Thursday March 14 2019, Weekly News Digest

GreenSky

News Comments Today’s main news: FTC makes final decision on SoFi. OnDeck extends two revolving credit facilities. LendingPoint sees drop in debt management loans, increase for new purchases. LendInvest to float 500M GBP. Lufax hits $39.4B valuation. Klarna adds GooglePay as payment option. Today’s main analysis: Unemployment rate and GreenSky’s earnings. Today’s thought-provoking articles: Earnest vs. SoFi for student loan […]

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GreenSky

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United States

United Kingdom

European Union

Australia/New Zealand

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News Summary

United States

Deal Final in FTC’s Action Against Online Lender (Manatt), Rated: AAA

The Federal Trade Commission (FTC) has finalized its deal with SoFi, an online lender that the agency had accused of making false statements about student loan refinancing.

According to the FTC, the California-based personal finance company misrepresented how much money student loan borrowers have saved or could save by refinancing.

Read the FTC complaint here.

Read the FTC decision and order here.

OnDeck Announces Extension of Two Revolving Credit Facilities With Credit Suisse & Deutsche Bank (Crowdfund Insider), Rated: AAA

OnDeck, a small business online lending platform, announced on Wednesday extensions to its existing credit facilities with Credit Suisse and Deutsche Bank on improved terms.  According to OnDeck, the amended facilities provide an aggregate of $360 million of committed funding capacity and are available to finance OnDeck’s term loans and revolving lines of credit. The scheduled maturity dates for the facilities were extended three years to March 2022.

Unemployment Rate Drops to 3.8%; GreenSky’s Strong Earnings (PeerIQ), Rated: AAA

The unemployment rate dropped to a near five decades low of 3.8% even as nonfarm payrolls only rose by 20K. Average hourly earnings rose by 3.4%, above economists’ expectations.

Source: WSJ
Source: Deutsche Bank Research, WSJ

GreenSky’s Strong 4Q2018 Earnings

GreenSky’s 4Q revenue grew by 22% YoY to $109 Mn, although net income fell by nearly 43% YoY to $23 Mn. The stock rose by ~6% post earnings.

  • Transaction volume increased by 23% YoY to $1.3 Bn.
  • Loan servicing portfolio increased by 36% YoY to $7.3 Bn.
  • GSKY had aggregate commitments of $11.8 Bn from its nine bank partners, of which $4.8 Bn were unused.
  • 30+ DQ rates rose slightly YoY from 145 bps to 148 bps.
  • GreenSky now has nearly 12 k home improvement merchant partners and nearly 3 k elective healthcare partners.
Source: GreenSky, PeerIQ

How to Decide Between Earnest and SoFi for Student Loan Refinancing (Credible), Rated: AAA

Earnest and SoFi are two of the best student loan refinancing companiesout there. They both offer fixed as well as variable rate loans, a 0.25% autopay rate discount, and certain unemployment protections to help in the event of involuntary job loss, but they also have their differences.

Here’s a side-by-side comparison of both lenders to help you make an informed decision.

Source: Credible

The rate of borrowers using loans for debt management drops; growing proportion of borrowers use loans for new purchases (LendingPoint), Rated: AAA

It turns out that, over the past two years, the proportion of our borrowers who say they are earmarking their loans for debt consolidation has decreased markedly, from about 60% in 2017 to about 54% in 2018. The percent using loans to pay for new merchandise or services has grown during those two years. Home improvement jumped from 6% to 8%; loans for medical expenses rose from 2% to 7%.

In 2017, the percent of millennial consolidators was about 61%. In 2018, that dropped a full 10%, down to 51%, a bigger decrease than any other age cohort.

Source: LeningPoint

What Do Millennials Want From Banks? Non-Financial Products (Forbes), Rated: AAA

If they haven’t, then why are 56% of Millennials giving megabanks (the four largest US banks) their 

Source: Cornerstone Advisors

The “Millennials hate banks” meme is a myth.

Millennials’ Access to Subscription Services
Percentage of Millennials that…
Don’t have the service but would like to Have the service, and pay for it directly Have the service, but don’t pay for it directly Don’t have or want the service
Identity theft protection 31% 20% 29% 21%
Personal/family data storage 29% 20% 19% 31%
Child identity theft protection 27% 15% 16% 42%
Rx, vision, hearing discounts 26% 31% 25% 18%
Travel/trip insurance 26% 18% 19% 37%
Roadside assistance 19% 40% 26% 15%
Cell phone damage protection 18% 42% 20% 19%
Source: Cornerstone Advisors

Green Dot targets social media influencers in banking-as-service push (American Banker), Rated: A

A new affinity banking service developed by Green Dot proposes to tap one of the most potent — and controversial — sources of distribution in the digital economy: social media influencers.

The digital banking and payments provider is developing what it calls Bank OS, a simpler version of its enterprise banking-as-a-service platform already used by the likes of Intuit, Stash, Uber and Walmart. It would enable partners to develop their own financial products just as those brands do, including offering credit cards, debit cards with loyalty programs or even a mobile app.

How online lenders attract and service the evolving SMB borrower (Tearsheet), Rated: A

But while small businesses still struggle with cash flow, how they shop for loans and their level of financial education about their options are changing. On Tearsheet’s recent webinar with leaders at Kabbage, BlueVine, and Intuit’s QuickBooks Capital, we discussed the changing nature of the SMB borrower and how their firms have evolved to keep up.

Pay Yourself First? Last Is How Small Biz Often Works (Newsmax), Rated: A

Everyone knows the Golden Rule of business is to pay yourself first. But more than half of small business owners are going months without pay – if they are taking any at all.

About a quarter of these entrepreneurs go two to six months without pay, and another quarter have gone more than six months without salary, according to a recent survey from Kabbage (), a cash flow optimization platform.

PAYNET STRATEGIC INSIGHTS MARCH 2019 (PayNet), Rated: A

The PayNet Small Business Lending Index (SBLI) rebounded with a 17.2 point jump to 150.7 in January, climbing to its second-highest level ever. On an annual basis, the SBLI increased 4.9%. The SBLI 3-month moving average also rose in January and currently stands 1.5% above its year-ago level.

Source: PayNet

The PayNet Small Business Delinquency Index (SBDI) 31–90 Days Past Due edged up one basis point to 1.45% in January, and is up six basis points on an annual basis — its 33rd consecutive year-over-year increase. The SBDI 91–180 Days Past Due was unchanged at 0.38% but is three basis points above its year-ago level.

Less Than Zero? This Proposed ETF Would Pay Investors, But There’s A Catch (Benzinga), Rated: A

Salt Financial, which currently offers one ETF, has filed plans with regulators to launch a low volatility that would pay investors, but there’s a catch.

Equifax Deleted Key Data Breach-Related Docs, Senators Say (Law360), Rated: A

Equifax Inc. failed to preserve key internal discussions over its massive 2017 data breach, U.S. senators said Thursday at a hearing where elected officials grilled the credit reporting giant’s CEO and the…

Home Equity Line of Credit Providers Face Growing Threat from Alternative Lenders, J.D. Power Finds (JD Power), Rated: A

Despite record-high levels,[1]new home equity line of credit (HELOC) originations have been steadily declining[2] as a perfect storm of rising interest rates, new tax laws and growing competition from alternative lenders has crimped traditional HELOC growth. According to the J.D. Power 2019 U.S. Home Equity Line of Credit Satisfaction Study, released today, HELOC customers are more likely than ever to shop for alternative sources of funding and HELOC providers are falling short on digital offerings.

This week in Chicagoland real estate: One Chicago Square, Woodlawn and more (Chicago Agent Magazine), Rated: A

New York-based DDG, Chicago-based Marc Realty and Ruttenberg Gordon announced plans for a 13-story hotelwith 250 rooms in Fulton Market. The developers are raising $55 million to fund the project through Prodigy Network, a New York-based real estate crowdfunding platform. The hotel will be located at 1234 West Randolph Street and will be operated by New York-based Standard Hotels. It’s set to be completed within two years.

PeerStreet Expands Executive Leadership with Two Senior Hires in Finance Team (BusinessWire), Rated: B

PeerStreet has announced the hiring of two executives with extensive experience in the financial services and real estate sectors: Ellen Coleman and Bob Brown. Ms. Coleman joins as Executive Vice President of Finance, and Mr. Brown joins as Executive Vice President of Finance & Corporate Development.

CoreLogic : Introduces Verification of Employment and Income Solution to Expedite Borrower Verification Process (MarketScreener), Rated: A

CoreLogic, a global property information, analytics and data-enabled solutions provider, today released an enhanced Verification of Employment and Income(VOE/I) product. The comprehensive new VOE/I product takes time, touch and cost out of traditional employment and income verification through a three-step ‘waterfall workflow’ process, ensuring that every mortgage applicant can be verified.

The enhanced VOE/I product features a three-step ‘waterfall workflow’ that ensures each borrower’s employment and income is verified as efficiently as possible.

  • Step One: Instant verification via a direct integration to The Work Number (TWN)
  • Step Two: Automated verification leveraging dozens of third-party data sources
  • Step Three: Manual verification by a team of dedicated CoreLogic verification experts

CORELOGIC INTEGRATES CONDOSAFE WITH THE ELLIE MAE ENCOMPASS ALL-IN-ONE MORTGAGE MANAGEMENT SOLUTION (CoreLogic), Rated: B

CoreLogic today announced the integration of its CondoSafe product with the Ellie Mae Encompass® all-in-one mortgage management solution. CondoSafeis a one-stop condo project review tool that enables lenders to have a single, consistent, standardized review process, allowing them to determine eligibility earlier in the process, resulting in quicker approvals.

ArborCrowd Announces New Equity Offering in 707-Unit Multifamily Portfolio (AP News), Rated: B

ArborCrowd, the first crowdfunding platform launched by a real estate institution, today announced a new offering that allows investors to acquire equity interests in the Sioux Falls Multifamily Portfolio, a collection of class-B apartment communities located in Sioux Falls, S.D. The properties exhibit strong upside potential due to Sioux Falls’ sound multifamily real estate fundamentals and notable lack of professionally managed workforce housing product.

The investment has a targeted internal rate of return (IRR) of 12 to 14 percent over a three- to five-year hold period. Tzadik has budgeted $5.2 million to perform a comprehensive capital improvement plan that will include upgrades to all renovated units, common areas and public spaces.

LendPro’s Female Leaders Celebrated on International Women’s Day (LendPro Email), Rated: B

As the financial technology (fintech) industry continues to grow, innovators are increasingly looking for leadership and expertise to grow their companies and stand out from competitors. LendPro, a Lending-As-A-Service (LaaS) fintech company, prides itself in hiring strong talent.  Women make up 50% of staffing at LendPro’s Charlottesville corporate office, versus 37% female staffing at most fintech companies.

United Kingdom

Property finance hub Lendinvest plots £500m London float (Sky.com), Rated: AAA

The online property finance hub Lendinvest is plotting a £500m stock market flotation that will provide a fresh test of investors’ faith in a fast-growing but volatile area of the non-bank lending market.

Sky News has learnt that Lendinvest, which was set up in 2008 and has so far lent roughly £2bn to help buy, build or renovate British homes, has appointed Lazard, the investment bank, to advise on its strategic options.

Lending revolution: fintechs vs banks (Raconteur), Rated: AAA

Eight out of ten SME loan applications were approved by banks in the third quarter of 2018, according to the latest figures from trade association UK Finance. While this is a far cry from the days of the global financial crisis, when SME lending all but dried up in part due to regulatory pressures to shore up capital, smaller companies are still citing challenges in securing funding from traditional players, according to Stuart Chalmers, commercial banking lead for Accenture UK.

Alternative lenders understand the hunger for a seamless customer experience and have built credit journeys that align to business expectations

Almost 30,000 companies used non-traditional channels over the year, with peer-to-peer lending and equity-based crowdfunding now established investment vehicles for seed, startup, early-stage and fast-growth companies seeking capital. In fact, CCAF estimates that 29 per cent of all new loans issued in 2017 to small businesses with annual turnovers less than £2 million came from alternative finance.

Source: Raconteur

Burnham residents are the most thrill-seeking in the UK according to new study (Windsor Observer), Rated: A

It may come as somewhat of a surprise, but according to research from Zopa, Burnham has been revealed to be the most thrill-seeking town.

Peer-to-peer firms told to improve wind-down arrangements (Out-Law), Rated: A

In a letter to chief executives (4 page / 352KB PDF) sent last week, the FCA said a recent supervisory review of firms’ current arrangements against current requirements “strongly suggests” some P2P firms were falling short of the standards required by its rules.

Augmentum Capital signs up to Innovate Finance (P2P Finance News), Rated: A

AUGMENTUM Capital has joined Innovate Finance as its first investor member.

It is currently planning to issue extra ordinary shares in its investment trust as it looks to fund around £300m of potential opportunities in the sector.

PEER TO PEER LENDER RELAUNCHES PRODUCTS (Insider Media), Rated: A

A South West-based peer to peer lender is to re-launch its lending products aimed at individuals and businesses.

Folk2Folk is to offers 9 per cent interest rates for investors with a loan to value ratio of up to 60 per cent.

The business has so far brought £275m into rural businesses in Britain over the past six years.

Wonga compensation claims four times higher than expected (TechRound), Rated: A

It has been recently revealed that the number of compensation claims made against the failed payday lender Wonga, which filed for administration in August 2018, has ended up increasing four-fold. The initial figure given by the Financial Ombudsman Service in a Treasury Committee in January this year suggested that there were around 10,500 customers who had open complaints with the short-term credit, high-interest company.

Now, it turns out that the number of redress claims that have been made against Wonga is considerably higher, totalling over 40,000. It is potentially the case that these people will not end up getting their money back after having been mis-sold loans.

The IFISAs you can open for £100 or less (P2P Finance News), Rated: A

According to the most recent HMRC statistics, overall ISA savings fell from £79.8bn in 2015/16 to £61.5bn in 2016/17. Meanwhile, Bank of England statistics found that the amount of money that Brits were saving (both within and outside of the ISA wrapper) fell by £7bn in 2018 alone.

  • Abundance

Minimum investment: £5

  • Assetz Capital

Minimum investment: £1

  • Crowd2Fund

Minimum investment: £10

  • RateSetter

Minimum investment: £10

  • Octopus Choice

Minimum investment: £10

Environmental benefits of ISA investment (The Ecologist), Rated: A

Crowdfunding and peer to peer lending grew out of the banking crisis of 2008. According to the European Central Bank, the availability of bank loans to SMEs declined 23 percent immediately following the crash, causing a devastating impact on the economy.

Over 100 Finastra customers upgraded trade software in time to meet new SWIFT standards (RealWire), Rated: B

Over 100 Finastra customers were upgraded to the latest compliant versions of its transaction banking software, Fusion Trade Innovation, ahead of the new SWIFT standards deadline of 17 November 2018. The new ‘Standards MT Release’ included significant changes to category 7 messaging standards used in trade finance – the most significant set of changes to the SWIFT trade finance messaging interface in over 30 years.

China

China’s Lufax hits huge $ 39.4bn vaulation thanks to Primavera Capital-led Series C (Alt Assets), Rated: AAA

Chinese peer-to-peer lending business Lufax has confirmed it has reached an enormous $39.4bn valuation thanks to a Series C round led by private equity house Primavera Capital.

Chinese fintech unicorn Lufax in no rush to IPO (Technode), Rated: A

Chinese peer-to-peer (P2P) lender Lufax is not in a hurry to list on the stock markets, said an executive of its biggest shareholder, Ping An Insurance, during its earnings call, Chinese media reported (in Chinese) on Wednesday.

Ping An Insurance Group deputy CEO Jessica Tan said after Lufax’s latest round of funding, Ping An still holds approximately 41% of its shares.

European Union

Google Pay Added to Klarna’s Bank of Payment Options (WWD), Rated: AAA

Today, Klarna, the global payments provider “smoothing” out kinks in the checkout process for retailers, announced a partnership with GooglePay. Available for Klarna customers in Sweden, the intention is to make mobile payments “even easier and more secure.”

CreditEase Invests in wefox Group, the European Largest Insurtech Platform (PR Newswire), Rated: AAA

CreditEase, a Beijing-based leading FinTech conglomerate in China, announced today that its direct investment arm, CreditEase FinTech Investment Fund (CEFIF), participated in wefox Group’s $125 million USD Series B, a fast-growing Berlin-based insurtech firm together with Mubadala’s newly created European Ventures Fund. The investment is the largest Series B round for a European insurtech and Goldman Sachs International is acting as the private placement adviser to wefox Group in connection with the transaction.

The investment will help spearhead the company’s expansion into the European broker market. It also paves the way for wefox Group to accelerate growth and create the world’s most innovative product and engineering team applying advanced data analytics to create an all-in-one insurance platform in which all interactions are personalized. The company, which was founded in 2014, has grown its revenue to around $40 million USD, while serving more than 1500 brokers and over 400,000 customers, making it Europe’s number one insurtech platform.

Luna Connect: A new digital disrupter in the lending landscape (Irish Times), Rated: A

Luna Connect is a new digital lending platform primarily aimed at those lending to SMEs. It is designed to fit into the rapidly evolving financial services ecosystem and its founder, Brian D’Arcy, drew the inspiration for his business from the disruption currently underway in the financial services sector.

The company’s target market are lenders offering loans of under €200,000, whose borrowers typically require a fast decision on their application and want a more transparent lending process. The initial focus will be on Ireland and the UK with Europe and the US to follow. Investment in the project to date has been around €120,000 which was self-funded with support from the NDRC and Enterprise Ireland through the competitive start fund.

Australia/New Zealand

New US ambassador warns of China’s ‘payday loan diplomacy’ (The Washington Post), Rated: AAA

The new U.S. ambassador to Australia said Wednesday that he’s concerned about the way China lends money to developing Pacific nations in what he describes as “payday loan diplomacy.”

China categorically rejects accusations that it uses loans, grants and other financial inducements to extend its diplomatic and political reach, saying it is merely acting in the best interests of both sides in such transactions.

New way to borrow takes Australia by storm (Mozo), Rated: A

As distrust of the nation’s big banks and mortgage brokers swells amongst the wreckage of the banking royal commission, online lenders are emerging as real challengers in the home loan, business loan and personal lending markets.

NAB’s UBank launches ‘green’ deposits to chase Millennials’ savings (Financial Review), Rated: A

The CEO of National Australia Bank subsidiary UBank, Lee Hatton, says future retail depositors will want more control over where banks lend their money, prompting it to launch a “green” term deposit targeting environmentally concerned Millennial customers.

How marketplace lending meets investor needs (Cuffelinks), Rated: A

However, it’s also true that today’s investors face a risk environment of unprecedented complexity. In 2018, the S&P/ASX200 declined by 6.8%. Residential property values are falling and bank deposit rates fail to match inflation. In the last year, the Australian media landscape was dominated by the findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, with its revelations of duplicitous lending practices, improper fees, and general misconduct that, by the banks’ own admission, fell far short of community expectations.

Financial Markets Authority executive steps down over employment matter (NZ Herald), Rated: B

Financial Markets Authority (FMA) executive Garth Stanish left the investment watchdog at the end of last month over an internal employment matter, a spokesman for the authority said.

Stanish was also a director of markets oversight, a group that includes oversight of NZX, crowd-funding/P2P lending platforms and frontline supervisors.

India

P2P startup PaisaDukan raises 1st round of investment from JITO (UNI India), Rated: AAA

Vivriti Capital raises second round of funding of Rs 110 Cr from Creation Investments (YourStory), Rated: A

Vivriti Capital, a Chennai-based lending platform for corporate entities, secured Rs 110 crore worth of equityin an additional round of funding from its existing investor Creation Investments.

This comes just within two months of the Series A funding closure in December 2018, in which the company raised Rs 200 crore from Creation Investments. With the current equity infusion, Vivriti’s overall capital stands at approximately Rs 320 crore.

MSME Lending fuelled by Digitisation (Free Press Journal), Rated: A

MSMEs play a major role in Economic development of India. There are around 63.4 million units and they contribute to 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities and 33.4% of India’s manufacturing output. They have been able to provide employment to around 120 million persons and contribute around 45% of the overall exports from India. The sector grows at a rate faster than the large ones at more than 10% pa.

About 20% of the MSMEs are based out of rural areas.They provide employment to more than 130 million people and contribute to 45% of exports. MSMEs are also the largest employment generator every year. As of Sep18, the total credit in India was Rs 105.5 Lakh crores and MSMEs had borrowed Rs 24.7 cr. Large and Mid Caps borrowed Rs 44.4 cr. Year on Year the growth of overall commercial credit was at 13.5%.

Micro loans which are less than Rs1 cr grew 22.2% year on year and SME loans between Rs1 cr – Rs 2.5 cr grew at 18.3%.The growth was faster than the overall growth. Share of NBFCs in SME credit increased from 13% in Sep 15 to 17% in Sep 18. The number of NBFCs lending more than Rs 100 cr to MSMEs stood at 77 at the end of Sep 18.

Asia

Investment Task Force suspend operation of 168 illegal fintech firms (Antara News), Rated: AAA

The Investment Alert Task Force has suspended the operation of 168 entities allegedly running peer-to-peer lending services without a legal business license from the Financial Service Authority (OJK).
The task force has also suspended the operation of 47 illegal investment entities which has the potential to harm the public.
“Based on the monitoring on website and application in Google Playstore, the Investment Alert Task Force has stopped the operation of 168 entities that have violated OJK regulation no. 77/POJK.01/2016 on fintech peer-to-peer lending services, which has the potential to harm the public,” head of the task force Tongam L Tobing said in a statement here on Wednesday.

Fintech group to help develop P2P lending (The Jakarta Post), Rated: A

A group of financial technology (fintech) lenders wants to help develop a healthier lending industry and protect consumers by setting out a strict code of conduct for its members.The Indonesian Fintech Lenders Association (AFPI) will help stimulate the industry, which only gained government recognition three years ago, by providing risk management certification, public education campaigns and a compulsory code of conduct, which should be uploaded to the AFPI website soon.AFPI chairman Adrian Gunadi said the association had been established to ease the Indonesian Fintech Association’s (AFTECH) workload in dealing with fintech companies that provide lending services, including peer-to-peer (P2P) lending, crowdsourcing and digital credit cards.Such lenders account for 30 percent of all licensed fintech companies, whereas the remaining 70 percent are companies engaged in, among other thing…

Government moves to legalise P2P lending (Vietnam Vet), Rated: A

During a recent meeting with relevant ministries and agencies to discuss P2P lending, Hue instructed that during the pilot operation, P2P lending would be restricted to connecting lenders and borrowers as currently being run by most P2P lending companies in Viet Nam. P2P lending companies would not be allowed to mobilise capital, but act as intermediaries to connect lenders (investors) and borrowers.

The development of P2P lending will also create a new capital supply channel. Research conducted by Transparency Market Research showed that P2P lending would surge by 48.2 per cent annually in the 2016-24 period, while Morgan Stanley forecast the business model would reach a growth rate of 53.5 per cent globally by 2020.

Authors:

George Popescu
Allen Taylor

The post Thursday March 14 2019, Weekly News Digest appeared first on Lending Times.

Wednesday August 8 2018, Daily News Digest

OnDeck KPIs

News Comments Today’s main news: SoFi reports $200M loss in Q2. OnDeck jumps 18%. LendingClub sees record net revenues in Q2. Alipay fined for regulation violations. Dianrong raises $40M. Even Financial raises $18.8M. Today’s main analysis: OnDeck’s Q2 2018 earnings presentation. Today’s thought-provoking articles: GreenSky, OnDeck, LendingClub earnings. Where did it go wrong for Wonga? OnDeck’s Q2 earnings presentation. United States SoFi reports […]

OnDeck KPIs

News Comments

United States

United Kingdom

China

Other

News Summary

United States

SoFi Is Said to Report Second-Quarter Loss of $ 200 Million (Bloomberg), Rated: AAA

Writedowns of underperforming loans drove Social Finance Inc. to a second-quarter adjusted loss of about $200 million, according to people familiar with the matter.

OnDeck jumps 18% after Q2 beat and raise (Seeking Alpha), Rated: A

OnDeck (NYSE:ONDK) surges 18% in early trading after reporting Q2 adjusted EPS that beat consensus by 8 cents and boosting year adjusted net income guidance to $30M-$36M.

OnDeck Reports Second Quarter 2018 Financial Results (Markets Insider), Rated: AAA

OnDeck today announced second quarter 2018 Net income of $5.8 million, Adjusted Net income of $10.0 million and Gross revenue of $95.6 million.

Source: OnDeck Earnings Presentation

Review of Financial Results for the Second Quarter of 2018

Net income was $5.8 million, or $0.07 per diluted share, improved from the Net loss of $1.5 million, or $0.02 per diluted share, in the year-ago period.

Adjusted Net income was $10.0 million, or $0.13 per diluted share, compared to Adjusted Net income of $4.7 million, or $0.06 per diluted share, in the year-ago period.

Unpaid Principal Balance grew 3% sequentially and 8% from a year ago to $1,027 million. Originations of $587 million were consistent with the prior quarter reflecting an increase in the number of loans funded and decrease in the average loan size.  Originations increased 26% from a year ago with growth in both term loans and lines of credit.

Gross revenue increased to $95.6 million, up 6% from the prior quarter and 10% from the year-ago quarter, driven by higher Interest income. The Effective Interest Yield was 36.1%, up from 35.6% in the prior quarter and 33.5% in the year-ago quarter, primarily reflecting increases in average loan pricing.

Source: OnDeck Earnings Presentation

Guidance for Full Year 2018

OnDeck increased its guidance for the full year ending December 31, 2018:

  • Gross revenue between $380 million and $386 million, up from between $372 million and $382 million,
  • Net income between $10 million and $16 million, up from between $0and $10 million, and
  • Adjusted Net income between $30 million and $36 million, up from between $18 million and $28 million.
Source: OnDeck Earnings Presentation

See OnDeck’s full Q2 2018 earnings presentation here.

Why On Deck Capital Stock Is Soaring Today (The Motley Fool), Rated: A

Shares of On Deck Capital (NYSE:ONDK) were soaring by nearly 25% as of 1 p.m. EDT on Tuesday as the company beat consensus earnings expectations in the second quarter and raised its outlook for the remainder of the year.

Lending Club: bob and weave (Financial Times), Rated: AAA

Now, the top-line numbers are improving. Second-quarter figures released after market close on Tuesday showed record net revenue, up 27 per cent from a year earlier at $177m, from record quarterly loan originations of $2.8bn.

On top of all that, there was a big writedown this quarter of an acquisition made four years ago, during an ill-fated push into supplying loans to medical patients. Over the first six months, total expenses came to $1.28 for every dollar of net revenue.

Roundup of Q2 2018 Earnings: GreenSky, OnDeck, LendingClub (Lend Academy), Rated: AAA

GreenSky went public just a few months ago on May 24, 2018. Their IPO was significant for a couple of reasons. One was the lack of US based fintech IPOs over the last few years and the second was that GreenSky is a wildly successful business. Last year they reported $139 million in net income on revenues of $326 million.

Source: Lend Academy

OnDeck reported net income of $5.8 million for the quarter with gross revenues of $95.6 million, up 10% year over and 6% from the previous quarter. Originations grew to $587 million, up 26% from the prior year period, but down slightly from the previous quarter. The company’s trend of increasing the number of loans funded and decreasing the average loan size continues.

Source: Lend Academy

CEO Scott Sanborn noted that LendingClub’s core business is firing on all cylinders with record revenue and originations. The company has seen a 50% increase in applications year over year. Originations were $2.8 billion, up 31% year over year and up from $2.3 billion in the previous quarter. For context, the company originated their last high water mark of $2.75 billion in the first quarter of 2016. Revenues came in at $177 million, up 27% year over year.

Source: Lend Academy

Even Financial raises $ 18.8 million from GreatPoint Ventures, Goldman Sachs and others (TechCrunch), Rated: AAA

Even Financial, a fintech startup that connects the disparate entities of the financial services industry, recently raised a $18.8 million Series A round led by GreatPoint Ventures with participation from Goldman Sachs, Canaan Partners, F-Prime Capital, Lerer Hippeau and others.

What’s missing from the OCC’s fintech charter (American Banker), Rated: A

Although the OCC emphasizes that it’s holding these special-purpose charters to standards equivalent to those demanded of national banks, this is only sort of true with regard to the named prudential requirements, and it looks to be completely incorrect on critical restrictions on competitive and financial risk. These omissions have significant consumer protection, safety and soundness and structural impacts. Absent egregious violations, a charter granted cannot be revoked. The OCC should be sure it isn’t a shadow-bank enabler before it hands out these high-powered charters.

Is the backing of the banks enough for Zelle to beat Venmo? (Marketplace.org), Rated: A

Rahul Chadha follows peer to peer mobile banking for the research organization eMarketer. His firm says Zelle will overtake Venmo this year.  Chadha spoke with Marketplace’s Lizzie O’Leary about the two payment systems.

US challenger banks: who’s who and what’s their tech (Banking Tech), Rated: A

BankMobile
A digital bank created by an established US-based financial services player Customers Bancorp. BankMobile opened for business in early 2015.

It caters mainly for students and offers a low-fee checking account with no monthly fees and no overdraft/non-sufficient funds (NSF) fees. It also provides personal loans.

Chime
Founded in 2014, Chime has raised over $100 million funding to date, values the business at around $500 million and has over one million accounts. It employs around 100 people.

Endeavor Bank
Endeavor Bank opened its doors for business in San Diego, California in January 2018, following an initial capital raise of $26.6 million and the backing of over 450 investors/owners. It is a brand new bank, with no merger legacy.

Finn
Finn is a digital bank account for smartphones created by JP Morgan Chase.

GoBank
GoBank was launched in 2013 by Green Dot Corporation, which claims it to be “the first bank account designed from scratch to be opened and used on a mobile device”.

Iam Money
Iam Money has its HQ in Chicago and an office in San Francisco. It also has two offices outside the US, in Dublin and London.

It has secured $3 million of funding, and plans to have $20 million when it launches.

Marathon International Bank
A start-up bank for the Ethiopian American community, based in the Washington DC area. Its founders are Tekalign Gedamu, a retired economist and former MD of the Development Bank of Ethiopia, and Tesfaye Biftu.

Marcus
An online platform launched by Goldman Sachs – named after Marcus Goldman, one of the firm’s founders – offering no-fee personal loans and high-yield savings to consumers.

Moven
Launched in 2011 by Brett King, Moven describes itself as “the world’s first real-time mobile money tool”. It is a digital bank account with a mobile app.

N26
A challenger bank from Germany, now working on its US presence, including obtaining a banking licence. It opened early access to users in the US in October 2017 and has an office in New York with eight staff.

PurePoint Financial
PurePoint Financial was launched in early 2017 by MUFG Union Bank. It is a “hybrid digital bank” offering savings accounts and certificates of deposit (CDs).

Revolut
European banking challenger Revolut opened early access to users in the US in September 2017. It says it aims “to clean up the American banking system”. It provides digital banking services to consumers and businesses.

Simple
Digital banking service Simple was founded in 2009 in Portland, Oregon. It describes itself “a tech company, not a bank”.

In early 2014, it was acquired by BBVA Compass for $117 million.

SoFi

In early 2017, it raised another $500 million, and spent $100 million (in stock) on Zenbanx, a mobile banking start-up. Zenbanx offered a mobile account in the US and Canada that lets people save, send and spend money in multiple currencies. This deal demonstrated SoFi’s interest in branching into other financial services, with a wealth management tool in beta at the time of the acquisition.

Stash

In early 2018, Stash raised $37.5 million in Series D funding for product expansion, and shortly afterwards teamed with Green Dot Corporation and its subsidiary bank, Green Dot Bank, to launch mobile-first banking services (underpinned by Green Dot’s Banking-as-a-Service platform).

Studio Bank
In 2017, Tennessee-based Studio Bank filed an application to become Nashville’s “first newly chartered de novo bank in nearly a decade”.

Varo Money
San Francisco-based mobile banking service Varo Money was founded in 2015. It applied for a national bank charter and federal deposit insurance in mid-2017, to form Varo Bank.

Treasury urges mortgage sector to embrace digital tech (National Mortgage News), Rated: A

The Treasury Department’s recent report on how to regulate nonbanks drew praise not just from tech startups but also from mortgage industry insiders.

In addition to recommendations for a new federal fintech charter and that regulators pull back from payday lending rules, the report contained a section that might be music to a mortgage banker’s ears, including support for the industry’s automation efforts and another call to soften the use of the False Claims Act against lenders.

Blend Launches Insurance Agency (Finovate), Rated: A

Mortgagetech company Blend is venturing into insurance. The San Francisco-based company launched Blend Insurance Agency, an extension of its digital mortgage platform that offers borrowers a range of options for homeowners insurance.

RealtyMogul Sells Four Real Estate Properties on Behalf of Digital Investors (Citizen Tribune), Rated: B

The first property is a 1,242-unit self-storage facility in Fayetteville, NC. It was acquired in December 2013 and sold in January 2018. It was acquired for $6,750,000 and sold for $9,645,000, representing a 43% increase in capital value from acquisition.

The second property is a 40,000-square foot office building in Tamarac, FL. It was acquired in May 2016 and sold in February 2018. It was acquired for $4,150,000 and sold for $4,900,000, representing an 18% increase in capital value from acquisition.

The third property is a 72-unit multifamily apartment building in Ogden, KS. It was acquired in July 2013 and sold in April 2018. It was acquired for $4,000,000 and sold for $4,450,000, representing an 11% increase in capital value from acquisition.

The fourth property is a 208-unit multifamily apartment building in Euless, TX. It was acquired in February 2015 and sold in May 2018. It was acquired for $12,375,000 and sold for $20,900,000 after a value-add renovation program, representing a 69% increase in capital value from acquisition.

Zillow gets into the mortgage business, acquires Mortgage Lenders of America (TechCrunch), Rated: B

Zillow, the publicly traded real estate portal and lead generation service, has acquired Mortgage Lenders of America. This is Zillow’s first move into originating mortgages.

DriveWealth and Bambu Launch Robo Platform for Registered Investment Advisors (BusinessWire), Rated: A

DriveWealth Holdings, Inc. (“DriveWealth”), a fintech company providing brokers, digital advisors and mobile online financial services companies seamless access to the U.S. securities market, and Bambu, a global provider of robo-advisory technology, today announced the launch of a white-label, end-to-end robo-advisory platform solution for the wealth management industry.

Arizona’s Regulatory Sandbox Is Open for Play (The National Law Review), Rated: B

To be considered for admission, applicants must complete the nine-page application and pay a $500 application fee.  Each application must be for an innovative financial product or service as defined by the enabling legislation.

United Kingdom

RateSetter: FCA marketing restrictions are “disproportionate” (P2P Finance News), Rated: AAA

RATESETTER has hit back at proposed marketing restrictions for peer-to-peer lenders, stating that they are “disproportionate” and “clunky”.

Where did it all go wrong for Wonga? (The Guardian), Rated: AAA

Just when things were meant to be getting better for Wonga, it emerged at the weekend that the payday lender’s investors had to rescue it with a £10m capital injection.

The emergency fundraising is the latest episode in Wonga’s rapid rise and fall. Just six years after the company was touted for a flotation that would have valued it at more than $1bn (£770m), it is reported to be worth just $30m.

Regulation didn’t wipe out Wonga – losing its reputation did (City A.M.), Rated: A

WHEN PAYDAY LENDER Wonga launched in 2007, it was tipped to become a £1bn success story. Today, the company is worth just £23m and has only managed to avoid insolvency thanks to a last-minute £10m boost from investors. So what went wrong?

Rothschild’s Augmentum receives £3.5m Zopa boost (Citywire), Rated: A

Augmentum Fintech (AUGM), the venture capital fund spun off from RIT Capital Partners (RCP) earlier this year, has received a £3.5 million boost from the revaluation of peer-to-peer lender Zopa.

LendInvest makes a series of changes to BTL product (Bridging and Commercial), Rated: A

The specialist lender has removed its requirement for a debenture or floating charge on limited company applications.

It has also reduced its ICR assessment rate to 5% across all products with the exception of the five-year fixed interest product, which remains at 4.19%.

Why brokers should be allowed to speak to decision makers (Bridging and Commercial), Rated: A

Roy Armitage, head of credit at LendInvest (pictured above), is clear that, for a specialist lender, a good working dialogue between the underwriters and the brokers placing the business is crucial.

Participate in the Cambridge Centre for Alternative Finance Research Study (Lend Academy), Rated: B

They are winding up their largest survey ever right now. In the past they have produced multiple reports targeting the various regions around the world including: the United Kingdom, Europe, the Americas, Asia and Africa. This year they are combining everything into one big study.

If you have not participated in the survey yet time is running out (while the survey says it closes on July 22nd, they have extended the deadline for another week or so). We need every platform in this country and around the region to participate. To learn more you can read more about this comprehensive piece  in 

China

China’s Central Bank Fines Alipay (PYMNTS), Rated: AAA

Alipay, a payment affiliate of Alibaba, has been hit with a $601,846 fine by the Shanghai head office for the People’s Bank of China.

According to a report in Reuters, citing the central bank, the fine was for payment services regulations violations. The regulator didn’t provide any other details.

Dianrong pockets $ 40 million funding amid mounting P2P defaults in China (Technode), Rated: AAA

Chinese P2P lending platform Dianrong announced that it has raised $40 million of funding from Dalian Financial Investment Group Co. Ltd. The current round will increase the company’s total funds raised to date to over $500 million. Its previous investors include big titles such as Standard Chartered, GIC Private Limited, Singapore’s sovereign wealth fund, CMIG Leasing, Simone Investment Managers, etc.

China’s P2P lending meltdown (CNBC), Rated: A

China’s P2P lending meltdown from CNBC.

International

Prime Trust to Enable Real Estate Syndicators & Securities Issuers to Accept Funds in Bitcoin & Ethereum (Crowdfund Insider), Rated: A

Prime Trust, a blockchain driven trust company, announced on Monday it has launched a new technology that enables real estate syndicators and securities issuers to accept funds from investors in the form of Bitcoin and Ethereum, frictionlessly and with zero crypto-market risks to the syndicator or issuer. According to Prime Trust, the technology enables holders of these virtual currencies to invest in real estate, crowdfunding and other private and public securities offerings without having to go through the cumbersome and often confusing process of liquidating tokens and then wiring funds in USD to an escrow account at Prime Trust.

TransUnion Partners with EXL to Create Turnkey Current Expected Credit Loss (CECL) Solution (MarketWatch), Rated: B

TransUnion TRU, +0.56% announced today it is partnering with global technology and analytics company EXL EXLS, +0.93% to create a seamless technology solution for lenders to comply with the new Current Expected Credit Loss (CECL) accounting rule. Information about the new accounting rule will be highlighted during TransUnion’s webinar, “Major Hurdles to Overcome to be CECL-Ready,” scheduled for 1 p.m. CDT on August 15.

Australia

Financial advice institutions to refund over $ 800 million (Business News Australia), Rated: AAA

As the revelations from the Royal Commission continue to pour in, the Australian Securities and Investment Commission (ASIC) has revealed that, in total, Australian financial advice institutions will refund customers over $800 million in reparations over fees for no service (FFNS) programs.

Australian challenger banks: who’s who (and what’s their tech) (Banking Tech), Rated: A

86 400

Launched in June 2018, the bank is led by former ANZ Japan CEO, Robert Bell, and ex-Cuscal Payments CIO Brian Parker. Joining as incoming chairman is Anthony Thomson, co-founder and former chairman of Atom Bank and Metro Bank.

Judo Capital

For its tech, it uses a variety of different vendors. Unifii’s Business Transformation Platform is used for its technical infrastructure. For its small business lending platform, it will use one from Realtime Computing, based in Perth, Australia.

Pelikin

Digital banking start-up Pelikin aims to reshape the way people save, send and spend their money in Australia and while travelling abroad. The company’s slogan is “spend like a local”. The founder is Sam Brown.

UBank

Unveiled in 2008 and developed and supported by National Australia Bank (NAB). It operates under NAB’s banking licence, and offers home loans, online savings accounts, and term deposit accounts. UBank has more than 400,000 customers.

Volt Bank

Sydney-based Volt Bank was given Australia’s first new restricted banking licence and is now working towards becoming a fully licensed bank.

Xinja

The neobank emerged from the shadows to unveil its plans for a mobile-only digital bank in 2017. It will have no bricks and mortar branches.

MENA

Visa Invests In Israeli Start-up Behalf (RTT News), Rated: AAA

Visa, Inc. (V) on Tuesday announced an investment and partnership with Israeli start-up, Behalf, to support small business growth through easy-to-access capital and financing.

Authors:

George Popescu
Allen Taylor

Tuesday November 29 2016, Daily News Digest

Tuesday November 29 2016, Daily News Digest

News Comments Today’s main news: What SoFi is planning next. Today’s main analysis : Incumbent finance companies say FinTech partnerships boost revenue. Today’s thought-provoking articles: How marketplace lending is evolving. How UBank is using Agile to lead online banking. P2P lending offers a new form of financial inclusion. United States SoFi is dominating and here’s what […]

Tuesday November 29 2016, Daily News Digest

News Comments

United States

United Kingdom

Australia

Asia

News Summary

United States

SoFi Is Dominating The Finance Space: Here’s What They’re Planning Next (Forbes), Rated: AAA

There is more than one trillion dollars of student debt in the U.S. today, making student loan debt the second largest amount of debt, second only to the $8.5 trillion owed in mortgages. Despite the gargantuan size of the market, there have traditionally been very few options: 90 percent of the loans are made by the government at standard 7 to 8 percent interest rates.

Dan Macklin, VP of Community and Member Success, co-founded SoFi at Stanford with CEO Mike Cagney as well as James Finnigan and Ian Brady. Macklin and I sat down recently to discuss the future of SoFi and his unusual and effective community growth tactics.

When you started out you were groundbreaking in your market and now there are a number of competitors seemingly coming up behind you. Is that a fear, are you always looking backwards? And how are you developing?

It’s great that other competitors are coming into the market because it validates the fact that this is a real market. It’s actually helpful for us in everything we do in that if another competitor gets some press we always see a spike in SoFi traffic because those articles almost definitely mention the fact that SoFi is the dominant player in the industry. We’re very happy with that!

Now you’re developing and you’re helping other smaller businesses get started as well. Why are you doing that?

We developed the SoFi Entrepreneur Program to help entrepreneurs who are starting a company and have student debt.

It’s very true that student debt is holding many people back from entrepreneurship and we want to try to alleviate that and encourage people to start those companies.

Through the program we do two things. One, we allow people to defer their loans for six months, that can be extended to 12 months, and that gives just a little bit of time where they can devote their time and energy to their companies and not have to worry about that student loan payment. But then second, and I think more importantly, we try and help them proactively as much as we can. We introduce them to investors, we bring them along to conferences, and we promote their products to our customer base.

Being the co-founder of a scrappy start-up is one thing and one type of job. What are the challenges that you’ve personally faced now that it’s a much bigger company? And what tips would you have for others, having been through this process?

So as a co-founder, I don’t know everything that’s going on in the business, but that’s the way it should be, because if you try to keep too close a hold on things then you won’t grow at the pace that you could be growing at.

How are you developing? Now that you’re a large established company and maybe a more-trusted brand, how are you developing your approach to market?

We’re doing a lot more marketing. You may have seen the Super Bowl ad earlier this year, and we’re doing a lot more out-of-home ads: billboards, taxi tops, as well as TV.

We’re now working with more than 600 companies who are helping their employees and offering SoFi as an employee benefit. Student loans are a big problem for the young workforce of the US today, and we see student loan benefits as the new 401k.

THIS START-UP’S VALUATION JUST DOUBLED TO BILLION (Vanity Fair), Rated: AAA

At least one start-up, however, appears to be bucking this trend: on Black Friday, payments start-up Stripe announced a new funding round that will nearly double the company’s most recent valuation, bringing its value to $9.2 billion, the company said. The new funding round, as The Wall Street Journal first reported, includes $150 million from investors such as CapitalG, the investment arm of Alphabet, Google parent company; General Catalyst Partners; and Sequoia Capital, an early investor. Stripe is now valued more highly than other private fintech start-ups, including $4 billion Social Finance.

Stripe, meanwhile, is also trying to build out new ways to make money, essentially also becoming a financial-services company by broadening its portfolio to include fraud prevention tools, among other things. Stripe’s clients include other highly valued start-ups like Lyft and Slack, more traditional retailers like Macy’s and Adidas, and less-traditional clients like NASDAQ, UNICEF, and “both presidential campaigns,” TechCrunch reports.

SoFi Offers Term Life Insurance for Millennials (Crowdfund Insider), Rated: AAA

SoFi has partnered with Protective Life Corporation to provide individual term life insurance of up to $1 million. All you have to do is complete the form online.

SoFi notes that Millennials are the least likely to posses life insurance. They also say that Millennials overestimate the cost of life insurance premiums by 213%. The expected high cost of term life is  “causing them to delay getting coverage”.

PeerStreet Raises M For Real Estate Loan Marketplace (Socal Tech), Rated: A

Los Angeles-based PeerStreet, a startup which operates a marketplace for investing in real estate backed loans, has raised $15M in a Series A funding round. The funding was led by Andreessen Horowitz, and also included The Kaiser Family Foundation, Rembrandt Venture Partners, Montage Ventures and others.

Credible adds MEFA to its marketplace (Bankless Times), Rated: A

Student loan marketplace Credible.com has partnered with the Massachusetts Educational Financing Authority (MEFA) in a move which sees MEFA offering student loan refinancing to borrowers across the country.

Credible.com now offers student loan refinancing through six lenders.

In a release Credible.com said the average borrower saves an average of 1.59 percentage points and $18,668.

For Underbanked, Higher Fees And Auto Payments (PYMNTS.com), Rated: A

There are 67 million adults in the United States who are part of the “underserved” market, and those individuals, who do not have bank accounts, paid as much as $141 billion in fees for various financial products last year.

The study found that border trends are afoot, as those individuals have begun shifting some of their financial activity, traditionally tied to alternative financing, in part away from online payday firms and storefronts. Activity has, in fact, moved toward other conduits, such as small business marketplace lenders. Marketplace loans jumped by as much as 210 percent, and payday loans across storefront and online conduits slipped by 23 percent — a finding the study attributed to installment loans, or subprime cards, in the wake of regulatory pressures.

8 million Americans could get a lower rate on their student loans (CNN Money), Rated: A

Eight million Americans could get a lower interest rate on their student loans, and many of them might not even know it.

That’s the estimated number of borrowers eligible to refinance their debt, according to a new report from Credible, an online student loan marketplace. It’s roughly one-third of all people who are currently paying down student loans.

Your eligibility does depend, though, on how much money you earn relative to the amount of debt you have, and it helps to have a good credit score.

Credible, which helps student borrowers shop around for the best rates, analyzed data from its users over the past 17 months to see who was getting the best rates, and how much money they were saving. Here’s a look at what they found.

Recent grads who used Credible to refinance had an average income of $54,200 and a loan balance of $49,379.

On average, borrowers who refinanced reduced their rate by 1.7 percentage points, cut their term by five years, and can expect to save $18,668 over the life of the loan, according to the report.

Money360 Closes .5 Million Bridge Loan for Signal Hill, California, Property (Yahoo! Sports), Rated: A

Money360, the leading commercial real estate marketplace lending platform, announced today that it has provided a $10.5 million bridge loan for a fully occupied, single-tenant suburban office complex in the Southern California coastal community of Signal Hill, California.

Totaling 72,485 square feet, the 3.7-acre complex features three, three-story buildings connected by steel-framed pedestrian bridges in a campus-like setting that surrounds an attractive water feature. The complex has been fully built out for classroom and administrative office use and is currently leased by an established private university providing post-secondary education in pharmaceutical, nursing and clinical research studies.

LendIt Launches Fintech Industry Awards (LendIt Email), Rated: B

March 7, 2017, following the close of the second day of the LendIt USA conference on March 6-7, 2017.

Nominations are now being accepted in 18 categories recognizing top performers, innovators and emerging talent in lending and fintech, including:

  • Top Consumer Lending Platform
  • Emerging Real Estate Platform
  • Top Fintech Equity Investor
  • Top Fund Manager
  • Best Journalist Coverage
“The lending industry is entering its 2.0 phase, after maturing in 2016,” said Peter Renton, co-founder and chairman of LendIt. “As we seek to connect the global online lending community and foster innovation and industry growth, we must recognize those that are making the biggest contributions and innovations and moving our industry forward.”
Categories were designed by the expert team at LendIt to reflect the most vital stakeholders in the online lending and fintech industries. LendIt expects to receive hundreds of nominations from leading and emerging lenders, law firms, accounting firms, banks, investors, journalists and executives that make the marketplace lending industry as vital and competitive as it is today.
The awards will be judged by a panel of 30+  industry experts, representing a diverse cross-section of the industry. Distinguished judges include:
  • Glenn Goldman – CEO at Credibly
  • Brian Korn – Partner at Manatt
  • Gilles Gade – CEO at Cross River Bank
  • Angela Ceresnie – Chief Operating Officer at Climb Credit

“There is no better place than LendIt USA 2017 to announce the winners of our first-ever LendIt Awards, as this year we are expecting more than 5,000 attendees, making it the largest fintech event ever held in New York City,” said Jason Jones, co-founder of LendIt. “LendIt is dedicated not only to connecting the global online lending industry, but also the global fintech industry, as online lending has been so important in putting fintech on the map.”

The awards nomination period closes on December 21 with finalists announced mid-January.

LendingTree Survey finds Most Americans Waive Budgets for Holiday Shopping (PR Newswire), Rated: B

LendingTree®, the nation’s leading online loan marketplace, recently conducted its second annual Holiday Shopping Survey among 1,062 American adults and found that once again, more than half of Americans  plan to shop for the holidays without a set budget. With more 43 percent admitting to having some form of financial regret after holiday shopping, some consumers may be facing more debt in the new year.

According to the survey, 27.02 percent of American’s were saddled with holiday-related debt in the first few months of 2016, and 4.6 percent are still paying off last year’s shopping debt. However, this is an overall improvement from last year, where almost 31 percent welcomed the new year with holiday shopping debt.

oughly two out of three shoppers (66.1%) estimate they will spend, in total, $500 or less on gifts during this holiday season. This represents a slight increase from the 64 percent who planned to do the same last year.

First Responders treated to National Funding Holiday Bowl (PR Newswire), Rated: B

 National Funding, this year’s title sponsor of the Holiday Bowl, announced today that they have pledged to match all public ticket donations for first responders and military service members, up to $100,000.  The San Diego business community and local San Diegans have the opportunity to help National Funding send up to 8,000 police officers, firefighters, sheriffs, lifeguards, paramedics, emergency supporters and military personnel to enjoy America’s Finest Bowl Experience.

National Funding CEO and founder, Dave Gilbert has committed this generous giveback on top of his one-year title sponsorship agreement and his support of the Holiday Bowl’s pregame FanZone.

“We’ve been thrilled to sponsor the Holiday Bowl for the past two years as a way to support our hometown. This year, we wanted to offer something special to our first responders and the military, who are such a vital part of the San Diego community. We are matching donations as a way to collectively thank and recognize their important contributions to the city and the country.”

Local businesses or individuals who wish to support National Funding’s efforts to send local first responders to the game can learn more at:www.sandiegobowlgames.com/tickets/corporate-giving. The deadline to pledge tickets is December 9th. Tickets will be distributed by the National Funding Holiday Bowl directly to first responder groups in San Diego.

The National Funding Holiday Bowl kicks off at 4:00 p.m. PST, Tuesday, December 27th and features a classic college football rivalry between the Pac-12 and Big Ten Conferences. The National Funding FanZone will kick off four hours before the Holiday Bowl, hosting a craft beer garden, local food trucks, interactive football skills challenges and a sports lounge. Access to the pregame party is included with each game ticket.

United Kingdom

54% of incumbents say fintech partnerships have boosted revenue (Business Insider), Rated: AAA

The growing number of partnerships between fintechs and legacy players suggests that incumbents believe there are benefits to working with new market entrants.

  • Cost savings. Eighty-seven percent of respondents said they were able to cut costs to some extent by working with fintech providers.
  • Brand refreshes. Eighty-three percent of respondents said collaborations with fintechs offered opportunities for incumbents to refresh their branding.
  • Increased revenue. Fifty-four percent of respondents said partnerships had resulted in boosted revenue. It’s worth noting that this is the benefit seen by fewest incumbents, which suggests it may take longest to emerge as the parties involved work out a business model that suits everyone.

The battle already underway will create surprising winners and stunned losers among some of the most powerful names in the financial world: The most contentious conflicts (and partnerships) will be between startups that are completely reengineering decades-old practices, traditional power players who are furiously trying to adapt with their own innovations, and total disruption of established technology & processes:

  • Traditional Retail Banks vs. Online-Only Banks: Traditional retail banks provide a valuable service, but online-only banks can offer many of the same services with higher rates and lower fees
  • Traditional Lenders vs. Peer-to-Peer Marketplaces: P2P lending marketplaces are growing much faster than traditional lenders—only time will tell if the banks strategy of creating their own small loan networks will be successful
  • Traditional Asset Managers vs. Robo-Advisors: Robo-advisors like Betterment offer lower fees, lower minimums and solid returns to investors, but the much larger traditional asset managers are creating their own robo-products while providing the kind of handholding that high net worth clients are willing to pay handsomely for.

Key themes discussed as marketplace lending sector evolves (Structured Credit Investor), Rated: AAA

Q: In an eventful year for the marketplace lending industry – during which growth has been rapid, but not without setbacks – which key themes stand out?
Chris Kennedy, md, MountainView:
The market has seen incredible growth up to this stage. Part of the process of a growing market is pull-backs and right now we are experiencing some of that, but this is still a huge opportunity for growth for investors – both investors in loans and in platforms. Unsecured consumer debt and unsecured small business debt is a US$1.2trn opportunity – at least – as US banks are over-regulated and do not have the economics to make these loans effectively.

Right now the M&A shake-out will only help the larger players grow market share and self-regulate to a certain extent, developing common standards with regard to being a data furnisher to the credit bureaus and really focusing on what works. I think everyone will realise that lending into the prime space, as SoFi does, works. These borrowers perform and the loans are good loans, so relative to global yield curves, these are above-average opportunities.

Q: The importance of thorough due diligence has come to the fore this year. What is driving this?
Charles Moore, chief commercial officer, Global Debt Registry:
This year has really put due diligence under the spotlight. It has always been important, but the specific issue of due diligence that has really come into focus has been loan verification.

Currently, the loan verification approach taken is generally to compare a loan tape to a loan agreement. The challenge in marketplace lending is that they are both electronic documents that are both provided by the seller of the asset, which represents something of a conflict of interest and is not a particularly robust model. That was being questioned last year by some of the risk departments, but I think this year is when it has really been brought to the front office and become part of the deal conversation.

Q: The concept of ‘trust but verify’ has been increasingly discussed in marketplace lending. Why is data standardisation important in this regard?
Brady Akers, director, Orchard Platform: 
Trust and verification are critically important, especially for this emerging industry to grow, and transparency is a necessity. I think it will take a coordinated effort for participants across the industry, and companies like Global Debt Registry, PwC and Thomson Reuters will play a vital role in due diligence and validating that borrowers actually exist, and that the data is accurate.

 

Institutional investors looking to enter this space, or deploy more capital, begin their research with data analysis. Right now, that is a very difficult and expensive process because datasets are not consistent across lenders.

Q: Regulatory initiatives are changing the market. What are the implications of this from an audit perspective?
CK:
From an auditor’s perspective, we are starting to see some requests that not only lenders but also platforms go out and seek independent third-party fair value marks – not only on the loan portfolios, but also the servicing assets of these platforms. On the loan side, it has been a pretty simplistic model of holding the loans at par and adding monthly adjustment for accrued interest and layering in some loss provision. Talking to investors and platforms, we have said that you really want to bake in a more robust approach and move to a discounted cashflow methodology.

Q: How much of an issue is loan stacking and should market participants be worried about it?
CK: 
The process is really understanding and tracking borrowers, so platforms will need to work with the credit bureaus to create some kind of data exchange. However, loan stacking is only affecting something like 5%-10% of the market.

How to cut mortgage fraud risk (Money Marketing), Rated: A

Recent figures from Financial Fraud Action UK revealed a financial scam was committed, on average, every 15 seconds during the first six months of 2016, says Roy Armitage, head of credit at Lendinvest.

That represents a 53 per cent rise year-on-year, with these scams coming in all shapes and sizes. Furthermore, a staggering 56 per cent of UK organisations have been affected by fraud in some way, and it is one of the biggest risk concerns facing board members.

It is crucial that lenders engage with these data feeds and add in their own information in a structured way. The richer those structured data feeds become, the more they benefit everyone across the industry.

However, the data can only do so much. There is no single algorithm that can look over that data and then decide if the application is credible and transparent. It’s also vital therefore to employ quality and experienced underwriters who know how to cast a truly critical eye over all application data.

LendInvest appoints former Castle Trust manager as BDM for Northern England (Mortgage Strategy), Rated: A

Online mortgage lender LendInvest has appointed its first business development manager for Northern England.

Damien Druce joins from Castle Trust where he was National Development Manager and was previously head of distribution and development at Crystal Specialist Finance.

He will be based in Greater Manchester and will travel extensively, considering bridging and development loan opportunities between Staffordshire and the Scottish borders.

Metro Bank revamps online banking platform (altfi), Rated: A

Metro Bank, the first in a flurry of UK-based challenger banks to receive a licence over the past five or six years, has launched an upgraded version of its commercial internet banking platform. Organisations with subsidiaries are now able to use a single customer view dashboard to keep tabs on all offshoots.

Metro Bank does not currently use marketplace lending platforms as a distribution channel for lending to small businesses, as far as we’re aware, but has been lending through consumer focused peer-to-peer site Zopa since May of last year. The challenger bank currently holds around £7.3bn in deposits, with 52 per cent coming courtesy of commercial customers.

Its revamped digital banking platform was built by Backbase, a fast growing fintech software provider.

A backward step as peer-to-peer pioneer Zopa takes banking road? (Evening Standard), Rated: A

Banks have performed a similar role for centuries but what is different about Zopa and the other marketplace lending platforms which have followed its lead is that they use the internet to find and match the borrowers and lenders.

As peer-to-peer infrastructure and regulatory costs are negligible in comparison to the banks, borrowers and lenders get a much better deal.

So it came as a shock last week when Zopa announced it was to apply for a banking licence. Its entire ethos has been to set out its stall as the future — yet here it was embracing the past.

With that action, all the promise that peer-to-peer technology would bring a new form of lending was called into question.

How all this would continue to work if all peer-to-peer lenders followed the Zopa lead and started to operate as banks is not immediately clear, given that their costs would soar and the value disappear because of that regulation and capital requirement.

Australia

How UBank’s FinTech culture enables Agile to thrive (CIO.com.au), Rated: AAA

Some organisational cultures can find it difficult to adapt to an Agile mindset. Central to adopting an Agile approach is emphasising visibility and transparency. This includes making everything (including bad news) visible across the entire organisation. It also means prioritising face-to-face communication. Finally, open team reflection is critical to identifying where things went wrong and how they should improve.

One organisation that has done this successfully is online bank, UBank.

To help drive the Agile approach even further, UBank’s digital team was recently organised into four cross-functional scrum teams, rather than by role-based functions. Cross-functional teams are used to foster a culture of innovation and encourage out-of-the-box thinking and problem solving.

Within a few weeks, UBank’s flat structure enabled this reorganisation of teams to work smoothly. The teams started talking a lot more, sharing development work, doing code reviews on each other’s code,

Strong executive support helped ensure success. Taking UBank’s CEO and other divisional leaders on the Agile journey helped guide the business transformation that the digital team was trying to achieve. To accomplish this, Bulletproof coaches worked with the product owners to link UBank’s goals to the initiatives that the digital team worked on.and clarifying with the product owner when they weren’t clear on exactly what they should be developing.

However, if you’re not there yet, there are some key takeaways that you can look into before you start your Agile journey.

  • Have a clear organisational vision: Have buy-in across the business about what your purpose is.
  • Provide visibility at the executive level: It’s important that everyone has visibility into why the cross-functional development teams are working on certain initiatives.
  • Foster a trusting environment: Software development is complex in nature which means issues will always arise.

HashChing trailblazes fully-digital loan approval (Australian Banker), Rated: A

Online home loan marketplace HashChing has announced they are set to pilot their new virtual identification system this weekend.

The technology will allow brokers on the HashChing platform to scan their clients’ faces via video call, along with a picture of their driver’s license or passport. 

Speaking to Australian Broker, HashChing co-founder and CEO Mandeep Sodhi said they partnered exclusively with South African company e4 International to develop the groundbreaking new technology.

The new system will dramatically speed up turnaround times and decrease processing costs, Sodhi said. Currently it can take one to a few weeks for brokers to validate their customers’ identities.

Asia

Peer-to-peer lending: A new form of financial inclusion (The Jakarta Post), Rated: A

Players within the financial services ecosystem expect P2P lending to become a solution for the lack of access to financial services in the country and to achieve financial inclusion through synergy with other financial institutions and technology companies.

The platform offers numerous advantages over banking services. For example, its flexibility allows it to channel capital to virtually anyone, in any amount, effectively and transparently, at low interest rates.

Financial services like P2P lending promise to be a solution for Indonesia, which has been struggling to overcome a bundle of problems: First, Indonesia still has to increase financial inclusion. The Indonesian FinTech Association has reported that 49 million SMEs are not bankable, as they are unable to provide collateral to access conventional loans. P2P lending can help creditworthy SMEs by providing loans without collateral.

Second, Indonesia must overcome regional disparities in financing across the archipelago. Some 60 percent of financing services are now concentrated in Java. P2P lending, meanwhile, can reach anyone in any place.

Third, there is a gap in infrastructure financing of Rp 1,000 trillion (US$73.9 billion) annually. The existing financial institutions can only provide about Rp 700 trillion in loans of the total annual demand of Rp 1,700 trillion. With lower overhead costs, combined with innovative credit scoring algorithms, P2P lending can close the gap in the infrastructure financing.

 

Learning from other countries, the potential of P2P lending can be optimized through collaboration with banks. China, for instance, has a dynamic SME ecosystem that allows support from financing services. In that environment, the number of P2P lending companies has soared over the past five years, while that of banks in China has doubled.

Despite its huge potential, P2P lending should be regulated carefully. The role of regulators is highly needed to nurture a healthy business ecosystem.

To ensure business safety, a significant capital ownership requirement (above Rp 20 billion) would be an important part in a selection mechanism and for quality control, since P2P lending is a capital-intensive and scalable business.

P2P lending firms must also guarantee the security of public funds and data while maintaining reasonable interest rates to ensure the financial health of the public.

Authors:

George Popescu
Allen Taylor