Thursday December 28 2017, Daily News Digest

china IPO

News Comments Today’s main news: VPC Specialty Lending Drops Prosper Loans.Best Egg to broaden services in 2018.Faircent raises $4M.RoboCash updates loan origination process.Tyro to launch new SME solutions. Today’s main analysis: China leads Asia’s IPO boom. Today’s thought-provoking articles: Can Lending Club grow by 20% in 2018?Blockchain could transform these major industries.APAC online lending is […]

china IPO

News Comments

United States

United Kingdom

China

  • China leads Asia in IPO boom. AT: Not really news, but it’s interesting to see where Chinese companies are going public. The big winner is the New York Stock Exchange. But Shanghai and NASDAQ are also looking good with Hong Kong hanging in there.”

European Union

International

Australia/New Zealand

India

Asia

Africa

News Summary

United States

Reversal of fortune (Breaking Views), Rated: AAA

Most new entrants have also found it hard to build scale. Lending Club’s top line may grow by 20 percent in 2018, according to Reuters data, but that will take it only to $800 million. Even online student lender Earnest, which largely avoided industry potholes, has struggled. In October it sold itself to old-school servicer Navient for $155 million – less than half its value in a 2015 funding round.

Best Egg Will Broaden to Financing Purchases in 2018 (Banking Innovation), Rated: AAA

Marketplace lender Best Egg will move towards financing consumer purchases, including homes, as it looks to expand in 2018, the company told Bank Innovation.

If I can know my monthly cost for Amazon Prime before I sign a contract, why can’t I know my monthly cost for a car payment before going to the dealership? If I can see movie options before I go to the theater, why can’t I see my financing options before I sign a 5-year loan contract? Being empowered with concrete choices would make both budgeting and buying a car that much easier and help to save hours on the financing process. So, using my personal experiences from childhood to fuel my passion, I co-founded AutoGravity in October of 2015.

Our goal at AutoGravity was to make car financing as easy as watching a movie on Netflix, streaming an album off Spotify or buying a book from Amazon. So, we demystified the process by making it accessible to everyone – empowering them through our app on their smartphone.

Tax cuts, softened regulatory tone likely to help banks in 2018 (Central Penn Business Journal), Rated: A

Financial institutions also could face challenges in the near future as a result of technology-driven competition and long-term impacts from the recently approved tax reforms.

Marsico expects banks to increase automation of certain support-center processes over the next year. Artificial intelligence, for example, could handle some of the work that goes into processing loans, as well as tasks like verifying the authenticity of checks submitted through mobile deposit apps.

One study predicts banks throughout the world will increase their tech budgets by 4.1 percent in 2018.

Consumers still not benefiting from bank overdraft programs (Consumer Affairs), Rated: A

Most consumers still don’t know they are not required to accept their bank’s overdraft protection service, according to the Pew Charitable Trusts’ latest consumer finance project.

Before the law was changed in 2010, banks automatically enrolled consumers in overdraft protection. If consumers made purchases that overdrew their accounts, the banks covered the expense and then assessed an overdraft fee, which often cost as much as $35.

Since the law changed, consumers must opt-in to this coverage — banks cannot automatically enroll them. Thaddeus King, officer of The Pew Charitable Trusts’ consumer finance project, says it’s clear consumers don’t understand that overdraft protection is not only costly, but unnecessary.

In September a survey found that an estimated eight million consumers have opted-in, primarily because they thought they had to. Two-thirds of consumers who agreed to pay the overdraft fees were unaware it was optional.

Banks actively headhunting, but they want specific skill (CNBC), Rated: B

The rising influence of digital and banking-specific technology — so-called fintech — is “really changing how banks themselves will organize their own recruitment functions,” O’Sullivan told CNBC.

United Kingdom

VPC Specialty Lending Sells Prosper Marketplace Loans (London South East), Rated: AAA

VPC Specialty Lending Investments PLC on Wednesday said it sold its Prosper marketplace loans and was able to immediately reinvest substantially all of the proceeds into new investments.

The loans sold represented around 4.1% of VPC’s net asset value as at the end of October, and it expects the hit to net asset value from the sale to be around 0.56%.

China

China bourses behind Asia’s lead in global IPO boom (Nikkei Asian Review), Rated: AAA

Asian companies raised $79.14 billion through initial public offerings as of Dec. 18, up 10% from 2016, data from Dealogic shows. The sum represents 42% of the global tally, which surged 41% on the year to $194.8 billion.

Shanghai, the world’s second largest economy saw a total of 409 companies tapping $31.61 billion from the market, up 30% compared with last year. Of the country’s total funds raised, 56% was from Shanghai, making it Asia’s top IPO destination.

Source: Nikkei Asian Review

Hong Kong saw total funds raised fall 34% to $14.08 billion this year, despite a 24% jump in volume.

Alibaba-backed online lender Qudian, for instance, saw its New York-listed shares tumble 55% after it debuted in October. Its peer LexinFintech Holdings, backed by JD.com, on Dec. 14 slashed its fundraising target by 76% to $120 million.

European Union

P2P Lender RoboCash Updates on 2017 Progress (Crowdfund Insider), Rated: AAA

Latvia-based European peer to peer lender Robo.Cash, a young platform that is less than a year old, has provided an update on loan origination progress.  According to the P2P lender, RoboCash attracted € 2.5 million of investments in pay day lending (PDL) loans in 2017. Robo.Cash launched its platform in Latvia in February 2017.

Robo.cash said the current average sum of investments is € 2.900 per investor with over 1,500 investors from 28 EU-countries have joined Robo.cash in 10 months. The site says investors may be separated as follows:Germany (50,5%), Spain (7,2%), the Czech Republic (6,1%), Austria (4,6%), Latvia (3,9%), Portugal (3,6%), the United Kingdom (3,3%), Netherlands (2,7%), Lithuania (2,3%), Estonia (1,6%).

More retailers’ customers using Klarna’s buy-now, pay-later plan (The Columbus Dispatch), Rated: AAA

The Swedish e-commerce company signed 500 online retailers for its new service, which allows consumers to buy products now and pay for them later.

And the company’s North American operations signed on a new CEO, Jim Lofgren, replacing central Ohio native Brian Billingsley, who recently was named chief revenue officer for Dallas-based payment-service company Modo.

“We serve more than 70,000 merchants over 18 markets, and our data in the U.S. market is really very similar to other markets,” Lofgren said recently. “We’re making a very significant impact for our merchants.”

Brussels moves to boost Europe’s fintech sector (Financial Times), Rated: A

The European Commission is to present draft legislation early next year to remove administrative hurdles to the cross-border operation of crowdfunding sites and online peer-to-peer lending services. It says the initiative will ensure that EU companies can grow and compete.

European fintech successes include TransferWise, the Estonian-developed foreign exchange company, and France’s PayPlug, which makes it easier for sole traders to accept credit card payments.

LoanBook Shares Latest Milestone (Crowdfund Insider), Rated: A

LoanBook, a Spanish marketplace lending platform, having easily surpassed its initial £650,000 last week is, is heading toward the home stretch having raised over £721,200 for 6.40% equity with the help of more than 253 Crowdcubeinvestors. £340,000 of this investment sum comes from current shareholders, local Business Angels and Family Offices. Funding will be used to continue LoanBook’s platform growth and development.

Crowdfunding saves tumbling down French chateau (The Business Times), Rated: B

It’s a modern story of an ancient fairytale castle: a crowdfunding effort online has raised 1.6 million euros (S$2.55 million) to restore a chateau in western France.

Around 25,000 people from 115 countries have become shareholders in the chateau de La Mothe-Chandeniers which has turrets, a moat and an elderly owner who had not maintained it.

International

30 Big Industries Blockchain Could Transform (CB Insights), Rated: AAA

1. BANKING

Swiss bank UBS and UK-based Barclays are both experimenting with blockchain as a way to expedite back office functions and settlement, which some in the banking industry say could cut up to $20B in middleman costs.

2. PAYMENTS AND MONEY TRANSFERS

Abra, another blockchain-enabled mobile wallet and payments startup, was recently integrated into the payments ecosystem of American Express: through a new feature, customers will be able to fund their Abra wallets using an eligible American Express Card.

3. CYBERSECURITY

Other potential applications include using blockchain to provide massive scale data authentication: for example, using its blockchain-enabled KSI (Keyless Signature Infrastructure), cybersecurity startup Guardtime tags and verifies data transactions for cryptographic assurance of their integrity and authenticity.

11. STOCK TRADING

Partnerships with existing trading networks and exchanges will help blockchain take off in the space. Blockchain startup Chain (which is also mentioned below) is a leader on that front: the company helped orchestrate a live blockchain integration that successfully connected Nasdaq’s stock exchange and Citi’s banking infrastructure.

12. REAL ESTATE

Tech startup Ubitquity offers a Software-as-a-Service (SaaS) blockchain platform for financial, title, and mortgage companies. The company is currently working with Land Records Bureau in Brazil, among other stealth clients, to input property information and record documents through the blockchain.

13. INSURANCE 

LenderBot is a micro-insurance proof of concept for the sharing economy that demonstrates the potential for blockchain applications and services in the industry. LenderBot, which allows people to enroll in customized micro-insurance by chatting through Facebook Messenger, enables blockchain to serve as the third-party in the contract between individuals as they exchange high-value items through the sharing economy.

28. CREDIT HISTORIES

Lenders minimize the risk posed by loans or lines of credit to small businesses by evaluating their histories using business credit reports. These third-party reports — issued companies such as Dun & Bradstreet — are inaccessible to the small business owners (beyond the basic profile information they provide to the credit bureau). This can make business owners feel like credit bureaus have all the power over loan terms, even though the credit bureau may be assessing outdated or inaccurate information to determine their reports.

Lumeno.us is one startup using blockchain technology to make business credit reports more accurate, transparent, and shareable. Lumeno.us normalizes semi-structured financial data using a proprietary application of collaborative tagging and advanced analytics. From there, it provides business owners the tools to share their data in order to get a loan, find trusted partners, or manage a portfolio or network.

30. CROWDFUNDING

Initial Coin Offerings (ICOs), in which companies sell cryptocurrency-backed tokens in their companies in the same manner as a publicly-traded company sells stock, are another example of blockchain-powered crowdfunding — startups such as OpenLedgermake that possible. Individuals may soon invest in real estate using “crypto crowdfunding,” as well: Singapore-based Real Estate Asset Ledger (REAL) intends to use blockchain technology to inject greater liquidity and transparency into real estate investing.

How telepresence can revolutionize financial services industry (Born2Invest), Rated: A

Imagine, you are trying to make an investment somewhere in the World and you want to be face to face with your investment advisor without leaving your own office or room?

What is different about telepresence is that you can be telepresent through someone else instead of being even present through video conferencing or other methods.

I the financial sector, companies are using telepresence to connect their customers with their loan officers, investment advisors, and other employees to discuss all the requirements and provide solutions without actually the presence of the customer as well as the financial organization at the same place.

Australia/New Zealand

Challenger Bank Tyro to Launch New Financial Solutions for SME (Crowdfund Insider), Rated: AAA

Australian fintech and challenger bank Tyro is set to launch a new set of financial solutions for small to medium enterprises (SMEs). Founded in 2001, Tyro describes itself as Australia’s largest independent EFTPOS provider, focusing on smaller to medium enterprises. The company states it is now has a license from APRA to offer banking products and deposits with its platform are government guaranteed. The company currently has 20,000 customers and has $42.2 billion in transaction.

Online Financing Down Under: A Rapidly Evolving Market (TG Daily), Rated: AAA

The research paints a clear picture of trends currently taking place in Australia and New Zealand, where $348.37 million and $267.77 million respectively has been issued through online financing options (through 2015). These statistics are notable since 2012, with a growth rate of 653% between 2013 – 2015.

Various small business loans lenders currently offer funding to Australian clients from $5,000-$400,000 (depending on the industry lender). Australian small business loans lenders such as prospa, Capify, Sail, and Spotcap dominate the market.

India

Online Peer-To-Peer Lending Startup Faircent Raises $ 4 Million (Bloomberg), Rated: AAA

Faircent raised $4 million (Rs 25 crore) in early-stage funding led a Belgium-based impact investor Incofin Investment Management, Rajat Gandhi, co-founder of Faircent, told BloombergQuint over the phone.

P2P lending marketplace platform launched (The Hindu Business Line), Rated: AAA

Rajiv Ranjan, a former Infoscion along with Ambar Kasliwal, a Mumbai-based Chartered Accountant, has launched a fully-owned P2P lending marketplace platform.

Called PaisaDukan.com, it is a part of BigWin Infotech, a government recognised start-up and it aims to start operations from January 2018, company officials said. The startup is among a few who have applied for an NBFC ((non-banking financial company)-peer-to-peer (P2P) licence after RBI’s revised guidelines.

Fin-tech gains from innovations, digital push (VC Circle), Rated: AAA

Private equity and venture capital firms, which sat on huge money piles and waited on the side lines looking for the right opportunities, caught on to the excitement and loosened their purse strings to record a four-fold jump in investments to $1.84 billion in 2017 from $447 million, showed provisional data from VCCEdge, the data and analysis platform of News Corp VCCircle.

While seed and angel investments accounted for 43% of the total number of deals at 32, growth- and late-stage deals, besides private transactions and venture debt accounted for the rest.

Besides, Paytm’s $1.4 billion infusion from Softbank, Policybazaar’s $77-million Series-E round, SME Lending platform Capital Float’s $45 million Series-C funding, MSwipe’s $41 million funding from UC-RNTand Eduardo Saverin’s B Capital, and Mobikwik’s $35 million round from Bajaj Finance also made the headlines during the year.

Source: VC Circle

RBL Bank to go stronger on fintech partnerships (Economic Times), Rated: A

While banks are fighting a bitter turf war with fintech startups to retain their share of business, private sector lender RBL Bank has seen value in strategic partnerships. The bank is growing its advances book by almost half annually, driven largely by partnerships with non-banking finance companies (NBFC) and tech startups.

While startups such as MoneyTap, BookMyShow are helping the bank acquire customers for its credit products, even its tie-up with one of the most prominent NBFCs Bajaj FinservBSE -0.14 % is helping the bank get customers who were never eligible for a credit card previously.

Rein in your exuberance as you step into 2018 (Business Standard), Rated: A

Investors need to position their personal finances in a manner that will enable them to gain from developments in the future.  Book profits in the mid- and small-cap space: Mid- and small-cap funds’ strong performance streak continued in 2017 (category average return: 47.19 per cent year-to-date). As valuations of growth stocks shot up, investors turned to value picks. …

Asia

Robo-advisory and its role in capital management (Fintech Innovation), Rated: AAA

Africa

Robots versus financial advisors (Moneyweb), Rated: A

With the advent of robo-advisors, where advice is provided at low- or no cost over the internet, questions are being raised as to the future of qualified financial advisors. Is my job becoming obsolete?

A qualified and trusted advisor is able to spot potentially poor financial decisions and gently advise against this course of action. A robo-advisor could never be such a friend in need.

Authors:

George Popescu
Allen Taylor

Monday January 30 2017, Daily News Digest

price & yield table for SCLP 2017-1

News Comments Today’s main news: ABA Banks seeks MPL partnership. Zopa passes 2bil GBP milestone. Today’s main analysis: SoFi Unsecured Consumer 2017-1. Today’s thought-provoking articles: Orchard Online Lending Snapshot. Five mistakes to avoid when starting a FinTech company. Spanish banks lead FinTech VC in Europe. Tyro, RateSetter, Stockspot and Westpac on past and future. United States ABA seeks MPL partnership. […]

price & yield table for SCLP 2017-1

News Comments

United States

United Kingdom

European Union

Australia

India

Asia

News Summary

United States

U.S. bank trade group seeks marketplace lending partnership (Reuters), Rated: AAA

The American Bankers Association, a trade group for U.S. banks, has been hunting for a marketplace lending platform to help its members ramp up their digital offerings.

The ABA has run a formal bidding process to secure a marketplace lending partner, spokesman John Hall confirmed on Friday. He could not say which companies were under consideration because the information was confidential.

Weekly Industry Update: January 29, 2017 (PeerIQ), Rated: AAA

The ABS market finished January on a high note with strong buyer interest. SoFi and Mosaic priced their first and inaugural transactions respectively in 2017, which were both heavily oversubscribed.
FinTech financings continue apace. Nyca announced the successful closing of a

Orchard Weekly Online Lending Snapshot (Orchard Platform), Rated: AAA

It was reported this week that LendingRobot launched a robo-advisor hedge fund for accredited investors that will invest in loans from LendingClub, Prosper, Funding Circle, and Lending Home. loanDepot announced that they have funded $100 billion in home, personal, and home equity loans since their inception in 2010. In yet another sign that positive sentiment seems to be returning to the industry, BorrowersFirst, an online consumer lending platform, announced last week that it has secured an additional $100 million in debt financing to accelerate loan originations and fund continued growth of its balance sheet. The Office of the Comptroller of the Currency issued OCC Bulletin 2017-7 as a supplement to OCC Bulletin 2013-29, which “governs the risk management frameworks maintained by OCC- regulated banks in establishing, monitoring and concluding third party relationships (including relationships with bank affiliates).” On Monday, we announced that LendIt has partnered with us for our 2017 Meetups–as a way to enrich the events–strengthening the depth and breadth of ourrelationships in the industry.

DiversyFund Takes Crowdfunding Real Estate Investment Giants Head On (Military Technologies), Rated: A

DiversyFund, Inc., announces the launching of its new full-service online crowdfunding real estate investment platform. DiversyFund principals, Craig Cecilio and Alan Lewis, have been delivering exclusive investment opportunities that generate high returns for their investors for over a decade. The company has planned to offer some unique features to its investors in the upcoming months. These are aimed to disrupt the current status quo of the industry.

With their new online crowdsourcing platform, DiversyFund is planning to become the key sponsor and lead developer to the majority of their projects, if not all of them. This is a key difference in their crowdfunding real estate investment platform. It makes them stand out since many of their competitors work with third-party sponsored projects and act only as mediators by providing technology to implement funding for outsourced deals.

AirBnb’s Fintech Future (The Financial Revolutionist), Rated: A

This week, word “leaked” that Airbnb is in advanced talks to acquire Tilt, a group payments/social network hybrid start-up that helps people split the cost of rent, dinners and events. Whether or not this deal happens (it probably will), the rumors support our view that of all the next-wave tech giants known as WASSUPPs (WeWork, AirBnb, Slack, Snap, Uber, Pinterest and Palantir), AirBnb is the most aggressive in embracing fintech as core to its business.

Crowdfunding takes aim at commercial real estate (Westfair Online), Rated: A

Despite a lack of data on the exact size of the real estate crowdfunding market in the U.S. – no federal agency or national trade association tracks those deals – the investment vehicle apparently is attracting a particular class of investor.

“This investor is typically younger,” said Ben Sayles, director in the Boston office of real estate brokerage HFF. “From what I am seeing, this person is high-earning, usually in the tech world – though maybe in the financial world – and doesn’t have a lot of expenses. They probably rent their apartment, do not have a car and have an extra income that they want to put to work.”

Among real estate professionals, the use of crowdfunding to raise capital also appears to be concentrated within a particular demographic.

“For a smaller commercial real estate developer or investor, the non-Donald Trump type, this can be a cheaper source of financing for a $10 million to $30 million project,” said professor Anthony Macari, executive director of graduate programs at Sacred Heart University in Fairfield.

Three Crowdfunding Sectors to Watch in in the US in 2017 (Crowdfunding), Rated: A

With investors becoming increasingly more comfortable with new Fintech platforms, the amount of money invested in crowdfunding in the Americas jumped from $11.4 billion in 2014 to $36.49 billion in 2015 — and Technavio market research analysts predict the overall industry will grow at a compounded average annual rate of 27% through 2020.

Since the first provisions of the JOBS Act went into effect, real estate has remained one of the most popular crowdfunding investment classes. The physical nature of buildings and land lends real estate more security than higher risk startups. And with a self-proclaimed real estate mogul now in the White House, many leading experts are predicting a record year for real estate. We are also seeing increasing issuer adoption — more real estate firms are launching their own crowdfunding platforms, and a variety of Regulation A+ real estate funds and traditional investment firms are increasingly using platforms to raise a portion of their capital stack.

In addition to standard real estate crowdfunding platforms, we think we will see an influx of hybrid platforms that allow users to not only invest but to solve other problems as well.

Last year’s announcement from OPEC to cut production in combination with President-elect Trump’s oil friendly appointments has oil and gas prices on the rise. Oil prices have already climbed 17.5 percent as of December 27 and show no signs of slowing. And investors are taking notice. EnergyFunders, a crowdfunding marketplace that allows investors to directly invest in U.S. oil and gas wells, reported a 45 percent increase in signups after OPEC’s announcement.

Impact investing, or investing in companies that bring about positive change in the world, is growing in popularity as more millennials enter the market. A recent survey from U.S. Trust states 93% of millennials believe that social impact is key to their investing decisions. Ryan Ràfols, CEO of Newchip.co an aggregation platform that uses Robo-advising to showcase impact investing crowdfunding offering, explains;

“Millennials want to invest in companies that can make a return while making a difference in the world.”

Elon Law dean addresses poor SoFi ranking (Biz Journals), Rated: A

Social Finance Inc. (commonly known as SoFi) ranks Elon among the bottom 10 law schools in the nation in its Return on Education Law School Rankings. It ranked Elon eighth out of the 10 worse schools. Elon’s graduates, SoFi said, average $87,680 in salary and $145,610 in debt.

Luke Bierman, dean of Elon Law, which is based in Greensboro, said he doesn’t argue that a law school degree requires a sizeable investment from a student in terms of both time and money. But he said Elon adopted a new curriculum two years ago intended to make it quicker and less expensive for a student to earn a law degree. He said the school’s current tuition is 20 percent below the national average for private law schools and said the new curriculum allows a student to graduate in 2.5 years as opposed to the three years required through a traditional curriculum.

He said the study released by SoFi doesn’t reflect students who have enrolled at Elon since the adoption of the new curriculum. The first group enrolled solely under the new curriculum, he said, will be graduating in December. He said it’s Elon’s hope that those students will be graduating with less debt.

Bitcoin P2P Lending Remains A Risky Business (Live Bitcoin News), Rated: A

On paper, the service provided by companies such as BTCJam is an excellent way to use Bitcoin. Extending loans to people from all over the world is a great solution to promote Bitcoin usage. Unfortunately, this concept still needs a lot of work, as there are a lot of caveats to using services such as BTCJam right now. In most cases, a lot of the loans are never repaid in full.

It is evident a lot of BTCJam users are losing money unless they are the borrowers for a specific amount of Bitcoin. In fact, some Reddit users argue the only people who benefit from using BTCJam are the ones who borrow money, and everyone else is losing money left, right, and center. BTCJam has been dealing with these issues for quite some time, yet it seems very little has changed over the past year or so.

Global Debt Registry Successfully Completes SOC 1 and 2 Attestation (Global Debt Registry Email), Rated: A

Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced receipt of its Service Organization Control [SOC] 1 and SOC 2 Type 1 attestation engagement report, providing independent validation that the Company’s internal security controls are in accordance with the American Institute of Certified Public Accountants’ (“AICPA”) applicable Trust Services Principles and Criteria. Just days after International Data Privacy Day on January 28, this attestation showcases GDR’s continued dedication to meeting the highest industry standards for protecting confidential consumer information.

GDR’s SOC 1 and 2 Report demonstrates that the Company has the necessary internal controls and processes in place to protect consumer data, maintain operational integrity, and comply with industry standards and regulations.  The SOC 2 engagement included evaluating GDR in accordance with the trust principles of security, availability, processing integrity, and confidentiality. The AICPA created the SOC guidelines to provide an authoritative benchmark for service organizations to demonstrate implementation of proper policies, operational practices and controls.

As a partner to online lenders, investors, warehouse lenders and other industry stakeholders, GDR delivers real validation and helps ensure asset certainty including protection against double pledging and double selling of assets with its suite of digital due diligence solutions. The Company contracted with KirkpatrickPrice for its SOC 1 and 2 engagement to meet the ongoing public and private reporting requirements of its financial institution clients.

GDR is also compliant with a number of additional industry standards, including PCI DSS (Payment Card Industry Data Security Standard), the GLBA (Gramm Leach Bliley Act) Safeguards Rule, and ISO 27002 (International Organization for Standardization 27002). As evidenced by the SOC 1 and 2 Report, the Company is continuing its focus on meeting the highest standards of data and information protection and operational integrity for its clients.

The 4 Best P2P Lending Platforms For Investors In 2017 — Detailed Analysis (Forbes), Rated: A

With interest rates at all-time lows since 2008 and many historically “safe” investments like government bonds carrying negative yields, investing in P2P loans in 2017 is a no-brainer.

Founded in 2007, Lending Club is the world’s largest P2P lending platform with over $20 billion in loan issuance. Lending Club has grown exponentially and currently has a 45% market share. It raised over $900 million from its IPO in 2014, but its share price has since fallen 72%.

Launched in 2006, Prosper was the first P2P platform in the US. It has since funded over $6 billion in loans and serviced over 2 million customers. Prosper grades borrowers through its Prosper Score. This proprietary system focuses on criteria such as debt-to-income ratio and other “soft checks” conducted by credit bureaus.

Launched in 2014 by a bunch of ex-Googlers, Upstart has originated more than $300 million worth of loans. Upstart uses unique grading criteria. It looks at FICO scores but also considers educational background. The firm has the lowest default rates across the industry thus far. Over 94% of loans are on track to be repaid in full. The company makes its money solely on origination fees from the borrower.

Funding Circle was founded by Sam Hodges who, after the 96th time of being rejected by banks, decided to take action. The company only makes business loans and operates in the US, UK, Germany, Spain, and the Netherlands. Funding Circle was founded by Sam Hodges who, after the 96th time of being rejected by banks, decided to take action. The company only makes business loans and operates in the US, UK, Germany, Spain, and the Netherlands.

Why More Consumers Are Seeking Alternative Investments (Newswire.net), Rated: A

However, modern consumers are starting to look at alternative investments, which stray from “conventional” standards either because they’re riskier, newer, less tested, or involve unknown variables. What you need to know about alternative investing is this: it’s on the rise, and there may be a benefit in jumping in early.

Types of Alternative Investments

  • Private lending. Private lending has grown in popularity in recent years, thanks to peer-to-peer apps that make it possible, such as Lending Club. Here, you may lend some of your own money to one or more private borrowers, who pay you back with interest.
  • Currencies. Currencies are constantly shifting in value against each other as various countries grow or shrink economically. Investing in a country’s currency when they’re poised for growth with an app like XE could result in a major gain.
  • Other tech-based solutions. There is also a rising number of new apps and technological solutions opening the doors to new investment possibilities. The rise of machine learning and automated investing solutions, like Wealthfront, is an example of this.

Manhattan Beach’s PeerStreet opens real estate investing to individuals (TBR News), Rated: B

Headquartered in Manhattan Beach just across the street from the town’s iconic 24-hour diner, The Kettle, PeerStreet may be located in a small beach town, but the reach of this real estate investment firm is national.

Crosby describes PeerStreet as an eTrade for real estate investing.

The business began right in the heart of Manhattan Beach, and currently has 50 employees. According to Johnson, they’ve recently received funding from venture capitalist Andreesen Horowitz and investor Michael Burry.

United Kingdom

Peer-to-peer lender Zopa passes £2 billion loans milestone (Business Insider), Rated: AAA

Zopa, the fintech businesses credited with inventing peer-to-peer lending, has passed £2 billion ($2.5 billion) in loans over its online platform.

The milestone means Zopa is still just about Britain’s biggest peer-to-peer lender by historical loan book. Funding Circle, which lends to small businesses, has lent £1.92 billion since its launch in 2010.

Zopa says in a release on Monday that the £2 billion in lending represents 300,000 loans made to 246,000 borrowers since its founding in 2005. 75,000 investors funded the lending over the platform.

Five mistakes to avoid when starting a fintech company (Banking Technology), Rated: AAA

However, what I feel very comfortable doing is pointing out some things that failed companies do, based on my experience in Startupbootcamp as well as building a number of successful companies. Here it goes:

  1. They forget to validate

Intuition, experience and opinions are important and helpful. However, building a fintech start-up based only on these three is very risky. A business can’t be built on limited data. Without really understanding if there is a real pain you are solving, a need you are fulfilling or knowing how many people would pay for your product or service you are multiplying the possibility of going after the wrong market, building the wrong solution or having the wrong commercial model or doing the wrong thing.

  1. They lose focus

 

Successful entrepreneurs focus on one thing at a time and they are very good at saying “No” to anything that would distract their real focus. This does not mean that they are not aware of what is going on around them or blindsided to changes or competition but they just know how to use their time efficiently.

  1. They focus too much on being “investable” and forget to build a sustainable business

It is easy to fall trapped to the chants of investors. It can be easy to believe that you have a sustainable business when an investor says that the company you started working on 12 months ago is worth £2 million. That does not mean that you have a business. It means that you can build a viable business. The criterion that investors use is not normally sustainability but potential for a large payout. Sometimes, those two factors are contradictory. Investors have to go for big money and some of these attempts fail.

  1. They don’t invest enough in team and culture

Building a fintech company is hard. The pressure is incredibly strong and never stops. Under continuous pressure, it is very easy for teams to crack and fall apart which in many occasions kill the company. A start-up’s biggest challenge is getting the team right and having the different skill sets covered to succeed. Complementing each other’s strengths and weaknesses is extremely important in small teams, especially with co-founders.

  1. They underestimate what it takes

The journey of an entrepreneur is incredibly hard and requires grit, execution and a lot of patience. In many cases, entrepreneurs get caught in the “fintech celebrity” hype and think that being on panels, and ranking high in different top lists and Twitter means success. Building a real business takes a lot of hours “in the basement”. Once the reality hits, many founders get bored and quit or fade.

Welendus – One Week on Seedrs (Welendus Email), Rated: A

One week has passed since the release of our Seedrs fundraise campaign with significant results.

Over the past week, Welendus attracted over 50 investors and raised over 25% of our target which only proves the level of interest people have in Welendus. The level of engagement and the discussion is another indication of how much people love Welendus.

We are raising £300k for equity in our company and would like to invite you to be one of our first investors and shareholders. You can access our Seedrs campaign at

Assetz Capital CEO Stuart Law Shares His 2017 P2P Lending Predictions (Crowdfund Insider), Rated: A

Nearly one month after ringing in the new year, Stuart Law, CEO and co-founder of peer-to-peer lending platform Assetz Capitalprovided his alternative finance predictions for 2017. 

Law stated:

“Brexit has already had a very positive effect on the peer-to-peer (P2P) market, and all indications signal that it will grow further in 2017 whilst bank lending remains subdued. With the larger platforms announcing record second half results in the six-month period after the Brexit vote, they are also attracting increasing amounts of capital in the form of equity.  Smaller P2P players however will likely struggle to lure the necessary lending or growth capital to survive independently, so we expect a degree of consolidation and some to drop out of the market altogether.

Alternative finance has certainly started to make its mark with savvy investors, but the biggest attraction to date will be the Innovative Finance (IF) ISA.  We predict that this will attract a huge amount of capital onto the main platforms and represent as much as 30% of all capital inflows to P2P platforms this year, assuming all large P2P lenders such as Assetz Capital get approved before the end of March 2016, and perhaps as much as 50% in 2018.

“The desire to invest in secured loans will increase amongst lenders and professionals.”

P2P Lender Flender Closes Successful Seedrs Campaign (Crowdfund Insider), Rated: A

P2P lending platform Flender has officially closed its successful equity crowdfunding campaign on Seedrs. Originally seeking £500,000, the initiative secured a total of £501,700 from more than 230 investors.

Flender stated it does not consider itself a traditional P2P platform with an anonymous marketplace. Instead, its team believes that it will help businesses create lasting bonds with customers, and for consumers to reach through their existing networks and be part of each other’s success. And at the same time, underpinned with legal contracts created by the platform between borrowers and lenders.

ArchOver Announces P2P Business Lending Services Expansion (Crowdfund Insider), Rated: A

On Friday, peer-to-peer business lending platform ArchOver announced it is expanding its current “Secure & Insured” lending model by launching “Secure & Assigned” business loans.

According to the lender, the first Secured & Assigned loan will be for Ergowealth, a firm of chartered financial planners based in Marlow, Buckinghamshire.

The loan announcement comes just a couple of months after ArchOver revealed it was extending its exclusive partnership with international credit insurer and collections company Coface by a further three years.

Banks and lenders face clampdown from the Bank of England on household borrowing (This is Money), Rated: A

The Bank is due to release figures this week showing that the growth in personal loans and credit cards is running at more than 10 per cent a year.

Lenders have been slashing rates in the past six weeks and banks including TSB are offering unsecured personal loans at less than 3 per cent.

The rock bottom rates come alongside cheap loans by peer-to-peer lenders which bypass the banks by allowing loans between private individuals. Ratesetter and Zopa are offering loans at just 3.1 per cent and 3.2 per cent respectively.

Funding Circle welcomes new BDM (Bridging & Commercial), Rated: B

Funding Circle has announced the appointment of Sarah Beard as its new business development manager.

Prior to joining Funding Circle, Sarah spent three years at Lease Plan as an account manager and three-and-a-half years at Hitachi Capital Business Finance, where she managed a portfolio of 30 introducers.

Sarah, who will be based in Bristol, said she was very excited about joining the company.

European Union

Spanish Banks Lead FinTech VC Investments Against Their European Peers (The Corner), Rated: AAA

Citi’s analysts also take a look at how different the FinTech evolution has been in the West: (1) the U.S. pivoted to InsurTech in 2016; and (2) two of the largest U.S. FinTech VC funding rounds in 2016 were in the health insurance space. Big data, the Internet of Things (IoT), and wearable devices, among other trends, will help insurance companies use FinTech to be more creative and customized.

Europe remains a laggard for start-ups/VC investing at about 10% of global FinTech VC investment in 2015-16. This is not a big surprise as Europe has a smaller VC market versus the U.S., it has none of the large technology/Internet companies that exist in the U.S. or China and its banking system (despite the sector’s weak stock prices, earnings and capital challenges of the past decade) offers more of a full-service provision versus U.S. or Chinese peers.

As reported by Citi:

European banks are increasingly interested in FinTech and with more bank investors and affiliates, we will see more of a shift to business-to-business (B2B). In 2017 we expect more focus on B2B FinTech topics, such as Artificial Intelligence, especially in London which is a hotspot with DeepMind and its concentration of universities; regulatory tech both in the U.K. and the U.S.; and cybersecurity primarily in the U.S. and Israel.

European Crowdfunding Networks Calls for Members to Assist with EU Crowdfunding Regulatory Review (Crowdfund Insider), Rated: AAA

The European Crowdfunding Network (ECN), a pan-European alternative finance advocacy group, is asking members to participate regarding input on the Capital Markets Union.  Specifically, the ECN will be working with the Directorate‑General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) regarding input on obstacles to cross-border

The ECN will also launch an open survey to all EU securities and lending crowdfunding platforms with will deliver input for the European Commission’s review of the Capital Market Union and which will be followed up by individual interviews with interested parties.crowdfunding for both online lending (peer to peer lending) and equity crowdfunding.

Australia

Tyro, RateSetter, Stockspot and Westpac on 2016 and the year ahead (The Mitchel Lake Group), Rated: AAA

CK: The transferability of information is huge with a growing number of middleware, SaaS applications and APIs. Sharing data and improving collaboration in the market is continually on the improve, benefiting the customer.

DF: Investors are much more discerning in the businesses they back. This will be better in the medium term, but it’s been difficult for some businesses locally.

CB: This year Stockspot became the first robo-adviser in the world to give clients the flexibility to personalise their portfolio with the launch of Stockspot Themes. We’ve already managed to generate some fantastic net returns for early adopters (6.2% and 9.2% per year) while charging clients less.

DF: For RateSetter, expanding our offering from consumer lending to business lending was a significant development. In Australia there’s been a real lack of business financing options outside residential property-secured bank finance and expensive short-term working capital finance, so we’re excited that RateSetter now offers Australian businesses a low-rate funding alternative to help them grow and prosper.

JS: My biggest highlight has been Tyro receiving a bank license. We are the only tech company to have achieved this so far. This was such a massive win for us and the sector. Following this, we were then able to deliver next-gen banking, a cloud-based, totally mobile & totally integrated banking solution for SMEs and growth companies.

JS: The FinTech community has limited potential if banking is not opened up. In a way, Australia is cursed by the entrenched bank oligopoly. If we don’t get our act together and open up banking, the next-gen banking providers will not be Australian.

CB: There are two things the Government could do to improve fairness for consumers when it comes to investing and superannuation. One is to require all superannuation and managed funds to provide fee and performance data to comparison websites so consumers can easily compare fund options. The second is to implement a public tender for the right to manage default super funds as outlined by the [Grattan Institute]( Chile established public tenders for the right to manage default super funds and it has reduced average annual super fees by 50%.

John Cummins Appointed New CIO for Australian Marketplace Lender SocietyOne (Crowdfund Insider), Rated: A

The Australian largest marketplace lending platform SocietyOne announced John Cummins has joined the group as CIO, according to The Advisor. Reporting to SocietyOne CEO and MD Jason Yetton, Cummins will be responsible for SocietyOne’s funding requirements to support demand from an expanding number of borrower customers, including building on SocietyOne’s existing network of investor funders which features large financial institutions, mutual banks, credit unions, high net worth individuals and SMSFs.

India

India Money Mart Serves as a P2P Lending Platform (Military Technologies), Rated: A

With India Money Mart serving as a P2P lending platform, borrowers and lenders find transactions easy. This online market place provides a reliable platform for both lenders and borrowers in India with a minimal operational cost.Lenders and borrowers can avail loan facilities at their own will. Borrowers can choose single or multiple lenders at the same time. IMM ensures that these transactions are carried forward without any hassles or meeting one another personally.

Through an easy lending process, Kissht helps consumers avail quick loans (YourStory), Rated: A

There is an entire population that has the money to repay loans, yet mainstream banks reject their loan applications. This does not favour consumer spending, although consumption has grown in this country. According to data available with the RBI there are only around 27 million credit cards in the country, and 300 million bank accounts. In 2016, although personal loans were 22 percent of all bank credit disbursed, several Indians remained without personal credit.

With this as the backdrop, Krishnan Vishwanathan, a consultant from McKinsey, wanted to find a fix to help people consume. Giving up his lucrative career, he set up Kissht, which means EMI  in Hindi, to provide collateral-free loans for products that consumers want to purchase. The total loans disbursed so far are to the tune of Rs 17 crore, with over 9,000 customers.

Asia

Peer-to-peer lending platform awaits BOT nod (The Nation), Rated: A

VORAPOL PHORNVANICH, chief executive of PeerPower, a financial-technology start-up, aims to create a new online peer-to-peer lending platform for investors and borrowers.

“At present, investors and savers in Thailand earn a relatively low return on their funds, averaging 0.5 per cent for savings accounts, 2-2.5 per cent for fixed deposits and 4-4.5 per cent for corporate bonds.

“On the other hand, if you are a borrower, you have to pay a relatively high interest rate on consumer loans, which have no collateral. Interest rates are currently as high as 15-36 per cent per annum. The interest-rate spread is huge, so we think this new online platform can help narrow the gap between deposit and lending rates as happens in other countries.”

Authors:

George Popescu
Allen Taylor