete their remodels, renovations and upgrades.

BlueVine raises $ 102.5M more for banking services that target small businesses (TechCrunch), Rated: AAA

The startup, which offers financing and other banking services to SMBs, today is announcing that it has raised $102.5 million, a Series F round of equity funding that is coming from a mix of financial and notable strategic investors.

Led by ION Crossover Partners, the round also includes existing investors Lightspeed Venture Partners, Menlo Ventures, 83North, SVB Capital, Nationwide (a major financial services player in the UK), Citi Ventures, Microsoft’s venture fund M12, and private investors; as well as new investors MUFG Innovation Partners Co., Ltd, O.G. Tech (the VC connected to Israeli billionaire and property magnate Eyal Ofer), Vintage Investment Partners, ION Group, Maor Investments and additional private investors.

FT Partners Advises BlueVine on its $ 102,500,000 Series F Financing (FT Partners), Rated: B

FT Partners served as exclusive financial advisor to BlueVine and its board of directors on its $102.5 million Series F financing

The OCC and FDIC Both Propose a Madden Fix (Lend Academy), Rated: AAA

There is finally some real light at the end of the tunnel. In the last two days we have heard from both the OCC and the FDIC on the Madden issue, something they called unfathomable in a joint amicus brief in Colorado a couple of months ago. They have each given notice of their proposal that would clarify the “valid when made” doctrine once and for all.

At the core of the issue is the ambiguity created by the Madden decision. A loan can be valid when it is made but if it is sold or transferred can suddenly become invalid in the Second Circuit states of NY, CT and VT. This has led to reduced consumer lending to these states and also concern that, given no regulatory clarity, this could expand to other states.

Here are links to the OCC and FDIC proposals. There will be a 60-day comment period where interested parties can weigh in.

Big Tech Race to Own Digital Wallet; GS Robo-advisor on Launchpad (PeerIQ), Rated: AAA

Refinance demand increased by 13% from the previous week and was 188% higher than a year ago, when rates were 114 basis points higher.

First-time inversion driven by the long-end…

Source: PeerIQ, Blackstone, St. Louis Federal Reserve

In regulatory news, lawmakers are taking aim at payday loan rates. Congress members plan to introduce federal legislation that would cap interest rates at 36%.

The next move for Facebook would be to offer lending products most likely indirectly (e.g., via POS partnerships or via co-brand products such as Amazon Chase Visa, etc.).

Insurance startup Vouch tacks on growth funding to serve startups (Pitchbook), Rated: A

Just two months ago, the ink was barely dry on a more than $24 million Series A that Sam Hodges raised for his startup Vouch Insurance. Now he is back with an even larger funding, led by Y Combinator‘s Continuity Fund, as the company seeks to join a crop of startups that cater to the needs of other startups.

Fireblocks Is Now Securing The Biggest Crypto Lending Company In The US (PR Newswire), Rated: A

Fireblocks (www.fireblocks.com), an enterprise platform for securing digital assets in transit, announced today, Celsius Network, the largest provider of interest income and digital asset loans in over 150 jurisdictions worldwide is enlisting Fireblocks to help protect over $400 million assets and 53,000 active wallets, securing both retail and institutional divisions.

5 Ways to Invest in Real Estate Online (The Motley Fool), Rated: A

The primary difference between using a crowdfunding site versus flying solo on your investment journey is that your investment is managed by a team of real estate professionals. Of course, that is also the biggest risk as you are completely dependent on the project developer to deliver what they promised.

If you are not an accredited investor but want to be involved in real estate crowdfunding, companies such as Fundrise, stREITwise, and RealtyMogul are a great place to start.

ArborCrowd Investors Receive Strong Returns on the Sale of Quarry Station Apartments (BusinessWire), Rated: A

ArborCrowd (the “Company”), the first crowdfunding platform launched by a real estate institution, announced today that its Quarry Station Apartments investment (“Quarry Station”) has been realized in under two years, providing investors with returns quicker and higher than initial projections. The property’s $49.35 million sale price generated an internal rate of return (IRR) of 20.31%, surpassing the original return target of 16% to 19%.

How Crowdfunding Has Changed the Game for Real Estate Investing (The Motley Fool), Rated: A

Through real estate crowdfunding, the developer can utilize an online platform that enables a large group of people to invest small dollar amounts in the project. If the development company chooses to follow the crowdfunding option, here’s how that could work:

  • First, the developer identifies an online platform that is suited to the company or mixed-use development. Each platform is different and most real estate crowdfunding sites receive significantly more project applications than they select.
  • If the investment passes all the legal, physical, and financial due diligence requirements the platform requires, that platform will then allow the developer to solicit funds using their site.
  • An investor can then use that platform to contribute financially to the development.
  • The funds are then tied up until the investor delivers on the project.

The 10 worst US cities for commutes that cost you time and money (Business Insider), Rated: AAA

Online loan marketplace Lending Tree published a report on the most expensive commutes in the 100 largest cities in the US in October.

Consider a resident in New York, which Lending Tree ranked as the city with the fifth most expensive commute. Using Lending Tree’s findings via 2017 Census Bureau data, the median annual earnings for a full-time employee in New York is $51,573; their hourly wage is $26. Now, consider the mean time of commuting one way, 41.8 minutes. If you make $26 per hour at your job, and you spend 83.6 minutes daily on your round-trip commute, then your time wasted commuting is worth $37 of time you would have been working.

Five cities in California – Oakland, San Jose, Irvine, San Francisco, and Fremont – took top 10 spots in the ranking, with four of those cities being in the increasingly expensive San Francisco Bay Area.

Read the full report here.

Fintech: The Fourth Platform – Part One (Forbes), Rated: A

While the first generation of fintech companies created billions of dollars of value, because of new enablers like Plaid, Cross River Bank, Finix and Wisetack, we’re now moving past that phase to one where fintech moves from being a business model unto itself, to being the fourth layer in the stack or the “fourth platform,” wherein financial functions like payments, lending and insurance join connectivity, intelligence and ubiquity as layers of the stack upon which new companies can be built.

Source: Forbes

Balboa Survey: Small Business Owners Anticipate Robust Black Friday (Monitor Daily), Rated: A

Online lender Balboa Capital released the results of its 2019 Black Friday Survey, which was conducted to examine how small business owners are preparing for this historically busy shopping day, and to find out what their Black Friday sales expectations are.

The survey reveals that 70% of small business owners are preparing for Black Friday early, and 83% anticipate meeting or exceeding their Black Friday sales goals. Balboa Capital’s survey was sent to a sample of small business owners in a wide variety of industries during the first week of November 2019.

American Financial Exchange, LLC (AFX) Announces AMERIBOR on the Blockchain (Mondovisione), Rated: A

American Financial Exchange (AFX), an electronic exchange for direct lending and borrowing for American banks and financial institutions, announced today the launch of its AMERIBOR on the blockchain. AFX now mints two ERC-721 non-fungible tokens for each AMERIBOR transaction on the AFX platform (for each counterparty to the transaction).  The pair of tokens is automatically minted when the transaction is repaid by the borrowing counterparty to the lending counterparty. Each token contains encrypted transaction data and encrypted counterparty data. The counterparty data is normalized prior to encryption to further preserve counterparty anonymity.

5 Best Alternatives to Traditional Savings Accounts (Nerdwallet), Rated: B

The pros. Peer-to-peer lending tends to be a win-win: Investors get a higher rate of return on their money than a lot of banking products offer, and borrowers get an interest rate on their loan that’s usually less than bank-offered loans and credit cards.

The cons. Peer-to-peer lending won’t give you quick access to your cash if you need liquidity.

Alchemy Partners with Plaid to Enhance Loan Decisioning and Fraud Detection Capabilities (PRWeb), Rated: B

Alchemy, one of the SaaS fintech lending infrastructure companies, has partnered with Plaid to support businesses in account and asset verification for improved lending decisioning.

United Kingdom

UK peer-to-peer lender Zopa gets banking license as it looks to compete with industry giants (Stock Daily Dish), Rated: AAA

British peer-to-peer lender Zopa has obtained a U.K. banking license, clearing a key hurdle in its bid to launch a digital bank and compete with industry giants.

Business Loans Marketplace Funding Xchange Raises $ 10.4 Million via Round Led By Downing Ventures, Gresham House Ventures (Crowdfund Insider), Rated: A

Funding Xchange (FXE), a company that helps people and organizations find suitable business loans and funding options from its marketplace of more than 45 established lenders, has raised £8 million (appr. $10.4 million) through an investment round.

London-based mobile credit card company Tymit secures £4m in funding (AltFi), Rated: A

Tymit, the London-based mobile-enabled credit card company, has secured £4m in a funding round, which it will use to develop its customer service offering.

Arbuthnot Commercial ABL supports EA-RS Fire Engineering’s acquisition of Circum with £2m facility (Business-Money), Rated: A

Arbuthnot Commercial ABL, the specialist asset based lending arm of Arbuthnot Latham, has completed a £2m asset based lending (ABL) transaction in support of the strategic acquisition of Circum Ltd, a fire protection services specialist, by EA-RS Fire Engineering Ltd. (“EA-RS”). The facility comprises a flexible confidential invoice discounting line and a term loan.

Crowd2Fund’s first EIS-approved funding round goes live (P2P Finance News), Rated: A

CROWD2FUND has launched its first funding round since being granted Enterprise Investment Scheme (EIS) approval from HMRC.

The platform has already raised 19 per cent of its target from current shareholders and has now opened the £1.2m fundraise to private investors.

Buzzy finance startup Starling Bank has lost another senior employee amid an exodus of executives (Business Insider), Rated: A

Starling’s head of banking compliance Rachel Coote has quit to join startup Paybase. Coote is the sixth senior employee to leave the buzzy finance company in 2019.The company’s chief financial officer Tony Ellingham has confirmed he will also depart within the next year.

Trading giant Robinhood makes its UK debut in Revolut challenge (City A.M.), Rated: A

US fintech Robinhood, a commission-free trading startup valued at $7.6bn (£5.9bn), has today arrived in the UK.

Users will be able to invest in more than 3,500 US-denominated stocks, including Apple, Amazon and Tesla. They will also be able to access foreign stocks that are available to trade in dollars through depository receipts, such as Barclays and Burberry.

OakNorth Bank completes GBP3.54m loan to fund aparthotel development in London (Property Funds World), Rated: B

The finance will be used to fund the acquisition of a mixed-use property at 68‐86 Clapham Road in Oval, and in its place, develop an aparthotel with between 120-175 units, subject to receiving planning permission. The site is located within walking distance of several Zone 1 underground stations – Oval, Stockwell and Vauxhall – as well as the South Western railway line, providing services to Clapham, Waterloo, Guildford, etc.

Crypto Lending Platform Nexo Joins FIO, As Usability Remains Top Priority (Chipin), Rated: B

Nexo, the dominant player in the crypto lending space, is joining the Foundation for Wallet Interoperability (FIO), the industry consortia bringing together leading companies in the blockchain ecosystem to solve the biggest problem faced by the industry — usability.

China

LexinFintech: A Rare Quality (Seeking Alpha), Rated: AAA

LexinFintech (LX) reported a solid set of Q3 results with loan origination growing 170% y/y that resulted in a beat on both revenue and EPS. More importantly, loan origination guidance was increased to RMB115-125b vs. the prior forecast of RMB115b.

Source: Seeking Alpha

Overall, asset quality remains stable at the end of Q3 with delinquency rate declining 9bps to 1.4% and the 6-month charge-off rate maintained at just above 2%.

Source: LexinFintech

Institutional funding has reached 75% of the total loan balance. In terms of origination, institutional accounts for 94% of the total loans originated, meaning that LX’s own P2P platform Juzi Licai is becoming less relevant going forward.

Source: LexinFintech
European Union

Twino CEO stands down, as Latvian lender swings into black (AltFi), Rated: AAA

Twino founder Armands Broks is to standing down as CEO and will now focus on new business opportunities and bringing talent on board.

The management change comes as Twino, which offers European investors investment opportunities in unsecured European consumer loans, reports pre-tax profits of €13m  (£11m) for 2018, compared to a €7.2m (£6.2m) loss the year previous.

Twino has also disclosed that it has also issued loans to the value of €1bn (£860m), since it was set up 10 years ago, half of the value of which have been issued in the past three years.

The Best Crowdlending Platforms (The African Exponent), Rated: A

Smart Lenders AM Launches New Investment Fund Specialized in Marketplace Lending (Crowdfund Insider), Rated: A

Smart Lenders AM announces the upcoming launch of a new fund dedicated to financing loans to European SMEs issued through marketplace lending platforms (crowdlending).

Real Estate Crowdfunding Platform EstateGuru Partners with Ober-Haus on Market Research (Crowdfund Insider), Rated: A

Real estate crowdfunding platform EstateGuru and OberHaus, real estate agency operating across the Baltic region, have joined together to produce shared real estate market research and analysis with a specialized focus on the needs of the crowdfunding platform.

International

Profits and Losses of P2P Lending Marketplaces 2017 and 2018 (P2P-Banking), Rated: AAA

Source: P2P-Banking
Australia

What does a competitive mortgage rate look like in November 2019? (finder), Rated: A

The lowest fixed rate in Finder’s database right now is 2.68%, a single basis point lower than the lowest variable. This is unusual (the lowest three year fixed rate this time last year was 3.74%).

Another online lender I spoke to was fine with apartments in the same suburb but didn’t offer pre-approval. This meant I would have to start a full application with them even before I had found a place to buy. For some borrowers, this can be a significant turn-off.

Asia

Ant Financial eyeing S’pore digital bank licence (The Straits Times), Rated: AAA

Billionaire Jack Ma’s Ant Financial Services Group said it may apply for a virtual banking licence in Singapore, a move that would add a heavyweight contender to the race.

OneConnect leads Southeast Asia’s sustainable financing with two smart lending platforms (Yahoo! Finance), Rated: A

OneConnect Financial Technology Co. Ltd. (OneConnect), today announced it is leading Southeast Asia’s sustainable financing with the launch of two smart lending platforms – SeekCap, the Philippines’ first lending platform that helps the underserved micro, small and medium enterprises (MSMEs) manage cashflow and grow their business, as well as a multi-finance platform that will empower millions of unbanked and underbanked Indonesians with easy access to loans to finance their purchase of vehicles essential for their daily transportation so as to improve mobility and their lives.

MSMEs form the backbone of any economy. In the Philippines, more than 99% of all businesses are MSMEs and they contribute to almost 63% of total employment. Yet, at present, only 9% of loans and financing from the country’s major banks go to MSMEs.

Latin America

Brazilian Digital Bank Neon Raises $ 95 Million (Crowdfund Insider), Rated: AAA

Brazilian Digital bank Neon has reportedly raised $95.27 million in a funding round led by Banco Votorantim and the General Atlantic fund. This is according to a write up in Estado.

Neon claims a customer base of 2 million users. The additional funding will help the digital bank grow with expectations to triple that number by 2020.

How Brazil is leading Latin America’s fintech revolution (Business Insider), Rated: A

There were 380 fintechs operating in the country in May 2019, per Finnovista, and around two-thirds (64%) of Brazilian consumers are defined as fintech adopters by EY — a rate that’s level with the global average and higher than the majority of G7 countries’.

  • Smartphone and internet penetration: Three-quarters of Brazilians used smartphones in 2017, which is expected to tick up to 86% by 2025 — and both figures are the highest across the region.
  • High fees charged by incumbentsBrazil’s four largest banks control almost 80% of the country’s deposits, with similar concentrations in credit and assets.
  • A large underserved population: Around 45 million people in the country don’t have access to or have not used a bank account in the past six months.

Why Mexico’s Fintech Sector Will Be One to Watch in 2020 (Next Billion), Rated: A

The economy in Mexico remains largely informal and cash dependent. An estimated 44% of the adult population in Mexico owns no financial products. This largely unbanked population, coupled with the new fintech legislation, has created immense opportunities for Mexico’s fintech sector to grow. In fact, roughly 100 new Mexican fintechs were established in 2018 alone, representing 52% growth for the industry. Mexico has become a regional leader with more than 273 fintech ventures operating in the country. When combined with Brazil’s 380 fintech ventures, the two countries make up 56% of the region’s total fintech activity.

Authors:

George Popescu
Allen Taylor

The post Thursday November 21 2019, Weekly News Digest appeared first on Lending Times.

Friday September 29 2017, Daily News Digest

C-PACE financing

News Comments Today’s main news: LendingClub completes 2nd self-sponsored loan securitization with $323M deal. Funding Circle restates IPO ambitions. Robo.cash tops 2M Euro, 1000th investor. AutoGravity surpasses $1B USD in finance amount requested. Singapore banks closing cryptocurrency, payments accounts. Today’s main analysis: Risk evaluation of commercial PACE securitizations differs from residential deals. Goldman Sachs’ aggressive push into consumer banking. Today’s […]

C-PACE financing

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India

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United States

LendingClub Completes 2nd Self Sponsored Loan Securitization with $ 323 Million Deal (Crowdfund Insider), Rated: AAA

LendingClub (NYSE: LC) has sponsored and contributed to its second securitization deal following the the last successful self sponsored deal this past June. The “Consumer Loan Underlying Bond” (CLUB) Credit Trust 2017-P1 (CLUB 2017-P1) issued $323.1 million in prime notes backed by consumer loan assets originated via the LendingClub platform. This is the sixth securitization supported or sponsored by LendingClub, and the fourth rated securitization of LendingClub facilitated loans overall. LendingClub described the deal as further expanding investor access.

LendingClub reported the transaction was backed by approximately $350 million of collateral and includes $217.3 million of Class A notes rated “A-(sf)”, $51.0 million of Class B notes rated “BBB (sf)” and $54.7 million of Class C notes rated “BB (sf)”.

Orchard’s Online Lending Ecosystem Update: “Lendscape” (Crowdfund Insider), Rated: AAA

Orchard Platform, the nexus of loan originators and institutional investing, has updated their ongoing graphical view of the online lending  world or “Lendscape”.  As the online lending universe has moved from peer to peer lending, to marketplace lending to all forms of online lending, the Lendscape has changed and grown. New lending platforms have been launched, new verticals targeted, and a growing number of ancillary services have joined the space.  Orchard points to the addition of lenders like LendingPointLiberty LendingLendmartAllegro CreditUpLiftArtMoneyAscendOppLoans, and Lendistry.

Perhaps the most important shift in online lending is the growing participation by traditional finance firms.

Source: Crowdfund Insider

Risk Evaluation of Commercial PACE Securitizations Differs From Residential Deals (Morningstar), Rated: AAA

Morningstar Credit Ratings, LLC believes the next iteration of property assessed clean energy securitizations will be in the commercial sector. While securitization of residential PACE assessments tops $3 billion, there have been no public transactions consisting primarily of commercial liens.

Evaluating Property Income Generated to Pay Debts In analyzing the credit risk of transactions backed by commercial assessments, Morningstar considers the debt service coverage ratio, because PACE lending is tied to the property rather than the owner’s creditworthiness.

Evaluating Property Income Generated to Pay Debts

Morningstar evaluates a property’s net operating income in relation to its annual debt-service payments. Among securitized commercial mortgages, the average DSCR is approximately 2.14x, according to Morningstar. C-PACE lenders and aggregators typically require a minimum total DSCR in the 1.00x to 1.15x range. Although, in some cases, the DSCR has dipped below 1.00x, especially if total debtto-value is low when operating expenses are higher than revenue. Factors possibly mitigating a lower DSCR, which include county support, property ownership affiliations within a network, liquidity account and equity position require case-by-case analysis. In addition, DSCR of the lien is more important than the DSCR of the overall debt.

Evaluating Divergent Leverage Metrics

The lien-to-value ratio is another leverage metric that Morningstar analyzes. Although a PACE assessment raises a property’s lien-to-value ratio, the increased risk to the underlying mortgage is likely minimal, as the obligation is usually small in comparison to the mortgage.

It can be more challenging to calculate the lien-to-value ratio for C-PACE levies, because the properties can run the gamut from hotels, farmlands, nursing homes, and gas stations to nonprofit buildings such as churches. Across residential PACE deals, we have seen lien-to-value ratios around 6.7% and combined PACE-lien-plus-mortgage-tovalue ratios at around 62.7%. In C-PACE, lien-to-value ratios hover around 25.0%, not including mortgage debt.

While we scrutinize total debt-to-value, the distribution of leverage offers insight into the financial health of the property. For example, we view a property with a 90% debt-to-value ratio that is composed of an 89% mortgage loan and a 1% PACE assessment more favorably than a property whose debt is composed of an 89% PACE obligation and a 1% mortgage because of higher subordination levels.

Growing Market Size

C-PACE financing has grown to about $482 million as of Sept. 1, encompassing 1,097 commercial projects, according to PACENation. More than 2,500 municipalities have C-PACE programs.

Compared with residential programs, C-PACE is in its infancy, as R-PACE financing totaled about $3.67 billion and R-PACE securitizations totaled around $3.40 billion. A sliver of
commercial assets was included in one of those securitizations, GoodGreen 2016-1, with commercial PACE levies representing approximately 4.8% of the pool’s assets.

Source: Morningstar

Get the full report here.

The Top Sources Of Small Business Financing Based On Approval Rates (Forbes), Rated: AAA

According to the latest Biz2Credit Small Business Lending Index, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Loan approval percentages of institutional investors have continuously reached new heights this year in terms of approval rates. In August Institutional lenders’ loan approval rates in August reached 63.9%.

Alternative lenders’ approval percentages continue to decline; in August the rate dipped to 57.1%. Approval percentages have dropped every month for more than a year.

Approval percentages at small banks rose one-tenth of a percent in August to 49.0% from July’s 48.9% figure. It is conceivable that the number may cross the 50% benchmark.

Big banks improved one-tenth of a percent to 24.6% in August, setting a new high for the Biz2Credit Index, which has tracked loan approvals since January 2011. The number is creeping up to one-in-four. It’s a good time for bank lending.

Loan approval rates at credit unions dipped to 40.3% in August, falling to a new low for this category of lenders on Biz2Credit’s index.

AutoGravity Surpasses $ 1 Billion USD In Finance Amount Requested, Launches Real-Time Dealership Inventory Nationwide (PR Newswire), Rated: AAA

AutoGravity, a FinTech pioneer on a mission to transform car shopping and financing, today announced that it has reached $1 billion USD in finance amount requested on the AutoGravity platform. Additionally, AutoGravity has announced the launch of real-time inventory for new and used cars from partner dealership groups across the nation. Car shoppers can browse real vehicle inventory on dealership lots, find the specific car that’s right for them and secure up to four finance offers in minutes on the AutoGravity smartphone app.

More over 750,000 car shoppers have downloaded AutoGravity, collectively requesting over $1 billion USD in financing. These users can now search inventory by car brand and model year – as well as characteristics such as body type, drivetrain and color. Car shoppers can find their desired car waiting for them on the showroom lot for the payment they want. With car selected and offers in hand, users can pick up their car and drive off the lot with the confidence of knowing they have secured a fair deal.

AutoGravity partnered closely with the largest dealer groups in the country to design a seamless process by which dealers can easily load inventory feeds, including vehicle details and pictures, to AutoGravity’s secure platform. Inventory is updated and shown to users in real time.

ID-verification firms seize on Equifax moment (American Banker), Rated: A

The Equifax hack, combined with the rise of online lending, may have turned 2017 into a golden age for companies with new ideas for ID.

The software company Mitek plans to roll out a product in the coming year called Mobile Verify for Lending, which offers lenders a five-step process to quickly verify customer identities. Borrowers first share their online bank account information with lenders. They then submit four pictures taken from their smartphones: the front and back of their driver’s licenses, a selfie and a pay stub.

Other players are offering digital lending solutions to make it easier for banks to keep pace with speedy fintech competitors. Upstart, for example, is marketing software, called Powered by Upstart, to banks wanting to get into digital lending.

DFS to Court: OCC Fintech Charter ‘Undermines’ Its Authority (New York Law Journal), Rated: A

The U.S. Office of the Comptroller of the Currency’s plan to offer a special-purpose bank charter for financial technology companies “undermines” the Department of Financial Services’ regulatory authority in New York, the state agency argued in court documents.

“The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 nondepository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.

Stockpile Raises $ 30 Million to Make Stock Investing Easy for Everyone (PR Newswire), Rated: A

Stockpile, a brokerage popular with millennials that is pioneering fractional share stock investing, announced today that it has raised $30 million in Series B funding led by Fidelity backed Eight Roads Ventures, with participation by Mayfield, Arbor Ventures, Hanna Ventures, Wang Ventures, and others.

This latest investment brings the total raised by Stockpile to more than $45 million.  Mayfield led Stockpile’s $15 millionSeries A in October 2015, with participation by Arbor Ventures, Stanford University, and actor Ashton Kutcher.  Stockpile will use the new funds to bring stock investing to more millennial customers and expand its unique features, Lele said.

Chime raises $ 18 million for mobile banking without the fees (TechCrunch), Rated: A

Chime is raising $18 million in Series B financing for its mobile-first approach to banking. Cathay Innovation led the round with participation from Northwestern Mutual Future Ventures, Crosslink Capital, Forerunner Ventures, Homebrew and others.

It’s a bank account and debit card built for the digital age.

Without monthly fees or overdraft charges, Chime tries to appeal to the millennial generation, touting its affordability and easy-to-use app. Since launching in 2014, Chime has signed up 500,000 customers, who are typically in their late 20s and making between $50,000 and $70,000 per year.

Shinola’s new pitch: the installment plan (Crain’s Detroit Business), Rated: A

Shinola/Detroit LLC is targeting millennials by adding an option to pay for its watches and other luxury goods in an old-fashioned way: the installment plan.

The average order value for Affirm customers is 70 percent higher than the sitewide average, Kopitz said. And about half of those using the service with Shinola are 18-34 years old, the release said.

Around 1,000 retailers now accept payment through Affirm.

Is marketplace lending maturing? (Banking Exchange), Rated: A

As new as fintech and marketplace lending—once known as “peer to peer lending”—may still seem, Noreika suggested that the online lending fraternity may be moving toward maturity.

Noreika said the sweat that went into those ideas has hit $40 billion in consumer and small business credit, with volumes doubling every year since 2010. He noted that some project that at that rate, marketplace lending will hit $1 trillion by 2025—versus the $3.7 trillion in unsecured consumer lending as of yearend 2016.

Noreika pointed out that marketplace lenders have been seeing cracks in their credit since the fourth quarter of 2015.

‘Fintechs tend to march to their own rules’: former SEC chair Levitt (American Banker), Rated: A

“Hardly a day goes by where there isn’t a recording of some scandal or another,” Levitt said. “I think that’s generally true of emerging cultures and emerging standards and cultures. That makes the odds of winning much less than in well established companies with better established cultures.”

His fellow fintech panelists, Sarah Friar, chief financial officer at Square, and Scott Sanborn, CEO of Lending Club, both pointed out that established companies have had their own share of scandals.

Levitt said it’s difficult for startups to attract the kind of quality board members that larger, more mature companies are able to attract.

“Regulators are always playing catch up,” he said. “Regulation today trails the fintech world and often presents impediments and costs that are unnecessary. Regulators are constantly protecting their space so they don’t get caught up in a scandal they’re held accountable for, so there’s a tendency to over-regulate.”

McHenry and Booker Introduce Fintech Bill to Automate Income Verification (House.gov), Rated: B

Today, Chief Deputy Whip Patrick McHenry (R, NC-10), the Vice Chairman of the House Financial Services Committee, and Senator Cory Booker (D-NJ) introduced the IRS Data Verification Modernization Act of 2017. This bipartisan bill will require the Internal Revenue Service (IRS) to automate the Income Verification Express Services process by creating an Application Programming Interface (API) allowing small businesses and consumers to access accurate credit assessments more efficiently. Joining McHenry as an original cosponsor of H.R. 3860 is Congressman Earl Blumenauer (D, OR-03), a senior member of the House Committee on Ways and Means.

Plug and Play Selects Their Winter 2017 Batches (PR Newswire), Rated: B

Plug and Play formally announces the startups accepted into their Winter 2017 batches. Plug and Play will run five programs this quarter focused on Health & Wellness, Insurtech, Internet of Things, Mobility, and Travel & Hospitality.

Wunder Brings on Rich Mauro as Director of Capital Markets (Wunder Capital), Rated: B

We’re incredibly excited to welcome the newest member of Wunder Capital’s team, Rich Mauro. As Director of Capital Markets, Rich will lead Wunder’s institutional fundraising activities, bolstering our capital stack and helping us scale Wunder’s platform to the next level.

United Kingdom

Funding Circle hits £50 million in revenue as CEO restates IPO ambitions (Business Insider), Rated: AAA

Accounts for 2016 filed with Companies House this week show:

  • Revenue rose 59% to £50.9 million;
  • Operating expenses rose by 43% to £103.1 million;
  • Losses dipped by 3% to £35.7 million thanks partly to a foreign exchange boost;
  • £1 billion lent last year;
  • Loans outstanding rose by 61% to £1.37 billion;

‘It goes without saying that international is really hard’

While Desai is bullish on international expansion, the accounts show Funding Circle stopped operations in Spain at the start of the year, a market it entered through the acquisition of Zencap in 2015.

International revenues grew slower than UK revenues last year and Funding Circle parted ways with the head of its continental Europe operations in the middle of last year.

In the UK, economic growth is slowing and consumer debt is ballooning, leading to fears of a possible economic slowdown that could hit lenders.

Funding Circle remains a loss-making business (accumulated losses stand at £116.6 million to date) but Desai says it is on a long-term path to profitability.

Funding Circle is onto a winning strategy (Business Insider), Rated: AAA

Funding Circle, however, has remained a firm market leader, and its annual results for 2016 show it continues to do well.

Its losses narrowed 3% from £37 million ($50 million) in 2015 to £36 million ($48 million) in 2016, as revenue grew 59% year-over-year (YoY) from £32 million ($43 million) to £51 million ($68 million), and originations saw a 61% boost from £846 million ($1.1 billion) to £1.4 billion ($1.9 billion).

Source: Business Insider

Funding Circle posts 59% revenue rise (Bridging&Commercial), Rated: A

Post year-end highlights:

Ranger Direct Lending fund expecting substantial dividend cut (AltFi), Rated: A

The £220m Ranger Direct Lending fund could see its dividend pay-out for the second half of 2017 fall to nearly half of that in the first six months of the year, according to a statement by Ranger.

It is expecting NAV returns in H2 2017 to average 0.4 per cent-0.5 per cent per month (c.5-6 per cent pa), and then recover to 0.6 per cent-0.7 per cent per month (c.7 per cent-9 per cent pa) in 2018, assuming the resolution of Princeton this year.

As a result aggregate dividends of c.25p are expected for H2 2017, compared to 46p in H1.

Source: AltFi

‘Oscars of the start-up world’ has an exciting new winner looking to disrupt property finance (CNBC), Rated: A

LendInvest, an online marketplace platform for property lending and investing, was named the most valuable tech company at the prestigious Investor Allstars event in London on Wednesday evening.

These 20-something Oxford grads just raised $ 30 million for their fintech startup (Business Insider), Rated: A

A “RegTech” — regulation technology — company founded by three Oxford grads all under 30 has raised $30 million (£22.4 million) from investors including Microsoft’s venture capital arm.

Onfido, an identity verification startup, has raised the “Series C” fundraising from Crane Venture Partners, Microsoft Ventures, and Salesforce Ventures, as well as existing investors. It takes the total raised by the London startup to over $60 million.

Onfido’s latest $30 million funding injection follows a $25 million investment last April. Kassai says the latest funding will go towards technology investment and global expansion.

Payday lender Wonga records £65m loss amid overhaul (BBC), Rated: A

Wonga – Britain’s biggest payday lender – posted pre-tax losses of nearly £65m in 2016, but claims its business has been “transformed”.

The lender, which operates in the UK, South Africa, Poland and Spain, saw its losses shrink from £80m in 2015 to £65m in 2016.

How Fintech Is Disrupting Traditional Banking Models (Minute Hack), Rated: A

One of the biggest changes in the financial sector in the UK has been the introduction of challenger banks.

Crucially, these banks have not been mired by the many recent scandals and still rely on customer deposits to build their balance sheets. That’s why fledgling banks such as Metro Bank, Aldermore, Tesco Bank and United Bank UK and currently dominating the best buy tables.

Retail banking is the area that has seen the biggest change as a result of the FinTech sector, but that’s not to say there hasn’t also been a significant impact in the commercial banking sector.

A perfect example is Barclay’s mobile payments service Pingit, designed to compete with Apple Pay, while other banks have launched new mobile banking businesses away from their legacy businesses in an attempt to compete in a digital age.

Bringing financial services to small businesses

One example is peer-to-peer lending, a sector that has sprung up from nothing ten years ago to lend a total of £2.9bn in 2016. This is now filling the capital void for many growing businesses and lending at lower rates than many firms would be able to access elsewhere.

New trustees join Finance Innovation Lab’s board (P2P Finance News), Rated: B

SIX new trustees have been appointed to the board of the Finance Innovation Lab.

The new trustees include Caroline Ellis, a social and organisational change consultant who is taking on the role of chair of the board, and Kate Ormiston Smith, director of finance and operations at The B Team, who is taking up the post of treasurer.

The other new members of the board are: Hanna McCloskey, founder and chief executive officer of Fearless Futures; Toyin Ogundana – investment manager at CAF Venturesome; Paul Riseborough – chief commercial officer at Metro Bank and Julian Thompson, social innovation and fundraising strategist.

How and where to get Crowdlending to fund your Business (TechBullion), Rated: B

When considering your initial application for funding, crowdlending platforms will review your business plan, financial information and other details about your company. In other words, the platforms will review your company’s financial information as well as your personal information in much the same way as banks will do before offering you a loan. Therefore, it is imperative to ensure that your business plan is engaging, comprehensive and well thought out.

Investors will usually seek to get more information about you and your business from social networks like FacebookTwitterand LinkedIn. It will serve you well to ensure that you have an online presence before you seek for funds through crowdlending.

Going by the FundingKnightresearch, most UK investors have a love for the community and would want to give back to some UK SME to ensure its prosperity.

China

More Chinese fintech firms to eye Hong Kong IPOs, says JP Morgan (SCMP), Rated: AAA

More Chinese fintech firms vying to go public could choose Hong Kong as their listing venue, after the city’s first fintech IPO received a hot response from investors, and that Hong Kong has unique advantages compared with other global financial hubs, said JP Morgan’s head of global investment banking in China.

Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, closed nine per cent up from its IPO price on Thursday in its Hong Kong debut. With an oversubscription of nearly 400 times from retail investors, the company had priced its IPO at the top end of the expected range, raising US$1.5 billion in the city’s biggest ever fintech offering.

“The next Zhong An could show up in online payment, P2P lending, [financial] product distribution, or online insurance.”

In particular, revenue from online payment is estimated to increase to 202 billion yuan by 2020. Revenue from online distribution of financial products could grow to 52 billion yuan by then, while that for online lending and online insurance may reach 142 billion yuan and 60 billion yuan respectively.

ZhongAn Insurance Starts Trading on the Hong Kong Stock Exchange (Lend Academy), Rated: AAA

ZhongAn’s IPO will likely make the company the 4th most valuable fintech company in the world with a market cap of about US$10.4 billion, following the top three fintechs, which are Paypal ($78bn), Ant Financial ($68bn) and Lufax ($18bn).

Peter Renton interviewed the CEO of ZhongAn Insurance, Jeffrey Chen, on the Lend Academy Podcast over the summer. Jeffrey said in the interview that ZhongAn has 492 million insurance customers as of December 31, 2016. That is more than four times that of insurance giant AXA’s customer base (107 million, as of December 31, 2016). By this measure, ZhongAn truly is the world’s largest insurance company. And this is just a four-year old company!

Why ZhongAn is So Succesful

For the technology part, ZhongAn has been using artificial intelligence and big data analytics in each step of the insurance value chain, from marketing, underwriting, pricing to claims processing.

Another example is that ZhongAn has partnered with a Chinese automaker to develop internet of things (IoTs) and telematics solutions. Telematics devices can capture drivers’ behavioral data, which can be fed to algorithms using big data techniques to tailor product pricing to observed risk levels.

In ZhongAn’s early days, the revenue generated by shipping return policies accounted for almost 90% of the total revenue. This product would not have been such a success were it not for its partnership with Alibaba. Ant Financial, the financial affiliate of Alibaba, is also the single biggest shareholder (16.04%) of ZhongAn.

Source: :Lend Academy

KKR Invests in Shenzhen Suishou Technology (BusinessWire), Rated: A

Shenzhen Suishou Technology Co. (“Suishou” or the “Company”), a leading personal finance management platform in China, and global investment firm KKR today announced the signing of a definitive agreement under which KKR will invest in Suishou’s Series C funding round to support the Company’s expansion across China.

European Union

Robo.Cash Tops €2 million with 1000th Investor (Crowdfund Insider), Rated: AAA

Emerging peer to peer lender Robo.Cashhas topped €2 million in loans with the advent of the 1000th investor.  According to Robo.Cash, investors are spread across most of Europe with lenders now coming from 28 different countries. The short term loans are coming from Spain and Kazakhstan.

The total sum of earned interests has amounted to more than €50,000 since the start of the platform’s work.

The End of Fintech Is Nigh (FiNews), Rated: AAA

Switzerland is one of the major global fintech centers and the industry is booming: Swisscom counted fewer than a hundred fintech startups in 2015, today there are 208 companies active in wealth management, comparative consulting, crypto finance, data management, payment services and lending (see illustration below).

Blurred Dividing Line

And this may also spell the end of fintech as we know it, in Switzerland, and abroad. That’s at least what Armands Broks (pictured below) believes. The founder and CEO of Twino, a peer-to-peer lending platform, thinks that the fine line between finance industry and fintech is about to be blurred and that fintech eventually will disappear.

The only way forward for fintech is through cooperation agreements and in doing so, «the fintech industry is signing its own death sentence,» Broks said.

PWC consultants said that about 60 percent of Swiss banks have links to fintechs. Four out of five banks are eyeing partnerships in the near future or are planning to expand existing ones.

International

Goldman Sachs’ foray into consumer banking is getting aggressive (Tearsheet), Rated: AAA

The same year it launched GS Bank, it began building a digital-only consumer loan product, Marcus, that was fully developed and on the market 12 months later. Without having the legacy infrastructure under previously existing consumer products and services, the overhaul other major banks have been experiencing don’t exist for Goldman.

“[The] platform approach has not been an obvious approach on Wall Street. Our competitors are generally structured in deep vertical silos and we have a different architecture: these shallower silos built on top of many layers of software, tech infrastructure, cybersecurity, enterprise platforms and increasingly, client platforms,” Marty Chavez, an engineer and Goldman Sachs CIO-turned-CFO this year, said in a keynote at Harvard University earlier this year.

46 percent of Goldman jobs are in technology 
CB Insights analyzed more than 2,000 open Goldman Sachs job listings by division and business unit to confirm it’s focused on building its technology and digital finance units.

Many of the jobs are in digital finance. Earlier this month it reportedly poached 20 employees from New York-based online lending startup Bond Street — engineers, product developers, and risk and marketing specialists — presumably to build out a lending product.

According to the research, published Tuesday, 46 percent of all of the firm’s jobs as of Sept. 14 are in technology, with the highest amount for core platform roles, followed by operations engineering and then equities technology.

Source: Tearsheet

Marcus is expanding in the U.K.

Marcus, the online lending startup built inside the investment bank, has been growing tremendously in the eight months since it launched in October 2016. It has one product: a customizable personal loan for Prime borrowers, with at least a 660 credit score, of up to $30,000. It promises no fees and straightforward repayment terms. It recently passed $1 billion in loan originations with expectations to originate $2 billion by the end of this year. By comparison: SoFi, which launched in 2011, reached its first billion after 14 months; Avant, founded in 2012, took 28 months; 10-year-old Lending Club took 65 months; and Prosper, launched in 2006, passed $1 billion in 98 months.

Goldmoney Inc. Adds Bitcoin and Ethereum to the Goldmoney Holding (Globe Newswire), Rated: A

Goldmoney Inc. (TSX:XAU) (“Goldmoney”) (the “Company”), a precious metal financial service and technology company, today unveiled the addition of vaulted Bitcoin and Ethereum as secure and fully-reserved offline investable assets within the Goldmoney® Holding, a major enhancement that allows qualified clients to buy, sell, and exchange cryptocurrencies with nine global currencies as well as gold, silver, platinum and palladium bullion. With today’s launch, Goldmoney becomes the world’s first publicly traded and regulated financial service to offer insurable, auditable, and Anti-Money Laundering (“AML”) compliant exposure to cryptocurrencies.

  • Buying and selling of digital assets that are safely secured in vaulted cold storage. Cryptocurrency offerings currently include Bitcoin and Ethereum; additional leading digital assets will be added over time.
  • Funding of Goldmoney Holdings with 50 types of cryptocurrency, enabling wallet holders to sell a variety of cryptocurrencies and fund their Goldmoney Holding with fiat currency to access precious metals and other Goldmoney service offerings.
  • Will seek the establishment of peer-to-peer (“P2P”) lending capabilities on digital assets in partnership with Lend and Borrow Trust, allowing owners of Bitcoin and other assets to safely borrow against their positions.

HNWs Would Use Amazon for Wealth Management (Financial Advisor IQ), Rated: A

The majority of high net investors would turn to GoogleAppleFacebook and Amazon for wealth management, Bloomberg writes.

If one of the four tech giants were to enter the advice space, 56.2% of wealthy individuals would entrust them with their money, according to a Capgemini survey of 2,500 individuals with a net worth of $1 million or more in North America, Latin America, Europe and Asia-Pacific cited by the news service. And among people under 40, more than 81% would use one of the four tech firms, according to the survey.

Australia

New fintech “Study Loans” aims to help cash-strapped students (Mozo), Rated: AAA

It’s called Study Loans and is said to be the first online platform dedicated to providing loans to students for both vocational and higher education.

Working closely with education providers, the fintech will track student performance and provide funds as you study through ‘tranches’ – which are based on the number of units you do and when they are completed.

Think of tranches as a ‘pay as you go’ kind of deal. So whether you pass one unit or four, Study Loans will release the funds according to your course progression.

Study Loans has raised $5 million debt equity so far, which is ready to be distributed as the first tranche to Aussie students who have already applied through the platform.

Financing options for students: 

  • Student loans – Student personal loans are designed to help fund your education. They often have a more lenient application criteria and have lower interest rates than standard personal loans. But you are expected to make monthly repayments – so you’ll need to make sure your budget can handle the amount.
  • Peer-to-peer lending
  • HECS-HELP – This is a Government funded scheme for students enrolled in Commonwealth supported institutions with no real interest charged on the loan. You won’t have to pay your student fees upfront, however, you are expected to make repayments once you start earning a salary of $54,869.

MONEFLY LAUNCHES FREE FINTECH PLATFORM WITH ENVESTNET | YODLEE FINANCIAL DATA (Yodlee), Rated: A

Monefly is an innovative new Fintech platform in Australia, focused on providing tools and resources that empower its members to grow income, reduce expenses, build assets, eliminate debt and protect themselves from risk. Some of these exciting tools include free property valuations, automated budgeting, credit scores, bank account consolidation and much more.

Monefly has partnered with Envestnet | Yodlee to help its members access comprehensive financial data available across banking and wealth management from over 15,500 data sources globally.

The data being integrated into Monefly includes superannuation, cash, credit cards, personal debts, mortgages, assets, shares, real estate, credit scores and other investment data.

India

MyAdvo Ties Up with Online Loan Advisor Square Capital for Loan Services (newKerala), Rated: AAA

MyAdvo, India’s leading Legal Tech Startup has entered into an agreement with Square Capital, the digital lending arm of India’s largest real estate transaction platform Square Yards to enable loan facilitation for lawyers on its panel.

Square Capital currently facilitates USD 30- 40Mn(INR 200cr – INR 260cr) of loan disbursals every month, contributed majorly by secured mortgages spread across 50+ banking partners for their different products in home loan, loan against property and business loan.

This exclusive tie-up will benefit MyAdvo registered lawyers in receiving immediate loan solutions without any hassle.

Indians are warming up to robo-advisers (livemint), Rated: A

Robo-advisers, or automated services based on computer algorithms, are catching on in the Indian market due to the relatively lower penetration of financial products in India compared to developed markets.

According to a Business Insider Intelligence forecast, robo-advisers (with some element of automation) will manage investment products worth $1 trillion by 2020, which will go up to $4.6 trillion by as early as 2022.

Scepticism notwithstanding, financial institutions in the country are realising the benefits of robo-advisory services by either building the product in-house or partnering with fintech companies to develop robo-advisers. Take the case of FundsIndia.com, which has a robo-advisory service for which it is forging partnerships with financial biggies. “We have a partnership with Axis Securities and one more company. There is a growing acceptance from the industry, and we are trying to enable better product design,” said Srikant Meenakshi, co-founder, FundsIndia.com. According to him, 15% of his company’s overall portfolio comprises robo-advisory services. Similarly, 5nance has an agreement with HDFC Mutual Fund for its robo-advisor.

Robo-advisory start-up ArthaYantra uses a patented methodology called the Personal Financial Lifecycle Management on its online platform, Arthos. Since its launch in 2008, the site claims to have helped 120,000 customers across more 650 cities and 30 countries.

Asia

Singapore Cryptocurrency Firms Facing Bank Account Closures (Bloomberg), Rated: AAA

Singapore banks have closed accounts of several companies which specialize in providing cryptocurrency and payments services, according to two local bodies which represent financial-technology firms.

Chia Hock Lai, president of the Singapore Fintech Association, which has broader membership than Access, said some of his organization’s members also experienced account closures, though he didn’t provide figures.

Access has 106 members and the Fintech Association has 185, though the two organizations said some companies belong to both groups.

How technology drives a new Taiwanese banking landscape (The Asset), Rated: A

According to Joseph Huang, president of E.Sun Bank, speaking in an interview with The Asset, payments is one area that every bank is looking to explore, although it does not generate huge profits for most banks.

Banks are also more frequently working with technology companies. E.Sun Bank partnered with IBM Taiwan in building its digital branch, which opened in February 2017, making it the first digital branch in Taiwan. Similarly, CTBC partnered with LINE Pay to help merge its banking services with communication apps and social media.

Taishin Bank’s e-banking application, Richart, which attracted over 120,000 subscribers, is targeting young Taiwanese users, while Cathay United Bank is also providing its products to retail customers through its platform My MobiBank.

Authors:

George Popescu
Allen Taylor

Friday September 29 2017, Daily News Digest

C-PACE financing

News Comments Today’s main news: LendingClub completes 2nd self-sponsored loan securitization with $323M deal. Funding Circle restates IPO ambitions. Robo.cash tops 2M Euro, 1000th investor. AutoGravity surpasses $1B USD in finance amount requested. Singapore banks closing cryptocurrency, payments accounts. Today’s main analysis: Risk evaluation of commercial PACE securitizations differs from residential deals. Goldman Sachs’ aggressive push into consumer banking. Today’s […]

C-PACE financing

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

LendingClub Completes 2nd Self Sponsored Loan Securitization with $ 323 Million Deal (Crowdfund Insider), Rated: AAA

LendingClub (NYSE: LC) has sponsored and contributed to its second securitization deal following the the last successful self sponsored deal this past June. The “Consumer Loan Underlying Bond” (CLUB) Credit Trust 2017-P1 (CLUB 2017-P1) issued $323.1 million in prime notes backed by consumer loan assets originated via the LendingClub platform. This is the sixth securitization supported or sponsored by LendingClub, and the fourth rated securitization of LendingClub facilitated loans overall. LendingClub described the deal as further expanding investor access.

LendingClub reported the transaction was backed by approximately $350 million of collateral and includes $217.3 million of Class A notes rated “A-(sf)”, $51.0 million of Class B notes rated “BBB (sf)” and $54.7 million of Class C notes rated “BB (sf)”.

Orchard’s Online Lending Ecosystem Update: “Lendscape” (Crowdfund Insider), Rated: AAA

Orchard Platform, the nexus of loan originators and institutional investing, has updated their ongoing graphical view of the online lending  world or “Lendscape”.  As the online lending universe has moved from peer to peer lending, to marketplace lending to all forms of online lending, the Lendscape has changed and grown. New lending platforms have been launched, new verticals targeted, and a growing number of ancillary services have joined the space.  Orchard points to the addition of lenders like LendingPointLiberty LendingLendmartAllegro CreditUpLiftArtMoneyAscendOppLoans, and Lendistry.

Perhaps the most important shift in online lending is the growing participation by traditional finance firms.

Source: Crowdfund Insider

Risk Evaluation of Commercial PACE Securitizations Differs From Residential Deals (Morningstar), Rated: AAA

Morningstar Credit Ratings, LLC believes the next iteration of property assessed clean energy securitizations will be in the commercial sector. While securitization of residential PACE assessments tops $3 billion, there have been no public transactions consisting primarily of commercial liens.

Evaluating Property Income Generated to Pay Debts In analyzing the credit risk of transactions backed by commercial assessments, Morningstar considers the debt service coverage ratio, because PACE lending is tied to the property rather than the owner’s creditworthiness.

Evaluating Property Income Generated to Pay Debts

Morningstar evaluates a property’s net operating income in relation to its annual debt-service payments. Among securitized commercial mortgages, the average DSCR is approximately 2.14x, according to Morningstar. C-PACE lenders and aggregators typically require a minimum total DSCR in the 1.00x to 1.15x range. Although, in some cases, the DSCR has dipped below 1.00x, especially if total debtto-value is low when operating expenses are higher than revenue. Factors possibly mitigating a lower DSCR, which include county support, property ownership affiliations within a network, liquidity account and equity position require case-by-case analysis. In addition, DSCR of the lien is more important than the DSCR of the overall debt.

Evaluating Divergent Leverage Metrics

The lien-to-value ratio is another leverage metric that Morningstar analyzes. Although a PACE assessment raises a property’s lien-to-value ratio, the increased risk to the underlying mortgage is likely minimal, as the obligation is usually small in comparison to the mortgage.

It can be more challenging to calculate the lien-to-value ratio for C-PACE levies, because the properties can run the gamut from hotels, farmlands, nursing homes, and gas stations to nonprofit buildings such as churches. Across residential PACE deals, we have seen lien-to-value ratios around 6.7% and combined PACE-lien-plus-mortgage-tovalue ratios at around 62.7%. In C-PACE, lien-to-value ratios hover around 25.0%, not including mortgage debt.

While we scrutinize total debt-to-value, the distribution of leverage offers insight into the financial health of the property. For example, we view a property with a 90% debt-to-value ratio that is composed of an 89% mortgage loan and a 1% PACE assessment more favorably than a property whose debt is composed of an 89% PACE obligation and a 1% mortgage because of higher subordination levels.

Growing Market Size

C-PACE financing has grown to about $482 million as of Sept. 1, encompassing 1,097 commercial projects, according to PACENation. More than 2,500 municipalities have C-PACE programs.

Compared with residential programs, C-PACE is in its infancy, as R-PACE financing totaled about $3.67 billion and R-PACE securitizations totaled around $3.40 billion. A sliver of
commercial assets was included in one of those securitizations, GoodGreen 2016-1, with commercial PACE levies representing approximately 4.8% of the pool’s assets.

Source: Morningstar

Get the full report here.

The Top Sources Of Small Business Financing Based On Approval Rates (Forbes), Rated: AAA

According to the latest Biz2Credit Small Business Lending Index, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Loan approval percentages of institutional investors have continuously reached new heights this year in terms of approval rates. In August Institutional lenders’ loan approval rates in August reached 63.9%.

Alternative lenders’ approval percentages continue to decline; in August the rate dipped to 57.1%. Approval percentages have dropped every month for more than a year.

Approval percentages at small banks rose one-tenth of a percent in August to 49.0% from July’s 48.9% figure. It is conceivable that the number may cross the 50% benchmark.

Big banks improved one-tenth of a percent to 24.6% in August, setting a new high for the Biz2Credit Index, which has tracked loan approvals since January 2011. The number is creeping up to one-in-four. It’s a good time for bank lending.

Loan approval rates at credit unions dipped to 40.3% in August, falling to a new low for this category of lenders on Biz2Credit’s index.

AutoGravity Surpasses $ 1 Billion USD In Finance Amount Requested, Launches Real-Time Dealership Inventory Nationwide (PR Newswire), Rated: AAA

AutoGravity, a FinTech pioneer on a mission to transform car shopping and financing, today announced that it has reached $1 billion USD in finance amount requested on the AutoGravity platform. Additionally, AutoGravity has announced the launch of real-time inventory for new and used cars from partner dealership groups across the nation. Car shoppers can browse real vehicle inventory on dealership lots, find the specific car that’s right for them and secure up to four finance offers in minutes on the AutoGravity smartphone app.

More over 750,000 car shoppers have downloaded AutoGravity, collectively requesting over $1 billion USD in financing. These users can now search inventory by car brand and model year – as well as characteristics such as body type, drivetrain and color. Car shoppers can find their desired car waiting for them on the showroom lot for the payment they want. With car selected and offers in hand, users can pick up their car and drive off the lot with the confidence of knowing they have secured a fair deal.

AutoGravity partnered closely with the largest dealer groups in the country to design a seamless process by which dealers can easily load inventory feeds, including vehicle details and pictures, to AutoGravity’s secure platform. Inventory is updated and shown to users in real time.

ID-verification firms seize on Equifax moment (American Banker), Rated: A

The Equifax hack, combined with the rise of online lending, may have turned 2017 into a golden age for companies with new ideas for ID.

The software company Mitek plans to roll out a product in the coming year called Mobile Verify for Lending, which offers lenders a five-step process to quickly verify customer identities. Borrowers first share their online bank account information with lenders. They then submit four pictures taken from their smartphones: the front and back of their driver’s licenses, a selfie and a pay stub.

Other players are offering digital lending solutions to make it easier for banks to keep pace with speedy fintech competitors. Upstart, for example, is marketing software, called Powered by Upstart, to banks wanting to get into digital lending.

DFS to Court: OCC Fintech Charter ‘Undermines’ Its Authority (New York Law Journal), Rated: A

The U.S. Office of the Comptroller of the Currency’s plan to offer a special-purpose bank charter for financial technology companies “undermines” the Department of Financial Services’ regulatory authority in New York, the state agency argued in court documents.

“The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 nondepository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.

Stockpile Raises $ 30 Million to Make Stock Investing Easy for Everyone (PR Newswire), Rated: A

Stockpile, a brokerage popular with millennials that is pioneering fractional share stock investing, announced today that it has raised $30 million in Series B funding led by Fidelity backed Eight Roads Ventures, with participation by Mayfield, Arbor Ventures, Hanna Ventures, Wang Ventures, and others.

This latest investment brings the total raised by Stockpile to more than $45 million.  Mayfield led Stockpile’s $15 millionSeries A in October 2015, with participation by Arbor Ventures, Stanford University, and actor Ashton Kutcher.  Stockpile will use the new funds to bring stock investing to more millennial customers and expand its unique features, Lele said.

Chime raises $ 18 million for mobile banking without the fees (TechCrunch), Rated: A

Chime is raising $18 million in Series B financing for its mobile-first approach to banking. Cathay Innovation led the round with participation from Northwestern Mutual Future Ventures, Crosslink Capital, Forerunner Ventures, Homebrew and others.

It’s a bank account and debit card built for the digital age.

Without monthly fees or overdraft charges, Chime tries to appeal to the millennial generation, touting its affordability and easy-to-use app. Since launching in 2014, Chime has signed up 500,000 customers, who are typically in their late 20s and making between $50,000 and $70,000 per year.

Shinola’s new pitch: the installment plan (Crain’s Detroit Business), Rated: A

Shinola/Detroit LLC is targeting millennials by adding an option to pay for its watches and other luxury goods in an old-fashioned way: the installment plan.

The average order value for Affirm customers is 70 percent higher than the sitewide average, Kopitz said. And about half of those using the service with Shinola are 18-34 years old, the release said.

Around 1,000 retailers now accept payment through Affirm.

Is marketplace lending maturing? (Banking Exchange), Rated: A

As new as fintech and marketplace lending—once known as “peer to peer lending”—may still seem, Noreika suggested that the online lending fraternity may be moving toward maturity.

Noreika said the sweat that went into those ideas has hit $40 billion in consumer and small business credit, with volumes doubling every year since 2010. He noted that some project that at that rate, marketplace lending will hit $1 trillion by 2025—versus the $3.7 trillion in unsecured consumer lending as of yearend 2016.

Noreika pointed out that marketplace lenders have been seeing cracks in their credit since the fourth quarter of 2015.

‘Fintechs tend to march to their own rules’: former SEC chair Levitt (American Banker), Rated: A

“Hardly a day goes by where there isn’t a recording of some scandal or another,” Levitt said. “I think that’s generally true of emerging cultures and emerging standards and cultures. That makes the odds of winning much less than in well established companies with better established cultures.”

His fellow fintech panelists, Sarah Friar, chief financial officer at Square, and Scott Sanborn, CEO of Lending Club, both pointed out that established companies have had their own share of scandals.

Levitt said it’s difficult for startups to attract the kind of quality board members that larger, more mature companies are able to attract.

“Regulators are always playing catch up,” he said. “Regulation today trails the fintech world and often presents impediments and costs that are unnecessary. Regulators are constantly protecting their space so they don’t get caught up in a scandal they’re held accountable for, so there’s a tendency to over-regulate.”

McHenry and Booker Introduce Fintech Bill to Automate Income Verification (House.gov), Rated: B

Today, Chief Deputy Whip Patrick McHenry (R, NC-10), the Vice Chairman of the House Financial Services Committee, and Senator Cory Booker (D-NJ) introduced the IRS Data Verification Modernization Act of 2017. This bipartisan bill will require the Internal Revenue Service (IRS) to automate the Income Verification Express Services process by creating an Application Programming Interface (API) allowing small businesses and consumers to access accurate credit assessments more efficiently. Joining McHenry as an original cosponsor of H.R. 3860 is Congressman Earl Blumenauer (D, OR-03), a senior member of the House Committee on Ways and Means.

Plug and Play Selects Their Winter 2017 Batches (PR Newswire), Rated: B

Plug and Play formally announces the startups accepted into their Winter 2017 batches. Plug and Play will run five programs this quarter focused on Health & Wellness, Insurtech, Internet of Things, Mobility, and Travel & Hospitality.

Wunder Brings on Rich Mauro as Director of Capital Markets (Wunder Capital), Rated: B

We’re incredibly excited to welcome the newest member of Wunder Capital’s team, Rich Mauro. As Director of Capital Markets, Rich will lead Wunder’s institutional fundraising activities, bolstering our capital stack and helping us scale Wunder’s platform to the next level.

United Kingdom

Funding Circle hits £50 million in revenue as CEO restates IPO ambitions (Business Insider), Rated: AAA

Accounts for 2016 filed with Companies House this week show:

  • Revenue rose 59% to £50.9 million;
  • Operating expenses rose by 43% to £103.1 million;
  • Losses dipped by 3% to £35.7 million thanks partly to a foreign exchange boost;
  • £1 billion lent last year;
  • Loans outstanding rose by 61% to £1.37 billion;

‘It goes without saying that international is really hard’

While Desai is bullish on international expansion, the accounts show Funding Circle stopped operations in Spain at the start of the year, a market it entered through the acquisition of Zencap in 2015.

International revenues grew slower than UK revenues last year and Funding Circle parted ways with the head of its continental Europe operations in the middle of last year.

In the UK, economic growth is slowing and consumer debt is ballooning, leading to fears of a possible economic slowdown that could hit lenders.

Funding Circle remains a loss-making business (accumulated losses stand at £116.6 million to date) but Desai says it is on a long-term path to profitability.

Funding Circle is onto a winning strategy (Business Insider), Rated: AAA

Funding Circle, however, has remained a firm market leader, and its annual results for 2016 show it continues to do well.

Its losses narrowed 3% from £37 million ($50 million) in 2015 to £36 million ($48 million) in 2016, as revenue grew 59% year-over-year (YoY) from £32 million ($43 million) to £51 million ($68 million), and originations saw a 61% boost from £846 million ($1.1 billion) to £1.4 billion ($1.9 billion).

Source: Business Insider

Funding Circle posts 59% revenue rise (Bridging&Commercial), Rated: A

Post year-end highlights:

Ranger Direct Lending fund expecting substantial dividend cut (AltFi), Rated: A

The £220m Ranger Direct Lending fund could see its dividend pay-out for the second half of 2017 fall to nearly half of that in the first six months of the year, according to a statement by Ranger.

It is expecting NAV returns in H2 2017 to average 0.4 per cent-0.5 per cent per month (c.5-6 per cent pa), and then recover to 0.6 per cent-0.7 per cent per month (c.7 per cent-9 per cent pa) in 2018, assuming the resolution of Princeton this year.

As a result aggregate dividends of c.25p are expected for H2 2017, compared to 46p in H1.

Source: AltFi

‘Oscars of the start-up world’ has an exciting new winner looking to disrupt property finance (CNBC), Rated: A

LendInvest, an online marketplace platform for property lending and investing, was named the most valuable tech company at the prestigious Investor Allstars event in London on Wednesday evening.

These 20-something Oxford grads just raised $ 30 million for their fintech startup (Business Insider), Rated: A

A “RegTech” — regulation technology — company founded by three Oxford grads all under 30 has raised $30 million (£22.4 million) from investors including Microsoft’s venture capital arm.

Onfido, an identity verification startup, has raised the “Series C” fundraising from Crane Venture Partners, Microsoft Ventures, and Salesforce Ventures, as well as existing investors. It takes the total raised by the London startup to over $60 million.

Onfido’s latest $30 million funding injection follows a $25 million investment last April. Kassai says the latest funding will go towards technology investment and global expansion.

Payday lender Wonga records £65m loss amid overhaul (BBC), Rated: A

Wonga – Britain’s biggest payday lender – posted pre-tax losses of nearly £65m in 2016, but claims its business has been “transformed”.

The lender, which operates in the UK, South Africa, Poland and Spain, saw its losses shrink from £80m in 2015 to £65m in 2016.

How Fintech Is Disrupting Traditional Banking Models (Minute Hack), Rated: A

One of the biggest changes in the financial sector in the UK has been the introduction of challenger banks.

Crucially, these banks have not been mired by the many recent scandals and still rely on customer deposits to build their balance sheets. That’s why fledgling banks such as Metro Bank, Aldermore, Tesco Bank and United Bank UK and currently dominating the best buy tables.

Retail banking is the area that has seen the biggest change as a result of the FinTech sector, but that’s not to say there hasn’t also been a significant impact in the commercial banking sector.

A perfect example is Barclay’s mobile payments service Pingit, designed to compete with Apple Pay, while other banks have launched new mobile banking businesses away from their legacy businesses in an attempt to compete in a digital age.

Bringing financial services to small businesses

One example is peer-to-peer lending, a sector that has sprung up from nothing ten years ago to lend a total of £2.9bn in 2016. This is now filling the capital void for many growing businesses and lending at lower rates than many firms would be able to access elsewhere.

New trustees join Finance Innovation Lab’s board (P2P Finance News), Rated: B

SIX new trustees have been appointed to the board of the Finance Innovation Lab.

The new trustees include Caroline Ellis, a social and organisational change consultant who is taking on the role of chair of the board, and Kate Ormiston Smith, director of finance and operations at The B Team, who is taking up the post of treasurer.

The other new members of the board are: Hanna McCloskey, founder and chief executive officer of Fearless Futures; Toyin Ogundana – investment manager at CAF Venturesome; Paul Riseborough – chief commercial officer at Metro Bank and Julian Thompson, social innovation and fundraising strategist.

How and where to get Crowdlending to fund your Business (TechBullion), Rated: B

When considering your initial application for funding, crowdlending platforms will review your business plan, financial information and other details about your company. In other words, the platforms will review your company’s financial information as well as your personal information in much the same way as banks will do before offering you a loan. Therefore, it is imperative to ensure that your business plan is engaging, comprehensive and well thought out.

Investors will usually seek to get more information about you and your business from social networks like FacebookTwitterand LinkedIn. It will serve you well to ensure that you have an online presence before you seek for funds through crowdlending.

Going by the FundingKnightresearch, most UK investors have a love for the community and would want to give back to some UK SME to ensure its prosperity.

China

More Chinese fintech firms to eye Hong Kong IPOs, says JP Morgan (SCMP), Rated: AAA

More Chinese fintech firms vying to go public could choose Hong Kong as their listing venue, after the city’s first fintech IPO received a hot response from investors, and that Hong Kong has unique advantages compared with other global financial hubs, said JP Morgan’s head of global investment banking in China.

Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, closed nine per cent up from its IPO price on Thursday in its Hong Kong debut. With an oversubscription of nearly 400 times from retail investors, the company had priced its IPO at the top end of the expected range, raising US$1.5 billion in the city’s biggest ever fintech offering.

“The next Zhong An could show up in online payment, P2P lending, [financial] product distribution, or online insurance.”

In particular, revenue from online payment is estimated to increase to 202 billion yuan by 2020. Revenue from online distribution of financial products could grow to 52 billion yuan by then, while that for online lending and online insurance may reach 142 billion yuan and 60 billion yuan respectively.

ZhongAn Insurance Starts Trading on the Hong Kong Stock Exchange (Lend Academy), Rated: AAA

ZhongAn’s IPO will likely make the company the 4th most valuable fintech company in the world with a market cap of about US$10.4 billion, following the top three fintechs, which are Paypal ($78bn), Ant Financial ($68bn) and Lufax ($18bn).

Peter Renton interviewed the CEO of ZhongAn Insurance, Jeffrey Chen, on the Lend Academy Podcast over the summer. Jeffrey said in the interview that ZhongAn has 492 million insurance customers as of December 31, 2016. That is more than four times that of insurance giant AXA’s customer base (107 million, as of December 31, 2016). By this measure, ZhongAn truly is the world’s largest insurance company. And this is just a four-year old company!

Why ZhongAn is So Succesful

For the technology part, ZhongAn has been using artificial intelligence and big data analytics in each step of the insurance value chain, from marketing, underwriting, pricing to claims processing.

Another example is that ZhongAn has partnered with a Chinese automaker to develop internet of things (IoTs) and telematics solutions. Telematics devices can capture drivers’ behavioral data, which can be fed to algorithms using big data techniques to tailor product pricing to observed risk levels.

In ZhongAn’s early days, the revenue generated by shipping return policies accounted for almost 90% of the total revenue. This product would not have been such a success were it not for its partnership with Alibaba. Ant Financial, the financial affiliate of Alibaba, is also the single biggest shareholder (16.04%) of ZhongAn.

Source: :Lend Academy

KKR Invests in Shenzhen Suishou Technology (BusinessWire), Rated: A

Shenzhen Suishou Technology Co. (“Suishou” or the “Company”), a leading personal finance management platform in China, and global investment firm KKR today announced the signing of a definitive agreement under which KKR will invest in Suishou’s Series C funding round to support the Company’s expansion across China.

European Union

Robo.Cash Tops €2 million with 1000th Investor (Crowdfund Insider), Rated: AAA

Emerging peer to peer lender Robo.Cashhas topped €2 million in loans with the advent of the 1000th investor.  According to Robo.Cash, investors are spread across most of Europe with lenders now coming from 28 different countries. The short term loans are coming from Spain and Kazakhstan.

The total sum of earned interests has amounted to more than €50,000 since the start of the platform’s work.

The End of Fintech Is Nigh (FiNews), Rated: AAA

Switzerland is one of the major global fintech centers and the industry is booming: Swisscom counted fewer than a hundred fintech startups in 2015, today there are 208 companies active in wealth management, comparative consulting, crypto finance, data management, payment services and lending (see illustration below).

Blurred Dividing Line

And this may also spell the end of fintech as we know it, in Switzerland, and abroad. That’s at least what Armands Broks (pictured below) believes. The founder and CEO of Twino, a peer-to-peer lending platform, thinks that the fine line between finance industry and fintech is about to be blurred and that fintech eventually will disappear.

The only way forward for fintech is through cooperation agreements and in doing so, «the fintech industry is signing its own death sentence,» Broks said.

PWC consultants said that about 60 percent of Swiss banks have links to fintechs. Four out of five banks are eyeing partnerships in the near future or are planning to expand existing ones.

International

Goldman Sachs’ foray into consumer banking is getting aggressive (Tearsheet), Rated: AAA

The same year it launched GS Bank, it began building a digital-only consumer loan product, Marcus, that was fully developed and on the market 12 months later. Without having the legacy infrastructure under previously existing consumer products and services, the overhaul other major banks have been experiencing don’t exist for Goldman.

“[The] platform approach has not been an obvious approach on Wall Street. Our competitors are generally structured in deep vertical silos and we have a different architecture: these shallower silos built on top of many layers of software, tech infrastructure, cybersecurity, enterprise platforms and increasingly, client platforms,” Marty Chavez, an engineer and Goldman Sachs CIO-turned-CFO this year, said in a keynote at Harvard University earlier this year.

46 percent of Goldman jobs are in technology 
CB Insights analyzed more than 2,000 open Goldman Sachs job listings by division and business unit to confirm it’s focused on building its technology and digital finance units.

Many of the jobs are in digital finance. Earlier this month it reportedly poached 20 employees from New York-based online lending startup Bond Street — engineers, product developers, and risk and marketing specialists — presumably to build out a lending product.

According to the research, published Tuesday, 46 percent of all of the firm’s jobs as of Sept. 14 are in technology, with the highest amount for core platform roles, followed by operations engineering and then equities technology.

Source: Tearsheet

Marcus is expanding in the U.K.

Marcus, the online lending startup built inside the investment bank, has been growing tremendously in the eight months since it launched in October 2016. It has one product: a customizable personal loan for Prime borrowers, with at least a 660 credit score, of up to $30,000. It promises no fees and straightforward repayment terms. It recently passed $1 billion in loan originations with expectations to originate $2 billion by the end of this year. By comparison: SoFi, which launched in 2011, reached its first billion after 14 months; Avant, founded in 2012, took 28 months; 10-year-old Lending Club took 65 months; and Prosper, launched in 2006, passed $1 billion in 98 months.

Goldmoney Inc. Adds Bitcoin and Ethereum to the Goldmoney Holding (Globe Newswire), Rated: A

Goldmoney Inc. (TSX:XAU) (“Goldmoney”) (the “Company”), a precious metal financial service and technology company, today unveiled the addition of vaulted Bitcoin and Ethereum as secure and fully-reserved offline investable assets within the Goldmoney® Holding, a major enhancement that allows qualified clients to buy, sell, and exchange cryptocurrencies with nine global currencies as well as gold, silver, platinum and palladium bullion. With today’s launch, Goldmoney becomes the world’s first publicly traded and regulated financial service to offer insurable, auditable, and Anti-Money Laundering (“AML”) compliant exposure to cryptocurrencies.

  • Buying and selling of digital assets that are safely secured in vaulted cold storage. Cryptocurrency offerings currently include Bitcoin and Ethereum; additional leading digital assets will be added over time.
  • Funding of Goldmoney Holdings with 50 types of cryptocurrency, enabling wallet holders to sell a variety of cryptocurrencies and fund their Goldmoney Holding with fiat currency to access precious metals and other Goldmoney service offerings.
  • Will seek the establishment of peer-to-peer (“P2P”) lending capabilities on digital assets in partnership with Lend and Borrow Trust, allowing owners of Bitcoin and other assets to safely borrow against their positions.

HNWs Would Use Amazon for Wealth Management (Financial Advisor IQ), Rated: A

The majority of high net investors would turn to GoogleAppleFacebook and Amazon for wealth management, Bloomberg writes.

If one of the four tech giants were to enter the advice space, 56.2% of wealthy individuals would entrust them with their money, according to a Capgemini survey of 2,500 individuals with a net worth of $1 million or more in North America, Latin America, Europe and Asia-Pacific cited by the news service. And among people under 40, more than 81% would use one of the four tech firms, according to the survey.

Australia

New fintech “Study Loans” aims to help cash-strapped students (Mozo), Rated: AAA

It’s called Study Loans and is said to be the first online platform dedicated to providing loans to students for both vocational and higher education.

Working closely with education providers, the fintech will track student performance and provide funds as you study through ‘tranches’ – which are based on the number of units you do and when they are completed.

Think of tranches as a ‘pay as you go’ kind of deal. So whether you pass one unit or four, Study Loans will release the funds according to your course progression.

Study Loans has raised $5 million debt equity so far, which is ready to be distributed as the first tranche to Aussie students who have already applied through the platform.

Financing options for students: 

  • Student loans – Student personal loans are designed to help fund your education. They often have a more lenient application criteria and have lower interest rates than standard personal loans. But you are expected to make monthly repayments – so you’ll need to make sure your budget can handle the amount.
  • Peer-to-peer lending
  • HECS-HELP – This is a Government funded scheme for students enrolled in Commonwealth supported institutions with no real interest charged on the loan. You won’t have to pay your student fees upfront, however, you are expected to make repayments once you start earning a salary of $54,869.

MONEFLY LAUNCHES FREE FINTECH PLATFORM WITH ENVESTNET | YODLEE FINANCIAL DATA (Yodlee), Rated: A

Monefly is an innovative new Fintech platform in Australia, focused on providing tools and resources that empower its members to grow income, reduce expenses, build assets, eliminate debt and protect themselves from risk. Some of these exciting tools include free property valuations, automated budgeting, credit scores, bank account consolidation and much more.

Monefly has partnered with Envestnet | Yodlee to help its members access comprehensive financial data available across banking and wealth management from over 15,500 data sources globally.

The data being integrated into Monefly includes superannuation, cash, credit cards, personal debts, mortgages, assets, shares, real estate, credit scores and other investment data.

India

MyAdvo Ties Up with Online Loan Advisor Square Capital for Loan Services (newKerala), Rated: AAA

MyAdvo, India’s leading Legal Tech Startup has entered into an agreement with Square Capital, the digital lending arm of India’s largest real estate transaction platform Square Yards to enable loan facilitation for lawyers on its panel.

Square Capital currently facilitates USD 30- 40Mn(INR 200cr – INR 260cr) of loan disbursals every month, contributed majorly by secured mortgages spread across 50+ banking partners for their different products in home loan, loan against property and business loan.

This exclusive tie-up will benefit MyAdvo registered lawyers in receiving immediate loan solutions without any hassle.

Indians are warming up to robo-advisers (livemint), Rated: A

Robo-advisers, or automated services based on computer algorithms, are catching on in the Indian market due to the relatively lower penetration of financial products in India compared to developed markets.

According to a Business Insider Intelligence forecast, robo-advisers (with some element of automation) will manage investment products worth $1 trillion by 2020, which will go up to $4.6 trillion by as early as 2022.

Scepticism notwithstanding, financial institutions in the country are realising the benefits of robo-advisory services by either building the product in-house or partnering with fintech companies to develop robo-advisers. Take the case of FundsIndia.com, which has a robo-advisory service for which it is forging partnerships with financial biggies. “We have a partnership with Axis Securities and one more company. There is a growing acceptance from the industry, and we are trying to enable better product design,” said Srikant Meenakshi, co-founder, FundsIndia.com. According to him, 15% of his company’s overall portfolio comprises robo-advisory services. Similarly, 5nance has an agreement with HDFC Mutual Fund for its robo-advisor.

Robo-advisory start-up ArthaYantra uses a patented methodology called the Personal Financial Lifecycle Management on its online platform, Arthos. Since its launch in 2008, the site claims to have helped 120,000 customers across more 650 cities and 30 countries.

Asia

Singapore Cryptocurrency Firms Facing Bank Account Closures (Bloomberg), Rated: AAA

Singapore banks have closed accounts of several companies which specialize in providing cryptocurrency and payments services, according to two local bodies which represent financial-technology firms.

Chia Hock Lai, president of the Singapore Fintech Association, which has broader membership than Access, said some of his organization’s members also experienced account closures, though he didn’t provide figures.

Access has 106 members and the Fintech Association has 185, though the two organizations said some companies belong to both groups.

How technology drives a new Taiwanese banking landscape (The Asset), Rated: A

According to Joseph Huang, president of E.Sun Bank, speaking in an interview with The Asset, payments is one area that every bank is looking to explore, although it does not generate huge profits for most banks.

Banks are also more frequently working with technology companies. E.Sun Bank partnered with IBM Taiwan in building its digital branch, which opened in February 2017, making it the first digital branch in Taiwan. Similarly, CTBC partnered with LINE Pay to help merge its banking services with communication apps and social media.

Taishin Bank’s e-banking application, Richart, which attracted over 120,000 subscribers, is targeting young Taiwanese users, while Cathay United Bank is also providing its products to retail customers through its platform My MobiBank.

Authors:

George Popescu
Allen Taylor

Friday August 25 2017, Daily News Digest

alternative investing

News Comments Today’s main news: Ellevest raises $32M to target women investors. eOriginal, Notarize close first digital mortgage closing. OFF3R launches SIPPS portal. Zopa reduces higher-risk lending. China issues draft rules on illegal fundraising. TWINO adds second Russian originator. African university to offer fintech degree. Today’s main analysis: Should P2P lending investors worry about default rates?Early-stage fintech investment in UK, Germany. Today’s […]

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News Summary

United States

Wall Street alum Sallie Krawcheck just raised $ 32 million for her investing platform (Business Insider), Rated: AAA

But the uncertainty and risk that comes with the markets is very often a major deterrent, especially for women, who invest at a much lower rate than men in the US.

To combat this, former Wall Street executive Sallie Krawcheck launched Ellevest in 2016, a digital investing platform that puts female investors’ money in low-cost ETFs based on a pick-and-choose set of goals, like starting a business, buying a home, having children, and retiring comfortably.

This week, the startup raised $32.5 million in its latest round of funding, according to CNBC. Tennis superstar Venus Williams, who is a champion of equal pay and opportunity for women both on and off the court, was among Ellevest’s first investors.

Just 28% of women are willing to take on high risk to get a good return on their investment, compared to 45% of men, according to a 2015 report by BlackRock.

Man finds it can be hard to return $ 6,000 (WoodTV), Rated: AAA

When 53-year-old Wyoming resident Duane La Varier found $6,180 had mysteriously appeared in his bank account, he never dreamed how hard it could be just trying to give money away.

He said he and his wife never filled out any applications and never sought any kind of loan.

The deposit a week ago had come from a company called LendingClub.

“I said, ‘I did not apply for this loan. Just take it back, just take it all out of my account.’ They said no.”

LendingClub is not the actual lender — it represents lenders — but Dudum said the company will take the hit for the $6,000 loan and its fees.

eOriginal and Notarize Make Digital Mortgage the New Reality (Broadway World), Rated: AAA

With its launch of Notarize for Mortgage, the company’s proprietary signing and remote notarization platform, Notarize recently completed the first-ever online mortgage closing. By integrating directly with eOriginal’s electronic vault, they enable lenders to leverage a joint solution that takes only a few short days to set up and launch before borrowers can start closing loans online. Together, Notarize and eOriginal allow lenders to quickly provide a seamless digital experience spanning the entire closing process all the way through registration with MERS (Mortgage Electronic Registration System, Inc.) and sale into the secondary market.

Connecting lenders, title agents, borrowers and notaries online 24 x 7 to digitize the closing process, the Notarize for Mortgage platform is approved by both Fannie Mae and Freddie Mac, underwritten by national title underwriters, and was launched with five lender customers and numerous warehouse lender and mortgage servicer partners. The platform is available to lenders online or via modern APIs that allow them to integrate an online closing process directly into their existing tools, automating their closing operations entirely.

eOriginal’s platform of integrated solutions delivers a fully digital mortgage and supports every type of digital closing strategy.

TRANSPARENCY IN ALTERNATIVE INVESTING (All About Alpha), Rated: AAA

In February of this year, the Economist Intelligence Unit surveyed 200 senior asset managers and institutional investor executives to learn what factors are most important in the way they make their decisions. Several different types of institution were involved, including hedge funds, private equity firms, insurance companies, and nonprofits.

New Business Models – and Transparency

The 2008 global financial crisis of course had a negative impact on the alternative investments industry.

New business models have arisen to supply demand across the spectrum of investors, including those investors eligible for and interested in alternatives. Publicly traded limited partners are one important example.

Who will win the robo advisor IPO race? (Financial-Planning), Rated: AAA

It’s been a decade since the launch of the industry’s leading independent digital advice platforms — Betterment, Wealthfront and Personal Capital.

The question that now remains for all three: who will cross the IPO finish line first?

In terms of assets, the trio has kept their positions in the market respectively, with Betterment leading all independents with over $10 billion in AUM, followed by Wealthfront’s $7.4 billion and Personal Capital’s $4.9 billion.

Collectively, the three count just over 420,000 clients and over 548,000 accounts, according to SEC filings and company statements.

Personal Capital, which always tailored its services for HNW clients before lowering its account minimums (and then raising them up again) claims its average client account size is roughly $380,000; users with more than $1 million in investable assets, the company says, comprise about 40% of its AUM.

Source: Financial-Planning.com

Online Lenders Featured in the Inc. 5000 (Lend Academy), Rated: A

Every year Inc. pulls together a list of the top 5000 fastest growing private companies in the United States. This year there were around 250 companies that made it in the financial services category and there are several familiar names on the list.

Other lenders readers may recognize are Lighter Capital (634), FastPay (1653), National Funding (2030), and ZestFinance (2202).

How Debit Activity Can Benefit Lenders in a Cashless Society (Clarity Services), Rated: A

With nearly half the American population carrying a subprime credit score, rent-to-own companies, online installment, storefronts and others are embracing new tools to intelligently navigate a market that has been largely overlooked.

  • Cash is only 14 percent of the share of transactions by value of payments (The Federal Reserve System Cash Product Office).
  • While the average American spends roughly $100 per day – not counting the purchase of a home, motor vehicle or normal household bills (Gallop), half of us are walking around with less than $20 cash (Bankrate.com).
  • If given the choice between a cashless and cash-only shop, most consumers in the wealthiest countries prefer the cashless option (ING Group/eZonomics).
  • Nearly 40 percent of Americans said that they would be happy to go completely without cash. (ING Group/eZonomics).

The top 7 startups from Y Combinator S’17 Demo Day 2 (TechCrunch), Rated: A

Standard Cognition is using machine vision to build the checkout of the future. Called autonomous checkout, the technology will allow shoppers to grab what they want and walk out of a store without having to go to a cashier. Standard Cognition believes it tech will enable those companies to save money and reduce theft.

Dharma Labs is building what it calls the first “protocol for debt on blockchains.” Citing the popularity of ICOs, the startup believes there’s a “proven demand for cryptoassets that look and act much like equity.” So Dharma has built a mechanism for decentralized peer-to-peer lending. “Anyone in the world can borrow and anyone in the world can lend.”

Emailage Raises $ 10m in Growth Equity Funding (Finsmes), Rated: A

Emailage, a Chandler, AZ-based provider of global fraud prevention and identity verification using email address scoring, raised $10m in growth equity funding.

The round was led by Anthos Capital, with participation from Radian Capital, Wipro Ventures, Mucker Capital and Tallwave Capital.

The company intends to use the funds to expand existing partnerships, further advance its email address-based predictive scoring system, and accelerate growth in North America, EMEA, LATAM and other key markets.

How to Expand Your Business Online by Offering More Products or Services (Kabbage), Rated: A

Hopefully, increased revenues will help ease cash flow problems and in the end, improve profits. Other advantages of growing business may include the chance to bring in more qualified employees, acquiring more customers and improving credit scores.

Expand service areas

Companies that provide services to homes or other businesses may find that their hometown or neighborhood has a limited customer base.

Expanding to nearby locations is one of the most common ways that local businesses grow into regional businesses. This also allows the company to add some more geographic areas to a business website, directories, and social pages to show up in more local searches.

Expand services

Most small business owners have to work to manage cash flow, and this task is much tougher when revenues are only high for a few months but operational costs last all year.

These are some ways to expand services both offline and online:

  • One good way to promote this kind of service online could be through holding webinars with tax tips for small businesses or even individuals. Some tax preparers might also produce books or videos for sale to help startups and small businesses manage tax planning better.
  • Some of these plucky entrepreneurs have learned to keep business flowing by offering holiday specials for getaways. Others have opened their facilities up to host seminars or workshops for organizations.
  • He kept his local business website to attract repair customers, but he also added an online store to sell products to the DIY crowd all over the country. He promoted this online store by creating some how-to videos.

This credit card alternative could be bad for your wallet (WSBTV.com), Rated: B

The problem is that these instant loans encourage impulse spending — and it doesn’t have to be a pricey vacation! Affirm will spread payments over a period of 12 months for loans of $100 or more.

To put that in perspective, you could easily pay more than $15 in interest on just a $100 loan!

LENDINGCLUB INVESTOR REVIEW: THE BEST PEER TO PEER LENDING SOLUTION (The College Investor), Rated: B

Over the last 8 years, 150,000 investors have lent over $26 Billion in personal loans through the peer to peer LendingClub platfrom. On average, investors in the top grade loans earned 5-7% annualized with strong cash flow.

As an added bonus, LendingClub allows you to invest as little as $25 per note. That means it’s easy to spread your risk across dozens or even hundreds of loans.

First, you need to meet some strict investor requirements.

  •  Income requirements: Must earn $70,000 annually ($85,000 in California)
  • Net Worth Requirements: Must have a net worth (exclusive of your home value) of $70,000 ($85,000 in California). People with a $250,000 net worth do not have to abide by the income requirements ($200,000 in California).
  •  Kentucky residents must be accredited investors (earn $200,000 annually or have a net worth of $1 million)
  •  Residents of Alaska, New Mexico, North Carolina, Ohio, Pennsylvania cannot invest in LendingClub
  •  No more than 10% of your net worth can be investing in lending club notes
  •  $1,000 minimum investment

LendingClub charges $100 per year for their self directed IRA accounts, but they waive that if you maintain $5,000 of investments in your first year or $10,000 in subsequent years.

Once you select your loans, LendingClub will help you evaluate the risk on your portfolio of loans. They will even provide a projected rate of returns based off of history.

Source: The College Investor

TD Auto Monitors Fintech Startups (Auto Finance News), Rated: B

TD Auto Finance is keeping a close eye on fintech startups as it evaluates “opportunities that might exist” for auto refinance and private-party transactions, President and Chief Executive Andrew Stuart told Auto Finance News.

TD Auto is already “in discussions” with several fintech players to evaluate “where that might go,” Stuart said.

5 Things To Know Before Taking A Loan Online (ValueWalk), Rated: B

If you’ve considered taking a personal loan online here’s what you need to know:

  1. More accessible – Smaller, newer financial firms have stepped in to fill the gaps left behind by traditional banks since the crisis.
  2. Tailored products – You can tailor the specifics of the loan, such as the timeline for payback and the purpose of the loan. Businesses can use everything from inventory to invoices without the need for a personal guarantee.
  3. Pricing Variety – Whether the payments are amortized monthly or weekly. Whether the effective annual rate is as attractive as you expected.
  4. Less Regulation – Alternative lenders and online loan providers are not regulated by the FDIC the same way as traditional banks.
  5. More awareness – The lack of regulation means alternative online lenders have more flexibility to provide custom lending solutions. They can be as innovative as they want with these financial products. However, you need to be more careful when dealing with an online lender. Look into their history, get assurances from the company, and do your best to educate yourself about their business.
United Kingdom

OFF3R launches new SIPPS portal (P2P Finance News), Rated: AAA

OFF3R has launched a new channel dedicated to Self Invested Personal Pensions (SIPPs), the tax-free vehicle for pension savings.

The investment aggregator’s SIPPs portal launched on Tuesday 22 August with an initial list of three pension providers: Hargreaves Lansdown, IG, and True Potential Investor. It details the various fees and investment thresholds of each platform, as well as information on the different management styles.

Zopa reduces higher-risk lending (Bridging and Commercial), Rated: AAA

Zopa has revealed it is taking steps to attract more lower-risk customers as it continues its reduction in higher-risk lending.

Zopa has reduced the amount of lending in its higher return D-E markets, which are included in its Plus product.

The Plus product was designed for investors who were willing to accept more risk for higher returns, with rates of between 6-7%.

Zopa expects that the lower-risk approach will mean the targeted returns for new investments in the Plus product will be 4.5%.

“For example, the proportion of D and E loans in the Plus product would go from 30% until now, to 10-15% in the future.”

Peer-to-peer lending: should you worry about default rates? (Your Money), Rated: AAA

Neil Faulkner, managing director of peer-to-peer research and ratings agency 4thWay, explains that investors should pay close attention to published bad-debt figures (which cover loan write-offs as well as simple defaults) of the different platforms.

Zopa

When a loan is approved, Zopa makes an assumption about its likelihood of falling into default over the lifetime of the loan, and then revises this default expectation over the lifetime of the loan.

Source: YourMoney.com

Zopa divides up investor money between many borrowers matching the risk profile specified at the outset by the investor, to spread the risk. If a borrower misses four months of repayments, then a recovery process begins.

RateSetter

The headline rate to note is that over its lifetime, 98.31% of loans are up-to-date – in order words, around 1.7% are in some form of arrears.

Funding Circle

Funding Circle is a little different in that you are lending to businesses rather than people. Over the lifetime of the site, it says that around 2% of loans have turned bad.

Lending Works

To date, Lending Works has an actual bad debt rate of 1.1%.

Assetz Capital Update: Investors Have Earned £25 Million to Date (Crowdfund Insider), Rated: A

Assetz Capital has shared that investors in aggregate have earned gross returns of more than £25 million on their investments in approximately four years. Assetz Capital says lenders earned an average of 8% gross interest across all Assetz Capital loans since platform launch, before allowances for tax or any losses not covered by a provision fund.

Currently, Assetz Capital has about 20,000 registered and active investors. The returns since the launch of the platform were generated from over £309 million lent to UK businesses from a range of industries looking to raise funds, including SME, bridging and development sectors.

ThinCats plans staggered IFISA roll-out before end of 2017 (P2P Finance News), Rated: A

Earlier this month, ThinCats received full authorisation from the Financial Conduct Authority (FCA), which allowed the firm to apply for ISA manager status from the HMRC. While a launch date has not been officially set, Stewart Cazier, head of retail, told Peer2Peer Finance News: “I’m definitely thinking 2017. I’d be very disappointed if it didn’t happen this year.”

Innovate Finance CEO steps down (AltFi), Rated: B

After two and half years at the helm of the fintech member association, Innovate Finance, Lawrence Wintermeyer has stepped down.

Wintermeyer is leaving to pursue other opportunities, he said.

China

China issues draft rules in crackdown on illegal fundraising (Reuters), Rated: AAA

China issued draft rules targeting illegal fundraising on Thursday, as the authorities step up a campaign to crack down on risky and illicit behavior in the country’s financial sector.

The draft rules, issued by the law office of China’s State Council, call for participants engaged in illegal fundraising to cover the losses stemming from those activities.

Regulators will guide financial institutions and non-bank payment service providers on tightening up their supervision of suspicious fund flows, the draft rules said.

Financial institutions and non-bank payment service providers, if found to be negligent, will be subject to having their illegal income forfeited. They will also be subject to a fine of more than 1 time but less than five times of the illegal income, the draft rules said.

The executives responsible for the illegal activity will be removed and banned from entering the financial industry for a certain period of time and could be subject to fines of between 50,000 yuan and 500,000 yuan each ($7,507-$75,072), the rules said.

China Rapid Finance Posted a $ 13.5M Net Loss in Q2, but Very Close to Profitability (Xing Ping She), Rated: A

Recently, China Rapid Finance (NYSE:XRF) released an unaudited financial report for the second quarter of 2017. In the second quarter, the company reported a gross income of $24.5 million, up 59% from a year earlier, and their net income was $15.2 million, up 9 percent year on year. The company posted a net loss of $13.5 million in the second quarter, compared with $5.9 million in the same period last year, as the cost of including customer incentives increased.

However, the company still held the “Low and Grow” business strategy. Compared to the profitability, there are more concerned about gross income. Through analysis of the company’s financial and business data, we can find that some business data is changing and the potential for profit is increasing.

Better Buy: SINA vs. Weibo (The Motley Fool), Rated: A

Chinese internet companies SINA (NASDAQ:SINA) and Weibo(NASDAQ:WB) are closely tied to each other. SINA holds a 46% stake in Weibo, deriving 72% of its top line from the Chinese Twitter clone (as Weibo is referred to by some).

Weibo’s greater gains have made it more expensive with a trailing price-to-earnings (P/E) ratio of 132 as compared to SINA’s 30.

SINA relies on Weibo for 70% of its revenue, which means that investors can still enjoy the latter’s rapid growth via a stock with a lower valuation. Additionally, SINA’s non-Weibo business has started gaining some traction of late, with the company witnessing 8% year-over-year growth from this segment in the latest quarter.

While there is no denying that Weibo’s growth is still impressive — as the 28% year-over-year jump in its monthly active users boosted its advertising revenue by 72% last quarter — at the same time, there will be a limit to the company’s growth given its negligible presence outside China and the competition from the likes of Tencent‘s (NASDAQOTH:TCEHY) WeChat.

Fluid Wins LendIt Choice Award – Aug 2017 (FluidFi), Rated: B

Fluid, a California based FinTech & AdTech startup announces today that it received LendIt LangDi Fintech Choice Award from LendIt Conference in Shanghai, China.

European Union

Latvian P2P Lender TWINO Adds Second Russian Originator (Crowdfund Insider), Rated: AAA

Latvian peer-to-peer lending platform TWINO has reportedly added a second Russian originator to its platform since its December 2016 launch.

According to P2P Finance News, over 40% of TWINO’s investors have funded Russian loans.

Early-Stage Fintech Investment In The UK & Germany Goes To Insurtech, Banking (CB Insights), Rated: AAA

Year-to-date, European fintech companies have raised close to $2.6B across 295 deals, meaning that at the current run rate 2017 could see 500 deals and $4.5B in total funding by year end. For perspective, funding to European fintech companies is already 30% higher in 2017 YTD than the 2016 total.

 

UNITED KINGDOM

UK early-stage fintech financing has remained above 15 deals quarterly since Q2’14. Total disclosed funding has been a bit choppier: at $27M, Q4’16 was the lowest quarter since Q2’14, while the following quarter (Q1’17) saw the third-highest total funding at $81M and the largest number of deals at 33. Most recently, Q2’17 figures fell to $41M across 16 deals.

For example, Monese, which provides banking services for immigrants and expats, raised a $10M Series A in Q1’17, while Wirex, which allows for the holding of fiat currencies and cryptocurrencies in a single account on its personal banking platform, raised a $3M Series A in the same quarter.

Insurance is trending up across Europe at large, with more than 20 early-stage deals closing for approximately $50M year-to-date.

GERMANY

Funding hit its peak in 2016 as well, at $135M, well above the previous high-water mark of $46M in 2013 and more than 4X the $31M total for 2015. 2017 is on pace to surpass 2016 early-stage fintech financing figures, with 22 deals and $83M year-to-date.

Germany has also seen an increase in early-stage deals to small business banking and API-focused mobile banking platforms. Financing rounds to this group have increased steadily since 2015, which saw 5 deals close for $17M and was followed by 7 deals in 2016 (for a much smaller $6M).

Klarna (Hortonworks), Rated: A

Klarna uses Hortonworks Data Platform (HDP) and Hortonworks DataFlow (HDF) to help drive its deep data mining and AI, and to thus mitigate risk for buyers and sellers.

International

San Francisco and Berlin have new competition for the capital of ‘fintech’ (CNBC), Rated: AAA

Dubai has seen a surge of interest from fintech startups and banking assets over the last three years, according to the emirate’s financial center’s management body.

It’s fast becoming a destination for financial technology startups because of its location, private investment and innovation.

He told CNBC that the financial services industry contributes about 12 percent to Dubai’s total gross domestic product and it is expected to increase to 18 percent by 2024.

Increased appetite for fintech investment in Dubai from CNBC.

AXIS Capital Partners with Plug and Play Tech Center (BusinessWire), Rated: A

AXIS Capital Holdings Limited and its operating subsidiaries (“AXIS Capital”) (NYSE:AXS) today announced it has partnered with Plug and Play, a global digital startup innovation platform headquartered in Silicon Valley. By joining Plug and Play’s InsurTech platform, AXIS will gain access to world-class digital insurance startups and will provide mentorship and technical support, along with underwriting and actuarial expertise, to help turn their ideas into products or services.

To help address the rapid and transformative changes underway within the (re)insurance industry, AXIS will work with property and casualty, life/health and general InsurTech startups that have been accepted to Plug and Play’s InsurTech program. This 12-week program attracts applications from hundreds of startups from around the world that utilize technology, data and analytics to develop innovative new business models, products and services.

AXIS will focus on the areas of Insurance, Reinsurance, Health, IoT (Internet of Things), FinTech and Mobility, with leaders from different business areas serving as program mentors and technical advisors.

Australia

Digital advice embraced by all ages (Financial Standard), Rated: AAA

Superannuation fund member engagement via Decimal’s digital financial advice software increased 37% in the past year, latest quarterly statistics show.

Decimal’s digital insights report for the June quarter shows 2366 members in its superannuation client base decided to engage with super via the digital advice channel over a 12 month period, up from 1731 the year prior.

Total funds under advice increased to $8.4 billion, up 72% year-on-year, and Decimal Software chief executive Nick Pollock said compound growth is stimulating for the super sector.

“The insights show that 43% of all logins were by women, 28% of logins took place outside of business hours, with 31% of those logins happening between 10pm and 6am,” Pollock said.

Australian fintech launches industry census (AltFi), Rated: A

Australian fintech has launched an expanded industry census, which will seek to unpack key issues like how to expand overseas and gender diversity and help set lobbying and policy priorities.

Working on the census, consultancy firm EY, and industry group FinTech Australia, have asked Aussie fintechs to complete it by 3 September.

FinTech Australia Reveals Initial Speaker Line Up for Inaugural Fintech Fest (Crowdfund Insider), Rated: B

FinTech Australia and Next Money, along with the State Government of Victoria, a gearing up for their inaugural week long Fintech event –  Intersekt. The Fintech festival will be taking place in Melbourne, Australia from October 27 to November 3rd if you happen to be in Australia.

Confirmed speakers for Intersekt so far include:

  • Anthony Thomson, founder of the UK’s Metro and Atom Banks (and the current chairman of Atom Bank). Atom Bank is one of the leading UK Challenger banks.
  • Ron Suber, called the “godfather of Fintech” due to his globe-trotting reputation for promoting online lending and all things Fintech. Suber recently joined the leadership team at Credible, the multi-lender marketplace for student loans. Suber is also President Emeritus of Prosper Marketplace and holds a broad portfolio of Fintech investments.
  • Megan Caywood, chief platform officer for the UK’s mobile only Starling Bank, who has delivered a range of major customer experience improvements.
  • David Birch, an international thought leader in digital identity and digital money and author of “Before Babylon, Beyond Bitcoin”
  • Van Le, who is the co-founder of Xinja, which is on track to be Australia’s first independent, 100% digital bank made for mobile.
    Lucy Liu, co-founder and chief operating officer of Melbourne-based payments company Airwallex who was this year named as one of Forbes’ 30 Under 30
  • Emma Weston, CEO and co-founder of AgriDigital, which provides a blockchain-enabled, integrated commodity management solution for the global grains industry
India

Over 40% Indians act on financial advice given by spouse, RBI report shows (Zeebiz), Rated: AAA

Key Highlights:

  • Over 50% Indians think that their children will take care of them financially after retirement
  • 44% Indians do not think they will ever retire from work 
  • An average of 66% of randomly selected adult household members have a bank account.
Source: Zeebiz

The report found that the average Indian household holds 84% of its wealth in real estate and other physical goods, 11% in gold and the residual 5% in financial assets.

Source: Zeebiz

The report said that 44% Indians have not thought of retirement as “people like me cannot retire from work,” they said.

Only 13% people surveyed were actively saving for their retirement while 33% had absolutely no planning for retirement.

Only around 5% people had money invested in financial assets for their retirement planning while gold formed nearly 10% of this fund.

India’s Domestic Workers Have A New Ally In This Innovative FinTech Startup (Forbes), Rated: A

The team at SERV’D has a simple but ambitious goal: to organize India’s unorganized domestic workforce. That means bringing financial inclusion to millions of unregistered workers via a mobile contract and payment app.

The lack of written contracts also makes it difficult for low-income domestic workers to build a financial history. Without that, they struggle to save money or obtain insurance, which all but guarantees they will remain in poverty. Exclusion from formal financial services bars people from accessing health insurance, bank accounts, and can even inhibit them from finding affordable housing.

SERV’D seeks to replace the verbal work agreements made between customers and their hired help. Instead of tenuous oral contracts, the fintech startup wants employers and employees to create digital agreements on the SERV’D app. The platform also allows them to make digital payment transfers so neither party has to worry about dealing with cash.

Most importantly, the online payment trail creates traceable income records for poor, unbanked workers. With enough proof of income built up, they will eventually be able to open bank accounts and access financial products that are currently beyond reach.

Ezetap’s fresh funds are the latest VC dollars flowing to Indian fintech (PitchBook), Rated: A

Mobile payments startup Ezetap is the latest Indian fintech company to pull in new equity financing. The company has raised $16 million from investors including JS Capital Management, Social Capital and Horizons Ventures.

Fintech NBFC “Prest Loans” Forays Its Operations In Rajasthan (BusinessWorld), Rated: B

Prest Loans the new age FinTech NBFC, providing online loans to small businesses and MSME segment has expanded its operations by opening new office in Rajasthan.

Asia

LATTICE80 & FINOLAB Sign MOU on Fintech (Crowdfund Insider), Rated: AAA

LATTICE80, a Singapore based non profit Fintech hub backed by Marvelstone Group, has signed a Memorandum of Understanding (MOU) with FINOLAB in Japan to mutually boost their Fintech ecosystems and global networks. Marvelstone is a global VC group based in Singapore.

This Fintech bridge will seek to create a passporting system for Fintech’s in each country to expand into new markets.

PH startups urged: Aspire to be unicorns (Cebu Daily News), Rated: AAA

Aldo Carrascoso, founder and chief executive officer of GlycoProX Biosciences, Veem, and Jukin Media & Verego, said that focusing on becoming “unicorns” detracts the purpose of why people launch startups in the first place.

Lee argued that the first unicorns were founded in the 1990s, Google Inc. being the clear “super unicorn” of the group with a valuation of more than $100 billion. Many unicorns were also born in the 2000s, although Facebook Inc. is the decade’s only super unicorn.

Other prominent unicorns today include Uber, Airbnb, Dropbox, Spotify, Pinterest, and Lazada, to name a few.

Treading the path toward that level takes mindfulness of revenue, a good business model, addressable market, and a product-market fit, said Carrascoso.

Benjamin cited Xoom, a San Francisco-based digital money transfer or remittance provider, which traces its foundations to serving clients between the Philippines and the US.

Since then the company has expanded to India and Mexico, among others, and was bought by PayPal for $890 million. Today, they do $9.1 billion in money transmissions and are operating in 18 countries with a demand for money remittance services.

The search for a unicorn is on (Sunstar), Rated: A

THE Philippines may have its own “tech unicorns” or technology businesses valued at $1 billion in the future. But experts says more work and collaboration is needed to achieve this dream.

To date, no Philippine tech startup has managed to meet the goal of being a billion-dollar company.

Globally, the US and China lead in numbers, having produced the most number of unicorns like Facebook, Uber, Airbnb as well as Xiaomi and Alibaba. Meanwhile, Malaysia in Southeast Asia has produced two unicorns in Grab and the Lazada Group.

First, he said Philippine startups need to know how to be fundable. Instead of aiming to be a unicorn, he advised local startups to become a “cockroach” instead, one that characterizes strong survival skills, or a rhino, “big and realistic.”

Getting payments to pay off (The Edge Markets), Rated: A

“A key advantage of e-wallets is the low cost. You can make payments and transfer money at much cheaper rates than in conventional payment systems,” explains Gunther Zhen, the founder and CEO of iPayLinks Financial Information Service (Shanghai) Co Ltd.

For China, this is certainly the case. While incumbent payment systems that rely on Visa, Mastercard and UnionPay charge merchants an estimated 2.5% to 3% MDR (merchant discount rate), new rivals like Alipay charge between 0.7% and 1.2%.

In Malaysia, however, the landscape could be different as the current MDRs are already quite low. Bank Negara Malaysia’s Payment Card Reform Framework has slashed the MDR on debit and credit cards since July 2015 when it took effect.

Today, domestic debit cards have an MDR of only 0.56% while for international debit cards, it is 0.96%. Credit cards are still relatively expensive with an MDR of 1.35%, but that is expected to drop drastically by 2021 when Bank Negara will cap interchange fees (the largest component of MDR) at 0.48% — less than half the 1.1% ceiling imposed today.

Just look at Touch ’n Go Sdn Bhd, which booked RM15.3 million of interest income in 2015 on RM429.3 million worth of deposits in card balances. And this is merely from the relatively small balance in each card.

Alipay creation, Yu’E Bao, is one of China’s most popular internet-based funds. It had amassed RMB1.43 trillion as at end-June. By comparison, Bank of China, one of the four major commercial banks in the country, had total deposits of RMB1.6 trillion as at end-2016.

Pundi-Pundi Raises $ 4M in Pre-A Funding (Finsmes), Rated: A

Pundi-Pundi, a Jakarta, Indonesia-based mobile payments and micro-loan startup aiming to create a cashless environment in South East Asia, closed a $4M pre-A round of funding.

Africa

UCT to offer fintech-focused degree from 2018 (BusinessDay), Rated: AAA

The University of Cape Town (UCT) has become one of the first tertiary institutions in Africa to offer a degree specifically designed to equip students with the critical skills and knowledge to embrace the technological revolution in the financial services sector.

One of its key focus areas will be blockchain technology, or the distributed ledger system, that has given rise to new crypto-currencies such as bitcoin and ether.

The crypto-currency market is reportedly now worth more than $50bn and the use of virtual currencies is gaining traction in SA.

UCT has sought to tackle this problem by offering a new master’s degree in data science with a specialisation in financial technology, said Georg, who is also the course convener. The programme is due to commence in 2018.

Authors:

George Popescu
Allen Taylor

Friday July 7 2017, Daily News Digest

mobile banking

News Comments Today’s main news: Orchard Platform, Experian partner on big data. Marlette closes $369 ABS transaction. OCC seeks to make banks fintech enforcers. MarketInvoice Q2 results. Dashu Finance raises $117M. BNI Europa enters Portuguese market with Puzzle. TWINO expands into central Asia. Today’s main analysis: The state of consumers and technology (a must-read report). International P2P volumes. Today’s thought-provoking articles: High-tech, low-effort loans […]

mobile banking

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

Orchard Platform, Experian collaborate on big data challenges (Cision), Rated: AAA

Experian® and Orchard Platform, the provider of data, technology and software to the online lending industry, have joined together to announce a strategic collaboration that will give institutional investors access to Experian’s depersonalized consumer credit data. Orchard’s institutional clients can use depersonalized credit data for ongoing monitoring of borrower creditworthiness for loans in existing portfolios. Experian also will provide access to anonymized historical data sets for enhanced credit modeling, analytics and reporting.

Delivering greater transparency, high-quality data and analytical tools to the market is central to the mission of both companies. Orchard’s institutional clients should benefit from the use of Experian data to not only make more informed investment decisions through refined credit modeling but also through the ability to manage risks more effectively with more current loan data. Experian has been harnessing the power of data for many years to help consumers, financial institutions and governmental organizations make more informed and effective decisions. Raw data without the right level of interpretation is nothing more than untapped potential.

Marlette Funding Closes $ 369 Million Securitization Transaction (BusinessWire), Rated: AAA

Marlette Funding, LLC, a leading provider of online consumer lending platforms and services, announced it has closed its third securitization from its proprietary “MFT” shelf. Approximately $369 million of Best Egg unsecured personal loan collateral was financed via three classes of Notes and one class of Certificates with certain loan sellers retaining risk on a portion of the Certificates.

The transaction was significantly oversubscribed and successfully priced well inside the two previous Marlette sponsored offerings. In this transaction ratings for each of the offered Notes attained one higher category to AA (sf), A (sf) and BBB (sf), respectively, by Kroll Bond Rating Agency (KBRA). Underwriting the transaction were Goldman Sachs, who served as the structuring agent, Deutsche Bank and Citi.

This transaction, in similar vein to MFT 2017-1, involved the sale of loans by Marlette and four other whole loan buyers who accessed the securitization markets via the MFT shelf.

The State Of Consumers And Technology: Benchmark 2017, US (Bank Innovation), Rated: AAA

The US market is fueled by empowered customers, who experiment with and rely on technology. In 2017, for example, 14% of US online adults use a fitness tracker, 8% use a smart speaker with a personal assistant, and 7% use Apple Pay.1 Forrester’s Empowered Customer Segmentation shows that about a quarter of US online adults are Progressive Pioneers, the most empowered consumers who lead the demand for product and experience innovation. Smartphone and tablet usage is now common among mainstream US consumers: Three-quarters use a smartphone, and half use a tablet.

Get the full report here.

The high-tech, low-effort loans winning over online shoppers (American Banker), Rated: AAA

In a study of more than 2,000 consumers conducted by Researchscape and sponsored by Klarna North America, 47% said that when shopping online, they would like to be presented with the option of instant financing.

The customer types in very little information — in some cases, nothing more than a name and email address. No effort is required.

Behind the scenes, Klarna’s underwriting software takes in data from more than 100 sources and uses artificial intelligence to make a credit decision in less than a tenth of a second.

Jim Lofgren, Klarna’s CEO for North America, theorizes that instant loans have become popular as a reaction against widely publicized card fraud and data breaches. Essentially, people are drawn to not having to surrender a bunch of information.

“The phone is only this big and you don’t like the inconvenience of having to pull up the card and keypunch all those numbers in and verify everything every time you want to make a purchase,” Lofgren said. “Instant financing lends itself well to the smartphone environment.”

Aaron Allred, CEO of Acima Credit, a provider of instant leases at the point of sale, gives a lot of credit for the growing U.S. market in the U.S. to Affirm, a startup based here.

Lofgren calls Klarna’s credit issuing platform the “secret sauce of what we do.”

It takes into account more than 180 creditworthiness variables.

Goldman Sachs is working on an iPhone app for the masses  (Business Insider), Rated: A

Goldman Sachs, which has been expanding its offerings to retail consumers in recent years, is building an iOS app for its growing crop of digital retail banking services, according to a job listing on the company website.

Here’s the job posting (emphasis added):

We are looking for an expert iOS developer to work on a greenfield enterprise-grade project delivered on iOS platforms.  Our goal in engineering is to facilitate the creative, iterative, and data driven creation of our all digital retail bank. As a Mobile Developer you will be working closely with our marketing team and UX designers to build mobile user experiences which will be A/B tested for effectiveness and impact to our clients. The code you write will reach millions and help redefine the firm.”

BETTERMENT CEO: We ‘could become the Amazon of financial services’ (Business Insider), Rated: A

Betterment, the largest independent roboadviser in the world, with $9 billion under management and 270,000 customers, thinks it might be able to do the same in finance.

Chaparro: Incumbents have had their own robo offerings for years, and they have their big brand and infrastructure to back them up. What makes you so certain Betterment can survive up against such competition?

Stein: For the same reason why we often see those few innovators break out.

You could also ask “Why did Amazon break out and become the dominant online retailer?” — some would say dominant retailer period. And why wasn’t it Barnes and Nobles, Target, or Walmart, or anybody else? It is because Amazon has a specific focus. They didn’t have conflicts with a set of existing infrastructure and systems and people who were built around doing things the old way.

In Lending, Next-Day Payout Doesn’t Cut It (PYMNTS), Rated: A

“So, many of these lenders have been wrestling with this problem for a long time,” said Edwards. “The number one complaint they get after a loan is approved is, ‘Why do I have to wait on my money?’”

That speed factor is why some online lenders may lose market share to competition. If a borrower’s car breaks down and he needs the vehicle to get to work, an online loan that takes a week for funds to transfer to his account won’t be much help. Instead, Edwards said, those borrowers are going to go to someone who can provide cash immediately.

The emergence of push payments and instant funding perfectly addresses this need for lenders. Push payments use the same mechanism as pull payments — only in reverse, moving funds from a business to a consumer. They deploy existing rails to do this, instantly transferring funds to credit and debit cards or a PayPal account.

For Ingo Money, API technology has been critical to making it easy for lenders and other companies to deploy push payment capabilities.

What Fintech Entrepreneurs Can Learn From Big Tech Companies (Entrepreneur), Rated: A

You may have heard of a number of successful “big tech” execs leaving behind great jobs at companies like Apple and Google to develop a new passion project in fintech. The trajectory from big tech to fintech is becoming increasingly common. What makes for a successful transition and what can big tech folks take with them in their new ventures?

Mission matters.

This is a lesson I learned repeatedly at Google. What you are trying to do as a company, and often as a team within a company, matters. It’s not simply having a mission, but having a mission that galvanizes others to action.

Leverage the “tech method.”

A huge lesson I learned from my career is the benefit of building a platform that empowers an ecosystem. Think about Android, AirBnB or Amazon. If your business model is designed to benefit other participants in the ecosystem, rather than competing with them, it can have far-reaching impacts that turn an industry in your favor. If you can create a system that connects buyers, sellers, service-providers, etc., you have the ability to change how that industry functions.

Use your network.

Leverage your network in a way that also allows them to participate in your cause. The successful big tech to fintech pioneers do not view the companies they have left as something in the past, but rather an ongoing support group.

Get creative.

We do lots of things, but one amusing yet somehow successful example is taking pictures of people wearing our PeerStreet hats.

Finra Fines Have Skyrocketed for Offenders (Financial Advisor IQ), Rated: A

The industry’s self-regulator imposed 624 monetary sanctions in 2016 – a 10% drop from the 691 it doled out the year prior, according to the report. But revenues from fines grew to $173.8 million in 2016 from $80 million in 2015, according to the regulator.

Finra also ordered firms to pay back $27.9 million in restitution to investors last year, according to the report. The fines helped the regulator post net income of $57.7 million in 2016, compared to a net loss of $39.5 million the year prior, Finra says.

In addition to a boost from fines, the regulator’s portfolio returns grew $70.9 million year-on-year, according to the report.

Two major lending changes mean it’s suddenly easier to get a mortgage (CNBC), Rated: A

First, the nation’s three major credit rating agencies, EquifaxTransUnion and Experian, will drop tax liens and civil judgments from some consumers’ profiles if the information isn’t complete. Specifically, the data must include the person’s name, address, and either date of birth or Social Security number.

Of about 220 million Americans with a credit profile, approximately 7 percent have liens or civil judgments against them. With these hits to their credit removed, their scores could go up by as much as 20 points, according to a study by credit rating firm Fair Isaac Corp. (FICO).

In addition to the FICO changes, mortgage giants Fannie Mae and Freddie Mac are allowing borrowers to have higher levels of debt and still qualify for a home loan. The two are raising their debt-to-income ratio limit to 50 percent of pretax income from 45 percent.

Creating a Bridge Between Fintech and FinServ (qlik), Rated: A

With this in mind, I recently set out to create examples of utilizing the Qlik platform in the Fintech space.

Ripple distributed financial ledger:

Working with our Qlik partner (Pomerol Partners) we utilized the Restful API’s provided by Ripple to access all 8.7 million payments transacted on the Ripple platform.

Lending Club peer-to-peer lending and alternative investing:

Whether it is Fintech, Insurtech, Regtech or any other new & exciting technology, there is one certainty…the data from these systems will need to be combined with other information to get a complete picture of the customer relationship, profitability and risk profile of the business.

OCC SEEKS TO MAKE BANKS FINTECH ENFORCERS (Yodlee), Rated: A

But, even amidst serious uncertainty with regard to the future of a federal charter for certain fintech firms, the OCC continues to demonstrate that it has every intention of continuing to expand its jurisdiction over the fintech market. Earlier this week, the agency released supplementary guidance to its risk management bulletin on third-party relationships for federally regulated banks. The new guidance very broadly defines third-party relationships as “any business arrangement between the bank and another entity, by contract or otherwise.” The guidance further notes that “If a fintech company performs services or delivers products on behalf of a bank or banks, the relationship meets the definition of a third-party relationship,” and the OCC would require that the bank include that fintech firm as part of its OCC-supervised third-party risk management process.

Bank web lending can be faster and cheaper (Banking Exchange), Rated: A

The company, with four subsidiary banks in New York and Pennsylvania, continues to do a traditional community banking business. Yet, just as every local retailer is potentially competing with Amazon and Walmart.com, Tompkins and other commercial lenders face competition from the likes of Kabbage and other business-oriented online lenders that promise fast online service with minimal hassle.

A year and a half ago, the parent company began evaluating web-based services from outside vendors that could help its subsidiary banks deliver what customers desired. What they found was a service that could integrate with their existing systems and credit standards—as a pure technology play, not a substitute for the bank’s own lending.

In January the company began rolling out Lightning Loans, beginning with the Tompkins VIST affiliate.

Payday Lender Taps Wall Street For Cash As Regulations Bite (ValueWalk), Rated: A

As lenders grow, they’re turning to the ABS market for funding as a natural step of diversifying. Securitisation trades began in 2014 and are slowly gaining traction around the world. Last year, P2P Global Investments Plc and Zopa Ltd. produced Europe’s first securitization of unsecured consumer loans originated online. The $179 million transaction was backed by 27,137 lines from individuals. This deal followed Funding Circle’s first securitization of peer-to-peer loans, comprising small-business debt — another first for Europe.

And as the pace of securitization picks up for peer-to-peer, other short-term non-traditional lenders are looking to get into the market. According to the June 30 issue of the Asset-Backed Alert, payday lender DFC Global is eyeing securitization as a funding source.

At least one other payday lender, Check ‘n Go, is known to be looking at the asset-backed bond market as a funding source.

Legislative Update 160 (Experian Email), Rated: A

Highlights:

  • The CFPB estimated in its May 2015 study “Data Point: Credit Invisibles” that more than 45 million American consumers are credit invisible, meaning they either have a thin credit file that cannot be scored or no credit history at all.
  • On June 8, the US House of Representatives passed the Financial CHOICE Act on a strictly partisan vote with Republicans supporting the bill and Democrats opposing it. In addition to making broad changes to the Dodd-Frank Act, the bill would substantially transform the CFPB into an enforcement agency by repealing the Bureau’s supervision authority, abolishing the UDAAP provision
    and prohibiting the public disclosure of complaint data.
  • On June 12, the US Treasury Department released a report on the Administration’s priorities for financial regulatory reform. The report was requested as part of the President’s February Executive Order on Dodd-Frank Reform.
  • Massachusetts H.B. 157 stipulates that no person or company engaged in trade or commerce shall have a right to obtain, possess, sell, lend, distribute, disseminate or use any person’s account number without his/her prior written permission. Account number is defined to include each person’s social security number, driver’s license number, license plate number, bank account number, credit card number, account number at a retail store which sells goods or services, account number at a business which sells goods or services on-line, telephone number and all other account numbers of all kinds and varieties.

See the full legislative update here.

Public Pensions Should Weigh Pros and Cons of Alternative Investments (Plan Sponsor), Rated: A

The allocation to alternative investments more than doubled from 9% to 24% during 2005 to 2015, according to data by the Public Plans Database (PPD), which accounts for more than 95% of pension assets. Between 2010 and 2016, traditional equity returned about 14% compared to private equity at 25% minus fees.

In 2005, for example, the maximum share held in alternatives by any plan was less than 30% and half of plans held less than 10%. As of 2015, however, the maximum allocation among plans was more than 50%, and only 9% of plans held less than 10% in alternatives.

New Teeth Dental Solutions Provides Exceptional Dental Implant Dentistry (Digital Journal), Rated: A

Another unique service that New Teeth Dental Solutions offers is their financing options. Dental service is considered a compulsory service to all people, and at a patient’s convenience, the clinic provides a choice between dental loans (CareCredit, Healthcare lending) and patient financing plans (Lending Club) that allow a low monthly payment with no down payment for at least three to seven weeks.

18 States Sue Betsy DeVos for Refusing to Enforce Student-Loan Protections (New York Magazine), Rated: B

Federal law already allows borrowers to apply for loan forgiveness if they attend a school that deployed fraudulent advertising or violated state consumer-protection laws. But the process for securing such forgiveness can be cumbersome. And some schools limit their students’ capacity to win settlements in fraud cases, by forcing them to pursue justice through arbitration instead of the court system.

These defects became conspicuous during the Obama administration’s final years, as hundreds of for-profit colleges collapsed amid accusations of widespread fraud. The demise of the mega-chain Corinthian Colleges, alone, led to more than 15,000 loan discharges, totaling $247 million.

Eighteen states and the District of Columbia reject that rationale. On Thursday, 19 Democratic attorneys general, led by Massachusetts’s Maura Healey, filed a lawsuit against the Trump administration in federal court, accusing DeVos of refusing to enforce duly enacted regulations in violation of the Administrative Procedures Act. They are hoping to convince a federal judge to order the administration to implement the new rules.

Elevate to Release Second Quarter 2017 Earnings on Monday, July 31, 2017 (BusinessWire), Rated: B

Elevate Credit, Inc. today announced that it will release its second quarter 2017 financial results after the market closes on Monday, July 31, 2017.

United Kingdom

Peer-to-Peer Lender Flender Celebrates First Wave of Successfully Funded SME Loans (Crowdfund Insider), Rated: AAA

The recently launched peer-to-peer lending platform, Flender, announced on Thursday it is celebrating the successful funding of its first batch of SME loans. According to the online lender, companies that received their requested funding include one of Europe’s fastest growing lingerie retailers, a café, and coffee roasting chain, a further education provider and developers of non-toxic disinfectant technology.

MarketInvoice sees record-breaking Q2 (AltFi), Rated: AAA

The growth builds on its previous record set in Q1 2017, with the firm funded invoices worth £161.9m in Q2 2017 providing UK business with critical working capital.

June 2017 was the company’s busiest ever month funding invoices worth £64.2m. The value of invoices funded is up 57.2 per cent from £103m (Q2 2016) to £161.9m (Q2 2017), and the current cumulative value of invoices funded stands at £1.34bn.

VPC Speciality Lending fund sees income growth but NAV hit (AltFi), Rated: A

The £350m VPC Speciality Lending fund saw a fall in its net asset value [NAV] of 0.68 per cent in May after a 0.62 per cent income return but a -1.3 per cent capital loss. It’s income return was the fifth consecutive payout increase.

Bridging ‘dabblers’ expected to exit the market (Mortgage Solutions), Rated: A

Earlier this week, asset finance lender Borro announced it was leaving the bridging sector with new chief executive officer John Allbrook citing overcrowding in the market as the reason for the decision.

“However, if you are well funded and provide a first-class service there is plenty of business. I suspect the cost of funding was prohibitive for Borro which was only a small player. Potentially others will exit this market, such as the ‘dabblers’ who may excel elsewhere but have been drawn into the property market seeing the potential returns while not realising what is involved and how competitive it is.”

Some of the UK’s hottest fintech firms went down, including Monzo and Revolut (Business Insider), Rated: A

A number of UK fintech startups encountered technical issues on Thursday, warning customers that their payments may not go through.

App-only banks and firms including Monzo, Revolut, Loot, Starling Bank, and Curve all ran into problems due to a supplier that provides some of their underlying technology.

How fintech can beat the banks and offer you competitive savings rates (Startups.co.uk), Rated: B

Rather than the modest 0.1% or 0.5% offered by most banks, the alternative saving and investment sectors have seen significant growth, offering rates of up to 15% per annum.

Peer-to-peer loans

This is currently one of the most popular ways to obtain a higher interest rate, with the peer-to-peer (P2P) lending industry estimated to reach £7bn in 2017.

Equity crowdfunding

This allows you to pitch to purchase a stake in a small business or start-up. Usually through a platform like Crowdcube, the business states how much of a stake they are willing to give up based on their valuation e.g. 7% or 15%.

Product Savings Rate Per £1,000 per annum Source
Peer to peer loans 3.3% to 9.9% £1,033 Zopa
Innovative Finance 8% £1,080 Innovative Finance ISA
Property investing 3.5% £1,035 Landbay
Business loans 10% to 15% £1,150 Rebuilding Society
Guarantor loans 10% £1,100 Guarantor My Loan
Equity Crowdfunding 1% to 20% Depends Crowdcube
China

PAG, Primavera Lead $ 117M Round In Online Unsecured Loan Lender Dashu Finance (China Money Network), Rated: AAA

Asian alternative investment management firm PAG and China-focused private equity firm Primavera Capital Group have led a RMB800 million (US$117 million) series C round in Dashu Finance, a Shenzhen-based online lender of unsecured loans to small and micro enterprises that traditionally could not secure funding from banks.

Dashu specializes in credit analysis based on big data, a method traditionally applied only to credit card loans and micro loans. It has issued over RMB200 billion in accumulated unsecured loans to individuals over the past several years, it said in an announcement.

In addition, Dashu offers its credit analysis tools to traditional financial institutions such as banks. To date, it has helped commercial banks issue micro loans worth roughly RMB10 billion. The cumulative non-performing loan ratio of these loans is around 2.3%, it says.

P2P firm Jusheng gets new funding (Shanghai Daily), Rated: A

ONLINE finance firm Jusheng Assets announced yesterday in Shanghai to finish a new round of finance, which made its registered capital hit 300 million yuan (US$43.5 million) and triple the previous level.

The new investor Zhejiang Fengzhou has core business in tourism, hotel and construction materials, which will help the platform find projects related to consumption upgrade as the national strategy, said Yang Dengpeng, chairman of Jusheng.

European Union

Challenger Bank BNI Europa Announces “Puzzle”, an Online Lender to Streamline Consumer Credit (Crowdfund Insider), Rated: AAA

Announced today, “Puzzle“, as it has been named, is the first totally digital and real time credit application in the Portuguese market.

“Puzzle” offers credit of up to three thousand euros with different payment maturities and is intended to be a quick response to small credit needs.

Accel leads Series B round for PayFit (PE Hub), Rated: A

PayFit, which simplifies payroll management and core HR processes for SMBs, announces that it has closed a €14 million Series B investment led by global venture capital firm Accel, with participation from Xavier Niel and Otium Venture.

Founded just one year ago, the startup has grown to have more than 600 clients and a team of more than 40 employees. This round will enable PayFit to continue to expand its suite of digital HR processes, kickstart its international expansion, with an initial focus on Europe, and double its workforce by 2018.

PayFit’s ambition: become the go-to solution to manage core HR and payroll processes for SMBs in Europe
PayFit drastically simplifies payroll management, which can be complex, expensive and time consuming for businesses of all sizes, particularly SMBs in countries with complicated labor laws. PayFit’s Software-as-a-Service solution is fast, intelligent, intuitive and automated. It allows employers to easily manage payroll on their own, saving time and money, and comply with local labor laws without having to be a payroll expert.

Accelerating internationalization – first step: Europe
The startup is planning to launch internationally with an initial focus on Europe. Rollout will begin with Spain, Italy, Germany and the United Kingdom. Markets with labor laws that can be as complex as those in France are a particular focus, as PayFit can bring significant core HR and payroll improvements to local businesses. In each market, PayFit will launch a fully localised version of its solution, covering all relevant regulations.

International

Why Banks And Startups Should Collaborate On Fintech (Forbes), Rated: AAA

Volume migration to pure digital players remains in the low single digits in the US, multiple challenger banks in the UK are facing funding and regulatory issues before they are even out of the gate, and many of the more successful fintech insurgents have been bought by incumbent banks just as they matured into legitimate competitors. Disruption of the banking industry hasn’t turned out to be a dramatic big bang; instead, the erosion of bank profitability by low interest rates and increased regulatory costs has triggered an industry-level response in which banks are using technology to improve efficiency and the customer experience. Instead of going extinct, the dinosaurs have been evolving.

London-based TransferWise, which allows consumers to transfer money internationally at a fraction of the traditional cost, is actually disruptive because it lowers fees by smart trade matching between buyers and sellers.

But TransferWise is an exception. Most fintechs have struggled to create sustained competitive differentiation.

This doesn’t mean that banks can be complacent. The asteroid strike on the banking industry is still possible, but is far more likely to come from existing tech giants than small startups. Amazon is now lending a billion dollars a year to merchants on its platform, a drop in the ocean for the largest commercial banks, but a statement of intent. While it hasn’t happened yet, Accenture research suggests that the combined disruption from fintech startups and Google, Apple, Facebook and Amazon could cause full-service banks in developed markets to lose about 35% of their market share over the next five years.

International P2P Lending Volumes June 2017 (P2P-Banking), Rated: AAA

 

The unconquerable attraction of cash (ATM Marketplace), Rated: AAA

An online survey of consumers in France, Germany, Israel, the U.K. and the U.S. poll revealed that fintech does appear to be gaining traction, with Israel emerging as a leader in early-adoption, according to a press release.

Nevertheless, cash remains king in most of these countries. For instance, in Germany, 75 percent of adults still use paper currency and coins to make purchases at least once a week.

What is more, nearly 1 in 10 Israeli adults say they have used alternative financing or lending services within the last 12 months.

Source: ATM Marketplace

 

Source: ATM Marketplace
Source: ATM Marketplace
Australia

KKR bids $ 500 million for Australian mortgage lender Pepper (PE Hub), Rated: A

U.S. private equity giant KKR & Co LP moved to bolster its presence in Australia’s lucrative mortgage market on Wednesday, joining a rush of players hungry for a slice of a property boom even as the sector shows early signs of slowing.

KKR Credit Advisors LLC made a $500 million bid for non-bank lender Pepper Group Ltd at an indicative price of A$3.60 per share, a 4 percent discount to Tuesday’s close. Pepper shares sank 7.2 percent to A$3.48 on Wednesday.

India

How alternative lending startups are rewriting traditional lending habits in India (India Times), Rated: AAA

People like Desai form the key clientele for financial-technology startup MoneyTap, which has developed a lending product called Credit Line—essentially, it assigns Rs 25,000 to Rs 5 lakh to a borrower deemed eligible for a loan.

The startup has nearly 300,000 registered users in about six months of launch. Like MoneyTap, which recently raised about $9 million from Sequoia India and others, a dozen-odd startups have attracted a string of investors to back them in the past few months.

EarlySalary secured $4 million from IDG Ventures and Diwan Housing Finance, and PaySense recently raised $5.3 million from Jungle Ventures.

The lending models are diverse—to allow customers to buy online; to buy consumer durables from regular stores; providing salary advances; or helping cover unplanned requirements such as medical bills.

Yes Bank taps AI to directly offer small loans to students (India Times), Rated: A

Yes Bank has partnered with fintech startups like Redcarpetup, Anytime Loans and FRS Labs among few others to adopt innovative technology based solutions for various businesses, such as lending, anti-fraud detection and easier customer onboarding processes.

Redcarpetup will allow the bank to lend to students, which is something banks have never done before. The technology company has identified about 100 colleges in the National Capital Region and underwrites applicants on the basis of the college, the type of course, their education background and their social circle.

Anytime Loans is an automated P2P lending platform that uses artificial intelligence to read facial features and feed it into a predictive model that determines the borrower’s propensity to default. The company has disbursed Rs 68 crore over the last 30 months to 38,700 entities for personal loans, business loans and education loans. Its gross defaults are at a low 0.6 per cent.

Where is fintech headed? Seven start-ups chart their course (livemint), Rated: A

Atyati Technologies: Mobile delivery

Bengaluru-based Atyati Technologies Pvt. Ltd, is a technology platform provider for the rural banking sector in India.

The company’s long-term vision is to have more services and products—custom lending products, insurance, e-tailing, etc.—across more geographies and more points of service, besides achieving quality-of-service levels in remote areas that are on a par with those in the metros.

FinBox: Banking on apps

This fintech aims to increase the revenue of lenders by increasing the number of customers on their books by reducing the cost of acquiring and servicing the loan—which it essentially does by building software tools such as application programming interfaces (APIs) and software development kits (SDKs).

FlexiLoans: Data-driven

The goal of FlexiLoans, the fintech platform run by Mumbai-based FlexiLoans Technologies Pvt. Ltd, is to provide working capital financing to small- and medium-sized businesses in India that are currently underserved by traditional institutional channels due to lack of collateral or inadequate credit history.

FundExpert: Robo adviser

Gumption Labs Software Solutions Pvt. Ltd, which launched FundExpert’s automated investing platform in 2016, wants to make monitoring investments “super-easy, using algorithms”.

IndianMoney.com: Financial guidance

Today, IndianMoney.com boasts of being “India’s largest financial education company”, with over 200 employees, serving 80,000 financial intermediaries and 3 million consumers.

KrypC: Blockchain riders

This fintech provides blockchain technology solutions to various organizations to enable them “to utilize blockchain features such as privacy, security and trust”, among others.

Turtlemint: Insuring its future

Touted as India’s first online-offline insurance platform, Turtlemint is building a pan-India network of offline partners and, according to co-founder and CEO Dhirendra Mahyavanshi, has been “a pioneer” in the online insurance aggregation domain with offerings like ‘match score’, ‘policy recommender’, ‘renew in a snap’, etc.

Fintech is now an innovator and enabler, says KPMG India’s Neha Punater (livemint), Rated: A

“This industry is definitely a force to reckon with,” Punater added, pointing out that the global annual growth of the fintech sector at 55% is not led by volume expansion but by investment, which shows investor confidence in the space. “Compared to about 12,000 global start-ups, there are about 900 Indian fintech firms—and over 120 of them were started in 2016 alone. An investment of $2.25 billion has been infused into Indian fintechs from 2010 to 2016,” she added.

The Indian fintech market, according to her, typically mirrors global trends. “Payments-related companies have the highest market share at 25% in India and in the world. Payments, lending and wealth management are growing, while P2P (peer-to-peer) lending, blockchains and payment banks are still nascent. Many payments-related activities are still in the business-to-consumer space but we haven’t seen much happening on the business-to-business side,” she added.

According to Punater, wealth tech is the third-largest sector in the fintech space and is still relatively small.

Asia

 

TWINO expands into Central Asia with Kazakhstan loans (IBS Intelligence), Rated: AAA

TWINO, a European peer-to-peer lending platform, has announced that it has started to list short-term loans via its Kazakhstan originator.

Kazakhstan is the sixth country to appear on the peer-to-peer lender’s platform. It is also the first time a European peer-to-peer lender has expanded into Central Asia.

The Kazakh loans have a duration of one month and will offer investors a return rate of 11% per annum.

Convenience drives growth of South Korean P2P lenders (Asian Review), Rated: A

The Korea P2P Finance Association said that accumulated loans of its 56 members reached 1.2 trillion won in June, up 665.1% from a year ago when the total reached 152.6 billion won. Month-on-month, total loans rose 17.5%.

“It is very convenient. Borrowers can get short-term loans quickly while investors enjoy higher profitability,” said Kim Soo-hyun, an analyst at Shinhan Finance Investment. “They may threaten banks’ business in the long term, if they become equipped with more advanced technology infrastructure.”

Lenders focusing on real estate projects are leading the market, with the biggest lender, Tera Fintech, accounting for 147.5 billion won of total loans in June, followed by Roof Funding with accumulated loans of 114.3 billion won.

Deputy Finance Minister I of Malaysia: Disruption in Banking is The Normal (SAT PR News), Rated: B

In a room of over 200 senior level bankers, Deputy Finance Minister I, YB Dato’ Wira Othman Aziz made a call to Malaysian banks during his opening speech at the 9th BankTech Asia Conference & Exhibition, an event co-organized by Knowledge Group of Companies, to disrupt themselves before others do it for them.

Quoting recent studies from Gallup which states that more than half of Malaysian banking consumers are indifferent towards their primary banks, YB Dato’ Wira Othmanbrought attention to this point to illustrate the industry’s need for an overhaul to remain relevant.

Authors:

George Popescu
Allen Taylor

Wednesday May 17 2017, Daily News Digest

developed ex-us vs usa total market etf

News Comments Today’s main news: Earnest is looking for a buyer. SoFi gets into wealth management. DBRS assigns provisional ratings to SoFi Professional Loan Program 2017-C LLC. Prosper issues new securitization backed by George Soros. Lending Club hires PayPal exec as new president. TransferWise reaches profitability. Renren announces 2016 results, unaudited. Today’s main analysis:  Capital One forays into digital ID. Today’s […]

developed ex-us vs usa total market etf

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

Asia

South America

News Summary

United States

SoFi gets into wealth management (TechCrunch), Rated: AAA

SoFi wants to be at the center of its members’ financial lives, and believes the best way to do so is to provide new products that complement its existing portfolio of student loan, mortgage and other loans. Today the company is announcing the launch of SoFi Wealth, a product it believes will compete with Wealthfront, Betterment and other low-cost wealth management platforms.

But the company is looking to go a step further than just creating yet another roboadvisor. SoFi Wealth will offer access to non-commissioned, licensed financial advisors that members can reach by phone or by chat to answer investment questions or just help them improve their overall financial health.

Wealth management customers will get the same benefits as other members, including access to community events, career coaching and discounts on other SoFi products. Management fees will be waived for SoFi loan borrowers, but otherwise are just 0.25 percent and will be waived for the first $10,000 invested.

People interested can sign up with as little as a $500 initial investment or monthly recurring deposit of $100 for access to any of its low-cost ETFs.

Capital One forays into digital ID, aiming to leverage KYC know-how (American Banker), Rated: A

Capital One Financial is trying to turn the expense of thoroughly vetting bank customers into a moneymaker with new digital identity products.

In so doing, Capital One is one of the first in the U.S. to test if businesses will pay banks to check users’ identities, and if consumers will sign into websites through their banks the way they use social media accounts. Since banks already have to collect and verify sensitive information, to comply with know-your-customer regulations and to prevent fraud, they theoretically could leverage this work and expertise for other businesses. Consumers, in turn, would have fewer passwords and usernames to remember and would not have to give out sensitive information such as Social Security numbers quite as often. Banks in Europe and Canada have begun to offer such services.

It is a market that several U.S. banks are dipping their toes into. One of the most prominent is USAA; in the past several years it has acquired multiple digital identity firms. This year it also granted development rights to some of its patented security technologies to Persistent Systems to create digital authentication tools.

DBRS Assigns Provisional Ratings to SoFi Professional Loan Program 2017-C LLC (DBRS), Rated: AAA

DBRS, Inc. (DBRS) has today assigned provisional ratings to the following classes of Post-Graduate Loan Asset-Backed Notes (the Notes) issued by SoFi Professional Loan Program 2017-C LLC (SoFi 2017-C):

— $96,069,000 Class A-1 rated AAA (sf)
— $230,156,000 Class A-2A rated AAA (sf)
— $175,653,000 Class A-2B rated AAA (sf)
— $41,000,000 Class B rated AA (sf)
— $18,000,000 Class C rated A (sf)

RATINGS

Issuer Debt Rated Rating Action Rating Trend Notes Published Issued
SoFi Professional Loan Program 2017-C LLC Post-Graduate Loan Asset-Backed Notes, Class A-1 Provis.-New AAA (sf) May 16, 2017 US
SoFi Professional Loan Program 2017-C LLC Post-Graduate Loan Asset-Backed Notes, Class A-2A Provis.-New AAA (sf) May 16, 2017 US
SoFi Professional Loan Program 2017-C LLC Post-Graduate Loan Asset-Backed Notes, Class A-2B Provis.-New AAA (sf) May 16, 2017 US
SoFi Professional Loan Program 2017-C LLC Post-Graduate Loan Asset-Backed Notes, Class B Provis.-New AA (sf) May 16, 2017 US
SoFi Professional Loan Program 2017-C LLC Post-Graduate Loan Asset-Backed Notes, Class C Provis.-New A (sf) May 16, 2017 US

Lending Club hires Paypal global credit head as new president (Financial Times), Rated: AAA

Lending Club has hired the head of Paypal’s global credit business as its new president, amid efforts to get on the front foot after last year’s loan mis-selling scandal.

Steve Allocca, PayPal’s vice-president of global credit, will start work at Lending Club next week, the company said in a statement on Tuesday, reporting to Scott Sanborn, chief executive. He will lead Lending Club’s efforts to deliver credit to more people across an expanding range of product categories, the company said.

PayPal Credit is the successor to BillMeLater, which PayPal’s then-parent, eBay, bought in 2008. The idea was to expand the company’s financial offerings, help merchants get more business and beef up its fraud detection tools.

Before joining PayPal in 2013, Mr Allocca had various consumer-facing roles at Wells Fargo after training as a banker at First Chicago, a bank bought by Bank One and then JPMorgan Chase.

US marketplace lender Prosper issues new securitization backed by George Soros (AltFi), Rated: A

US marketplace lender Prosper is prepping a $450.5m consumer loan ABS transaction that is expected to close on May 24, 2017.

Prosper announced it had agreed a $5bn programme of securitizations backed by a consortium of investors including credit Suisse and George Soros’  Soros Fund Management LLC.

Online Lender Earnest Said to Be For Sale (Crowdfund Insider), Rated: A

According to a report by Bloomberg, Earnest is up for sale. The San Francisco based online lender is said to have an asking price of $100 million. Founded in 2013, Crunchbase reports Earnest has raised over $99 million not including an undisclosed sum in a VC round in January 2016 and $200 million of debt financing.

DBRS Confirms Ratings on Three OnDeck Asset-Backed Securities Transactions (DBRS), Rated: A

DBRS, Inc. (DBRS) has today conducted a review of the outstanding public ratings of five securities from three structured finance asset-backed securities transactions: OnDeck Asset Securitization Trust II LLC, Series 2016-1; OnDeck Account Receivables Trust 2013-1 LLC; and Prime OnDeck Receivables Trust II, LLC. Of the five ratings reviewed, all were confirmed at their current rating levels.

RATINGS

Issuer Debt Rated Rating Action Rating Trend Notes Published Issued
OnDeck Asset Securitization Trust II LLC, Series 2016-1 Series 2016-1 Asset Backed Notes, Class A Confirmed A (sf) May 16, 2017 US
OnDeck Asset Securitization Trust II LLC, Series 2016-1 Series 2016-1 Asset Backed Notes, Class B Confirmed BBB (low) (sf) May 16, 2017 US
OnDeck Account Receivables Trust 2013-1 LLC Class A Revolving Loan Note Confirmed A (low) (sf) May 16, 2017 US
OnDeck Account Receivables Trust 2013-1 LLC Class B Revolving Loan Note Confirmed BBB (low) (sf) May 16, 2017 US
Prime OnDeck Receivables Trust II, LLC Class A Loans Confirmed A (low) (sf) May 16, 2017 US


SoFi’s CEO wishes the US had less student loan debt
(TechCrunch), Rated: A

SoFi was founded on the business of helping high-earning graduates refinance their student loans. But perhaps ironically, CEO Michael Cagney thinks today’s record amount of student loan debt is a bad thing.

“When you go to a school and take a loan out, no one explains what you can afford, how much money you’re going to make when you graduate and how much you’re able to pay back,” he explained.

Meanwhile, universities aren’t incentivized to provide that education because it’s in their interest to have students matriculate, and there’s no downside to the college when a graduate is unable to pay back their loans.

Money360 Closes $ 45M in Commercial Real Estate Loans in April, Breaks Monthly Record (Marketwired), Rated: A

Money360, a commercial real estate marketplace lending platform, closed more than $45 million in loans in April, the company announced today. This brings the company’s total production to over $250 million in closed loans, with an expected $500 million in transactions by year-end. Money360’s recent loan closings span properties nationwide and provide a variety of borrowers with quick funding to purchase or refinance income-producing properties.

The more than $45 million in loan closings, all of which have loan-to-value ratios of not more than 75 percent, include:

  • A $9.70 million bridge loan for a two-story, 198-room hotel property in Fayetteville, North Carolina. The 131,000 square foot property was built in 1983 and renovated in 2011.
  • A $7.70 million bridge loan for a multi-tenant, medical office building in San Jose, California containing 20,341 square feet of rentable space.
  • An $8.50 million bridge loan for a five-story, multi-tenant office property in Orange County, California containing 58,755 square feet of rentable space.
  • A $4.90 million bridge loan for a two-tenant, 19,107 square-foot anchored retail property in Ocean County, New Jersey.
  • A $6.00 million permanent loan for a one-story, 10-tenant retail property in Johnson County, Kansas containing 39,483 square feet of rentable space.
  • A $3.48 million permanent loan for a one-story, four-tenant retail property in Johnson County, Kansas containing 21,450 square feet of rentable space.
  • A $5.00 million permanent loan for an anchored retail center containing 202,219 square feet of rentable space, located in San Bernardino County, California.

Automation Drives Retirement Savings to New Heights (Financial Advisor IQ), Rated: A

Financial advisors may want to pay closer attention to automation in retirement savings accounts. Auto-escalation and auto-enrollment played major roles in how Fidelity retirement savings accounts reached new highs this year, Bloomberg writes.

Among the 27% of employees who raised their contribution, 50% did so in such auto-escalation accounts, Jeanne Thompson, a senior vice president at Fidelity, tells the news service. And for workers under 30, automated increases accounted for a whopping 68% of the rise in savings rates, according to Fidelity’s analysis.

SoFi CEO explains how his fintech company will make banks ‘more… (CNBC), Rated: A

CBC National Bank Ranked 3rd Highest Customer-Rated Mortgage Lender in First Quarter by LendingTree (PR Web), Rated: A

CBC National Bank, headquartered in Fernandina Beach and with branches in Fernandina Beach, Ocala and The Villages, Fla., and Beaufort and Port Royal, S.C., today announced that it has been named by LendingTree as the 3rd highest customer-rated mortgage lender in the first quarter of 2017.

Online loan marketplace LendingTree said its rankings feature top lenders in multiple loan product categories, including mortgages, personal loans, business loans, and auto loans. CBC National Bank earned the 3rd highest ranking in the mortgage category.

Can financial technology unite Republicans and Democrats? (The Hill), Rated: A

Last year, the Office of the Comptroller of the Currency (OCC) set a course for the future of financial services. Now it appears that the agency is adrift without a captain, and a storm is upon it.

The fintech charter proposal may not survive legal challenge. The OCC has said that it has authority to issue fintech charters to non-depository companies if they engage in other “core banking activities,” such as paying checks or lending money. But that position is based only on the OCC’s own 2003 regulation, which the state regulators are also challenging. And, as Sens. Merkley and Brown noted, other SPNBs that do not accept deposits (bankers’ banks, credit card banks, and trust banks) are specifically authorized by Congress under the National Bank Act.

Congressional Republicans and Democrats have both recognized the importance of the issue, and Congress is the right institution to explore the implications for the burgeoning fintech industry and the federal-state banking system. And unlike the highly partisan warfare over the Dodd-Frank Act, the SPNB charter provides a rare opportunity for members of both parties to work together to fully examine the risks and benefits of providing a national bank charter to fintech companies.

Finra chairman John Brennan says DOL rule has raised standard for financial advice (Investment News), Rated: A

Finra chairman John J. Brennan said on Tuesday that even if the Labor Department’s fiduciary rule is repealed, it has elevated and put into plain language the idea of providing investment advice that’s better for clients’ returns than for financial advisers’ revenue.

The DOL regulation, which would require financial advisers to act in the best interests of their clients in retirement accounts, was supposed to be implemented on April 10. That date was pushed back to June 9 so that the agency can reassess the measure under a directive from President Donald J. Trump that could lead to its modification or repeal.

If the DOL rule meets its demise, the concept will live on at the Securities and Exchange Commission and at Finra, the broker-dealer self-regulator, Mr. Brennan said.

Finra president and CEO Robert Cook said he supports the concept of raising advice requirements for brokers.

Clayton’s SEC Likely to Roll Back Enforcement (Financial Advisor IQ), Rated: A

The SEC’s new chief is likely to focus on well-functioning capital markets and capital formation rather than enforcement, Todd Cipperman writes in the Hill.

But Clayton’s “Wall Street pedigree” and his opening statement to the Senate Banking Committee suggests that he will not spearhead enforcement to the same extent as his predecessor, Mary Jo White, Cipperman writes.

As a securities lawyer to Wall Street firms, Clayton will likely focus on broader policy goals and regulations vetted by the financial industry, in part by putting more emphasis on the Division of Investment Management and the Division of Trading and Markets rather than enforcement, according to Cipperman.

But Clayton’s reign isn’t likely to result in unregulated markets. Clayton cites as role models former SEC chairmen Arthur Levitt and William Donaldson, both of whom were tough on the industry despite being insiders, according to Cipperman. Because of that — and because regulatory change occurs slowly — advice firms should stay focused on compliance, he writes.

Real estate crowdfunding firm graduates to first apartment property (IBJ), Rated: A

A local startup that uses crowdfunding to invest in residential real estate is starting to make bigger acquisitions by progressing from rental homes to apartment complexes.

Jacob Blackett and Sterling White launched Holdfolio in October 2014 by attracting investors to collectively purchase run-down rental houses that the company could renovate with hopes of turning a profit.

Now the company has acquired its first apartment property, in the Garfield Park neighborhood on the city’s near-south side, and has another under contract in Beech Grove.

Holdfolio buys properties and bundles them into a portfolio. The residential properties are renovated, and outside investors can buy equity stakes in the properties via an online platform. They receive returns from rents paid for the properties.

The company so far has drawn about 100 investors who have forked over a minimum of $10,000 each. Holdfolio says they have reaped an 8 percent average annual return on their contributions.

The company targets properties that are considered distressed and in areas of the city that can benefit from the company’s investment. Holdfolio typically purchases the homes it targets for roughly $25,000.

Elevate Appoints Denise Russell as Head of Enterprise Risk Management (BusinessWire), Rated: B

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced the appointment of Denise Russell as Chief Risk Officer, effective immediately.

As Chief Risk Officer, Russell will oversee internal audit, regulatory compliance and enterprise risk management operations including risk identification and mitigation activities. She will work closely with the Elevate executive and legal teams to identify opportunities for enterprise risk reduction in support of the company’s strategic plan. Russell will lead a team of more than 15 compliance, audit and risk management professionals.

United Kingdom

Fintech unicorn TransferWise reaches profitability, planning ‘new financial services (TechCrunch), Rated: AAA

Six years after launch, TransferWise, the London-headquartered international money transfer startup, which was most recently valued at a reported $1.1 billion, has announced that it has finally reached profitability this calendar year and is “cash-generating”.

Breaking this down a little, the company says it’s currently seeing £8 million per month in revenue, which extrapolates to a £100 million revenue run-rate, and is growing 150 per cent year-on-year and expecting to do the same this year. It also says over £1 billion is being moved every month, saving its customers what it claims to be over £1.5 million per day in foreign exchange fees.

With that said, let me speculate on what products I think the company could quite easily move into, should it choose to do so. Friend-to-friend or P2P payments within the same country, along the lines of Paypal’s Venmo or Barclays Pingit, doesn’t seem a stretch, given that TransferWise already has much of that infrastructure already in place. It also seems odd that the company doesn’t offer its own debit card with low cost currency exchange when spending abroad, for example.

Were TransferWise to do the latter, that would see it go up against Revolut, and a ton of other much more recent fintech startups that utilise MasterCard’s low exchange rate, including all-your-cards-in-one app Curve, of which Hinrikus himself is an investor.

P2P Property Lender Lendy Tops £300 Million. (Crowdfund Insider), Rated: AAA

Peer to peer property lender Lendy has surpassed £310 million in originations with £50 million coming in last 100 days. The P2P lender states that investors and developers are responding to post-Brexit slowdown in bank lending.  Lendy adds that quick turnaround, security and low Loan to Value (LTVs) are key to their growth. Lendy says there are over 16,000 registered users on their site.

Lendy highlighted several UK property investments recently listed on their platform:

  • £7.5 million for the purchase and redevelopment of a commercial building in Marylebone, central London
  • £5.7 million for the development of a major residential building at Liverpool waterfront
  • £2.4 million for the development of a major student accommodation complex in Huddersfield

CreditEase’s Tang Joins Oxford Said’s New Global Leadership Council (PR Newswire), Rated: A

CreditEase announces today that its founder and CEO Ning Tang has been appointed to the University of Oxford’s Said Business School’s (“Oxford Said”) new Global Leadership Council. This council of senior global leaders will provide independent advice and guidance to the school.

Said Business School is a vibrant and innovative business school embedded in the historic and prestigious University of Oxford. The school offers programs and research opportunities that have global impact and help individuals and organizations find ideas and valuable network to tackle world-wide problems. As one of the fastest growing business schools in the world, the school is ranked 1st in the UK in the FT’s ranking of open enrollment programs in 2016, and 2nd globally for aims achieved in the FT ranking of MBA programs in 2017.

BondMason looks to non-P2P investments (P2P Finance News), Rated: A

PEER-TO-PEER investment manager BondMason is increasing its exposure to non-P2P lenders to broaden its offering.

The firm aims to get its clients a seven per cent return by selecting P2P loans across approved platforms on their behalf, but chief executive Stephen Findlay says he is now looking outside the industry to provide more diversification for investors.

BondMason is also working to increase awareness among financial advisers and recently partnered with professional body the Chartered Institute of Securities and Investment (CISI) to compile a report on the P2P sector.

Fintech competition heating up in money transfer space (AltFi), Rated: B

Revolut has quietly allowed users to make international money transfers in roughly 3-5 days for some time. These transfers are free for amounts of up to £5,000, with a 0.5 per cent charge applying for larger amounts.

Now there is a new Turbo option, which will see international transfers delivered in 1-2 business days, for a flat rate fee of £5 for amounts of up to £5,000, again with a 0.5 per cent fee applied for larger sums.

China

Renren Announces Unaudited Fourth Quarter and Fiscal Year 2016 Financial Results and Update on Proposed Transactions (PR Newswire), Rated: AAA

Fourth Quarter 2016 Highlights

  • Total net revenues were US$20.3 million, a 49.8% increase from the corresponding period in 2015.

    • Advertising and Internet Value-Added Services (IVAS) net revenues were US$10.8 million, a 31.4% increase from the corresponding period in 2015.
    • Financing income was US$9.5 million, a 77.8% increase from the corresponding period of 2015.
  • Gross profit was US$4.4 million.
  • Operating loss was US$16.4 million, compared to an operating loss of US$29.0 million in the corresponding period in 2015.
  • Net loss attributable to the Company was US$93.3 million, compared to a net loss of US$53.0 million in the corresponding period in 2015.
  • Adjusted net loss (1) (non-GAAP) was US$87.9 million, compared to an adjusted net loss of US$43.2 million in the corresponding period in 2015.

Fiscal Year 2016 Highlights

  • Total net revenues were US$63.4 million, a 54.1% increase from 2015.
    • Advertising and IVAS net revenues were US$34.0 million, a 4.7% increase from 2015.
    • Financing income was US$29.4 million, compared to US$8.6 million in 2015.
  • Gross profit was US$11.6 million, compared to US$4.4 million in 2015.
  • Operating loss was US$73.0 million, compared to an operating loss of US$105.3 million in 2015.
  • Net loss attributable to the Company was US$185.4 million, compared to a net loss of US$220.1 million in 2015.
  • Adjusted net loss (1) (non-GAAP) was US$161.8 million, compared to an adjusted net loss of US$193.3 million in 2015.

(1) Adjusted net loss is defined as loss excluding share-based compensation expenses and amortization of intangible assets. See “About Non-GAAP Financial Measures” below.

CDB Capital Leads $ 42M Round In Chinese Fintech Firm Wacai (China Money Network), Rated: A

China Development Bank Capital, an investment unit under China Development Bank, has led a US$42 million strategic investment in Chinese financial technology firm Wacai.

Chinese investment firms CBC Capital, New Horizon Capital, Qiming Venture Partners and Ally Bridge Group also participated in the financing round, the company announced today. Today’s investment brings the company’s total fundraising to over US$200 million cumulatively.

The company has cumulative users of 160 million and has facilitated wealth management product transactions in the range of RMB100 billion (US$14.5 billion) annually, it says.

European Union

Twino and KPMG publish European alternative lending index (Finextra), Rated: AAA

TWINO, Europe’s fastest growing peer-to-peer (P2P) lending platform, has today released the first ever Alternative Lending Index (ALI) in conjunction with KPMG.

The report compares lending environments across Europe over the period 2010- 2016.
Highlights
· Highest ranked countries for alternative lending in Europe are: Hungary, Slovenia, Latvia, Poland, Romania, Greece and Ireland
· Countries with largest potential in terms of overall lending market size and alternative lending environment are: Poland, Greece and Ireland
· In 2010-2016 total density of credit institutions per 1 million inhabitants decreased from 19 to 15
· Aggregate European credit gap has increased from close to breakeven in 2010 to 12 percentage points of GDP
· Significant differences in availability of financing for household and corporate borrowers across countries:
· UK significantly higher for corporate borrowers than for households
· Credit gap for the UK and France is negative, indicating lending demand is met with a surplus
· Germany is lending market leader – total outstanding loans reach EUR 2.5 trillion, followed by France, where outstanding loans are EUR 2.1 trillion
· Ireland top country by number of credit institutions per 1 million inhabitants, followed by Austria and Finland
Currently the countries ranked as the most favourable for the expansion of alternative lending are Hungary, Slovenia, Latvia, Poland, Romania, Greece and Ireland whilst France, Germany, Netherlands, Austria, Finland and Sweden show highly efficient lending markets and therefore the lowest ALI.

Interview with the Founders of DoFinance Janis and Viesturs Kulikovoskis (P2P-Banking), Rated: A

What are the three main advantages for investors?

  • Potential investment risks for investors are well-balanced and brought to minimum: all loans are secured with a BuyBack guarantee. If the borrower doesn’t pay back the loan, you don’t have to wait for an extra 30 days (after the investment due date) to get your funds back – your money is available right away;
  • You have access to your money at any timeif you decide to withdraw invested money before the due date, you can receive your money starting from 14 to 28 days after your request with (or without) accumulated interest, depending on your chosen investment plan and preferred withdrawal term;
  • Your money never sits still; it is always earning. Auto Invest program on DoFinance reinvests funds the moment the borrower returns the loan and the investor’s money becomes available.

According to the press release Alfa Finance Group has invested 2 million Euro in launching DoFinance. Can you please describe what the money was used for?

The money was invested in technologies to create the platform and in building our loan portfolio.

What was the greatest challenge so far in the course of launching DoFinance?

The greatest challenge was to develop a risk assessment tool that would minimize the risk of failure to repay the loan, be effective and secure. Risk assessment and management is our strength, and all our loans are secured with a BuyBack guarantee. If the borrower doesn’t pay back the loan, you don’t have to wait for an extra 30 days (after the investment due date) to get your funds back – your money is available right away.

Another challenge was becoming available also to Asian investors. DoFinance is the first European-based P2P lending platform to open customer center in Indonesia, bringing together European customer centered approach and Asian investors. We are happy to be the first ones to offer such individual approach to all our customers and give the chance to Asian investors to invest in Europe.

Is DoFinance open to international investors?

Yes, DoFinance is available to private individuals holding a bank account in EU, EEA countries as well as Asian countries which are not included in the lists of high-risk and non-cooperative jurisdictions and international sanctions (Indonesia, Singapore, Vietnam etc.).

What is your opinion on the planned upcoming regulation in Latvia for p2p lending?

Fintech industry has a potential to become Latvia’s success story which would contribute to both image and prosperity of the country, thus there must be healthy balance between industry regulation and its self-regulation. The entire financial industry and eventually the consumer will benefit from the development of FinTech as banks and FinTech companies will start cooperating when it comes down to providing financial services, customer service etc. Therefore, it is the state’s responsibility to create environment where these companies will stand and where intellectual capacity of labor will increase and taxes will be paid. At the same time, the regulation must ensure transparency and monitoring – simply because then dishonest entrepreneurs wouldn’t be able to harm investors.

International

US AND GLOBAL STOCKS REMAIN STRONG – WEEK OF MAY 16, 2017 (SoFi), Rated: AAA

U.S. stocks are strong; developed world stocks are rallying, but still uncertain; and despite some investors’ fears, emerging markets are still appealing. Here’s what’s been happening in the market over the past few weeks.

U.S. equities remain strong
United States equities are continuing to look very attractive after a positive jobs report and an impressive earnings season. The hiring report in early May was more positive than expected with 211,000 jobs added in April, bringing unemployment to a 10-year low. There was also continued wage growth, meaning that, on average, households were getting a bump in income. This increased spending power in the economy bodes well for U.S. equities (stocks).

Earnings season has also revealed impressive corporate earnings growth. While it’s relatively easy to have nowhere to go but up after negative earnings growth in the first two quarters of last year, it’s still reassuring to see higher company earnings and sales growth pushing stock prices up.

Developed world equities still uncertain despite rally
Over the past two weeks, stocks of companies in the developed world outside the U.S. are catching up after lagging behind for much of the post-U.S. election rally. This is largely because European equities were held back due to uncertainty about which way the French election would go. With Macron’s victory and a smooth election in the Netherlands back in March, developed world (excluding U.S.) equities have begun to close the gap.


In Japan, equities remain reliant on Japanese policy makers to lead the country out of its current disinflationary state, but current efforts inspire little confidence based on the failure of similar policies in the past.

Emerging markets hold potential
The cyclical recovery story in emerging markets is still holding our attention. After years of lagging behind the developed world with recessions in Brazil and Russia, we are finally seeing growth at a faster pace. Global trade is accelerating once more, and the positive growth in the U.S. and E.U. is expected to further boost emerging market economies as demand for exports increases.

There have been some recent signs of slowed growth in China. This is mostly due to the fact that China recently raised interest rates in order to curb property price inflation.

Backed by Chinese gov, Silk Ventures is a new $ 500M fund to invest in European and U.S. ‘scale-ups’ (TechCrunch), Rated: A

European and U.S.-based tech ‘scale-ups’ with Asia ambitions, rejoice. Outing today is a new $500 million VC fund from Silk Ventures, and backed in part by the Chinese government.

It plans to invest across all stages from Series-A upwards, and says that, although it will remain open to tech startups from any sector, a key focus will be “deep tech and science, industry 4.0 technologies, such as Internet of Things and robotics, fintech and medtech companies”. I’m told that the first investments from the fund will be announced in July.

Headquartered in London but with offices in Menlo Park, Beijing and Shenzhen, too, Silk Ventures took its tentative first steps as what it describes as a “digital accelerator,” consisting of an online platform connecting startups to corporates, thus facilitating links to Asia.

Meanwhile, the new $500 million fund is backed 50 per cent by the Chinese state-owned Assets Supervision and Administration Commission (SASAC) Shenzhen, who is acting as both an LP and Strategic Partner.

Is Fintech a Disruptor or an Enabler for the Big Banks? (Finance Magnates), Rated: A

Ever ubiquitous, in 2016 the term ‘fintech’ appeared in the global print media 90,000 times and multiple times that in social media. In a study conducted by Citigroup in 2015, they found that fintech investments topped $19 billion, which represents a tenfold increase from 2010.

The argument towards fintech being perceived as a disruptor is largely due to the fact that fintech start-ups have the freedom to be a lot more nimble. They are not burdened down with legacy technology systems and restrictive regulations.

For example mobile-based banks have emerged in the past year, such as Monzo, Starling, Tandem and Atom, all of which offer accounts that allow customers to manage their money and lifestyle.

Yet, there are many who are of the contrasting opinion that fintech developments are set to be an enabler for established financial service companies. In possession of enormous capital, they are in a position to invest in these technologies and take a more innovative approach towards attracting new customers, cut costs and boost profits.

The emergence of fintech has motivated banks to consider their pain points, in ways which may be solved through technological innovation.

Additionally, banks can look to fintech as a means to enable their revenue growth with higher margin and through less capital-intensive programs, such as insurance or wealth management. By incorporating fintech applications such as robo-advisers and automation into their operational model, they then have the means to scale their business more rapidly to provide services to clients that beforehand were not profitable or were too taxing on their customer service systems.

Australia/New Zealand

Small Business Lender OnDeck Launches #turnthatNOaround Campaign (Bandt.com.au), Rated: AAA

The campaign, which is already running on radio in Sydney, Melbourne and Brisbane, is scheduled to run across outdoor, social (LinkedIn and Facebook) and digital media to encapsulate an integrated multi-channel outreach.

With the #turnthatNOaround campaign, OnDeck aims to reach small business owners who have experienced a “no” from their banks, giving them an opportunity to secure a loan that is much faster than the banks – taking just one business day.

Australian expert’s robo advice warning (NZ Herald), Rated: A

The founder of an Australia’s robo-advice business says a law change may not be enough to allow such companies to operate in New Zealand.

Under the current law only “natural persons” may give financial advice in New Zealand but a change to the Financial Advisers Act is expected to make robo-advice legal here by 2019.

In New Zealand there are growing concerns about an advice gap after research by the Financial Markets Authority found most people who got professional financial advice had assets of more than $200k, leaving question marks over how people with less money, including those with savings in KiwiSaver, get advice.

Chris Brycki, who founded robo-advice business Stockspot in 2014 and now has several thousand customers, said he was keen to enter the New Zealand market but could not do so because the company could not find a suitable banking partner.

Asia

Singapore fintech firm says launches first digital platform for trade finance assets (Euro News), Rated: AAA

A Singapore central bank-backed fintech firm, CCRManager Pte Ltd, on Tuesday launched what it says is the first digital platform for the distribution of international trade financing, transactions now handled mainly by phone and email. CCRManager Pte Ltd, which received a grant from the Monetary Authority of Singapore’s Financial Sector Development Fund, is supported by 16 financial institutions, including Bank of China, DBS Bank, Standard Chartered Bank, Mitsubishi UFJ Financial Group, Spain’s BBVA and the commercial insurance arm of Swiss Re.

CCRManager charges a transaction fee on every successful deal. The Singapore-based company said its users will be able to list assets for distribution, negotiate deals, and manage supporting documentation in a secure environment. The web-based platform will enable members to manage the entire process of distributing trade finance internationally to other banks, credit insurers, and fund managers.

South America

Brazil’s Central Bank Plans FinTech Regulations for Recession Respite (Cryptocoins News), Rated: AAA

The Central Bank of Brazil is eyeing regulations for the FinTech sector this year to help industry startups and companies to enter and expand in the country currently reeling from a recession.

According to a Reuters report today, the Banco Central do Brasil (BCB) – the country’s monetary authority- is looking at implementing these regulations within this year to fuel the growth of FinTech firms and services in Latin America’s biggest economy.

As of March 2017, Brazil’s economy was 8% smaller than it was in December 2014.

While details are scarce, some of the new regulations will help financial technology companies and startups in areas including:

  • Financing via peer-to-peer lending platforms connecting borrowers directly with individual investors
  • A wider playground, by facilitating foreign banks to enter Brazilian shores without the need for a presidential decree
  • Diversification, by helping financial technology companies team up with banks to offer loans or ‘securitized credit from institutional investors.’

Authors:

George Popescu
Allen Taylor

Thursday February 23 2017, Daily News Digest

robo-advice

News Comments Today’s main news: RealtyMogul unveils new retirement investment options for MogulREIT. Funding Circle tops 2B GBP in lending. Today’s main analysis: Jury still out on robo-advice. Today’s thought-provoking articles: Twino enters Spanish market. China Lufax shifting its business focus. Savills bullish on global REITs. United States RealtyMogul adds retirement investment options to MogulREIT & new assets. […]

robo-advice

News Comments

United States

United Kingdom

European Union

Australia

China

Asia

Africa

United States

RealtyMogul.com Unveils New Retirement Investment Options for MogulREIT I & Adds Two New Assets (Crowdfund Insider), Rated: AAA

Real estate crowdfunding platform RealtyMogul.com announced on Wednesday it will now be accepting retirement funds from self-directed IRAs as a new investment option for its MogulREIT I trust. The funding portal reported that the new investment option would allow investors to gain exposure to commercial real estate and enjoy potential benefits of passive income in their retirement accounts.

In addition to the investment options, RealtyMogul.com also announced a new feature that allows investors in MogulREIT I to automatically reinvest their dividends, thereby offering the possibility of compounded returns, making the REIT even more investor friendly. The platform noted the addition of two new properties to its REIT including Parkway Plaza, a $3.4 million mezzanine debt investment related to the acquisition of a office complex with national tenancy located in San Antonio, Texas.

Everything You Need to Know About Real Estate Crowdfunding (Dough Roller), Rated: A

In a sense, crowdfunding is doing for real estate investing what Lending Club and Prosper are doing for personal loans. They are acting as online peer-to-peer marketplaces that match investors with borrowers, often under better financial terms than what they can get through traditional lending institutions, such as banks.

The platforms are primarily used by individual investors. However, they are growing more popular with institutional investors, such as banks and insurance companies.

Real estate crowdfunding offers a  number of great benefits. But real estate crowdfunding is not without its drawbacks either. Some of those include:

  • Capital calls. Due to the complexity of real estate projects, an investment may require more capital than originally anticipated.
  • You must typically be an accredited investor.
  • Investments aren’t liquid. Real estate investments tend to be long-term in nature, and are not traded on national exchanges. Once you commit money to an investment, you will usually be required to remain invested until it matures.
  • Your investment isn’t guaranteed. Though you can make higher investment earnings, you can also lose your initial investment.

RealtyShares is an online real estate investment platform that focuses its business on smaller projects. These include things like single-family house fix-and-flips, rather than large projects, such as retail shopping centers or apartment complexes.

RealtyMogul is an online real estate capital marketplace. The platform was launched in 2013 and now has more than 100,000 investors holding more than $250 million in real estate, and has paid out $55 million to investors.

PeerStreet is open to accredited investors who can invest in high-quality private real estate loans. Those loans are typically secured by first liens on real estate.

6 Ways to Make (Legit) Money While You Sleep (PalmBeachPost), Rated: B

Also known as “marketplace lending,” peer-to-peer lending is the practice of individuals loaning money to others in place of a bank or other financial institution. In recent years, platforms like Prosper and Lending Club have made these crowdfunded loans more widely available to borrowers and opened the possibilities for investors.

“New, technology-driven intermediaries have been coming in and replacing banks to make small loans to businesses or individuals, and they offer many comparative advantages,” Brown says.

Remember, though, that while investing through a peer-to-peer marketplace can pay off, there are still risks involved and borrowers may default on their debts. One way to protect yourself, Brown says, is by requiring that borrowers’ credit quality is above a certain level, depending on your appetite for risk. You can also reduce risk by diversifying your investment across many different loans.

How Xero + Kabbage power a bright idea (Xero), Rated: B

By combining Xero’s business insights with Kabbage’s flexible access to funding, Adam and Jamie can effectively understand and manage their cash flow needs to avoid dipping into their profits as they grow.

United Kingdom

Funding Circle Has Topped £2 Billion in Lending (Crowdfund Insider), Rated: AAA

SME lender Funding Circle has reportedly topped £2 billion in lending. The SME marketplace lender is closing in on UK’s largest online lender Zopa that announced in January it had surpassed the £2 billion mark. Of course Funding Circle is an international operation with lending occurring in the US and elsewhere in continental Europe. So far, Zopa has satisfied itself with just the UK market.

The jury is still out on robo-advice (Pensions expert), Rated: AAA

For those unable to afford the cost of face-to-face financial advice, robo-advice, which provides algorithm-based digital financial advice with minimal human intervention, offers a lower-cost alternative, but the new technology comes with its own caveats.

Eighty-three per cent of consumers are concerned about cyber security, with 89 per cent of consumers saying it was important for them to recognise and trust the online brand, according to research conducted by Altus Consulting.

By 2020, many retirees will be asset-rich, cash-poor and “much more engaged digitally than they have been in the past”, Evans explained.

Robots cannot replace face-to-face advice

However, Evans noted that many people are not going to be able to afford this, resulting in robo-advice inevitably becoming a necessity. “Robo-advice will become the default for the mass market” and artificial intelligence “will have a large part to play in how that pans out in the next few years”, he said.

Buy to Let Club adds MTF and LendInvest to bridging panel (Financial Reporter), Rated: A

Buy to Let Club has added MTF and LendInvest to its panel and appointed an in-house bridging specialist to extend its offering to Club members.

The panel expansion has been accompanied by the appointment of a new in-house bridging specialist, Victoria Barnard, to further improve Buy to Let Club’s offering to its members.

P2P lending news midweek roundup (altfi), Rated: A

UK P2P business lending Growth is still in rude health as proven by AltFi Data’s number crunching, in the same week that Funding Circle tops £2bn mark.

In the funds world, P2P GI has continued its share buyback strategy while the SME Loan Fund may be about to see an investment management change by New York-based SQN.

European Union

Twino enters Spanish market (ArcticStartup), Rated: AAA

Peer-to-peer lender Twino has started to offer investors short-term Spanish consumer loans, offering its investors a chance to further diversify their portfolios, the Latvian startup said on Wednesday.

The Spanish short-term loans will have a maximum duration of one month and will offer investors a return rate of 8% per annum. The loans will be covered by Twino’s  buy-back guarantee, which protects investors from borrower default risk.

Australia

Savers may be turning backs on bank deposits (RNZ), Rated: A

The country’s biggest banks, ANZ, and ASB, saw deposits shrink in the September quarter.

The associate professor at the School of Economics and Finance at Massey University, David Tripe, said savers turned to other investment classes to bolster returns, including property and stocks.

The banks took notice.

They slowed lending by voluntarily tightening lending restrictions on investors following a Reserve Bank consultation paper released on 19 July, and excluded foreign income from affordability calculations for home loans.

They also boosted deposit rates.

KPMG’s John Kensington suspects the dip in bank deposit growth will be temporary.

But he thinks savings habits may be changing.

Mr Kensington added that some younger New Zealanders were turning to riskier, but potentially more lucrative, investments like peer-to-peer lending to get a foot on the increasingly unaffordable housing market.

China

Top P2P lender shifting to new business (China Economic Review), Rated: AAA

China’s Lufax, short for Shanghai Lujiazui International Financial Asset Exchange Co., is valued at $18.5 billion, far more than peers like San Francisco-based LendingClub. At the end of October, it had an estimated 13% share – the largest – of China’s $109 billion market for matching small borrowers with lenders. But the company is pivoting away, shifting into China’s booming retail-investing market with online accounts that let clients trade stocks, mutual funds and fixed-income products.

Asia

Savills bullish on global REITs in face of market uncertainty (The Asset), Rated: AAA

Investors are looking to global REITs (real estate investment trusts) as an alternative asset class in the face of market volatility and uncertainty in 2017.

Although investors can invest directly into individual REITs, by providing them with a fund that invests in a portfolio of global REITs, Savills gives them more liquidity, better distribution, and more diversification compared to if they invest directly into individual REITs.

Most REITs generally provide about 5% return annually and a steady income stream that is not subject volatility and market uncertainty.

Savills recently won two mandates to invest in Japanese real estate. These mandates, with a combined total of US$600 million, were awarded by an existing client and a new client.

Malaysian uses Harvard business know-how to crowdfund for SMEs (Free Malaysia Today), Rated: A

A Malaysian-born entrepreneur and his Indonesian business partner have started a crowd-funding company to provide financial assistance to local small and medium enterprises (SMEs).

Harvard business school graduate Kelvin Teo has embarked on an online lending platform called Funding Societies Malaysia which hopes to help Malaysian SMEs thrive and allows the average person an opportunity to become an investor.

Teo and his partner, Reynold Wijaya, whom he met at Harvard, started the company in June 2015. In less than two years, the company has arranged more than 400 loans in Singapore and Indonesia, worth a total of almost RM90 million.

Today, Teo launched the Malaysian chapter of his company, targeting 200 SMEs in 12 months, with an average of RM100,000 to RM200,000 per loan.

Africa

How these two SA startups made it onto the world’s best 100 fintech companies list (SME South Africa), Rated: AAA

Zoona and Wealth Migrate, have just been named in the 2016 Fintech100, an annual top 100 Fintech Innovators list that compiles the leading 50 established fintech companies across the globe, as well as the most intriguing 50 ‘Emerging Stars’.

Who is Zoona: Launched in 2009, Zoona is a Cape Town-based money transfer company operating primarily in Zambia and other Sub-Saharan countries.

2012: The company raises US$4 million in an international Series A round led by Omidyar Network and Quona Capital allowing the business to not only expand its planning horizon but also giving them resources to concentrate on ideas and innovations that, according to CEO Mike Quinn, resulted in a big inflection point in their growth.

2016: Having grown from a team of 2 to over 150 people with 25 nationalities across four countries, Zoona successfully raises $15-million (R200-million) in a second round of financing led by the International Finance Corporation (IFC), a member of the World Bank Group, as well as first round investors Accion, a global nonprofit and pioneer in the field of financial inclusion, and Omidyar Network, an impact investment firm started by eBay founder Pierre Omidyar.to scale our operations into new markets and develop new innovative products.

Who is Wealth Migrate: This is a global online real estate investment marketplace that was launched in 2010 and aims to give investors direct access to real estate investment opportunities in markets around the world. It is, according to research firm Massolution, the tenth-largest global real estate crowdfunding platform.

2015: Wealth Migrate raises $3.99 million (USD) in a seed round of funding from real estate, technology and other investors.

2015: With offices already in Singapore and Hong Kong, Wealth Migrate open new offices in Shanghai further expanding its reach into the lucrative Asian market, according to founder Scott Picken.

2017: The platform’s management team is hoping to use the power of crowdfunding to fill the funding gaps present in many prime real estate markets.

Authors:

George Popescu
Allen Taylor

Thursday December 1 2016, Daily News Digest

ratesetter

News Comments Today’s main news: CAN Capital replaces CEO and other execs. Croudify: LC’s secondary market. Funding Circle sets new monthly UK record. Today’s main analysis : Online credit card fraud jumps 20%. Ratesetter’s provision fund. Today’s thought-provoking articles: China emerges as world’s largest FinTech and P2P market. Online lenders get majority of Chinese C-round funding. United States CAN Capital […]

ratesetter

News Comments

United States

  • CAN Capital replaces CEO and other execs. AT: “When a company lets more than one top leader go at the same time, that’s usually an indication that something is wrong with the internal workings of the company. Judging by the comment from the company, I’d say it has to do with investor value. If collection processes impacted this turnover and the company isn’t satisfied with the performance of some of its assets, that spells unsatisfactory profits. According to Bloomberg, CAN’s biggest competitor OnDeck, has seen a decrease in value in its shares by 55%. While CAN Capital is still private, its backers–Wells Fargo Capital Finance, Morgan Stanley, Barclays, and other large banks–will definitely want to see the company’s profits go up, not down, in this critical time when big banks are investing in FinTech.”
  • Croudify startup launches as LC secondary market. AT: “Earlier this year, Prosper shut down its secondary market Foliofn because few investors were using it. This makes me wonder if there is a marketing for Lending Club loans in the secondary sector. We’ll have to wait and see.” GP:” I strongly believe that a secondary market is needed and there is a big demand. I hope the user interface and the process is simply and smooth. I also hope pricing works similarly or better as on Lending Club’s FolioFN. The other interesting part here is how Orchard is still working on theirs…”
  • Online retail credit card fraud increases 20% during holiday shopping. AT: “We’ve been hearing more and more about online credit card fraud and CNP fraud. This is a natural outflow of the rise of e-commerce, but it does need to be addressed. Online retailers need to address this security issue, as do online lenders and alt finance companies that offer consumer loans.”
  • New LC ABS to test market. GP:”This is supposed to be the 1st rated LC securitization.”
  • OnDeck creates new chief risk officer position.GP:”De facto somebody already has or should have this role in each lender. It’s perhaps just a matter of title and holding 1 person accountable.” AT: “If Nick Brown succeeds in this role, I think you’ll see more online lenders appoint risk management officers, and if they can get a handle on the growing problem of loan defaults by improving the borrower approval process, it will be good for the industry as a whole.”
  • Finstar invests in Rocket10.
  • Mara Poling enters crowd investing niche. AT: “Mara Poling’s focus is on multi-family properties, a great niche to develop.”
  • RealtyShares names Bill Lanting VP of commercial debt originations.

United Kingdom

European Union

China

India

News Summary

United States

Shakeup at CAN Capital – CEO and 2 other Execs Put on Leave of Absence (deBanked), Rated: AAA

CAN Capital has confirmed that CEO Dan DeMeo has gone on a leave of absence. The company’s chief financial officer Aman Verjee and chief risk officer Kenneth Gang have also reportedly stepped down. Parris Sanz, the company’s Chief Legal Officer, has been made acting head of the company, while Ritesh Gupta has been promoted to COO.

Some of CAN Capital’s referral partners have reported to us that the funding of new deals has been put on hold until January 2017. This could not be confirmed, however.

A statement from CAN Capital is below:
As the board and our leadership team conducted our business reviews and looked at how we can best position the firm for future growth, we self-identified that some assets were not performing as expected and that there was a need for process improvements in collections. It became clear that our business has grown and evolved faster than some of our internal processes.

Croudify Launches Platform for Lending Club Secondary Market (Lend Academy), Rated: AAA

A new company called Croudify recently announced that their secondary market platform for Lending Club was launching in beta. The company describes itself as a secondary trading platform that allows you to find the best listed notes based on analytical models that they have built.

What made Croudify’s platform possible was the creation of Lending Club’s secondary market API last year. In fact, Croudify was the company that worked closely with Lending Club as they were developing the secondary market. Abhishek stated that after beginning work on their product in 2015 they eventually compelled Lending Club to build the API which was eventually made public.

Logging into Croudify you are presented with a portfolio summary which includes a snapshot of your loan portfolios, holdings by states (pictured below) and the percentage of your loans that are performing.

Clicking on a note shares further information.

Online Retail Credit Card Fraud Jumps 20% During Holiday Shopping Weekend (Marketwired), Rated: AAA

iovation, the leading provider of device intelligence for authentication and fraud prevention, today released new data that shows card-not-present fraud — fraudulent transactions where a credit card is not physically presented to a merchant — increased significantly from Black Friday to Cyber Monday 2016 when compared to the same period in past years.

iovation research shows a 20 percent increase in online retail credit card fraud during the 2016 holiday shopping weekend when compared to the same period in 2015, and a 34 percent increase in online credit card fraud from Black Friday to Cyber Monday 2014 to 2016. In addition, iovation disclosed:

  • The percent of all online retail fraudulent transactions from Black Friday to Cyber Monday that involved credit card fraud
    • 2016: 59 percent
    • 2015: 49 percent
    • 2014: 44 percent
  • The percent of all online retail fraudulent transactions in 2014, 2015 and 2016 that involved credit card fraud
    • 2016: 59 percent
    • 2015: 42 percent
    • 2014: 50 percent
  • The percent of online retail transactions from Black Friday to Cyber Monday that were fraudulent
    • 2016: 0.38 percent
    • 2015: 1.16 percent
    • 2014: 2.34 percent
  • The percent of online retail transactions in 2014, 2015 and 2016 that were fraudulent
    • 2016: 1.13 percent
    • 2015: 2.89 percent
    • 2014: 2.53 percent

iovation attributes the rise in online credit card fraud to the recent shift from consumers using traditional credit and debit cards with magnetic strips to EMV (Europay, MasterCard, and Visa) chipped cards. While the new chip cards have proven to do a great job of stopping card-present fraud, it is now clear that fraudsters are turning online.

iovation also found that consumers conducted 55 percent of their retail online transactions from this Black Friday to Cyber Monday using mobile phones and tablets compared to 49 percent the rest of 2016. This continues an ongoing mobile retail transaction increase over the holidays and year-to-year. Last year during that same period that percentage was 47 percent compared to 44 percent the rest of the year, in 2014 that was 37 percent compared to 32 percent the rest of the year and in 2013 that was 31 percent compared to 20 percent the rest of the year.

For the holiday shopping weekend, mobile retail transactions compared to all retail online transactions were:

  • 56 percent on Black Friday, Nov. 25
  • 59 percent on Saturday, Nov. 26
  • 59 percent on Sunday, Nov. 27
  • 48 percent on Cyber Monday, Nov. 28

New Lending Club ABS to test market (GlobalCapital), Rated: A

Sources speaking with GlobalCapital on Wednesday said that the deal could potentially reflect whether investors have been put off by recent reports of several outstanding marketplace loan securitizations breaching their loss triggers earlier than expected.

OnDeck names Nick Brown to newly created position of chief risk officer (MarketWatch), Rated: A

OnDeck Capital Inc. ONDK, -0.22% said Wednesday it has named Nick Brown to the newly created role of chief risk officer. Brown comes to the company from Commonwealth Bank of Australia, where he was general manager of the group decision sciences team. Brown has a PhD in organizational behavior and statistics from Cornell University.

Finstar Announces Investment in Mobile Marketing Tech Company Rocket10 (BusinessWire), Rated: A

Finstar Financial Group, a fintech-focused international private equity group founded by Oleg Boyko, announces that it has invested USD 3 million in Rocket10, a rapidly growing mobile marketing agency. This investment forms part of Finstar’s strategy to use mobile technology to grow its fintech businesses.

As part of the venture investment, Finstar will utilise Rocket10’s mobile marketing technology across the Group’s portfolio of companies. This will offer cost efficiency and unlock new development opportunities for both companies. Finstar has also secured the right to further increase its equity stake in Rocket10.

Financial services is a key focus area for Finstar and its portfolio companies. It is estimated that the number of mobile phone users will hit 4.77 billion in 2017. So mobile is becoming increasingly important, especially in the financial services sector.

Mara Poling Enters Crowd Investing (Digital Journal), Rated: A

Both Mara Poling and FundingTree.com will be sponsoring the Crowd Invest Summit in Los Angeles, California on December 7-8, 2017. Pat Poling, Founder & CEO of Mara Poling will be speaking at CIS as a panelist. Rayaan Arif, Founder & CEO of FundingTree.com will also be moderating a panel at the Summit. Mara Poling has partnered with FundingTree.com to bring Accredited Investors to properties before opening them to the public.

Mara Poling marketing partner, FundingTree.com is a new total commercial real estate marketing solution in the crowd investing and funding marketplace. The principals have decades of experience in Marketing, Social Media, Technology and Fundraising with a strong emphasis on Commercial Real Estate.

Bill Lanting Joins RealtyShares to Expand Commercial Real Estate Debt Program (BusinessWire), Rated: B

RealtyShares, a leading online marketplace for real estate crowdfunding, today announced the hiring of Bill Lanting as Vice President of Commercial Debt Originations.

Lanting brings rich financial experience in the real estate syndication and hospitality industries to the online marketplace. A former executive with Radisson Hotels and Wyndham Hotels, he has recently been responsible for bridge loan originations, underwriting, and raising large, multi-million dollar investment funds from institutional investors for Thorofare Capital and Partners Capital. At RealtyShares, he will head the expansion of the platform’s commercial debt product.

United Kingdom

Defaults gather, and now our Ratesetter watch begins (FT Alphaville), Rated: AAA

As we’ve discussed in detail before, Ratesetter now reserves the right to take interest payments and capital away from investors and put it into the provision fund, in order to make sure there are enough funds to account for loans going bad. The upshot is that investors in Ratesetter need to pay attention to the entire book of loans, rather than their individual investments. (Whisper it softly, it’s sort of like a bank.)

So how’s the provision fund doing? Well, here’s one set of data the company shows to investors on its provision fund page, as it was on Tuesday, with the relevant numbers highlighted:

But there’s another set of data provided by Ratesetter, which tells a slightly different story. It’s on their statistics page, which provides “data on annual performance of loans and returns, updated automatically in real time.” Again, the relevant numbers are highlighted below:

The second thing to note is that it’s possible to calculate the total value of expected bad debt using the numbers on the statistics page. It’s a simple matter of applying the “actual lifetime bad debt rate to date” figures to the total amount lent, and then comparing that to the value implied by the “projected lifetime bad debt rate”. The difference is the total amount of defaults that are yet to happen.

It comes to £24.3m, according to our calculations, which is about £2m higher than the amount of current and expected money in the provision fund. However, according to a Ratesetter spokesperson, that’s not the whole story. They said “around £3m” of those losses are on loans not covered by the provision fund, which means they are held by institutional rather than retail investors.

Funding Circle tops £100m in a month (alt fi), Rated: AAA

Funding Circle, a leading marketplace lender for small businesses, has recorded a UK industry first by topping £100m in loan originations in a single month. As of yesterday, the platform was sitting on £107m in loan originations for the month.

In addition to the monthly mark, Funding Circle also notched a daily lending record yesterday, with over £9.3m disbursed.

After a temporary slowdown in volumes post-Brexit, the UK marketplace lenders hit their stride again in September, with Funding Circle, RateSetter and Zopa each posting monthly origination records. Funding Circle led the pack with what was then a UK industry-wide record at £75.2m. Funding Circle then smashed its own monthly record in October, with £95m lent.

European Union

Global Companies Enlist DirectID for Real-Time Bank Data Ahead of PSD2 (Benzinga), Rated: AAA

DirectID today announced Fleetcor, Marlette Funding and Shawbrook Bank as examples of 8 new companies using its platform for trusted online verifications and live financial data. With DirectID, these companies can reduce application fraud, enable instant customer on-boarding, and scale services internationally.

These new customers build on earlier DirectID integrations with Prosper Marketplace, Amigo Loans, Bigstone Capital, and other banking, lending, payments, insurance, property and legal businesses. Forward thinking fintech disruptors can use DirectID to unlock the power of live bank data far ahead of the expected European Union Payment Services Directive (PSD2) activation in 2018.

DirectID combines identity verification, real-time financial data, compliance checks, affordability insights and ACH payment confirmation into a single platform. This improved process automates new customer on-boarding and actively reduces risk to support growth and scalability. Businesses using DirectID reduce fraud attempts by 75%, decrease on-boarding time from days to seconds, increase back office efficiencies, and can expand product offerings to over 32 countries.

In addition, DirectID announced that U.S.-based marketplace lending accelerator LendFoundry has integrated the service to offer real-time financial data and insights, such as verification income, to its participating companies for faster and more accurate credit risk underwriting capabilities.

Comrade-to-Comrade Lending? A Marketplace Lender Opens to Russia (The Wall Street Journal), Rated: AAA

Twino, a Latvian company that facilitates peer-to-peer lending, will begin listing Russian subprime loans on its website on Thursday, a first for a European marketplace lender. Investors get scant information on the people they are lending to, but they’re offered double-digit interest payments.

Twino operates a model more akin to a payday-loan operator than a classic peer-to-peer lender. Rather than matching borrowers and lenders, Twino makes loans and then uses its website to resell them to investors. It makes money by taking a cut of the interest payments.

The cut is considerable: The Russian loans will pay around 14% annual interest to investors. The company’s portion depends on the interest charged on the loan. Meanwhile, the borrowers in Russia will pay over 100% in interest, Mr. Kazanins says. Twino says that large margin is enough for it to pledge to repurchase any defaulted loans.

Russia getting slapped with international sanctions in 2014 after annexing Crimea “was a break for us,” says Mr. Kazanins. Russian banks curtailed lending and customers were forced into the nonbank market to get loans.

TRANSFER PRICING Italian ABS hindered by NPL valuation issues (LinkedIn Pulse), Rated: A

The securitisation of non-performing loans (NPLs) has been deemed a credible solution for Italian banks seeking to offload the assets from their balance sheets. Just one deal has launched to date, however. Getting a plausible valuation for the NPL portfolio being transferred to the SPV may be one of the main obstacles.

Following a set of initiatives set out by the Italian government over the past 18 months, many Italian banks are anticipating sales of large NPL portfolios into SPVs for securitisation purposes. The Italian government has agreed to guarantee the senior NPL ABS notes under its Garanzia Cartolarizzazione Sofferenze (GACs) scheme, while the fund Atlante II will invest in mezzanine notes (SCI passim).

Several factors drive the transfer price of an NPL portfolio to an SPV: the quality of the loans, the geographical location and whether the loans are secured or unsecured. However, the lengthy Italian legal process and the availability of loan data are two additional factors that may also be weighing on the NPL valuation process.

Banking Platform Mambu Receives AWS Financial Services Competency Certification (Crowdfund Insider), Rated: B

Mambu, a software as a service (SaaS) banking platform, has received the Amazon Web Services (AWS) Financial Services Competency certification.

The AWS Financial Services Competency is focusing on the AWS Partner Network (APN) members in three categories: Risk Management, Core Systems, and Data Management. Mambu had to achieve specific requirements in order for them to be a recognized partner.

China

China Emerges As The Biggest Advanced Fintech Market In The World (China Money Network), Rated: AAA

China is the world’s largest financial technology market, with a market size greater than US$1.8 trillion in 2015.

Out of 27 Fintech unicorns globally, China’s eight Fintech unicorns have raised US$9.4 billion in funding and have a combined valuation of US$96.4 billion, according to a report released by entrepreneur Gaurav Sharma.

The four biggest Fintech unicorns in the world are Chinese: Ant Financial (US$60 billion), Lufax (US$18.5 billion), JD Finance (US$7 billion), and Qufenqi (US$5.9 billion).

Mobile payments are also at an all-time high. China has 380 million people shopping online via their phones, as well as nearly 200 million people using their phones as a wallet for in-store payments.

On the other hand, domestic incumbent banks continue to struggle with their relatively undeveloped systems. The biggest Fintech startups are in payments and lending, which account for nearly 80% of the combined value of all unicorns.

China is also the world’s biggest P2P (peer-to-peer) lender. In 2015, registered P2P lenders originated around US$60 billion consumer and US$40 billion business loans.

Lufax is the largest P2P lender, with a valuation of US$18.5 billion. There is also Jiedaibao, which is backed by JD Capital.

Around Jan 2016, there were 4,500 P2P platforms in China with 50% of them facing frauds, high delinquency, or liquidity issues.

China is also planning to develop a far-reaching social credit system by collecting information online and providing all its citizens a score.

Hyperledger Project Hits 100 Members With Addition of China’s SinoLending, Gingkoo, ZhongChao (Bitcoin Magazine), Rated: A

Hyperledger Project, an open source blockchain initiative hosted by the Linux Foundation, has hit a major milestone of 100 active members. Several new members from China have joined the project, including Dianrong (formerly SinoLending), Shanghai Gingkoo Financial Technology and ZhongChao Credit Card Industry Development Company.

Dianrong now ranks among the top three peer-to-peer lending platforms in China, according to a report by Wdzj.com and Yingcan Consulting.

Htite has hinted numerous times at his company’s interest in blockchain technology, stating earlier this month that Dianrong has been developing blockchain applications for use in online lending. He said that that the company has committed to invest between U.S. $30-40 million in development over the next two years.

More than 80% of Internet Finance Companies Received C-round Funding are Online Lending Platforms (Crowdfund Insider), Rated: A

Data from IT Juzi.com indicates there are now 30 Chinese internet finance companies having received C-round funding (25thNovember 2016).

India

Rupaiya Exchange raises $ 200,000 in funding (Business Standard), Rated: A

Rupaiya Exchange, a peer-to-peer (P2P) lending aggregator, has raised USD 200,000 (about Rs 1.36 crore) in angel funding from a group of high-net-worth individuals (HNIs) and professionals.

The company, which began its operations in November last year, has developed proprietary technology to assess users registered on its platform and perform credit checks on the borrowers.

The information is then shared with lenders which includes banks, non-financial companies (NBFCs) and individuals.

i-lend.in signs pact with Cove Ventures (India Info Online), Rated: A

Hyderabad-based i-lend.in; one of the best performing company in the nascent Peer 2 Peer (P2P) / Alternate Finance and UK-based Cove Venture, a leading Big Data solutions provider entered into a strategic agreement.

Under this strategic agreement, both firms will apply Artificial Intelligence, Deep and Machine Learning algorithms in the Indian Alternate Finance & P2P Lending industry to ensure more people in urban and rural India get access to credit at moderate interest.

The models will help improve the predictability by analyzing online, social and financial behaviour thereby enabling I-lend with significant accuracy. This predictability will help in pricing loans, opening up new segments and deliver better financial performance.

Authors:

George Popescu
Allen Taylor

Friday September 16th 2016, Daily News Digest

Friday September 16th 2016, Daily News Digest

News Comments Correspondence : On Wednesday, September 14th we wrote: “A great analysis by C2FO on the cost of capital , trends and more for SMEs. This report contradicts quite a few of the latest reports and surveys that claim the opposite ( SME optimism is on the rise, and borrowing is getting cheaper). This […]

Friday September 16th 2016, Daily News Digest

News Comments

  • Correspondence :
  • On Wednesday, September 14th we wrote: “A great analysis by C2FO on the cost of capital , trends and more for SMEs. This report contradicts quite a few of the latest reports and surveys that claim the opposite ( SME optimism is on the rise, and borrowing is getting cheaper). This survey looks more thorough but it is still hard to figure out who to believe. At least we can say that the trend is unclear.”
  • An anonymous reader comments:
  • “I really enjoy reading Lending Times – it’s a great source of information about developments in the alt fin space.  I’m writing because yesterday you published info about a survey by C2FO which states ‘An apparent higher cost of capital has caused some of these firms to look at other sources, such as peer-to-peer, or marketplace, lending that involves directly matching would-be borrowers with lenders. On average, 18 percent of respondents in each country reported using peer-to-peer lending at some point.
  • I have some comments.  First, this cannot be a representative sample of SMEs in the countries covered – I find it inconceivable that 18% of SMEs in the countries included in the survey have used P2P lending – unless there is a huge selection bias in the sample (in which case the findings should not be stated in a manner that implies they are representative of the SME population).  In Italy. for example, other sources estimate the 2015 P2P volume was less that EUR5m for both invoice factoring and lending combined.  A rare source of P2P info on the Italian market is Octopus, a £6bn asset manager, launched a P2P lender; RateSetter’s auto loan volume reaches £100m in partnership with 209 locations.
  • Today’s main analysis: An article on customer ownership in p2p lender-bank partnerships; Alt Fi’s conference take away;
  • Today’s main thought provocations: Twino’s geographical expansion; Lending Club and OnDeck’s stocks in August.

United States

United Kingdom

European Union

India

 

United States

That Marketplace Lending ‘Partner’ Just Wants Your Customers, (American Banker), Rated: AAA

In October, Regions Bank announced a deal to let small-business owners access Fundation’s online application directly from the bank’s website. In April, JPMorgan Chase partnered with OnDeck to offer loans to the bank’s existing small-business customers. And most recently, Kabbage teamed up with Scotiabank to make small-business loans in Canada and Mexico.

The deals seem simple: the marketplace lender provides the backend technology and the bank provides the brand name. However, the reality for smaller banks is that making similar partnerships could be very dire to their business models.

The first conflict involves customer acquisition and retention. According to a Forbes blog, acquiring a new small-business customer costs an alternative lender between $2,000 and $3,000. Banks that partner with alternative lenders are essentially providing them free referrals, and marketplace lenders won’t want to let these new customers go.

The second potential conflict these partnerships pose involves regulatory issues. Currently, marketplace lenders operate outside the strict regulatory system for banks. Banks, which have spent decades carefully guarding their reputations, are now entrusting their reputations to unregulated partners. Regulators are very likely to view any loan that goes through a bank in any way as being a loan from that bank, and yet, the loans will not be up to the bank’s standards.

A deal with a business that’s actively competing for some of a community bank’s key customers can never be a true partnership.

Online Lending at AltFi: A New Phase for a Growing Industry, (Crowdfund Insider), Rated: AAA

Comment: post about the AltFi conference in New York that took place on Sept 14th 2016. 

When I realized the 2016 AltFi Conference was at the posh Pierre Hotel on the corner of Central Park, it immediately gave me pause. I remembered 2007 and 2008 when certain mortgage-backed security investment conferences were held at such addresses.

Noteworthy absentees from former years were SoFi, Dealstruck, OurCrowd, Symbid, LendKey, Biz2Credit, OneVest, Realty Mogul, Assetz Capital, CommonBond, Seedrs, Crowdcube, P2BInvestor, and Zopa.

Ron Suber, of Prosper Marketplace, presented the opening keynote.

He likened marketplace lending to Boeing in 2013 when it manufactured faulty batteries for its new Dreamliner aircraft. He noted that loan volumes are increasing [again], loan values are coming back and quality securitizations are back since the second quarter of this year.

He also noted that the industry needed to focus on developing a deep liquid secondary market, securitizations with a cusip and a rating so that institutions with certain investment criteria can invest, and properly executed derivatives and synthetic market.

Today he offered a new necessary nine, essential for funds looking to invest in this asset class, many of which were tested earlier this year. They are as follows:

  • Proper loan valuation – did they value them correctly?
  • Adequate accruals for defaults – in the second quarter, many didn’t set these correctly and had to true up accruals
  • Effective loan selection – obvious
  • Account for platform performance – many struggled with losses exceeding projections and this was felt by the funds that invested in them
  • Fund fees – are these billed and set up correctly?
    Manage use and cost of leverage
  • Manage use of cash – many funds stopped purchasing new loans and experienced a cash drag
  • Purchase price of loans (premium vs. origination fee) – borrowers prepaid and many funds never realized those premiums they anticipated
  • Currency hedge – Brexit affected many funds who did not hedge against currency fluctuations

As final thoughts, he left us with four things the industry needs to get right:

  • Risk management groups – meaning the industry needs to ensure that it has appropriate safeguards when it comes to legal, compliance, data and other risks
  • Sustainability/profitability
  • Equilibrium (between borrowers and investors) – platforms need to be able to balance supply and demand
  • Trust and transparency

The third keynote of the day was Albert Periu of Funding Circle US, whose focus was on the need for diversity of funding sources for platforms. He also shared that since formation in 2010, Funding Circle has lent over $2.5 billion to over 20,000 businesses. Periu conceded that diversification of funding sources is difficult to achieve but is the only way marketplace lenders can scale. Funding Circle has used retail investors as a source of capital in the UK and EU for some time, they will soon be utilizing such investors in the US as well.

In an online audience poll 44% agree that retail investors will become a more important source of capital to 56% feel that it will become less meaningful over time.

The final event of the morning session was a debate of sorts about the importance of retail investors to the future of marketplace lending between Peter Renton of LendAcademy and David Stevenson, of AltFi. Stevenson argued that accessing retail investors brings the ire of regulators and that the herd mentality of retail investors causes them to be less permanent. Renton countered that institutional investors are less sticky and move massive amounts of money at a time causing volatility, and further, that the financial crisis was driven by institutional investors and not retail investors.

Ron Suber on Marketplace Lending: Keep Calm & Lend On (Deck), (Crowdfund Insider), Rated: A

Comment: you can find here Ron Suber’s powerpoint presentation from the article just above.

Why LendingClub Corp. and OnDeck Capital Rocketed in August, (Motley Food), Rated: A

Lending Club and OnDeck Capital have taken a beating since their respective IPOs, as investors have generally tempered their expectations for the profitability and sustainability of online marketplace lending.

In August, the company’s share prices began to recover when Lending Club reported earnings and simultaneously announced the departure of its CFO and the addition of a banking veteran to its board of directors.

Shares of OnDeck Capital typically follow Lending Club, and vice versa. In August, OnDeck Capital showed that the problems plaguing its rivals had not affected its ability to originate new loans. Notably, OnDeck’s originations grew 41% year over year compared to just 2% growth in originations at Lending Club. Unlike Lending Club, which seeks to originate loans solely to resell them to investors, OnDeck funded about 75% of its total loans from its own balance sheet capital at the end of the second quarter.

OnDeck Capital and Lending Club regained some trust with their shareholders in August, but they also need to recapture the confidence of investors who buy loans from their marketplaces.

Options Heat Up As Lending Club (LC) Rallies, (Schaeffers Research), Rated: A

LendingClub Corp (NYSE:LC) is on pace for its highest finish since CEO Renaud Laplanche resigned amid a cloud of scandal in early May. Specifically, the stock is up 7.7% at $6.20, breaking out above the $5.80-5.90 region — which capped the shares’ rally in mid-August. Options traders have been quick to chime in, with contracts crossing the tape at four times the usual intraday pace.

While puts are changing hands at a particularly impressive eight times the expected rate for this point in the day, calls still lead puts more than 2-to-1, on an absolute basis. A large chunk of today’s action has come from one trader who appears to have rolled his block of 5,000 October 6 calls up and out to the January 8 call, per data from the International Securities Exchange (ISE). By doing so, the speculator is betting LC will extend its rally beyond the $8 level over the next four months.

Taking a step back, a preference for calls over puts is nothing new for LC, though options volume has generally been light. In fact, traders on the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have purchased 5,467 calls over the last 10 sessions, compared to just 78 puts. The resulting call/put volume ratio of 70.09 sits 2 percentage points from an annual peak.

Groundfloor Doubles Lending Footprint on One Year Anniversary of Qualification Under Regulation A+, (PR Web), Rated: A

GROUNDFLOOR, the first and only real estate P2P lending marketplace open to non-accredited investors, today announced that it is clarifying certain historical results included in its September 1 press release describing the expansion of its lending business to 12 additional states just one year after GROUNDFLOOR qualified under Regulation A+.

Since achieving qualification under Regulation A+ and commencing our multi-state offering program in late August 2015 and through September 7, 2016, GROUNDFLOOR has funded 111 loans. During this period, retail securities sales were $13.6 million. GROUNDFLOOR borrowers have fully repaid 39 loans under this program. This compares with retail securities sales of $1.9 million in the preceding 12-month period (with 36 loans funded via our intrastate offerings in Georgia). The average annualized rate of return for investors since inception of our business has been over 12%. As of September 7, 2016, no loans funded under our multi-state offering program or Georgia program have lost principal value.

GROUNDFLOOR’s Regulation A+ highlights (since commencement of our multi-state offering program):

  • Number of registered borrowers up 300%
  • Number of loans funded up 175%
  • Value of loans funded up 525%
  • Number of investors up 300%
  • Amount invested per investor up 300%

GROUNDFLOOR remains open to investors in 9 states. Upon qualifying under Regulation A+ one year ago, GROUNDFLOOR expanded its lending business beyond Georgia to 10 additional states. Now, 1 year later, they have expanded their lending business to 12 additional states, for a total of 23 states. The states being added are Rhode Island, Massachusetts, New Hampshire, Michigan, Missouri, Minnesota, Colorado, Arizona, Utah, Nevada, Oregon, and Washington.

United Kingdom

Peer-to-peer lender passes £100 million milestone for auto loans, (Asset Finance International), Rated: AAA

RateSetter, which was only launched in 2010, has now delivered more than £100 million in car financing, becoming “the first peer-to-peer lending platform to lend this amount through motor partnerships”.

RateSetter motor finance is available through more than 60 affiliated dealerships, car supermarkets and brokers at 209 locations across the UK. Separately, RateSetter also provides personal loans to car buyers, with an average car purchase price of £6,700; the £100 million figure does not include this.

Car finance is a very well-established form of lending which is traditionally difficult for new companies to enter. RateSetter has done this by starting small (in 2013, its first year providing car finance, RateSetter wrote £15 million of motor loans) and by focusing on a personal loan product, rather than hire purchase.

Octopus launches P2P lending platform, (FT Adviser), Rated: AAA

Octopus Investments has created a peer-to-peer lending platform, as it looks to give investors more choice through the Innovative Finance Isa.

The fund management company, which manages over £6bn of assets, has launched Octopus Choice, which targets a return of around 5 per cent through short-term residential property loans, typically between six and 18 months.

This announcement comes just months after the firm decided to launch a new online lending product, which sought to address the scepticism and scarce uptake of P2P products among the advice community.

The platform is powered by an underwriting team that has loaned over £2bn since 2009 and which had a default rate below 0.1 per cent. The minimum monthly investment is £10 and the maximum is £2m, and interest is paid monthly. Investor capital is secured against residential property assets with an average LTV of around 60 per cent, therefore providing a 40 per cent cushion against capital loss in the event of default

European Union

Twino Hits €300 Million Milestone for Loans Issued,(Crowdfund Insider), Rated: A

TWINO Group, a European consumer lender, has announced that it has reached a new funding milestone of €300 million in issued loans. TWINO also operates a peer to peer lending platform that has funded approximately €50 million in loans.

Interestingly, TWINO points out that 8% of its investors are based in the UK. The company, which has been operating since 2009 and its P2P lending commencing in 2015, provides unsecured consumer loans for private individuals in ten countries, including Poland, Russia and Georgia. TWINO’s peer-to-peer lending platform, offers European investors the opportunity to invest in consumer loans originated by TWINO Group’s lending companies. T

WINO is unique as it is currently offering a “BuyBack Guarantee”, which protects investors from the borrower default risk, the platform says it has attracted over 4,000 investors from 30 countries. TWINO states that investors earned on average a 12.3% return by investing through the platform.

India

Faircent Names Dr. Shakti Goel as Chief of Product and Technology, (Udaipur Kiran), Rated: B

Faircent.com, India’s [assumed] largest peer to peer lending marketplace, today announced the appointment of Dr. Shakti Goel as Chief of Product and Technology. Dr. Goel’s deep domain knowledge of Financial Markets and Banking would further accelerate the growth momentum of the largest player in the P2P lending space of India.

A doctorate from MIT (Massachusetts Institute of Technology), and an IIT Delhi graduate, Dr. Goel has worked across geographies in companies like Oracle Corp, Fidelity, Raytheon, State Street Corpand HCL Info-systems in US and India. He has deep domain knowledge of Financial Markets, Banking, Retail and Healthcare.

Startups ease process of obtaining education loans, (The Times of India), Rated: A

Gyan Dhan, founded by founded by two IIT alumni -Ankit Mehra and Jainesh Sinha, operates in the higher education segment for foreign universities. The startup, partnering with SBI and Axis Bank, facilitates loan disbursal to students who do not even have a collateral. ”

Over half the close to 100 loans have been processed without collateral,” said Jainesh Sinha, co-founder. The startup takes into consideration the employability quotient of the student. Sinha added that the startup has also help reduce unnecessary paper work. “In one case, the bank had asked an applicant to furnish the i20 form (which states that you are a non-immigrant student), which wasn’t required. We approached the bank and got the loans sanctioned.

The startup has processed loans worth 21 crore, with an average ticket size of 27 lakh across the country.

Facilitating loan disbursal towards of blue-collar workers, OpenTap, a peer-to-peer lending platform, does the vetting process before it connects loan borrowers and loan givers. The P2P platform says 40% of its loans are for educational purposes — for school and college-going students.

Author:

George Popescu

Volumes: Monthly P2P, marketplace and alternative credit origination volumes

Volumes: Monthly P2P, marketplace and alternative credit origination volumes

Lending Times has started a new initiative of publishing monthly volumes of the P2P, marketplace, and alternative credit space. We believe that our volume report will be a proof of the industry’s transparency and will help promote our industry. The volume report will also help lenders stand to be more visible to potential investors and […]

Volumes: Monthly P2P, marketplace and alternative credit origination volumes

Lending Times has started a new initiative of publishing monthly volumes of the P2P, marketplace, and alternative credit space.

We believe that our volume report will be a proof of the industry’s transparency and will help promote our industry. The volume report will also help lenders stand to be more visible to potential investors and lending capital sources.

An excel file with the entire historic volume data is available for download here.

Firm Currency Country July 2016 August 2016
Arboribus EUR Spain                  535,690
Capital Match SGD Singapore               1,910,700               1,786,400
CreditGate24 USD Switzerland, Rüschlikon                  870,000
Crowdhouse USD Zurich, Switzerland               3,500,000
CrowdProperty GBP London, UK                  210,000
Dianrong.com RMB Shanghai, China         1,300,000,000         1,370,000,000
Fellow Finance EUR Helsinki, Finland               3,577,776               5,054,475
FinBee USD Vilnius, Lithuania                  320,640
Finexkap EUR Paris, France               3,067,736
Funding Societies USD Singapore                  200,000
GyanDhan USD Delhi, India               1,300,000               1,500,000
Investly EUR Estonia                  346,813                  347,047
Investly GBP UK, London                    29,668                    25,433
Lendahand EUR Netherlands, Rotterdam                  597,300                  584,000
Lendino DKK Danemark             33,089,000
Lendix EUR France               3,733,568               2,056,920
LoanZen.in USD India                    50,000                    99,000
Mintos EUR Riga, Latvia               7,142,272               9,283,736
Modalku USD Indonesia                  120,000
Money Thing GBP UK, London               3,030,416               3,545,418
MytripleA EUR Soria and Madrid, Spain                  548,100                  548,100
Ovation USD Austin, TX             26,098,914
Plataforma Grow.ly, S.L. EUR Spain, Madrid                  185,000  177,451
SAVY EUR Vilnius ,Lithuania                  259,800                  249,500
ThinCats UK GBP UK               4,726,000
Twino EUR Latvia               8,308,804
Validus Capital Pte Ltd SGD Singapore               1,465,000
Viventor EUR Riga, Latvia               1,242,270
Zltymelon.sk USD Czech and Slovak republics 124,575 195,585

Publishing volumes with Lending Times is free.

Lending Time’s focus is on accuracy. Therefore:

  1. We will publish the volumes on the 11th day of the following month. If the data is received later we will update the volume tables in an attempt for completeness.
  2. We will only publish numbers reported by the lenders themselves by email or on their websites.
  3. We are publishing all data in the original currency in order to avoid currency conversion effects on present and historical volumes.

To include your company’s volumes in the report please email us, preferably before the 10th of each month, the following information:

Company name
Country and City
Month
Currency
Volume ( in original currency)
(and optionally, the previous month’s volumes going back since company
creation)

Please send your information to volumes@lending-times.com