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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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.

Tuesday September 26 2017, Daily News Digest

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News Comments Today’s main news: SoFi’s CTO leaving the company. World Business Lenders buys BizFi assets. Zopa improves loan sale processing times. Fintech startups, banks face off on new European payments rules, data access. Klarna wins international ANDY award. Today’s main analysis: How MoneyTap is tackling the unbanked problem in India. Today’s thought-provoking articles: Fundrise, Wealthfront spar over real […]

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News Comments

United States

United Kingdom

China

European Union

India

APAC

Africa

News Summary

United States

SoFi’s chief technology officer to step down (Daily Mail), Rated: AAA

June Ou, chief technology officer of online lender Social Finance Inc and wife of its former CEO Mike Cagney, plans to leave the company, according to a source familiar with the situation.

The exact date of her departure from SoFi, has yet to be decided, according to the source. Ou did not immediately respond to requests for comment.

Ou, who joined SoFi in 2012 and is also the company’s vice president of engineering, is the latest senior executive to depart the embattled financial technology firm.

A pair of investing startups are in a public spat about the future of real-estate investing (Business Insider), Rated: AAA

It all started when Andy Rachleff, the CEO of Wealthfront, a California-based roboadviser with nearly $8 billion under management, went after the business model of Fundrise, a Washington DC-based real-estate crowdfunding company. , Rachleff said professionals who run managed real-estate funds fare poorly compared with low-cost index-tracking ETFs, such as Vanguard REIT Index Fund.

Fundrise’s CEO Benjamin Miller says this is a misrepresentation of how Fundrise works. “Amateur investors” on the platform aren’t picking individual projects, but rather strategies managed by the company.

“We operate like a Blackstone, but we democratize it and lower costs,” Miller told Business Insider.

Miller points to the recent initial public offering of Invitation Homes (INVH) to illustrate how expensive the public markets can be. INVH priced 215% higher in the public markets than in the private markets, according to data from Google Finance.

Source: Business Insider

Bizfi Survives, Thanks to World Business Lenders Asset Purchase Deal (deBanked), Rated: AAA

The Bizfi marketplace is slated to live on, according to Stephen Sheinbaum who joined World Business Lenders (WBL) as a managing director in July. On Wednesday, WBL purchased several assets from Bizfi including the brand, the marketplace, the Next Level Funding renewal book, and other related pieces of the company, he says. Sheinbaum founded Bizfi (then Merchant Cash and Capital) in 2005.

WBL, a Jersey City-headquartered small business lender will also be a lender on the platform.

The Tech Revolution Has Arrived For Alternative Lending (Bisnow), Rated: A

The growth of alternative sources of capital has opened a door for online and marketplace lenders, combining the availability and flexibility of capital with speed and transparency.

“Upward of $100B in loans are coming due and there is a gap,” Money360 President Gary Bechtel said. “The banks, life insurance companies, agency lenders, can only provide so much capital, and this is the void that nonbank lenders like Money360 are filling. And many of these firms have a technology component to them.”

Marketplace lending has become a popular alternative for student loans, credit card and small-business debt, but the commercial real estate industry has yet to fully participate. For Bechtel, it is a missed opportunity.

Money360 lifts those constraints. Because it does not have the same balance sheet requirements and regulations as traditional lenders, borrowers seeking financing for any asset class can apply for a loan on the platform. The platform offers loans between $1M and $20M on both bridge and permanent loans, with competitive terms and features similar to traditional lenders. Bridge loans are interest-only, and like banks, permanent loans utilize 25- to 30-year amortization schedules.

Worthy Financial Announces the Closing of Its Seed Financing Round (BusinessWire), Rated: A

Worthy, a digital investment app that redefines how Americans access investment products, diversify their portfolios and save for retirement, announced the successful closing of its seed financing round. The funds will be used for the full-scale roll-out of the Worthy mobile app, and will enable Worthy to expand its growing user base as well as to broaden the array of investment product options it offers retail investors.

Although yield-starved sophisticated investors have been increasingly allocating more and more of their capital to alternative asset classes such as real estate and private company debt, most retail investors are still unaware that modern technology and a new regulatory regime allows them to access these products online in very small aggregates.

Acting Comptroller of the Currency Keith Noreika Addresses Online Lending & Fintech Innovation (Crowdfund Insider), Rated: A

Speaking at the Online Lending Policy Summit in Washington, DC, Acting Comptroller of the Currency Keith Noreika discussed the online lending industry and his perspective on responsible innovation. Noreika told the conference participants;

“I see the growth of online lending and marketplace lenders as the natural evolution of banking itself. Your industry demonstrates a certain entrepreneurial spirit to seize economic opportunity that begins with your new idea. The idea may be leveraging the lending power of groups or using new data to assess creditworthiness. Or, the idea may be a way to make decisions faster or to give consumers more control of their financial lives.”

Noting that US marketplace lenders have originated about $40 billion in consumer and small business loans in the past ten years, Noreika said that online lending represents a substantial portion of all consumer unsecured credit in the US.  Some prognosticators expect that online lending will top $1 trillion by 2020.

What’s Hot and What’s Not in U.S. Fintech (Finovate), Rated: A

Here are the rules– we shouted out a list of 20 fintech trends and our cocktail-fueled audience shouted their opinion on whether the trend is hot or not*.

The hottest

  • Regtech
    I was fairly surprised to hear the audience react so strongly to this trend, since the U.S. is lagging in regtech startups and adoption.

What’s hot

  • AI  As we close out 2017, players in the fintech sector seem to be in all out hype mode on the subject.
  • Open Banking  Though the U.S. doesn’t have any pending open banking regulation, folks still seemed quite optimistic about this trend.
  • Mobile account opening  Certainly a necessity for mobile-centric onboarding, mobile account opening has been around for awhile. It seems to have received new life with many enabling technology developments and IoT device launches throughout the years.
  • Challenger banks  With the lack of challenger bank launches in the U.S. (that is, compared to the U.K.), it was surprising to see the group cheer on challenger banks so vociferously. Perhaps a sign that more challenger banks are coming to the U.S.?
  • Insurtech – The audience seemed to heavily favor this trend over others, despite the relative lack of insurtechs in the U.S.

Not hot

  • Chatbots
  • Roboadvisory
  • ICO’s
  • Alternative credit scoring
  • Voice banking
  • Mobile wallets
  • Biometric authentication
  • Alternative lending

Payday lender operators forced to forgive $ 12M in loans (New York Post), Rated: A

New York on Monday announced a settlement with two payday lender operators — barring them from working in the state and forcing them to forgive roughly 20,000 loans worth roughly $12 million.

While payday lending is illegal in New York, state residents can fall prey to the predatory loans through out-of-state lenders trolling online.

Vullo called out E-Finance for making “unlawful misrepresentations” to New Yorkers when requesting payments and negotiating payment agreements.

TAR, headed by Jeremy Schaffer, and E-Finance, headed by Joshua Mitchem, according to court papers, will pay a $45,000 penalty plus as much as $15,000 to cover the cost of sending notices to consumers whose loans were forgiven.

After ending payday lending, group looks for alternatives (Argus Leader), Rated: A

South Dakotans for Responsible Lending will hold a meeting Thursday aimed at creating a nonprofit to help South Dakotans get small-dollar loans without taking on debt.

The effort comes months after South Dakota voters opted to cap interest rates on payday lenders, crippling the industry in the state.

The grant and donation-funded Minneapolis group helps participants pay back loans over a 12-month period with no fees or interest. Since 2015, the group has helped 131 loan participants refinance $90,072 and save $355,042 in interest.

Sara Nelson-Pallmeyer, the group’s executive director, said South Dakota voters have already taken a significant step in reducing payday loan debt by eliminating the industry. In its place, banks and credit unions should look to offer additional loans, she said.

The Great “Sexism in FinTech” Debate (FintekNews), Rated: A

Although I would never diminish it or deny its existence, I just don’t see sexism as an escalating problem in FinTech – or anywhere in the developed world for that matter. In fact, what I see trending is the exact opposite.

Extraordinary women in FinTech are all around us. I read about them every single day – not only in leading industry rags like FintekNews, Bankless Times and Crowdfund Insider, but also in long-established financial periodicals. In fact, FintekNews, which is published by Cindy Taylor, an accomplished FinTech visionary in her own right, devotes an entire section just to 

Breaking Banks: How men can support women in fintech (American Banker), Rated: A

Brett King is back on the show, talking about diversity in fintech with Anouska Streets, head of engineering at Finkit, a unit of digital banking software company Monitise, which was recently bought by Fiserv; and Colleen Wilson, founder and CEO of consulting firm Collaborate Chicago.


Women in Banking: The Most Powerful in 2017 (American Banker), Rated: B

The Most Powerful Women in Banking

1. Cathy Bessant, Bank of America
2. Marianne Lake, JPMorgan Chase
3. Ellen Alemany, CIT Group
4. Nandita Bakhshi, Bank of the West
5. Diane Reyes, HSBC

16. Hannah Grove, State Street

23. Teresa Tanner, Fifth Third Bancorp

The Women to Watch

1. Mary Mack, Wells Fargo
2. Thasunda Duckett, JPMorgan Chase
3. Heather Cox, USAA
4. Yolande Piazza, Citigroup
5. Ellen Patterson, TD Bank

19. Jane Russell, TD Bank

Andy Hinrichs of AutoGravity (Lend Academy), Rated: A

Our next guest on the Lend Academy Podcast is the CEO and co-founder of AutoGravity, Andy Hinrichs. After spending two decades in auto finance Andy decided he wanted to do something to finally bring the car buying experience into the 21st century. He started AutoGravity less than two years ago but they are already seeing great traction.

First Associates Broadens Service Offerings to Offer Additional Client Support (Benzinga), Rated: B

First Associates Loan Servicing announced a new lineup of loan support and lending solutions today to better serve the expanding needs of their industry–leading clients.

New solutions include:

Primary Loan Servicing

  • Reduced delinquencies & defaults
  • Low-risk, cost-effective
  • Omnichannel communication to maximize reach
  • Top-notch investor, credit bureau & regulatory reporting
  • Secure fund flow & control

Capital Markets Support
Backup servicing, Contract Verification, Borrowing Base Calculation or Validation, Custodial Services & Treasury Services (Collateral & Payment Agent)

Pre-Funding Support
To help ensure loans are properly originated and funded: Applications by Phone, Customer Service Call Support, Borrower Verification Calls & Document Verification

Post-Funding Support
Customer Service Call Support, Multi-channel Collections Support & Borrower Verification Calls

Futurist Jack Uldrich to Speak on the Future of Wealth Management and Banking in Four Cities in Four Days (Life Pulse Health), Rated: B

Starting tomorrow, acclaimed financial futurist and best-selling author Jack Uldrich will begin a series of four separate presentations on the future of finance in four consecutive days. His first presentation will be for leaders with Atlantic Trust in Denver, Colorado, followed by presentations in Chicago, Washington D.C., and ending in Toronto on Sept. 29th.

Uldrich is a prolific speaker on future trends in wealth management, finance, and banking, speaking to dozens of finance groups globally each year, including some of the biggest names in these industries.

United Kingdom

Zopa improves loan sale processing times (P2P Finance News), Rated: AAA

ZOPA investors are now able to sell their loans within a few days on the secondary market, after the peer-to-peer lender made improvements to speed up processing times.

Earlier this month, Zopa promised a “large change” to address investor concerns about the time it is taking to sell loans.

UK peer-to-peer lending is about to face its toughest test since the sector was born (Business Insider), Rated: AAA

GLI Finance, a listed investment company that backs fintech businesses, on Monday wrote down the value of its investments in eight peer-to-peer lending platforms by £12.6 million to £28.9 million, citing “concerns over the collectability of some platform loans.”

The disclosure came after concerns were raised above fast-growing peer-to-peer lender Lendy Finance over the weekend.

Meanwhile, Zopa, the UK’s oldest peer-to-peer lender, last month wrote to investors telling them to expect higher-than-forecast losses as a result of deteriorating credit conditions. And peer-to-peer platform Wellesley & Co. last year raised £2.5 million to “absorb impairment losses that would otherwise have been passed on to peer-to-peer investors.”

The backdrop to all these disclosures is a surge in unsecured consumer borrowing and rising inflation in 2017, factors which are combining to fuel fears people may be unable to pay back all they have borrowed. Unsecured consumer borrowing hit £202 billion in July, the highest level since 2008. Meanwhile, inflation is running at 2.9%, well above wage growth.

Can’t afford to buy a property? You can now borrow your deposit (The Sun), Rated: A

Property Pact aims to help those who are struggling to get together a deposit for their first home.

To apply for a loan with Property Pact, you must meet the following:

  • Have a good or excellent credit rating
  • An annual salary of £30,000 or more
  • No County Court Judgements (CCJs) against you
  • Have at at least one year of continuous employment with the same employer
  • Must be employed in a profession or managerial role or a key job leading to a professional qualification or managerial role.

To register your profile on the site, you’ll need to pay £150.

Investors can then browse your profile and decide if they want to lend the money to you.

If an investor then agrees to lend, you’ll pay a 5 per cent arrangement fee – on a loan of £30,000 that would be £1,500.

The loan will be repaid at a rate of 5.5 per cent above base rate – so currently 5.75 per cent.

Britain’s first Small Business Commissioner is needed now more than ever (SME Web), Rated: A

With this in mind, let’s look at the three main challenges that the Small Business Commissioner will need to address in the coming year:

  1. Late payments: Time and time again we are reminded of the late payments crisis damaging small businesses, who are owed a collective £26.3 billion. Research from the FSB shows that poor payment practices are on the rise, causing 50,000 business deaths each year.
  2. Funding: SMEs bring a combined turnover of £1.8 trillion to the UK economy and we must encourage people to follow their dream of running their own business. In addition, some will need educating about using alternative finance methods, such as P2P lending, invoice financing and crowd funding.
  3. Rising costs
China

A Missing Piece in China’s Economy: Consumer Credit Ratings (WSJ), Rated: AAA

The world’s second-largest economy doesn’t have a widely accepted system to gauge creditworthiness among a fast-expanding middle class with growing paychecks, a hunger for consumer products and little or no credit history.

Chinese household debt is growing rapidly, outpacing broad credit growth every year since 2013 and reaching 38 trillion yuan ($5.7 trillion) by the end of the second quarter of this year. But household debt remains relatively low by global standards, at about 44% of gross domestic product, and the absence of a widely used standard of creditworthiness is keeping consumer borrowing from growing even faster, hampering access to credit for some 500 million potential borrowers.

China’s central bank has sought for nearly three years to put in place an answer to the FICO credit-scoring system predominant in the U.S., created in 1989 by data firm Fair Isaac Corp.

Technology giants Ant Financial Services Group and Tencent Holdings Ltd., along with several smaller companies, are developing competing credit-rating systems. Tencent began testing its system in August, two years after Ant, an affiliate of e-commerce giant Alibaba Group Holding Ltd. , launched its Sesame Credit personal scores.

But none of these projects has emerged as a single standard that’s widely used and trusted by lenders nationwide.

Paving the way?

Regulators in March set up a new clearinghouse, Wanglian, to centralize the processing of online payments.

Meanwhile, Ant’s Sesame Credit has a head start on its competition. Launched in 2015, Sesame derives a person’s credit score—which the individual can view on Ant’s popular Alipay payment platform—by mining data on the consumer’s e-commerce activity and other online behavior. Higher ratings confer perks such as waived deposits at some hotels and faster security screening at Beijing’s airport.

There are small credit bureaus in major cities including Beijing and Shanghai, but they have never gained traction and often lack access to borrowers’ financial data. Such bureaus reach only a third of Chinese borrowers, compared with 90% of borrowers in the U.S. reached by credit bureaus there, according to consulting firm Oliver Wyman.

Source: The Wall Street Journal

Hong Kong ‘falling behind’ in race to build up automated financial adviser platforms (South China Morning Post), Rated: A

Operators of automated, algorithm-driven financial planning services, or so-called robo-advisers, in Hong Kong need to significantly step up their game if they are to compete with Chinese and US institutions, according to Freeman Tsang, head of China and Hong Kong for asset management firm Legg Mason.

Only a few securities brokerages have entered Hong Kong’s robo-advisory market, which unlike the one in the US, lacks an open, computer interface that allows access to investors’ portfolios across different companies to develop an overall view of their financial status.

Such a foundation is vital for robo-advisers to be able to offer more customisable financial advice and support transactions across different investment tools and firms.

European Union

Fintech startups and banks face off on new rules over European payments and data access (Tech.eu), Rated: AAA

A large group of over 70 European fintech companies are warning that new EU rules on payments processing could unfairly pit them against large banks and decimate the industry if they are passed into law.

The rules are part of the European Union’s Payment Services Directive (PSD) and would ban the practice of “screen scraping,” a common practice used by fintech companies to “scrape” display data from one application (like an online banking service) and display it on their own.

In their manifesto, the 71 fintech firms argue that the ban on scraping is unreasonable and a backdoor method for traditional banks to claw back control as the Fintech revolution threatens to upend their business models.

Revised payment services directive

The European Union’s Payment Services Directive (PSD), originally passed in 2007, built a single market for cashless payments in Europe, making cross-border payments as easy and efficient for European consumers and businesses as domestic transfers.

Most importantly, the revised PSD (also known as PSD2) mandated that banks loosen their grip over customer account data and allow third parties to be able to access it with customers’ permission.

Klarna “Smoooth” Ad Campaign Wins International ANDY Award from Ad Club of New York (PR Newswire), Rated: AAA

Klarna, a global payments provider, has been honored with an International ANDY Award by the ADVERTISING Club of New York for its 2016 “Smoooth” campaign that illustrates how ‘smoooth’ payments can be for consumers and online merchants using its platform.

The award was presented at the 14th annual “Stars of Madison Avenue” luncheon.

The AD Club’s International ANDY Awards jury chose this year’s six honorees for making an impact on marketing, commerce, culture and social responsibility through brave and creative advertising and marketing campaigns.

Klarna’s “Smoooth” campaign kicked off with a series of critically acclaimed ad spots. Samples of the campaign are available here and here.

Europe’s top venture capital investors by country (Banking Technology), Rated: A

 

At the top of the list, High-Tech Grunderfonds has made nearly 200 deals to 150+ German companies since 2012, making it the top investor in European tech VC by a long shot. Notable recent deals include a $3.4 million seed round to POSpulse (shopper intelligence platform) and participation in a $2 million seed round to MoBerries (HR and workforce management company). Since 2012, German tech companies have seen more than 1,600 deals worth over $10 billion.

The UK has seen the highest number of deals and total funding deployed to tech companies, at more than 3,200 deals worth nearly $20 billion since 2012, according to CB Insights.

Top investors in European tech by country (as of 30 August 2017), according to CB Insights:

  • Austria – SpeedInvest
  • Belgium – PMV
  • Cyprus – SingulariTeam
  • Czech Republic – Credo Ventures
  • Denmark – SEED Capital
  • Estonia – SmartCap
  • Finland – Lifeline Ventures
  • France – Alven Capital
  • Germany – High-Tech Grunderfonds
  • Greece – PJ Tech Catalyst
  • Iceland – Frumtak Ventures
  • Ireland – AIB Seed Capital Fund
  • Italy – LVenture Group
  • Latvia – Imprimatur Capital
  • Lithuania – Practica Capital
  • Luxembourg – Mangrove Capital Partners
  • Netherlands – Newion Investments
  • Norway – Investinor
  • Poland – SpeedUp Venture Capital Group
  • Portugal – Portugal Ventures
  • Romania – GECAD Group
  • Slovakia – Neulogy Ventures
  • Spain – Caixa Capital Risc
  • Sweden – Almi Invest
  • Switzerland – Swisscom Ventures
  • Turkey – Aslanoba Capital
  • UK – LocalGlobe

 

New10 open for business! (ABN-AMRO), Rated: B

Starting today, SMEs looking for a loan online can go to New10, an initiative of ABN AMRO. New10 lets them know within 15 minutes whether they qualify for a loan and under what terms and conditions. New10 meets the needs of this group of SMEs that want to take out a loan entirely online.

New10 provides loans ranging between EUR 20,000 and EUR 1 million.

India

Consumer Lending Startup MoneyTap Is Shooting For The Stars (Inc42), Rated: AAA

Ensnared by the allure of entrepreneurship, Bala ventured into the promising world of fintech with MoneyTap, a consumer lending startup that was launched last September.

Touted as India’s first app-based credit line, the fintech startup is working to democratise credit in a country where 19% of the total population is still unbanked.

“The reason we started MoneyTap was that we wanted to solve the problem of consumer credit. Clearly, India is very credit starved. Less than 1% of Indian consumers have access to any form of unsecured credit from a bank or any financial institution. Most people, whether it’s from middle class or lower middle class, need credit, but they have to use informal methods,” explains Bala.

Based on his interactions, he concluded that there are four main reasons behind this pervasive inadequacy of consumer credit in the country:

  1. Historical baggage/legacy
  2. Lack of data
  3. High overhead in small-ticket loans
  4. Finally, the emergence of a new class of demanding consumers

Between 2003 and 2007, a number of banks in India were issuing loans without doing any detailed checked. At the time, there was no credit bureaus or Aadhaar. Even PAN was not widely used. When the subprime crisis hit in 2008, all these banks got burned. In the period prior to that, around 24 Mn credit cards were sanctioned in India, of which nearly 10 Mn crashed.

In a country with a population of over 1.31 Bn, only 220 Mn people have PAN cards. Other forms of KYC (know your customer), including voter ID, Aadhaar and ration cards are not considered as the sole identity proof, especially when it comes to financial activities. Credit information companies (CIC) – such as TransUnion Credit Information Bureau Ltd. (CIBIL), Experian India and Equifax India – still do not have records of a large section of the country’s banked populace.

As per Bala Parthasarathy, the cost of evaluating and issuing a credit line/loan/credit card for a bank is extremely high and thus they prefer to give big-ticket loans to few people rather than small ticket loans for a large group of people. The average loan ticket size in this country is between $4,629 – $7,715 (INR 3 Lakh-INR 5 Lakh).

If you think of India as a pyramid in terms of the net worth of people, all these banks focus on only around 12 to 15 Mn customers at the top of the pyramid because they are capable of applying for a loan worth $4,629 to $7,715. The problem, according to him, arises when someone wants a $463 (INR 30,000) loan because the overhead, in this case, is too high for the bank to make any profit.

The consumer lending startup claims to currently cater to customers with monthly income ranging between $308-$1,080 (INR 20,000-INR 70,000).

On the MoneyTap platform, consumers can borrow anywhere between $46-$7,715 (INR 3,000 to INR 5 Lakh) with an option to choose the repayment duration from as little as two months up to three years.

At present, MoneyTap charges a one-time setup and origination fee of $7.7 (INR 499) plus tax.

Source: Inc42
APAC

Fintech experts to discuss the future of finance in Phnom Penh (Southeast Asia Globe), Rated: AAA

Inspire Asean is back on 29 September at Sofitel Phnom Penh Phokeethra for an afternoon of presentations, exchanges and networking. One of our larger events, this edition will have six engaging presentations from top Fintech startups, infrastructure providers and international banks to discuss digital wallets, big data, blockchain technology, cryptocurrencies and alternative lending models.

The speaker lineup includes:

  • Brad Jones, chief executive officer of Wave Money in Myanmar and previously CEO of Wing in Cambodia.
  • Hong Samarkkeenich, regional sales director at Lenddo, is responsible for bringing the company’s technology to new and underserved market segments in Indochina.
  • Sim Chankiriroth is the founder and CEO of BanhJi, a free and localized online accounting software, built for Asean MSMEs.
  • Vincent Ling, deputy general manager of UnionPay International SEA, is responsible for regional brand and communications as well as the Core Products portfolio.
  • Steve Miller is the founder of CryptoAsia, a growing Bitcoin startup based in Phnom Penh.
  • Tomas Pokorny is the CEO of PiPay, a Cambodia-based fintech company that combines payment and lifestyle (social) application solutions.

Big Data, a Key Factor in Decision-Making (FiNews), Rated: A

A survey conducted by Deloitte showed that the respondents feel that analytics will become more important to their organizations in the next three years and that its greatest benefit is a key factor in making better decisions, and Singaporean companies are picking up on this.

This trend is great news for the local data analytics sector. In Singapore, the industry is expected to contribute at least $1 billion to the economy this year alone according to the Economic Development Board.

However, being in the service industry, these firms often lack significant physical collateral and assets, leaving them unable to turn to banks and similar financial institutions for financing. This results in cash flow issues that could limit the growth of these companies, if not hamstring them completely.

How Can Data Analytics Persevere?

  • P2P Financing
  • Equity Crowdfunding
  • Receivables Financing

10 Fast Growing Fintechs in Philippines (Fintech News), Rated: A

Acudeen

 

Acudeen is an organization opens its business to small and medium enterprises (SMEs) looking to boost cash flows, thereby answering an unsolved business need.

Ayannah

Ayannah is a leading provider of digital financial services to the world’s emerging middle class, most of whom are migrants or unbanked coming from the base of the pyramid.

BloomSolutions

Bloom makes money smarter by combining modern technologies like cryptocurrency with traditional infrastructure such as SWIFT and SMS.

Lendr

Lendr is an end-to-end loans origination and loans management platform that you can access via your desktop or mobile device.

LoanSolutions.ph

Loansolutions provides loans via our network of partner banks and lending companies.

Mynt

Mynt is a leader in mobile financial services focused on accelerating financial inclusion through mobile money, micro-loans, and technology.

PawnHero

PawnHero now lets you pawn online, anytime and anywhere.

PayMaya

PayMaya Philippines, Inc. (formerly Smart eMoney, Inc.) is the pioneer in mobile money and payments, having established brands such as PayMaya, the first prepaid online payment app that enables the financially underserved to pay online without a credit card; PayMaya Business, the company’s system solutions provider that allows businesses to receive online and card payments anytime, anywhere; Smart Money, the world’s first e-wallet linked to a mobile phone; and Smart Padala, the leading remittance network in the Philippines with over 15,000 agents across the country.

Ripple Supports Singapore’s Fintech Hub Aspirations With New Office (Ripple), Rated: B

Singapore has publicly stated ambitions to be the world’s leading fintech and innovation hub. It is also one of the biggest and busiest global trade centers with many large, multinational companies basing their regional treasury offices in the country. For these reasons, and to support our rapidly-growing customer base across Asia-Pacific markets – including Standard Chartered, a Ripple investor, member of the RippleNet Advisory Board, and early adopter of blockchain technology to power payments – we are excited to announce we have opened a new office in Singapore.

Africa

Riby aims to transform the way over 20 million West Africans use co-operatives (Techpoint), Rated: AAA

Mr. Lanre used to be hesitant about loaning his colleagues at work money, having suffered from bad debts. Luckily for him, his organisation launched a co-operative scheme to manage employees’ finance. Among other things, the co-operative allows anyone with an urgent financial need to easily request and get assistance.

It is estimated that 63% of Kenyans derive their livelihoods from co-operatives, while in New Zealand, 22% of the gross domestic product (GDP) is generated by co-operative enterprise. And while 50% of sugar-cane planters are grouped into co-operatives in Mauritius, the co-operative movement in Columbia accounts for as much as 697,006 jobs in the country.

Nonetheless, as CEO of a financial management service platform, Salami Abolore reveals that over a million co-operative bodies exist in Nigeria.

He says this with confidence because his company, Riby, helps co-operatives and their members remotely control both their finance and financial operations.

Riby happens to provide the technology that helps Mr Lanre’s company to manage their (employee) co-operative scheme.

The Riby peer-to-peer lending module allows companies to run internal co-operatives within their fold. A case in point is a savings rotation mechanism that auto-debits employees and credits whoever is due to receive money for the month. For both modules, Riby charges a per-user fee of ₦200 upfront, amounting to ₦2000 per annum and ₦500 on a quarterly basis.

The agent management platform, Riby’s third module, is another exciting proposition that raises an innocent suspicion as to whether Riby is taking the competition to the commercial banks. This is apparent in their overall quest to include everyone in the system.

About 40% of Nigerians are yet to register with any financial institution in the country, according to the Central Bank of Nigeria. Statistics from the Nigeria Inter-Bank Settlement System (NIBSS) further show that there are only about 40 million registered bank accounts across the country. These accounts are enrolled by just 20.8 million customers, some having more than one account. It is therefore apparent that co-operatives can be used to reach the unbanked.

Fintech startup MaTontine wins Seedstars Senegal (Disrupt-Africa), Rated: A

Fintech startup MaTontine was named winner of the Senegal round of the global Seedstars World competition over the weekend, earning the chance to represent the country at the global final in Switzerland next year to compete for up to US$1 million in equity investment.

MaTontine emerged the overall winner for its solution that provides access to small loans and related financial services like microinsurance by digitising traditional savings circles.

Authors:

George Popescu
Allen Taylor

Monday July 31 2017, Daily News Digest

credit card issuers

News Comments Today’s main news: RateSetter tops 2B GBP in lending. P2P Global Investments holds steady. P2P Finance Association reports new lending growth. One of China’s largest P2P lenders quits. BNI Europa invests 15M Euro in Creditshelf. Marqeta, Visa partner on global payments. Prospa secures $20M debt facility. Today’s main analysis: Bank and credit card issuer charge-off trends. Today’s thought-provoking articles: […]

credit card issuers

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

Africa

News Summary

United States

Earnings Season Continues—Bank and Card Issuer Charge-Off Trends (PeerIQ), Rated: AAA

As PeerIQ observed last quarter, we continue to see a “tale of two cities”–a divergence in charge-off rates of card issuers and large money center banks.

Discover reported a 55% increase in loan loss reserves citing re-normalization of credit performance, an increased supply of consumer credit, and an increase in consumer leverage. We also see observe increases in loan loss reserves from Synchrony Financial (30%), American Express (26%), and Capital One (13%).

Source: PeerIQ, Bloomberg

Outlook for Consumer Lending 

The backdrop for consumer lending businesses is strong. Although delinquencies have picked up, originators remain compensated for taking on credit risk. The ROE for Discover and American Express are both over 20% as compared to C, JPM, WFC, and BAC where ROE remains stubbornly low in the 6 to 11% range. Also, consumer loan demand continues to grow (total loan requests on Lending Tree increased 48% year-over-year to 5.4 Mn).

The biggest challenge to the above state-of-play is the latest scale entrant to the retail banking business–Goldman Sachs. GS’s new lending business, Marcus, is on pace to originate $2 Bn in loans this year–the fastest growth rate of any lender that PeerIQ tracks.

Inside seven plans for a faster U.S. payments system (American Banker), Rated: AAA

A task force convened by the Federal Reserve has released its evaluations of 16 proposals to build a faster U.S. payment system. The plans were judged by the task force’s consulting firm, McKinsey & Co., based on how well they satisfied 36 criteria related to speed, security and other attributes.

EastWest ties up with PLDT unit (Inquirer.net), Rated: A

Gotianun-led EastWest Banking Corp. has teamed up with FINTQ, the technology arm of PLDT and Smart’s Voyager Innovations, to offer consumer loans through digital lending platform Lendr.

With this partnership, consumer-focused lender EastWest will make available personal loans and auto loans through Lendr by the fourth quarter of this year. Eventually, the offering will also include EastWest home loans, small and medium enterprise (SME) loans and credit cards.

Providing well-rounded financial advice and servicing through automated technologies (CGI.com), Rated: A

While robo-advice may account for only a fraction of the total assets under management today, it is a technology that is here to stay—but not in the way that has dominated news stories. Rather than supplanting the financial advisor with technology, firms need to leverage new multi-channel automation to empower their advisors to focus on value-added, relationship-building activities. In this paper, we look at how wealth management players can focus on getting to the right combination of human advisors and automated investment advisory solutions in a hybrid model that seamlessly integrates the two.

Read the paper here.

Overstock’s TØ Has Already Built a Platform for Trading Regulated ICOs (Coindesk), Rated: A

US retail giant Overstock.com has been waiting for the US Securities and Exchange Commission (SEC) to tell the world exactly when a crypto token is a security.

Then, earlier this week, tØ got the news it had been waiting for when the SEC finally published the results of a landmark report in which it clearly laid out its rationale for why some tokens are still securities.

Long a detractor of a practice called “naked short selling” – where traders methodically bid down the price of stock by selling shares they haven’t first procured, Byrne set about using blockchain to cut out everyone who stood in the way of buyers and sellers.

BLOCKCHAIN AND INITIAL COIN OFFERINGS: SEC PROVIDES FIRST U.S. SECURITIES LAW GUIDANCE (Pepper Hamilton LLP), Rated: A

For those who hoped that the SEC would allow cryptocurrency and ICO markets to evolve unregulated, their hopes were dashed by the report and the bulletin. The SEC did not outlaw ICOs by any stretch of the imagination, but it did indicate that, depending on the facts and circumstances, an ICO may indeed involve an offering of securities. In that case, organizations that proceed without registering with the SEC or that structure the offering in such a manner so as to qualify for an exemption from registration will violate federal securities laws. The remedies for such a violation include rescission of the offering, cease-and-desist orders, fines and penalties, bans from participating in the securities industry, bans on serving as an officer or director of a public company, and, in the most egregious cases, referral to the local U.S. Attorney for possible criminal prosecution. So, whether an offering involves a “security” is a very important initial determination.

Inside the development of Erica, Bank of America’s AI-powered bot (Tearsheet), Rated: A

However, when Bank of America got a sense of the vision for its AI-enabled “digital assistant,” called erica, it didn’t take the bank long to gather the resources necessary to make her real.However, when Bank of America got a sense of the vision for its AI-enabled “digital assistant,” called erica, it didn’t take the bank long to gather the resources necessary to make her real.

The bot is now in the beta testing phase.

Fintech Apps and Banking Mobile App Development for Startups (Upwork), Rated: A

Paypal is the world leader in processing payment apps today. The app for Android and iOS devices provides the same functionality as the online Paypal.com service.

A good choice for small businesses Due.com lets users benefit from a convenient digital wallet, invoicing service and fast operations handled at low transaction rates.

iZettle also efficiently serves small businesses. What this fintech app does perfectly is that it allows small business owners accept cash and credit card payments from a smartphone or tablet. With additional cash drawers and receipt printers from iZettle one can also provide customers with printed or online receipts.

Another interesting example of a successful fintech app is Mobikwik. Now with the base of 50 million users Mobikwik offers a user-friendly digital wallet, which has become a real substitute of a physical purse for its users worldwide.

In regards to the ways of making personal loans an easier experience for users, LendUp offers just one of them. It’s a web application (also available for mobile) that lets users from selected US states apply for a short-term loan 24/7.

Citi Mobile is one of the leading mobile apps for iOS and Android mobile devices introduced by Citibank. According to Business Insider, the app has significantly grown in popularity mainly due to addition of FICO scorefeature.

Rating the Robo-Advisors (Barrons), Rated: A

By tech start-up standards, robo-advisors are already approaching middle age. Betterment, the pioneering robo-advisor and still the largest of the independent firms, turned seven in May. It now has $9.1 billion in assets under management.

Lawmaker Queries Alt-Lenders With Concerns Over ‘Trapped’ Small Biz Borrowers (PYMNTS), Rated: A

Rep. Emanuel Cleaver II (D-Mo.) has reportedly sent letters to five alternative SMB lending companies with questions regarding borrower protections, anti-discrimination efforts, transparency and other factors.

Cleaver is reportedly seeking details of the companies’ business models and products offered to small businesses, how those products are originated, information on fees and rates and whether these businesses offer borrowers a repayment plan based on future credit card receivables, reports said.

The lawmaker is also seeking information on how these lenders handle transparency and whether they make disclosures to SMBs the same way they do to consumers as required under the Truth in Lending Act. He is also asking about whether these firms pull a consumer credit report for small business lending.

The SEC’s ICO crackdown will help in the long-run. (The Financial Revolutionist Email), Rated: A

But unless your plan was to make a quick billion in ICOs in time to ring in 2018 with Payments deal activity is en fuego.

Also in payments land, 

What is “working capital”? And how can it help my small business? (OnDeck), Rated: A

For many business owners, it makes sense to borrow funds to create a liquid cash cushion to operate their business to the best of their ability. Before you decide to borrow, you need to understand what your working capital needs are and to make sure numbers make sense for you and your business.

3 Reasons Why the Finance Industry Needs VR (UploadVR), Rated: A

The finance industry is one of the most data-driven trades, and by visualizing and analyzing data in VR, early adopters can get a leg up on the competition. Not only can VR improve the way data is viewed, but it can also improve the level of communication through the use of a shared virtual office (SVO). This is immensely important because, in the high stakes world of finance, a mistake or lapse in communication could cost millions of dollars.

The Biggest Trends in Home Mortgage Loans We’ve Seen This Year (Huffington Post), Rated: B

Typical of hot real estate markets, there’s a cycle. Home prices rise, people catch on and want in, and then they decide to sell. Soon, even more people jump in the market and serious sellers make their sale, causing inventory to thin. Buyers get wise to the overheated marketplace and decide to wait until the prices come down. The sellers who are eager to make a buck overprice their houses and when they don’t sell, they become income properties. As a result, the rental markets fill up with income properties, and the inventory continues to thin out.

We are at historic lows for mortgage rates, and they are not going to spike that drastically in the next year that it would preclude you from getting a solid thirty-year fixed rate loan.  The important thing is that you do NOT overpay for a home.

GE Alum Brings Discipline to High-Growth Financial Firm (CFO), Rated: B

After 16 years at General Electric, Chris Capozzi was still a young man. That was because he’d joined the company upon graduating from Boston College, where he earned a degree in finance and management information systems.

Eventually, one of the alumni introduced Capozzi to Stone Point Capital, which had just become a major investor in Freedom Financial Network, a privately held financial services firm. Everything clicked with the company’s co-founders and co-CEOs, Bradford Stroh and Andrew Housser, so Capozzi moved across the country to start work as Freedom’s CFO at the beginning of this year.

What kinds of opportunities are you focused on?

Secondly, we’re in the process of developing a securitization platform to complement our existing sources of capital and further expand our investor base, which will enable the growth on the marketplace lending side. Initially the plan is to securitize unsecured consumer loans, very similar to what other marketplace lenders, like SoFi and Avant, have done.

United Kingdom

Peer-to-peer lender RateSetter passes £2 billion lending milestone (Yahoo! Finance), Rated: AAA

Peer-to-peer lender RateSetter announced on Monday that it has passed £2 billion in loans over its platform, with more than £1 billion of the total made since the beginning of 2016.

About £1.3 billion of the total lent has gone to individuals, with £700 million going to businesses. The company now has 423,000 customers, the majority of whom are borrowers, more than any other UK peer-to-peer lender.

P2P fund holds steady on dividend (AltFi), Rated: AAA

Onerous banking regulations will continue to hamper growth in regulatory capital‐intensive lending asset classes, according to the investment managers of the £821m P2P Global Investments trust.

The fund is moving away from a pure P2P play, instead transitioning more into direct lending and other Alternative Credit niches. Its manager MW Eaglewood is also merging with Pollen Street Capital, which while still on-going, is expected to close later this year subject to regulatory approval. Pollen Street is also the manager of £359m Honeycomb investment trust which invests in direct lending assets.

Source: AltFi Data

P2PFA reports growth in new lending as LendInvest departs (P2P Finance News), Rated: AAA

CUMULATIVE lending among the Peer-to-Peer Finance Association (P2PFA) members in the second quarter of 2017 fell slightly to £8.39bn, due to LendInvest’s departure from the trade body.

However, new lending among the members has still grown significantly year on year, the P2PFA said on Friday.

The number of investors in P2PFA member-platforms has now hit 185,652, the trade body said, while the number of current borrowers has risen to 435,267.

UK P2PFA: Peer to Peer Lending Rises in Q2 (Crowdfund Insider), Rated: A

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Folk2Folk

£139,344,302

£161,408,804

Funding Circle

£1,524,427,000

£1,830,397,245

£2,158,457,107

£2,455,740,443

Landbay

£42,948,000

£43,142,119

£43,975,419

£46,515,723

LendInvest

£776,112,000

£855,354,293

£971,875,952

Lending Works

£33,636,000

£39,368,050

£48,864,686

£58,441,220

MarketInvoice

£754,325,000

£837,793,900

£918,450,994

£1,018,021,696

RateSetter

£1,442,743,000

£1,604,406,564

£1,815,320,079

£1,995,142,453

ThinCats

£196,907,000

£211,446,000

£226,981,000

£242,540,000

Zopa

£1,731,685,000

£1,926,038,724

£2,172,561,894

£2,409,257,844

Total

£6,502,783,000

£7,347,946,895

£8,495,831,433

£8,387,068,183

The LendInvest bond promises to pay investors 5.25% with two payments a year until 2022 (This is Money), Rated: A

Alternative property lender and investment platform LendInvest has launched a five-year bond paying 5.25 per cent a year for investors with a minimum of £2,000.

In an era of one per cent savings rates and where yields ranging beyond 5 per cent are hard to come by in the equity markets, this deal is sure to whet the appetite of many investors – particularly as it comes with twice-yearly payouts.

LendInvest’s Christian Faes On Why Property Investing Is Still Going Strong (Forbes), Rated: A

According to Christian Faes, CEO and co-founder of LendInvest, the retail bond serves a number of purposes – it allows the business to diversify its funding and expand its capacity to lend to property professionals, but also creates a new entry point into property for investors.

He explains:

[The retail bond] is launching at a critical time when demand in the UK’s residential property market continues to outstrip supply. There’s a serious lack of capital available to professional property investors who buy, build, refurbish and renovate homes for UK streets. Our model allows us – and by extension our investors – to support these people and small businesses.

Faes says that it is difficult to pin down what a typical LendInvest investor looks like; the investor base ranges from those looking to build a portfolio of property loans on the firm’s online investment platform all the way up to pension funds, infrastructure funds and banks.

Fintech company DueCourse goes into administration (Manchester Evening News), Rated: A

Manchester fintech company DueCourse has called in administrators.

This comes less than a year after the cloud-based invoice financing service for SMEs was boosted by a £6.25m investment, the largest seen outside of London for a fintech firm.

Bosses said the money will be used to expand and grow its software with plans to raise a further £10-15m to grow its services worldwide.

Abundance Tops £50 Million in P2P Invesment into Renewable Energy Projects (Crowdfund Insider), Rated: A

Abundance Investment, a UK based peer to peer lending platform in the renewable energy sector, has just topped £50 million in investment, according to a company report. Management said the “huge” popularity of its IFISA and three highly popular renewable projects from tidal, geothermal and energy efficiency technologies helped to fuel the recent growth. Abundance says three projects have attracted more than £10 million of new investment in less than 2 months.

  • Atlantis tidal energy debenture has sold out raising £4.3 million,
  • Green Deal bond will close in 4 days’ time and has raised £3.95 million to date
  • United Downs Geothermal project has raised 60% of its £3.8 million target (£2.7m) in less than a week.

New products and milestones for ethical P2P platforms (AltFi), Rated: A

Investors looking for ethical options now have more choices when it comes to peer-to-peer lending.

Lending platform Downing Crowd has launched two regular access crowd bonds, with one for a renewable energy generation and storage company.

Cash management and peer-to-peer lending could boost your balance sheet (Director), Rated: A

With inflation on the rise but interest rates at an all-time low in the UK – and some high-street banks even raising the prospect of charging commercial customers to keep deposits – companies’ savings may actually be losing value in real terms.

If you can’t beat ’em, join ’em

Over the past few years a new way to potentially beat the banks has emerged – one that plays them at their own game. Called property-backed peer-to-peer lending, it gives companies the opportunity to be the lending bank themselves.

One of the fastest-growing products of this type is Choice, offered by Octopus Investments, an experienced investment company that manages more than £6bn of assets.

Working with a growing roster of challenger banks, Octopus can offer a savings product that currently provides an interest rate of more than one per cent.

This week in MoneyWeek: banks are back (MoneyWeek), Rated: A

Banks have been out of favour for the last ten years after they almost brought the global financial system to its knees.

So why would anybody invest in them? Oddly, one reason is “the failure by politicians to enforce a key promise” – that no bank would ever become “too big to fail” again. “In every developed country”, says Jonathan, the big banks have just got bigger. The “never again” promises have been replaced with “complex rules to strengthen bank capital, thus reducing the chances of collapse”. Another reason is that “banking has changed for the better” – governance has improved and customer satisfaction has shot up.

Why Banks Can’t Help But Help Fintechs (Fintech Weekly), Rated: B

It remains to be seen if any bank can ever do what the music industry is in the process of doing – taking back “their” industry by becoming the pre-eminent innovators. Such a thought might be laughable right now. But a word of caution on laughing too soon – if they do realise how to leverage their enormous power, accept that legacy systems must be overhauled and replaced wth the truly innovate, and execute such a strategy well, would you bet against them retaining and entrenching their dominance?

For now and the foreseeable future, most banks prefer to sit back and avoid risk. Really the risk lies in doing nothing and inviting a slow death by a thousand cuts. OK, yes, you can talk about record bank investment in fintech, cooperation between banks and fintechs – again, this is only helping fintechs move in on bank stomping ground.

China

One of China’s biggest P2P lenders quits ahead of clampdown (Financial Times), Rated: AAA

China’s pending regulatory crackdown on the $120bn peer-to-peer lending industry has claimed its first scalp before it has even begun, with one of the biggest players saying it will wind up its business in an industry full of bad loans and no profits.

P2P lending, in which borrowers are matched with investors via online platforms, has mushroomed in the past five years, with China boasting more than 2,100 such platforms, but so too have scandals. Last year was marked by multibillion-dollar scams in China and a governance scandal that rocked New York-listed LendingClub.

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Beijing this month said it would delay regulations that will bar online lenders from guaranteeing principal or interest on loans they facilitate, cap the size of loans at Rmb1m for individuals and Rmb5m for companies, and force lenders to use custodian banks — a requirement only a fraction of the industry has met so far.

Three more Chinese banks join Swift’s global payments innovation (Banking Technology), Rated: A

Three local Chinese commercial banks have joined Swift’s global payments innovation initiative (gpi), bringing the number of Chinese banks involved to 16, the most in the world, according to Xinhua.

The new trio are Yinzhou Bank and Bank of Ningbo in eastern China’s Zhejiang province; and the Bank of Jiangsu, in the eastern Jiangsu province (and just south of Zhejiang).

Embrace the cardless era, CUP launched the electronic account cloud flash, or its Jedi fight back (TMT Post), Rated: A

A few days ago, UnionPay cloud flash together with Apple Pay launched promotional activities; early June, CUP also joined nearly 10 million businesses to create “62 CUP cloud flash to the whole people Sheng Hui.” Looks, CUP is imitating Alipay, WeChat to pay the subsidy routine.

Can you imagine using your Jingdong or US group (the new US big) account, you can pay through the UnionPay POS machine? Do not scan, do not have to swipe, do not open the APP, just need to close the POS machine and verify the fingerprint can be completed to pay.

The point is that you do not need to use the bank card account directly, but through the Jingdong or US group to pay the account, you can use the phone in the UnionPay POS machine to complete the payment.

European Union

BNI Europa invests EUR15 million in Creditshelf (Finextra), Rated: AAA

In Banco BNI Europa (“BNI Europa”), Creditshelf has succeeded in acquiring another strategic partner to help it provide financing to small and medium-sized undertakings (SMEs).

The online marketplace that specialises in SME financing, and the Bank, which operates throughout Europe, have agreed that Banco BNI Europa will invest up to 15 million Euro in the credit platform over the coming months.

Your Banker Is Always In: Sweden Rolls Out the Robots (Bloomberg), Rated: A

Aida is the perfect employee: always courteous, always learning and, as she says, “always at work, 24/7, 365 days a year.”

Aida, of course, is not a person but a virtual customer-service representative that SEB AB, one of Sweden’s biggest banks, is rolling out. The goal is to give the actual humans more time to engage in more complex tasks.

Besides Aida at SEB, there’s Nova, which is a chatbot Nordea Bank AB is introducing at its life and pensions unit in Norway. Swedbank AB is adding to the skills of its virtual assistant, Nina. All three are designed to sound like women, based on research suggesting customers feel more comfortable with female voices.

International

Marqeta & Visa Ink Global Partnership to Power Payments & Loans (Crowdfund Insider), Rated: AAA

Visa (NYSE: V) and Marqeta, a payment card issuing platform that can provide consumers with immediate loans, has announced a global partnership to propel innovations in commercial and consumer payments in lending. Visa has also made a strategic investment in Marqeta and led a $25 million funding round that included the participation of previous Marqeta investors including Commerce Ventures, 83 North, Granite Ventures, IA Capital, and CommerzVentures GmbH, as well as new investor CreditEase in China, one of the world’s largest alternative lender.

15 ‘RegTech’ Investors Every Fintech Startup Needs to Know (Entrepreneur), Rated: A

  1. Octopus Ventures
  2. SeventySix Capital
  3. Summer Capital
  4. Carrick Capital Partners
  5. EQT Ventures
  6. Insight Venture Partners
  7. JMI Equity
  8. Aquiline Capital Partners LLC
  9. Sageview Capital
  10. Accel Partners
  11. Warburg Pincus
  12. HarbourVest
  13. Digital Currency Group
  14. TTV Capital
  15. Balderton Capital
Australia

Online lender secures $ 20m debt facility (Australian Broker), Rated: AAA

Digital online lender Prospa has secured a $20m debt facility from the Australian arm of a US-based commercial finance provider, Partners for Growth (PFG).

Fintechs target millennials with online financial services (The Australian), Rated: A

Millennials are likely to fall into three categories:

• Inheritors: With wealthy parents, they are major consumers while they wait to inherit.

• Strivers: Coming from a more modest background, they are studying, saving and working hard with ambitions for promotion. They will borrow to support their lifestyle, not unlike inheritors.

• Given-ups: They are more likely earning a low salary but continue to consume as much as the other two categories. Buying a house is not on the agenda, so they do not see the point in saving.

And 71 per cent of millennials, according to Viacom’s Millennial Disruption Index, would rather go to the dentist than to the bank.

India

i2ifunding looks to break even by second half of FY20 (DNA India), Rated: AAA

i2ifunding.com, a peer-to-peer (P2P) lending platform, today said it aims to break even by the second half of 2019-20, given its robust growth in the last two years and promising outlook in the next two years.

It has a vision to scale up this disbursement up to Rs 200 crore over the next two years, i2ifunding.com said in a statement.

Fin-tech startup Finomena shuts down after failing to raise funding (The Indian Wire), Rated: A

Finomena, a startup which provided small ticket loans to students and young professionals, has shut down after failing to raise pre-Series A funding round.

The company is now no longer accepting new users on its website.

FinMomenta to introduce new products; targets SMEs (Deccan Herald), Rated: A

After working in a bank for many years, Brahma Mahesh and his friend decided to do something in the burgeoning FinTech space. They zeroed in on lending, as only 5-6% of the population is covered by banks and NBFCs. Mahesh, along with four other co-founders, started FinMomenta last year, and launched its first product ‘Tachyloans’, a peer-to-peer lending platform in May this year.

FreeCharge’s acquisition is proof that the Axis of Indian banking is changing (Quartz), Rated: A

In the next five years, almost 50% of the world’s financial services are planning to acquire fintech startups, according to a report by PricewaterhouseCoopers LLP. Collaborations, too, are expected to increase, with eight out of 10 companies waiting to partner with these new players, the report added.

Some 67% of senior Indian financial sector executives believe their business is at risk following the rise of fintech firms, and 95% of them were willing to explore partnership with them, a separate report by PwC released this April revealed.

On July 27, Axis Bank, the country’s third-largest private sector lender, acquired FreeCharge, a payments application and mobile-wallet company, for Rs385 crore ($60 million). This is the first such deal in the sector, potentially setting off more such transactions in the future, believe experts.

These serial entrepreneurs are offering bank products through an Ola-Uber model (YourStory), Rated: A

Five-month-old fintech startup Cashcow, which provides banking services and products to a customer at his doorstep, has expanded its operations to seven cities including Delhi, Kolkata, Pune, Ahmedabad, Hyderabad and Chennai. 

Joining fintech company Rubique as a chief product officer in 2016 introduced him to Manish Aggarwal, his future co-founder, who was leaving the startup at that point.

According to the founders, Cashcow is a platform providing banking services and products to a customer at his doorstep.

Can Regulatory Sandbox Nurture India’s FinTech Innovation? (CXO Today), Rated: A

The Indian financial services sector is undergoing major changes today. With more than 600 startups in the space of lending, payments, insurance and trading space, Fintech startups are not only spearheading innovation, but are also prompting traditional banks and financial institutions to explore new technologies and investing heavily in digital service delivery channels.

However, fintech startups unlike others face additional challenges of operating in a heavily regulated industry and have stiff competition as their key competitors are well established banking players. To overcome this challenge, experts believe, adopting a “Regulatory Sandbox” based approach where the regulator works closely with emerging Fintech firms make better sense.

Asia

Finca launches Pakistan’s first ever digital wallet (Daily Pakistan), Rated: AAA

FINCA Microfinance Bank, one of the fastest growing microfinance banks in Pakistan, has announced a movement to make digital commerce and payments free in the country.

SimSim, a mobile payment platform, was introduced in partnership with Finja – an internationally funded FinTech startup – at a launch event Thursday night at Mohatta Palace, Karachi. The event was attended by major industry stakeholders, government officials, artists, tech enthusiasts and media figures.

SimSim will give people access to frictionless payment options directed towards a diverse pool of merchants.

Middle East

Bahrain’s FinTech Sector Loses Ground to Dubai (Cryptocoins News), Rated: AAA

Africa

FINTECH Association of Nigeria debuts to support development of the financial technology industry (PR Share), Rated: AAA

Over 25 FinTech companies attended the recent inaugural meeting of FTAN – FinTech Association of Nigeria – which principal objective is to serves as a platform for the development of the financial technology industry in Nigeria and to be a forum for the exchange of ideas and dissemination of information by and between various stakeholders in the industry. 

Authors:

George Popescu
Allen Taylor

Wednesday July 26 2017, Daily News Digest

Lending Club loans

News Comments Today’s main news: Seedinvest cancels Sharestates’ Series A Offering. LendInvest bond issue. How Samoyed Financial is outsmarting Tencent, Alipay. Faircent launches auto-invest. MoneyMatch to replace 5-6 scheme in Philippines. Today’s main analysis: The state of business lending. Fintech lending: Financial inclusion, risk pricing, and alternative information. Today’s thought-provoking articles: How Goldman Sachs is disrupting consumer lending. How FCA consultations will […]

Lending Club loans

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

Canada

Philippines

News Summary

United States

Seedinvest cancels Sharestates Series A Equities (Anonymous Email), Rated: AAA

Seedinvest gave the investors this explanation, according to our anonymous source:

The closing was held up and we subsequently discovered new material information. Sharestates’ offering (i.e. the ability to make new investments) came to a close during Q1 of this year. As we were working through closing operations, we requested a final set of offering documents from Sharestates’ counsel. This request in and of itself took months to be satisfied. While reviewing the red-line version of these updated documents, our counsel discovered that Sharestates had begun distributing quarterly management bonuses using cash they were generating through normal course of operations. As a result, we do not recommend proceeding with an investment. We are also withdrawing our fund’s commitment. 

How Goldman Sachs Is Disrupting This Trillion Industry (The Motley Fool), Rated: AAA

It’s been just over nine months since Goldman Sachs (NYSE:GS)launched Marcus, its newly created consumer lending venture, and the platform has been rather successful so far. In fact, the company recently announced that it has surpassed $1 billion in loans already, and it could have much more room to grow.

It’s been just over nine months since Goldman Sachs (NYSE:GS)launched Marcus, its newly created consumer lending venture, and the platform has been rather successful so far. In fact, the company recently announced that it has surpassed $1 billion in loans already, and it could have much more room to grow.

In addition, there’s no legacy credit card business to worry about, unlike most banks that also make personal loans.

According to Talwar, Marcus customers enjoy rates that are 300 to 500 basis points lower than credit card interest rates, and Marcus’ loans come with no origination, prepayment, or late fees — a rarity in consumer lending.

The State of Business Lending in 2017, According to Small Business Owners (Fundera), Rated: AAA

The biggest factor that’s presently clouding small business lending is the post-financial crisis surge of alternative small business lenders. Fundera’s VP of Strategy, Brayden McCarthy (along with Karen Mills, former head of the Small Business Administration) identifies in his working paper on small business lending that tighter restrictions on lending were imposed on banks after the 2008 financial crisis. Because of these tighter restrictions, banks had their hands tied when it came to providing loans to small businesses—providing a space within the small business lending market.

Main Takeaways

  • Small businesses are mainly applying for offensive financing rather than defensive financing.
  • Small businesses are still overwhelmingly going to brick-and-mortar banks to apply for financing.
  • A disconnect exists between small businesses owners and educational resources made specifically for them.

When you look at the business owners we surveyed, they are, by-and-large, successful. 56% of the businesses surveyed had a revenue of greater than $100,000 a year, and 60% of those surveyed ran businesses that had been in business for five years or more.

Furthermore, 80.6% of the small business owners reported having a personal credit score of 650 or above, one of the most important parts of the business loan application, and 68% reported having a business credit score of 80 or above.

One of the more shocking results was that a mere 5.94% of the respondents sought business financing in order to refinance a loan.

Meanwhile, only 10.89% of respondents said they applied for small business financing with an online lender. 

That being said, our respondents demonstrated a preference for the experience of applying online. 57.23% applied for a business credit card online directly while another 16% applied online through an affiliate like Creditcards.com, Nerdwallet, or The Points Guy.

Our poll found that 89.73% of those polled checked their personal credit at least once a year. Meanwhile, within the same sample of small business owners, 58.19% don’t check their business credit score at all.

Even more, when we asked respondents if they would be interested in a free business credit check, 34.23% said that they were “not at all interested.”

FINTECH LENDING: FINANCIAL INCLUSION, RISK PRICING, AND ALTERNATIVE INFORMATION (Philadelphia Fed), Rated: AAA

In this paper, we explore the advantages/disadvantages of loans made by a large fintech lender and similar loans that were originated through traditional banking channels. Specifically, we use account-level data from the Lending Club and Y-14M bank stress test data. We find that Lending Club’s consumer lending activities have penetrated areas that could benefit from additional credit supply, such as areas that lose bank branches and those in highly concentrated banking markets. We also find a high correlation with interest rate spreads, Lending Club rating grades, and loan performance. However, the rating grades have a decreasing correlation with FICO scores and debt-to income ratios, indicating that alternative data is being used and performing well so far. Lending Club borrowers are, on average, more risky than traditional borrowers given the same FICO scores. The use of alternative information sources has allowed some borrowers who would be classified as subprime by traditional criteria to be slotted into “better” loan grades and therefore get lower priced credit. Also, for the same risk of default, consumers pay smaller spreads on loans from the Lending Club than from traditional lending channels.

Download the white paper here.

LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q2 2017 (PR Newswire), Rated: A

LendingTree today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the second quarter of 2017. The list features the top lenders in multiple loan product categories, including Mortgages, Personal Loans, Business Loans and Auto Loans, all of which are included in LendingTree’s online loan marketplace.

Lender rankings are based on a weighted average of overall rating and the total volume of customer reviews for mortgage, personal, business and auto loans. Lenders were rated on offered rates, fees and closing costs, responsiveness, customer service and overall customer experience.

Mortgage Category

#1 Winner: Busey Bank

Personal Loans Category

#1 Winner: Avant

Business Loans Category

#1 Winner: RapidAdvance

Auto Loans Category

#1 Winner: RefiJet

Mobile banking startup Varo Money has applied for a bank charter (TechCrunch), Rated: A

But Varo Money, which provides a mobile-first banking product to consumers, is up to that challenge. In an effort to offer similar — but better — checking, savings and lending products to consumers, the company has applied for a national bank charter with the Office of the Comptroller of the Currency.

To get the company off the ground, Walsh raised $27 million from Warburg Pincus and spent the last two years creating a mobile-first competitor to existing checking accounts.

Meet the World’s First Robo-Lawyer for Real Estate Investing (PR Newswire), Rated: A

Bootstrap Legal, a legaltech and fintech startup, today launched software that automates the drafting of complex legal paperwork for those raising capital for real estate projects of $2 Millionand under. For the first time, real estate investors can draft their own legal offering documents using artificial intelligence. The new online service was launched in recognition of the changing marketplace of real estate investing. More and more smaller investors are able to access investment opportunities online. For platforms and issuers originating these offers, a streamlined and low cost service to provide necessary legal documents is vital.

This first-of-its-kind legaltech product both undercuts the legal fees associated with real estate capital raises and expedites the process. Real estate investors typically have limited time to raise capital for their project, and Bootstrap Legal’s new software allows users to control the legal process, so that they can have extra time to raise capital. Users who require additional assistance are connected to a real estate securities attorney to get questions answered.

These Bay Area FinTech Companies Are Revolutionizing The Lending Space (Benzinga), Rated: A

BeSmartee: BeSmartee is an artificial intelligence-powered lending and mortgage platform that originates documents, credit checks, and other financial information in just minutes.

Capsilon: Capsilon builds technology solutions for the mortgage industry’s most imperative challenges.

Credit Sesame: Credit Sesame is a fintech company that operates in the fields of education, credit, and personal finance.

Home Captain: Home Captain is a lending company that pairs clients with a pre-screened realtor in their area with the help of a real estate concierge throughout the way.

SuperMoney: SuperMoney compares financial products and services to give people the information they need to make better financial decisions.

CoinList Attempting to Standardize & Self-Regulate ICOs (Crowdfund Insider), Rated: A

CoinList, founded as a partnership between Angel List and Protocol Labs, is quietly trying to standardize initial coin offerings (ICOs) by self-imposing similar restrictions as the SEC imposes on companies that conduct certain private offerings under Regulation D.

CoinList, which was founded in part by AngelList, appears ready to launch token offerings on its site that are similar to the offerings available on AngelList’s site; that is, offerings regulated by the SEC under Regulation D. In order to invest in the offerings on CoinList, investors have to be “accredited” which is the same requirement that investors on Angel List have to meet as imposed by Rule 506(c) of Regulation D. However, since the SEC hasn’t come out with any guidance on ICOs and token sales yet, the requirement that investors be accredited on CoinList is one that is self-imposed by CoinList.

Why This Co-Founder Keeps His Calendars Public to His Employees (Entrepreneur), Rated: A

From client meetings to doctor appointments to family time, most things Sam Hodges does is public knowledge to his employees. All they have to do is check out his online calendar, which is set to “public” for employees. So why is this co-founder and managing director OK with letting others in on even his private life? Because at Funding Circle, Hodges says he fosters a culture of openness and transparency — in every respect.

“The first really crucial trait is around vision. As a leader your job is to understand the market, understand the business’ capabilities and then come back to the organization with a view on what you need to do in order to become successful.

“A second really vital skill is communication — being able to communicate in the right way with many different types of stakeholders.

“A third really important skill is problem-solving. In a leadership position, oftentimes what you face day to day are the things that are not going well and the opportunities that exist — so comfort with ambiguity, the ability to put structure around problems and the ability to be calm in the face of things blowing up.”

The Emotional Robo-Counselor For Your 401(k) (NASDAQ), Rated: A

So he co-founded Dream Forward, a 401(k) supplier that offers, as its website says, “Emotional Advisor A.I. technology.”

Easterbrook: The super high level of what we do is we’re selling 401(k) plans, fix all the obvious problems, lower the cost, make it easier to use, cause less headaches, no conflicts of interest, and then add conversational AI that employees can talk to about whatever they don’t understand, whatever the issues are.

Easterbrook: It looks like an online chat. It’s a chatbot. It’s designed to basically have 24/7 chat available to employees on whatever they don’t understand, whatever their issues are, whatever concerns they have. It talks to them in plain English in a way that we call it almost an emotional advisor instead of a robo-advisor.

AI 100: The Artificial Intelligence Startups Redefining Industries (CB Insights), Rated: A

Google can take on Amazon’s cloud dominance: PayPal co-founder (Fox Business), Rated: A

Tech companies are increasingly becoming more mobile and cloud based. According to Affirm and PayPal co-founder Max Levchin, Google’s (GOOGL) best bet to rival Amazon (AMZN) is through the cloud services business.

In his opinion, Google should diversify and focus on its cloud storage services as a means of competing and catching up to Amazon’s AmazonDrive.

A quick guide to what’s at stake in the SoFi charter controversy (American Banker), Rated: A

Social Finance’s application for an industrial loan charter has not only drawn opposition from a coalition of incumbent banks and community activists. It also serves as a microcosm of several perennial debates in financial services policy.

From complaints about an unlevel playing field to warnings about systemic risk, from giving back to the community to fostering innovation, here’s a rundown of the issues.

Why I Am Joining Affirm (LinkedIn), Rated: B

I’m excited to share that I recently joined Affirm as Head of Product to help build honest financial products that improve lives.

Affirm presents a new and unique opportunity for me at the intersection of technology, user experience, and financial services. If we’re successful, Affirm has the potential to be the most innovative and globally loved financial institution in the world.

4 Fintech Companies That Might Replace Your Bank One Day (Benzinga), Rated: B

Based in San Francisco, SoFi has changed the lending and wealth management space of fintech.

Wealthfront has introduced to the automated financial advisor to the world. Based in Redwood City, the company has deployed high tech software to follow market trends and create analysis for good investments. The automated financial investor manages risk, lowers taxes, and minimizes fees. Wealthfront’s trademark product, PassivePlus, combines high-level research experts with high-level technology to create a speedy and precise automated financial advisor.

Nerdwallet is the hub for free information on credit cards, banking, investing, mortgages, loans, credit scores, and more.

LendingClub Corp LC, based in San Francisco, allows people to invest and borrow money. The company offers personal loans, small business loans, auto refinancing, and now loans for medical treatments. Investors make monthly payments in order for investors to make a monthly return. Scott Sanborn is the CEO of the company, which has lent $26 billion and has over 1.5 billion customers.

United Kingdom

LendInvest Bond Issue (SyndicateRoom), Rated: AAA

Property investment platform LendInvest is launching a five year retail bond, offering investors a fixed rate of 5.25 per cent. The Bond is due to reach maturity in August 2022.

The bonds will bear interest at a fixed annual rate of 5.25 per cent, payable semi-annually on 10th February and 10th August. The minimum initial subscription is £2,000, each Bond has a face value of £100. Once launched, investors will be able to sell their bonds on the open market at any time during market hours. The offer period is now open and is expected to close at 12 noon (London time) on 4 August 2017.

Upcoming FCA consultations will shape future of UK P2P lending (AltFi), Rated: AAA

Peer-to-peer (P2P) lending will continue to go from strength to strength, with low interest rates still squeezing bank margins, a trend towards fintech and a requirement for rapid decision making. P2P lending is establishing its position in the market even with an uncertain economic and political climate. As a result, myriad of opportunities and challenges must be considered across the sector.

The regulator has also expressed concern that P2P firms’ wind-down plans may not be adequate and is planning to strengthen the rules around this. Firms should therefore expect to see an increase in capital requirements.

Another cause of concern, which requires further exploration, is around potential conflicts of interest. There’s a risk that large investors will have greater access to preferential deals, over small investors, which creates problems for effective competition within the sector. Given the regulator’s mandate to promote competition more generally across financial services, it will be interesting to see how this gets applied to the new rules.

Is new retail bond from LendInvest a buy? (AltFi), Rated: A

That looks a smart move because it’s now planning to return to the retail market but this time via bond – Funding Circle, by contrast, chose to use an investment trust to raise money from the stock market, with a target annual yield of around 6.5%.

Compared with the rates on offer from rival P2P platforms such as Zopa and Ratesetter, the yield of 5.25% is not bad and unlike its nearest rivals the investor also get secured assets to work against. That’s important when comparing the Lendinvest yield of 5.25% against the Funding Circle SME Loan income fund yield of around 6.5%. The latter is not secured and is mostly invested in risky SME loans.

Also, Lendinvest has a sensible average LTV ratio at 63% which should give private investors some comfort although I would observe that if house prices fell more than 15% across the board, the bond might be in danger of breaching its covenant. I don’t think that is likely but it is always possible.

The damaged reputation of asset-backed securities is on the road to recovery (City A.M.), Rated: A

It’s been a decade since the collapse of two hedge funds managed by Bear Stearns. The funds were backed by subprime mortgages, and they failed when hoards of borrowers defaulted on their loans. This sparked a chain reaction which culminated in the global financial crisis of 2008.

“ABS could therefore represent the future of crowdfunding more generally, but real estate crowdfunding in particular. This long-suffering acronym could very well make a comeback to help revolutionise the market for real estate investment as we know it.”

Growth Street bolsters team with new sales and relationship management hires (LendIt), Rated: B

SME lender Growth Street has brought on board a new Director of Sales, Head of Relationship Management and Business Development Manager as the firm’s expansion continues.

The new appointments bring a wealth of sector experience to Growth Street. Chan Purewal, formerly of Boost Capital and Bibby Financial Services, has joined the business as Director of Sales.

Nicola Weedall, previously of GE Capital and latterly Head of Risk and Compliance at invoice financing specialist DueCourse, has joined Growth Street as Head of Relationship Management. Her role will be split between London and Manchester.

Meanwhile, Nick Owers, formerly Head of Banking Relationships at iwoca, becomes a Business Development Manager. Nick has also worked for Lombard and Royal Bank of Scotland in the past.

VC investment into UK FinTech ‘fell by 40% in Q2 2017’ (Tech City News), Rated: A

According to CB Insights’ ‘The Global FinTech Report: Q2’17′, venture capital-backed deals in UK FinTech fell by 40% during the second quarter of this year.

The report says funding plummeted by 52% after a temporary surge in the first quarter of the year following Atom Bank’s and Funding Circle’s $100m deals.

How to boost your retirement income with Peer-to-Peer? (Radio Times), Rated: B

Over the past ten years, peer-to-peer lending has taken the UK by storm and has become a viable option for many people looking for a potential retirement income. To date, more than £10 billion has been invested through UK peer-to-peer lenders, returning on average 7.17% total gross interest. (source: AltFi Data)

With the right peer-to-peer loans that are backed by tangible assets like property, such as ones offered by Assetz Capital, the risk of loss can be reduced as those assets may be sufficient to recover lent funds should the loan default.

Creditors set to miss out in Morgan Tucker administration (The Business Desk), Rated: B

Morgan Tucker, the Nottinghamshire-based consulting engineering firm, went into administration at the end of May owing over £3m to creditors, according to papers seen by TheBusinessDesk.com.

The business’s expansion into the Middle East caused significant losses, it emerged in June.

Among some of the firm’s biggest creditors were Funding Circle which was owed £218,513 and Vendor Loans which was owed £112,000. The firm also owed HMRC £286,513.

China

This Chinese Credit Card Company Plans On Outsmarting Tencent And Alipay With A More Secure Product (Forbes), Rated: AAA

Startup firms like Samoyed Financial, a Chinese online credit card issuer, are on the cutting edge of consumer lending.

Samoyed Financial offers prime consumers credit cards online at below-market interest rates. While so many consumers require loans to make larger purchases, online lending firms in China (particularly peer to peer lending firms) have in the past struggled to control risk.

Credit card use in China has risen from five million in 2002 to 300 million at present.

Because China lacks a complete credit risk credit rating system like FICO, firms have been forced to rely on their own credit risk assessments in the burgeoning consumer lending market. Lin’s firm uses data taken from the consumers’ phone records and online behavior, with consumers’ authorization. The data is then used to build a credit risk model.

Samoyed Financial also incorporates artificial intelligence in the form of the Alpha S robot to review information and determine whether an applicant looks suspicious.

China declares war on get-rich schemes, citing risk of social unrest (SCMP), Rated: A

Chinese police will strike hard against shady financial schemes because of the risk of social unrest from such fundraising ploys, according to the Public Security Ministry.

Guo said at a nationwide meeting with local police authorities on Sunday that law enforcers must use “big data” technology to uncover and stop such crimes as early as possible.

Chinese Fintechs Use Big Data To Give Credit Scores To The ‘Unscorable’ (Forbes), Rated: A

Last November 11, China’s so-called Singles’ Day, sales across Alibaba platforms reached new heights: RMB 120 billion, or $17.9 billion.

Offline borrowing, however, is still largely absent. Hua Bei is basically a virtual credit card, but 60% of the users have never owned a physical credit card. Traditional banks are not lending money to individuals because they lack a reliable credit score. In fact, most Chinese people, by Western standards, are simply “unscorable”–only 25% of the population have a credit history.

With spending increasing, credit card use per capita actually declined from 0.34 in 2014 to 0.29 at the end of 2015, according to People’s Bank of China. In that same year, however, mobile payment users grew 65%. For the whole year, $5.5 trillion third-party mobile payments were completed in China.

Chinese P2P Neo Online Helps Children Realize Football Dream with International Champions Cup (Markets Insider), Rated: B

Neo Online, a leading Chinese peer-to-peer lending platform under Neo Capital Management Group Co., Ltd. (“Neo Group”), joined with the 2017 International Champions Cup China to hold a public interest meeting under the theme “Big big kids in a big big world”.

In January 2017Neo Online launched the public welfare program “Kids Are Awesome”, which supports adolescent development and growth in such areas as culture, sports, arts, and health.

European Union

P2P lending platforms poised to join Nutmeg and Seedrs on Fidor marketplace (AltFi), Rated: AAA

One of the most interesting and recent of these partnerships is between challenger bank Fidor and host of other players such as digital wealth manager Nutmeg.  Fidor’s UK commercial customers can now access a whole suite of investment opportunities through the digital marketplace, including access to alternative investment opportunities via a number of the most respected fintech companies in the UK.

Fidor Bank is a digital bank with over 100,000 users across Germany and UK.

Interview with Loit Linnupõld, CEO of Crowdestate (P2P-Banking), Rated: A

What are the three main advantages for investors?

Pre-vetted real estate investment opportunities – Our experienced real estate and finance team evaluates thoroughly each aspect of every project and picks the best investment opportunities to be published for crowdfunding.
Low minimum investment amount – the minimum investment on our platform is just 100 euros, meaning basically anyone can afford to invest into real estate with Crowdestate.
Everyone can invest – Crowdestate is open to all investors all around the world, provided that they have a way to make an international bank transfer to their virtual investment account previously created on our platform.

There are many different types of investment opportunities on Crowdestate. Debt, equity, secured, unsecured… Why did you decide to use so many different types for the offers?

What ROI can investors expect?

The historical money-weighted average internal rate of return on our exited investment currently at 29.59%. However, as the fast-increasing money supply is driving the expected returns down, the investors’ annual returns are probably going to remain between 10-20%.

Stock loan falls short for buy side as liquidity source (Securities Lending Times), Rated: A

In a joint survey by InvestOps and SimCorp, 14 percent of 100 respondents highlighted securities lending as their most popular source of liquidity.

The survey did not detail respondents’ reasons for neglecting securities lending as a liquidity source or expand on whether heads of operations simply considered the practice as a back-up option.

International

ID Finance’s chatbot cuts client services workload by a third (ID Finance Email), Rated: AAA

ID Finance, the digital finance, credit scoring and emerging markets company has developed and introduced a self-learning chatbot for MoneyMan, its online lending platform serving customers in Spain, Georgia, Russia, Poland, Kazakhstan and most recently Brazil.  Since launch at the beginning of July, over a third of customer requests are already being processed automatically.

The chatbot interacts with new customers at the loan application stage and with registered users when they log in to their personal account. The chatbot helps to locate the information required to determine loan eligibility, and provides recommendations of relevant products tailored to the individual’s requirements and financial prudence. General advice on personal budget planning and financial literacy is also offered.

The chatbot works within the NLP (Natural Language Processing) and NLU (Natural Language Understanding) AI frameworks. Information is processed based on statistical matches covering a wide range of frequently asked questions. And the NLU platform enables analysis of messaging flow so the meaning of the information can be sought out in context.

Additional capabilities include finding non-trivial links in dialogue with users and providing relevant answers to questions unrelated to credit and finance. Thanks to the machine learning technology, the number of questions the chatbot is able to answer increases by 20 per cent daily. The average response time is around ten seconds and if a question cannot be answered the message is automatically forwarded to an available client support operator.

Australia

Former big bank CIO joins fintech board (Broker News), Rated: B

Online loan marketplace and fintech HashChing has welcomed two new financial services heavyweights to its advisory board.

Paul Rickard, managing director of CommSec and former executive at Commonwealth Bank of Australia, and Marty Switzer, chief operating officer of the Switzer Financial Group both joined the board in June earlier this year.

India

Faircent.com launches fully-automated ‘Auto Invest’ feature (DNA India), Rated: AAA

In a pioneering development for the country?s fintech sector, Faircent.com, India?s largest peer-to-peer lending platform has launched a new Auto Invest feature for registered lenders.

It eliminates the need for lenders to browse through several borrower profiles by automating the entire process.

As per its latest Data and Analytics report, 90 percent of the lenders on the platform are earning 18 percent to 26 percent gross returns.

Softbank to pick up 20% stake in Paytm’s parent company One97 Communications (Money Control), Rated: A

The Competition Commission of India (CCI) on Tuesday approved Softbank’s acquisition of 20 percent stake in Paytm’s parent company One97 Communications.

The Competition Commission of India (CCI) on Tuesday approved Softbank’s acquisition of 20 percent stake in Paytm’s parent company One97 Communications.

The target launch is August 15, 2017.

Why India’s Hike messaging app adding payment services matters (Kapron Asia), Rated: A

Hike messenger, a popular phone messaging service app in India, has recently decided to introduce payment services on its platform.

The payment service includes both peer to peer payments that do not require bank accounts and use in-app wallets, and bank to bank payments using the UPI platform introduced by the National Payments Corporation of India (NPCI).

Hike has been able to beat Whatsapp to providing in-app payment services.

Asia

‘Flexible’ Regulations Give Indonesia’s Peer-to-Peer Lending Startups Room To Grow (Forbes), Rated: AAA

It’s been seven months since the Indonesian government issued regulations for the peer-to-peer (P2P) lending industry, and the mood in the sector is optimistic.

Suleiman said the market is dominated by local companies that engaged with regulators as the guidelines were being created and were primed to grow once the legal structure was in place.

Indonesia’s Financial Services Authority (OJK)stipulated that startups must have $200,000 in capital before they can be approved for an operating licenses as lenders, and capped loan values at $150,000. For now, that amount suits most P2P lenders just fine, Suleiman said.

Suleiman said that most SMEs fail to secure traditional bank funding because they don’t have enough collateral, which he said is especially problematic in creative industries.

One company meeting the demand for SME financing is Investree, a P2P marketplace startup that launched in 2016.

Ant gold service together Malaysia’s second largest bank to build local version of Alipay (Tech.Sina.com.cn), Rated: A

The ant gold service today announced an agreement with Touch’n Go (TNG), a subsidiary of CIMB, to form a joint venture to provide electronic wallet solutions for local users.

At present, millions of Malaysians use the Touch’n Go card for electronic payments every day in retail stores, car parks and public transport systems. In the future, new e-wallet will help TNG’s new and old customers to get more services on their mobile phones, including electricity providers.

Indonesian FinTech Launches App For Individual SME Investors (PYMNTS), Rated: B

Reports Friday (July 21) said Mitrausahua Indonesia Group, which operates a peer-to-peer lending platform, has launched a mobile app for individual investors of small businesses.

The app joins Mitrausahua’s flagship offering Modalku. For small businesses, interest rates range from 12 to 26 percent. For investors, Modalku promises returns higher than those of commercial bank deposit and fixed investment products.

The app offers a feature, Automatic Funding, which automates the process by which investors can find SME borrowers suitable to lenders’ preferences. Investors can start investing at $75 but must have $750 deposited into their accounts.

Middle East

Middle East women seed crowdfunding campaigns attract more backers (Khaleej Times), Rated: AAA

A total of 97 campaigns were successfully funded in the region in 2015 and 2016, 24 of which were female-led and 73 male-led. And while the number of campaigns funded in the region is still relatively low vis-a-vis more established territories, however, seed crowdfunding is still relatively new to the region. Average pledge amounts to female-led campaigns are 29 per cent higher than male-led campaigns, compared with a difference of only 5 per cent globally, said PwC and The Crowdfunding Centre report – Women Unbound: Unleashing female entrepreneurial potential.

Seed crowdfunding generated a total financing of $ 3.25 million (with $527,300 going to female led campaigns) in the Middle East for 2015 and 2016, with female-led campaigns in the Middle East generating an estimated 5,320 backers, compared with 4,240 for those that were male-led, it added.

Canada

Despite recent gains, Canada lags in fintech adoption (The Globe and Mail), Rated: A

Although the percentage of Canadians using new financial technology has doubled over the past 18 months, Canada lags much of the rest of the world in adopting services offered by online providers.

In Canada, only 18 per cent of digitally active Canadians have used two or more fintech services in the past six months, compared with 33 per cent globally, according to Ernst & Young LLP’s FinTech Adoption index. And while the Canadian rate has almost doubled from 8 per cent in 2015, Canada remains in the bottom of world rankings along with Japan and Belgium.

China has the highest adoption rate at 69 per cent, while India and Britain are close behind with 52 per cent and 42 per cent, respectively.

Philippines

New lending platform to replace ‘5-6’ scheme (The Standard), Rated: AAA

MoneyMatch, an online peer-to-peer lending platform developed by local company FinTech Global Inc., aims to provide Filipinos an alternative to “5-6” scheme, or moneylenders charging exorbitant interest rates on loans.

Bautista said a borrower could apply for loan from P10,000 to P2 million which could be used to start to a small business, get a housing loan, or a new car, and pay for their loan at terms that they could afford.

The interest rate for the loans will range from 15 percent to 36 percent depending on creditworthiness of the borrower.

Authors:

George Popescu
Allen Taylor

Pros and Cons of Peer-to-Peer Lending for a Small Business

P2P lending

The peer-to-peer (P2P) lending business model enables small businesses (SMBs) to raise capital without necessarily approaching traditional lenders such as banks. More specifically, this business model gives entrepreneurs an online platform they can use to communicate and solicit funds directly from potential investors. To learn more, check out the infographic below created by Norwich University’s […]

P2P lending

The peer-to-peer (P2P) lending business model enables small businesses (SMBs) to raise capital without necessarily approaching traditional lenders such as banks. More specifically, this business model gives entrepreneurs an online platform they can use to communicate and solicit funds directly from potential investors.

To learn more, check out the infographic below created by Norwich University’s Online MBA program.

An Overview of P2P Lending

Modern P2P lending activities normally take place online where borrowers and lenders join P2P online platforms such as Prosper and Lending Club. People typically register as either borrowers or lenders. After joining, a borrower submits a loan application for review along with a plan detailing how he/she intends to spend the money raised. This stage normally determines whether a loan application is viable and aligns with the borrower’s investment strategies. Upon accepting a loan application, the review team publishes it on the P2P platform so that it is visible to all investors. In most cases, a loan application remains visible until it is fully funded or taken down by either the borrower or the P2P lending platform.

Differences Between P2P Lending and Traditional Financing

For starters, P2P lending platforms run their operations entirely online. As such, they typically have minimal personal contact between both borrowers and investors. Moreover, they require minimal personal information from the parties involved, which is considered good news for advocates of digital privacy. Another major difference between P2P platforms and mainstream lenders is that the P2P platforms do not lend their own money. Instead, they act as matchmakers that bring borrowers and lenders together. Nevertheless, P2P platforms offer investors some degree of assurance in the form of security notes that can be purchased on their sites. Unlike traditional financiers, P2P lending offers better interest rates, making the service highly attractive to value investors. In general, P2P lending offers better returns than financing opportunities offered by traditional lenders.

P2P Lending Platform Revenue Models

Like most web platforms, P2P platforms must generate revenue to cover their operational costs. Firstly, loan applicants are charged origination fees that vary depending on factors such as platform policies and the total loan amount. In addition, P2P lenders generate revenue by deducting and retaining a percentage of the interest charged to investors. You can think of these deductions as loan servicing fees. Peer-to-peer lenders also earn money via late fees.

Benefits

Compared to borrowing funds from a traditional lender, P2P loan application and processing is much faster. In fact, most loan applications are approved or denied almost instantly and those that make it through the approval stage are usually processed within two weeks. The collective funding approach underpinned by the P2P lending model protects investors from crippling financial losses. Small businesses also benefit immensely because they can easily access funding even with a poor credit history. Additionally, the minimal paperwork involved means fewer bureaucratic processes. Another major benefit is the lower likelihood of loan denial. Finally, the peer-to-peer lending model is predicated on a simplified customer experience. For instance, most P2P financing platforms are accessible via dedicated mobile apps, meaning investors can review funding applications while borrowers can check interest rates and application updates from the comfort of their homes.

Drawbacks

In spite of its benefits, the P2P lending industry is a relatively new financial model that is yet to be comprehensively regulated. This means investors may be unable to accurately determine the default risk of borrowers. It is also worth noting that borrowing funds via P2P lending platforms could substantially hurt your credit score because such platforms are set up to accept individual borrowers, not legal entities such as small to medium enterprises. This is particularly important because a low credit score would make it difficult for you to access financial services from mainstream lenders. P2P platforms also do not cultivate relationships with borrowers or lenders, which is the opposite of the know-your-customer approach adopted by banks. For this reason, there is little information about the P2P lending industry compared to the traditional financial sector. This aspect alone can have a negative impact on interest rates.

P2P Lending Statistics

The P2P lending industry dates back to 2005 when the first platform, Zopa, was launched in the UK. Shortly thereafter the Lending Club and Prosper, among others, were launched in the US. Since 2007, the volume of transactions via US-based P2P lending platforms has grown by 84% with loans worth $5.5 billion issued in 2014 alone. By 2025, the P2P lending industry will reach $150 billion or more. Some of the leading players in the P2P SMB lending space include Kabbage, Funding Circle, and OnDeck. OnDeck went public in December 2014 and boasts a market valuation of $1.8 billion, while Kabbage has raised $135 million in seed funding at a valuation of $1 billion. The Funding Circle has raised $150 million from investors at a valuation of $1 billion.

P2P Lending Trends

There is no doubt that advancements in information and communication technologies (ICTs) have boosted the fortunes of the P2P lending industry. As such, it is quite popular with tech-savvy Millennials who also account for 15.7% of small business owners. This was confirmed by a survey carried out by Morgan Stanley, which found that Millennials prefer faster, cheaper, and more convenient forms of credit. In addition, Millennials more than any other American age demographic favor web transactions conducted via mobile apps. Compared to Generation X, for instance, Millennials running small businesses are five times more likely to seek funding via P2P platforms.

Conclusion

The peer-to-peer lending business model is a novel capital-raising model that enables entrepreneurs to seek funds from a group of investors. Some of the key benefits of P2P lending include minimal paperwork, low interest rates, low risk of loan denial, simplified customer experience, and faster loan application processing. Nevertheless, P2P lending has drawbacks including lack of proper regulatory frameworks, minimal or no personal interactions, and high likelihood of negative credit score impact. In spite of these challenges, the P2P lending industry is growing fast, especially in the US where platforms such as the Funding Circle and Kabbage disbursed loans worth $5.5 billion in 2014 alone.

Norwich University Master of Business Administration Online

Wednesday July 19 2017, Daily News Digest

UK financial services

News Comments Today’s main news: Goldman’s traders have worst first half of Blankfein’s reign. RateSetter hit hard by struggling loans. RateSetter offers investors free sell out option. LandlordInvest hits 1M GBP lending milestone. Revolut offers free personal accounts for Europeans. Today’s main analysis: Goldman has worst first half in Blankfein era. Today’s thought-provoking articles: 35 institutional investors raise stakes in Yirendai. A […]

UK financial services

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

News Summary

United States

Goldman’s Traders Turn In Worst First Half of Blankfein’s Reign (Bloomberg), Rated: AAA

Goldman Sachs Group Inc. traders turned in their worst first-half performance since Lloyd Blankfein rose from that business to become chief executive officer in 2006.

Investment-banking revenue fell 3 percent to $1.73 billion from a year earlier, better than the $1.59 billion prediction. Investment management as well as the Investing and Lending business also surpassed expectations.

35 INSTITUTIONAL INVESTORS ARE RAISING STAKES IN YIRENDAI LTD. (YRD) (Post Analyst), Rated: AAA

(NYSE:YRD) enjoyed a 74.75% run-up in share price since hitting record low of $18.3. The stock managed 3.53% rise and now stands at $31.98 as of July 17, 2017.

Institutional investors currently hold around $143 million or 7.7% in YRD stock.

Yirendai Ltd. 13F Filings

At the end of Mar reporting period, 35 institutional holders increased their position in Yirendai Ltd. (NYSE:YRD) by some 1,343,454 shares, 22 decreased positions by 2,144,331 and 5 held positions by 1,150,551. That puts total institutional holdings at 4,638,336 shares, according to SEC filings. The stock grabbed 21 new institutional investments totaling 973,854 shares while 12 institutional investors sold out their entire positions totaling 1,445,115 shares.

For Millennials, It’s Hip To Have A Traditional Bank (PYMNTS), Rated: A

In a survey held from the end of June into early July and conducted by SurveyMonkey, the web-based survey firm queried more than 1,000 adults above the age of 18, 290 of which were defined as 18- to 34-year-olds: millennials.

Among the findings in the How We Will Pay study: 83 percent of respondents wanted to be able to use an ever-burgeoning roster of new devices to conduct commerce. But, interestingly, when it came to actually transacting, 77 percent of those surveyed said trust remained a key factor when deciding who they want enabling those transactions.

People tend to trust the banks, financial institutions and bank card networks where payments relationships are already in place and already are known to consumers, according to the data.

Most Americans, at 63 percent, have used peer-to-peer payments, said SurveyMonkey. PayPal claimed the lion’s share there at about 80 percent across all demographics. Venmo remains a distant second, at 11 percent, with even greater adoption among millennials at 30 percent. Peer use also mattered to those surveyed, as 28 percent of millennials used the platform because their friends and family members did.

Eighty percent of surveyed millennials wanted the option to visit a brick-and-mortar bank branch based near their towns. In fact, the banks without a tangible footprint in a millennial-centric town lose out, as members of that demographic claimed they would be less likely to open an account with a bank were it not to have a physical branch nearby, said SurveyMonkey.

A new fintech startup wants to democratize trust funds (Business Insider), Rated: A

Now, app-only fintech Tomorrow, which launched services across the US this week, wants to help this group access inheritance products: In the US, 74% of millennials don’t have a will, and 50% of millennial households would struggle to pay their bills without their primary wage earner, according to studies Tomorrow cites. The company’s raised $2.6 million in Seed funding from backers including Plug and Play, Allianz Life, and Curious Capital. It’s now available for iPhone, and will release an Android version later.

Tomorrow aims to show that 

Urban FT Acquires iParse To Bridge The Mobile Banking Gap (PYMNTS), Rated: A

When it comes to mobile banking, there’s often a massive gap between the consumer’s experience with a big bank and with a smaller regional operator or credit union. The big banks have embraced mobile as a critical part of their overall delivery experience — with custom mobile banking apps, proprietary mobile wallets, biometric-authentication, cardless ATMs and more.

But when it comes to the smaller players serving more local populations, the well of mobile innovation can run dry rather quickly and for many reasons.

“A staggering statistic I came across recently really gave me pause. A full 42 percent of credit unions still don’t have mobile banking apps — and it’s not because they don’t want them or don’t think they need them,” Steggall remarked, “but because they don’t have the ability or the resources to do the technical integrations, and they can’t justify the cost.”

While Urban FT’s new products with iParse are for smaller FIs, Steggall told Webster the company also sees a profitable future working with existing payments processors in the market today. Steggall said the iParse solution will help those players — including larger processors already offering their own mobile banking services — better serve their smaller bank and credit union partners.

4 Tips for Developing a Product Around an Unknown Concept (Entrepreneur.com), Rated: A

Being an innovator always comes with the huge challenge of educating potential investors, developers and end users on the significance of a totally new product or service. When bitcoin hit the market, its leaders struggled to answer the same question: “Why is this necessary?”

When you’re building something new, your mistakes form the blueprints future entrepreneurs will study. If you’re a trailblazer in a novel space, here are four ways to forge ahead.

1. Don’t sell — educate.

YieldStreet, an online alternative investments platform, created YieldStreet University, which combines video content, infographics and other visuals to help simplify complex concepts about alternative investing for its customers.

2. Slow your roll.

Faster isn’t always better. When you’re dealing with an unknown concept, speed kills the sales process. If your service or product is new to the market, resist the temptation to immediately convert cold traffic. First, take time to make sure your clients or customers understand what they’re working with and how to utilize your product or service to its fullest potential.

3. Be open about swings and misses.

Honesty builds trust. One study from Label Insight showed 73 percent of participants were willing pay more for more transparent brands.

4. Focus on your mission, not personas.

Don’t concern yourself with selling to anyone in Box X or Box Y. If you do, you’ll end up tailoring your product to suit demographics instead of your vision. Identify your mission and purpose, and sell that.

Recent IPO Movers of the Week (July 10-14, 2017) (Money Morning), Rated: B

China Rapid Finance Ltd. (NYSE: XRF) soared 20.6% for the week. The online consumer-lending marketplace announced on Monday that it had reached the 20 million-loan milestone on its platform.

United Kingdom

Peer-to-peer lender Ratesetter hit by £80m of struggling loans (The Guardian), Rated: AAA

The peer-to-peer lender Ratesetter has been hit by £80m of struggling loans in the first major setback for the nascent online lending sector.

The company said it would use its own funds to prevent losses being taken by its 50,000 users, who are mostly small investors using the website in order to lend their savings to other individuals and benefit from higher interest rates than are available at high street banks.

The company admitted that it had made £36m of loans to a company called Vehicle Trading Group Limited (VTG), a motor finance holding company that then fell into administration because it had taken on too much debt.

It also loaned a further £12m to an advertising company called Adpod, which during 2015 became 50% owned by VTG. The website admits that the loans, of which £8.5m are still outstanding, should not have cleared its own credit policy.

RateSetter gives investors option to sell out free due to wholesale “interventions” (P2P Finance News), Rated: AAA

RATESETTER is giving all its lenders an option to sell out of their investment free of charges, as part of its wind-down of exposure to its wholesale lending portfolio.

The peer-to-peer platform wrote to investors on Tuesday to outline “interventions” it has made on three former wholesale lending partners.

LandlordInvest reaches £1m lending milestone (P2P Finance News), Rated: AAA

BUY-TO-LET peer-to-peer platform LandlordInvest has passed the £1m lending milestone.

The property lender, which launched in December 2016, has amassed 700 investors and completed six loans over the past seven months.

A vision for a transformed, world-leading industry (The City UK), Rated: AAA

TheCityUK and PwC’s Strategy& have developed a vision for the future of the industry, drawing on extensive engagement with leaders across the industry and a rigorous fact-based assessment. By 2025:

1) The industry will have transformed itself to be highly digitised, innovative and customer-centric. It will be a leader in cyber security, using data in a secure and sophisticated way. This will be alongside new technologies, to drive forward significant improvements in the way services are delivered. Firms will be consistently and relentlessly doing what is right for their customers.

2) London will still be one of the most important and attractive international centres for financial services and global business, retaining the full ecosystem of financial and related professional services. It will continue to play an important domestic role and be a leading FinTech centre that keeps the UK at the forefront of financial innovation.

3) Regional and national financial centres will have become more important within the UK industry. There must be a strong supply of local talent with the relevant skills, competitive costs and high productivity. Banking, insurance and asset management centres outside of London will continue to develop, hosting more headquarters of major companies. While other regional and national hubs will focus on enhancing specialist roles which serve both UK and global markets.

Access the full report here.

The peer-to-peer lending model involves a fair bit of intervention in the market (FT Alphaville), Rated: A

While Funding Circle (and Zopa, for the most part) allow the losses from loans to fall onto lenders, Ratesetter has built a loss reserve to protect investors from bad debts. This “Provision Fund” is funded by taking a fee when a loan is extended and, in times of stress, can be topped up by diverting interest payments and capital away from investors. This means lenders on Ratesetter need to pay attention to the risk in the overall loan book, rather than any individual borrower.

At the moment, the Provision Fund has a 119 per cent coverage ratio, so there is enough money in the fund — if you include expected future fees — to cover losses 1.19 times higher than currently expected. Ratesetter’s target ratio is 125 per cent to 150 per cent.

The important thing here is that the Provision Fund currently has £12.9m in cash and £8.9m of expected future income, versus £18.2m of expected losses. If Ratesetter had let £12m of bad debts suddenly wash into the fund, it would have resulted in a big knock to its coverage ratio. We don’t know what that would do to investor confidence, but it’s fair to say it wouldn’t have helped.

OFF3R Report Says Equity Crowdfunding Defies Brexit Uncertainty in First 6 Months (Crowdfund Insider), Rated: A

OFF3R is out with a report today on the status of equity crowdfunding in the UK. According to their numbers, the UK investment crowdfunding sector is booming. In fact the OFF3R Index states that UK crowdfunding platforms raised a record £130 million during the first half of 2017.

Additionally, the report states that March of 2017 was a record breaking month as well. Over £40 million was raised with several large crowdfunding rounds on the big three platforms; CrowdcubeSeedrs and SyndicateRoom.

Retail Banking IT – giving customers what they want (IT ProPortal), Rated: A

Peru Consulting asked 1000 consumers and 100 Senior IT Leaders in the banking sector.  The results, published in our report – Retail Banking IT: Turn to Face the Change – offer a startling insight into the scale and speed of change and the challenges faced by traditional banking’s IT leaders.

For example, when asked about the specifics of banking transactions using mobile phones, nearly two thirds (63%) of consumers in the 18-44 age group stated this was important to them, while only 14% of the 55-64 age group felt the same.

More generally, the next 12 months holds little comfort for the retail banks when it comes to customer loyalty, with 38% of 18-24 year olds and 41% of 25-34 year olds set to change the bank that provides their main account.

We asked the Senior IT Leaders why they though their customers would be likely to switch banks. Strangely, while 64% recognised that challenger banks are taking their market share, less than 5% recognised that customers might be tempted by new technology such as mobile apps. Given the strength of the GAFA companies and fintechs, this is a dangerous blind spot for the traditional banks.

Guru Appointed to Head Up Comparison Site (Fintech Finance), Rated: B

CONSUMER credit comparison site MoneyGuru.com has appointed an experienced channel director to lead its rapid expansion after a successful launch period.

The site has signalled its intention to disrupt the big four in the comparison market by appointing expert Deborah Vickers who has helped some of the biggest names in the market with optimisation and product development.

Deborah, 35, from Northwich brings 13 years of experience in technology and IT to the role, many of these within the financial services sector. She started her career at industry leader MoneySupermarket.com as a service desk manager before working her way up to IT delivery manager during her eight year tenure.

China

China Is Leapfrogging U.S. In Payments Technology, Ex-Ambassador Max Baucus Says (Forbes), Rated: AAA

Former U.S. Ambassador to China Max Baucus on Saturday lauded China’s can-do spirit and cited the country’s rush to online payments as an area where the country was overtaking the United States.

Baucus was speaking at an annual LendIt fintech conference held in Shanghai that attracted more than 2,000 participants.

“Apple Pay is trying to be an accepted mode of payment in the United States but it is catching up very slowly,” he said. “It’s disadvantaged, I think, compared with China and other Asian countries’ emerging payment systems. Why? Because established legacy institutions such as banks and credit card companies, while still useful, will soon be overtaken by the new innovative technology being developed here and in other Asian countries.”

China’s Internet Sector Grows Up (Institutional Investor), Rated: A

Leading investors who specialize in financial technologies and are taking stakes in new technology startups in the country say China is no longer an innovation laggard and in fact is taking a commanding lead in specific areas.

Take online payments. Two Chinese Internet giants, Alibaba Group Holding and Tencent Holdings, already hold strong leads over their U.S. counterparts in this area. Alipay, for instance, is Alibaba’s online escrow payment system that now counts more than 630 million users globally, of which 450 million are in China. Tencent’s messaging app, WeChat, boasts 900 million users, and its WeChat Pay service has about 600 million active users. Both Alipay and WeChat Pay allow their users to make transactions all over the world using their mobile phones, notes Jones, adding that at present not a single U.S. rival can offer a similar global product.

Lufax international platform starts up in Singapore (Xing Ping She), Rated: A

On 17th July, Ping An Insurance announced the affiliate Lufax started a international business platform, Lu International Financial Asset Exchange in Singapore. Lu International was known to have got the capital market service licence(CMS) approved by MAS. It is also the first Chinese fintech company  to have a CMS in Singapore, and will start for operation in the third quarter of 2017.

Lu International was registered in Singapore in January 2017, after licensed it will provide a series of wealth management services including securities trading, asset management and custody for investors with overseas bank accounts or assets.

Lu International aim to provide pure online banking services for the Asian middle class, and the investment amount will be among $10 thousand to $1 million,according to Gregory D Gibb, the CEO of LufaxHoldingLtd. The initial product line of Lu International is relatively simple, mainly including monetary fund, fixed income products, bond fund, REITs fund and ETF.

European Union

Revolut Introduces Free Personal Euro Accounts Following $ 66 Million Raise (Crowdfund Insider), Rated: AAA

Just days after announcing it secured $66 million through its Series B funding round, digital challenger bank Revolutintroduced free personal euro accounts. The company revealed this new feature enables all its customers, across 42 European countries, to open a free Euro account straight from their smartphone in as little as 60 seconds.

Getting Paid to Run Up Debt (Handelsblatt.com), Rated: AAA

It used to be clear: borrowing cost money. But now Smava, a Berlin-based fintech, has broken new ground by offering loans at a negative rate of interest. In other words, paying consumers to borrow. “Anyone borrowing €1,000 ($1150) will only pay back €994,” says Smava boss Alexander Artopé. That translates to a cool -0.4 percent.

Unsurprisingly, there’s a catch: The largest amount a Smava consumer can borrow at these enviable terms is €1,000, and each person is restricted to a single loan.

Citi to set up a ‘major new trading operation’ in German city after Brexit (Business Insider), Rated: A

American banking giant Citi is set to become the latest major financial firm to choose Frankfurt for its post-Brexit EU hub, reports late on Monday suggested.

Financial centres across the EU — including Frankfurt, Paris, Dublin, and Luxembourg — are battling to attract financial services work moving out of London as a result of Brexit as a result of expected legal changes that will make operating in the EU out of London tricky.

Frankfurt is emerging as a popular destination for many international firms choosing a post-Brexit base. Three Japanese lenders, Daiwa, Sumitomo Mitsui Financial Group, and Nomura, have all confirmed in recent weeks that they will set up new post-Brexit bases in Frankfurt.

Cyprus fintech startup Capital.com raises $ 25 million (Tech.eu), Rated: A

Cyprian fintech startup Capital.com has raised $25 million from Larnabel Enterprises and VP Capital and launched its mobile trading app.

The Capital.com app allows investors to trade financial products and receive updates from its patent-pending Smart Feed with news, analysis, and research based on user behaviour. The app, the company claims, uses AI to detect common trading biases and patterns.

International

What The SoftBank Vision Fund Means For Tech Investing (CB Insights), Rated: AAA

The SoftBank Vision Fund, first announced in October 2016, has now closed at least $93B of a target $100B to invest in global technology companies – making it the largest tech investment fund in history.

$100B is an unprecedented sum for a single fund, totaling almost exactly the same amount that all VC-backed companies received in 2016 ($100.8B across 8,372 deals globally, per CB Insights data). Yet the fund’s massive size is raising concerns among some investors, who fear that an influx of high-dollar rounds could overinflate the market and prolong exits while crowding out competing investors.

With both Saudi Arabia and the UAE — which have contributed a combined $60M of sovereign capital to the fund — counting on the Vision Fund’s investments to diversify their national economies, the stakes are high. Other high-profile investors are also placing bets with the Vision Fund: The Vision Fund has closed contributions of $1B or less from Apple, Qualcomm, Sharp, Foxconn, and Larry Ellison’s family office. (SoftBank’s own $25B rounds out the $93B secured so far.)

Australia/New Zealand

Cyber-attacks significant threat but RBNZ says no need for prescriptive requirements (NBR), Rated: AAA

Cyber-attack poses a significant threat to the global financial system but the Reserve Bank has decided not to introduce more prescriptive requirements at this stage due to the swiftly changing nature of both the threats and the technology, said Reserve Bank head of prudential supervision Toby Fiennes.

Fiennes said the central bank did not believe prescriptive regulations would appreciably improve the outcome, when the technology and threat landscape are both changing so rapidly.

VicSuper has launched a digital advice suite called Beeline to strengthen member engagement.

The digital advice service would act as an online coach to provide members with access to financial advice 24 hours a day, seven days a week, free of cost to members, with the fund saying it would provide super advice at scale.

Areas of financial advice would include additional contributions and investment asset allocation in their superannuation. The service would also provide general advice to members on retirement adequacy and budgeting goals.

Surging investor confidence in clean energy drives record $ 2 billion investment from CEFC (Mozo), Rated: B

The CEFC assisted in a number of clean energy projects in 2016-17 including the establishment of a green loan marketplacewith peer-to-peer lender RateSetter, 500 new energy efficient homes for low income families in New South Wales and ten large-scale solar projects in regional Queensland, New South Wales and Victoria.

India

RentoMojo raises $ 10 mn from Bain Capital Ventures, Renaud Laplanche (The Hindu Business Line), Rated: AAA

RentoMojo, a consumer product leasing start-up, has raised $10 million (over Rs. 64 crore) from Bain Capital Ventures and Renaud Laplanche.

The series B funding also saw participation from existing investors, Accel Partners and IDG Ventures, Rentomojo said in a statement today.

The funds raised will be used to further strengthen the product, finish building a stellar leadership team, and expand into new categories and geographies, it added.

Asia

Indonesia: P2P app Julo raises seed funding from Skystar Capital, others (Deal Street Asia), Rated: AAA

Indonesian peer-to-peer (P2P) lending startup Julo has raised an undisclosed amount of investment in a seed round led by Skystar Capital, along with East Ventures, Convergence Ventures, according to an announcement. A few notable angel investors also participated in the round.

Julo is focussed on financial inclusion in Indonesia by helping over 100 million people obtain loans for their various personal use.

Loan applicants can carry out the process from their phones through Julo’s app, where they submit pictures of personal documents and then receive their loan within 24 hours upon successful verification.

How Singapore-based P2P lending platform Crowd Genie aims to help underbanked SMEs grow (e27), Rated: A

One of the recipients of the CMS is Singapore-based P2P lending platform Crowd Genie. Like many of its ilk, Crowd Genie was founded by entrepreneurs who saw that certain traditional financial services were rigid and could not serve certain profiles of clients.

Ideally, the profile of borrowers would be SMEs turning over about S$1 million (US$731,000) to S$5 million (US$3.66 million) in revenue yearly, and would have had a bank loan and a corporate bank account; they would also have to be in operation for about two to four years, and need a short-term funding gap that the banks are not able to extend.

In place of just traditional financial metrics, Mehra and his co-director Bikash Saha, who has experience in a credit rating agency and retail banking, leverage a hybrid of machine-based learning algorithms combined with hands-on groundwork to assess the credit risk profile of potential borrowers.

Part of the reason Crowd Genie is still heavily reliant on human input is that its machine-learning algorithm is currently a work-in-progress. Accurate data analytics can only be achieved once there are enough actionable data points.

Mehra says the next review of the algorithm will take place at the end of the year, when Crowd Genie has accumulated about 300 – 400 cases.

Currently, institutional investors are qualified to be lenders on Crowd Genie; retail investors are barred.

Africa

Will robots narrow the financial advice gap? (Biz Community), Rated: A

Interestingly, however, a study by international investment house, Legg Mason, personal interaction is still important for these younger investors – 53% of participants in this group indicated that technology can never truly replace personal customer service. This was particularly relevant when it came to retirement and tax planning, but was of less importance when it came to tracking the stock market.

Furthermore, humans can remove irrelevant data from their memory, which allows for increased learning. Robots, however, store all data, which begs the question around the long-term competency of robo-advice.

Authors:

George Popescu
Allen Taylor

Tuesday July 18 2017, Daily News Digest

fintech adoption

News Comments Today’s main news: Laplanche shares vision for Online Lending 2.0 at Lang Di Fintech. Elevate named a great place to work (again). FinLeap raises 39M Euro. Crunchbase-like database launches in Singapore. Today’s main analysis: Ant Financial poised for more growth. Fintech use reaching mass adoption among digital consumers. Today’s thought-provoking articles: OCC vs. New York DFS.  Ant Financial […]

fintech adoption

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

News Summary

United States

Elevate Named Great Place to Work by Independent Analysts for Second Year in a Row (4-Traders), Rated: AAA

Elevate was recently certified as a great workplace by the independent analysts at Great Place to Work®. Elevate earned this credential based on ratings provided by its employees in anonymous surveys. A summary of these ratings can be found at 

“According to our study, 87 percent of Elevate employees say it is a great workplace,” says Sarah Lewis-Kulin, Vice President of Great Place to Work Certification & List Production.

79% of Elevate employees completed a survey, resulting in a 90 percent confidence level and a margin of error of ± 2.04.

Ex-LendingClub CEO Laplanche sees new Upgrade venture growing loan volumes (Yahoo! News), Rated: AAA

Online lender Upgrade, launched by former LendingCLub Corp CEO Renaud Laplanche in April, expects to grow its loan volumes and add new asset managers to its roster of buyers in coming months, Laplanche said in an interview on Monday.

Upgrade has been testing its credit quality and risk management systems, compliance framework and other operations, as well as building up its infrastructure to deal with rising volumes before ramping up the service, Laplanche added. The company has signed up six asset managers who are already buying or plan to buy loans originated by the company, including Jefferies LLC and an unnamed Hong Kong firm, he said.

OCC vs. New York DFS: Battle for the Future of FinTech (Bloomberg BNA), Rated: AAA

In the rapidly developing world of financial technology it often is unclear who has the legal authority to regulate the activities of newly created companies. Many of these companies do not neatly fit into any established regulatory scheme. However, answering the question of who will be creating the regulatory rules for FinTech companies is important both for regulators and the FinTech companies themselves.

State Regulators Want to Regulate FinTech

Over the past several years, state regulators have been staking out positions as leading regulators of FinTech companies.

During this same period, federal regulators have announced the intention to assert control over the regulation of FinTech companies.

The OCC indicated that its authority to grant FinTech Charters to nonbank FinTech companies stems from 12 C.F.R. § 5.20(e)(1), which states that the agency may grant such charters to institutions that conduct “at least one of the following three core banking functions: receiving depositions, paying checks, or lending money.”

The Lawsuit

The DFS did not limit itself to criticizing the proposed FinTech Charters. On May 12, 2017, the DFS filed a lawsuit against the OCC in the District Court for the Southern District of New York, alleging that the OCC’s proposed FinTech Charters exceeded the agency’s statutory authority under the National Banking Act and violated the Tenth Amendment. Based on these claims, the DFS sought declaratory and injunctive relief that would declare the proposed FinTech Charters to be unlawful and prohibit the OCC from creating or issuing these charters in the absence of express authorization from Congress.

Third, even if the OCC prevails and begins granting FinTech Charters, state agencies such as the DFS will still attempt to regulate FinTech companies. This could lead to future disputes over the nature and scope of the federal preemption of state regulations, which will add to the confusion over which regulations apply to which FinTech companies.

As a result of these issues, FinTech companies have little idea what the future regulatory terrain will look like. This uncertainty makes it difficult for companies to predict the future regulatory cost of business decisions they would like to make today.

Worthy Financial Announces the Closing of Its Seed Financing Round (BusinessWire), Rated: A

Worthy, a digital investment app that redefines how Americans access investment products, diversify their portfolios and save for retirement, announced the successful closing of its seed financing round. The funds will be used for the full-scale roll-out of the Worthy mobile app, and will enable Worthy to expand its growing user base as well as to broaden the array of investment product options it offers retail investors.

Worthy provides users with the unprecedented ability to spend their way to retirement by investing retail round-ups into high-yielding fixed interest bonds, the proceeds of which fund growing businesses. In doing so, anyone has the capability to build a nest egg, enhance portfolio returns, mitigate risk, and generate both social as well as financial returns. Worthy investors grow their portfolios while simultaneously supporting American entrepreneurs.

Stash, now valued at $ 240 million, lets anyone start investing in the stock market with just $ 5 (Business Insider), Rated: A

Krieg and Robinson realized then that they had an opportunity to help.

They founded Stash, an app that lets you build a portfolio and start investing with only $5, plus it teaches you the ins and outs of the stock market.

Krieg and Robinson realized then that they had an opportunity to help.

The company launched in October 2015 and just closed on a $40 million Series C led by Coatue Management. That brings Stash’s total funding to $78 million and values the New York-based startup at $240 million, according to a person familiar with the company.

Stash makes money by charging a subscription fee of $1 per month for accounts with less than $5,000. When an account has more than $5,000, Stash charges a fee of 0.25% fee.

Stash now has about 850,000 customers nationwide.

Why Robo-Analysts, Not Robo-Advisors, Will Transform Investing (The Financial Revolutionist), Rated: A

Robo-advisors and robo-analysts are both important to enabling wealth management firms to cut costs without sacrificing quality of advice, but the importance of a robo-analyst to enhance the quality of investment advice shouldn’t be underestimated.

Today, many of the tasks performed by robo-advisors are low value-added services such as determining and communicating asset allocation strategies (e.g., 60% equities, 30% fixed income and 10% cash). In fact, these services are so low value-added that advisors cannot make money doing them unless they are bundled with higher value-added services.The value proposition of a robo-analyst is very different.

Specifically, by shining an analytical light in the dark corners of financial filings, robo-analyst technology can identify many critical data points overlooked by most research analysts today. No longer must investors rely on the headlines or management-manipulated earnings. With new technologies, investors can receive a much fuller, more comprehensive analysis of financial filings, company profits and valuation so as to make better informed decisions than ever before. As a result, robo-analyst tech raises the analytical bar universally, enabling investors to transcend the short-sighted and high turnover trading mentality that, in the long run, does more damage to investors than good.

Bankers Worry About Jobs Lost to Automation (Newsmax), Rated: A

A quarter of banking’s “front line” professionals are worried about losing their jobs to robots and artificial intelligence-boosted mobile apps, according to a LinkedIn survey.

In the poll of 1,012 pros from financial technology, investment banking, retail and corporate banking, financial and hedge fund management, accounting, insurance, and private equity, 25 percent said they are concerned automation will impact their job security – with 34 percent of retail bankers saying it is a significant concern for them.

The survey also found 42 percent of financial services pros think financial technology is a “direct threat” to traditional financial services, compared with 13 percent of professionals who work in traditional financial services, and 18 percent of all the financial professionals.

Matthew Wong of CB Insights on Insurtech (Lend Academy), Rated: A

In today’s episode of the Lend Academy podcast we have Matthew Wong of CB Insights. He has been following innovation in the insurtech space for some time and his weekly insurtech newsletter has a subscriber base of more than 18,000 people.

In this podcast you will learn:

  • Matt’s background and how he first became involved in insurtech.
  • What CB Insights does.
  • The headwinds facing insurance industry incumbents today.
  • Why millennials are not buying insurance as much as other generations.
  • Why insurtech is hot right now when it comes to VC investments.
  • Some of the most interesting companies in the insurtech space right now.
  • Why it will probably take a long time for these startups to get to scale.
  • Why Matt likes Zhong An Insurance, the first and largest online insurer in China.
  • How the incumbent insurance companies have been reacting to this surge in startup activity.
  • Why Munich Re is one of the most interesting incumbents.
  • Matt’s view on what SoFi is doing partnering with a life insurance company.
  • The endgame for many of the insurtech startups.

Solar Loans Are A Risky Investment But Not Unlike Other ABS (ValueWalk), Rated: A

Solar loans are on the rise as the industry undergoes a transition and credit investors consider whether these asset-backed securities are worth the risk. In some ways, they’re similar to other types of collateral, and credit investors are already used to dealing with the types of risk they pose. However, analysts at Moody’s warn that they’re one of the riskiest securitization asset classes.

The reason solar loans are so new is because until now, the residential solar market has been dominated by third-party ownership of solar panel systems via power-purchase agreements and leases. GTM Research projected late last year that 2017 will be the year direct ownership of residential solar panels retakes its position as the top solar financing model.

The firm projected that 55% of the U.S. residential solar capacity that’s installed this year will be bought by customers who either pay in cash or take out a loan to finance their systems.

Jefferies gives IBM Watson a Wall Street reality check (TechCrunch), Rated: A

IBM’s Watson unit is receiving heat today in the form of a scathing equity research report from Jefferies’ James Kisner. The group believes that IBM’s investment into Watson will struggle to return value to shareholders.

The narrative isn’t the product of any single malfunction, but rather the result of overhyped marketing, deficiencies in operating with deep learning and GPUs and intensive data preparation demands.

If job postings are any indication, IBM is not keeping pace with other technology companies in hiring machine learning developers.

Cascade Fintech Signs 3-Year Contract for AU10TIX ID Authentication & Onboarding Automation (WVAlways.com), Rated: A

US prepaid card and P2P payment services provider Cascade Financial Technology Corp has signed a 3-year contract to power customer onboarding and KYC with 2nd generation ID authentication and onboarding automation. AU10TIX Secure Customer onboarding (SCO) cloud service that already powers major players across financial services markets, is known not only to increase KYC robustness and fraud protection but also improve customer conversion success chances and operating efficiency.

The future of Millennial banking (Marketing-Interactive), Rated: A

In the last ten years, the fundamental assumption that financial institutions are the only avenue to financial transactions is being called to question, especially by Millennials, who are by far the most entrepreneurial generation.

In a disruptive world, what does the future of banking and finance look like? How can and should financial institutions adapt to remain relevant, or even lead in this era of change?

  • Seamless, efficient and fast

Payments are perhaps the most basic and prevalent interaction with finance for the masses, yet for the longest time, payments to businesses saw minimal innovation. P2P transfers were never a focus for banks since it was a zero commission business. This was a pain-point to Millennials, who are used to sending everything from photos to documents electronically – having to withdraw physical cash or obtaining account details to securely transfer money for lunch is considered old fashioned!

  • Flexibility and access to funds

Traditional unsecured loans might require a strong financial history or proof of steady income stream, which would be unlikely if the individual were not taking a salaried job. Cash advances on credit cards would usually incur overly high interests costs.

This creates opportunities for peer to peer (P2P) lending marketplaces such as Prosper and Lending Club, platforms which create alternative ways to access cash loans while providing alternative yields on deposits.

  • Information access

Websites such as MoneySmart, DirectAsia, GoBear and Milelion position themselves as third-party and an unbiased advisor of investment products and policies. They perform the heavy lifting of trawling through multiple sites to aggregate and analyse information, empowering consumers to make informed purchases in the shortest time.

  • The reversal to brand love

The answer lies in placing the consumer in the centre of their businesses and asking the right questions constantly to redefine scope of value-add. It is an iterative journey, and worthwhile to include consumers as co-creators in product design and transformation.

Wela, the World’s First Financial Advice App Pairing Artificial Intelligence with Real Advisors, Available for Android Devices (Marketwired), Rated: B

Wela, a personal finance app that pairs artificial intelligence (AI) and human advisors, announces today it is available for download on Android devices in addition to iOS. Wela pairs real financial advisors with AI through the personification of its digital advising algorithm, Benjamin. The first true digital advisor, Benjamin utilizes AI to track users’ daily, weekly and monthly spending habits and provides personalized advice based on their financial needs and goals. Unlike other free consumer finance apps, Wela also offers access to real financial advisors via phone, video chat or in-person at no additional cost.

The Android app contains the full functionality of the iOS version and employs the same innovative features that allow users to track all their financial accounts in one place. Wela protects user privacy by leveraging bank-level security, as well as 256-bit SSL encryption and two forms of secure authentication. Capable of aggregating data from more than 13,000 financial institutions, Benjamin pulls linked account information to run a complete analysis, helping users take steps toward financial wellness based on three main pillars: creating an emergency reserve, paying off debt and implementing an investment strategy. In addition to Benjamin’s foundational metrics, the algorithm delivers custom insights on demand, helping users stay on track to reach their short- and long-term goals.

Three Leading Lawyers Take the Helm of Manatt’s Financial Services Group (BusinessWire), Rated: B

Manatt, Phelps & Phillips, LLP, today announced new co-chairs of the firm’s industry-leading financial services group, with the appointment of Richard Gottlieb, Brian Korn and Donna Wilson.

Gottlieb is a partner in the firm’s Chicago office, Korn is based in Manhattan, and Wilson practices in Manatt’s Los Angeles office.

United Kingdom

MarketInvoice Stands at £1.34 Cumulative Invoices Funded (Crowdfund Insider), Rated: AAA

This past February, MarketInvoice shared it had funded invoices over £1.1 billion since platform launch in 2011. The online lender said it expects to top the £2 billion in invoices funded by the end of the year.

In Q2 of 2017, MarketInvoice announced that it had funded invoices from UK businesses worth £161.9 million. Compare this amount to the £103 million funded in Q2 of 2016 and the platform is generating some serious momentum.

In the first quarter of 2017, MarketInvoice generated £130 million in invoice finance.

RateSetter’s new chairman heralds benefits of provision fund (P2P Finance News), Rated: AAA

RATESETTER’S new non-executive chairman Paul Manduca (pictured) has heralded the peer-to-peer lender’s “simplicity”, citing its provision fund as an example, on his first day in his new role.

The asset management veteran said that financial innovation can sometimes result in overly-complex products that investors cannot understand, which is “complacent and out of step with what customers want”.

Activist investor increases stake in Ranger Direct Lending fund (AltFi), Rated: A

The LIM Asia Special Situations Master Fund has increased its stake in the £243m Ranger Direct Lending fund, following the portfolio’s move to a double-digit discount.

The Hong-Kong based fund had already invested in the closed-ended portfolio, which invests in a host of online lending platforms, owning less than 4 per cent. Last week it increased its holding to 5.48 per cent (on the 7th July).

Assetz Capital Continues UK P2P Expansion with Scotland Appointment (Crowdfund Insider), Rated: A

Assetz Capital is continuing its strategy of establishing a local presence across the UK with the appointment of Ian Craig as Regional Relationship Director to help manage operations in Scotland. The appointment comes as Assetz Capital says growth in Scotland continues with a target of £50 million in lending (subject to two upcoming completions). Assetz Capital says it is well on its way to becoming the second largest alternative finance lender in Scotland.

Craig will be responsible for helping local Scottish businesses acquire finance through the peer-to-peer platform and ensure borrowing with Assetz Capital runs seamlessly.

P2P lenders helped British Business Bank fund £717m of SME loans last year (P2P Finance news), Rated: A

PEER-TO-PEER lenders were among the delivery partners helping the British Business Bank (BBB) fund £717m of loans to small businesses last year, the firm’s annual report revealed.

The state-backed institution, which has channelled funds through P2P platforms such as RateSetter, Funding Circle and MarketInvoice, facilitated 94 per cent of its finance through banks outside of the ‘big four’ last year, up from 90 per cent in 2015 and 79 per cent in 2014.

The BBB has a key performance indicator of having more than 75 per cent of its finance facilitated through providers other than the four largest banks over five years, so it has already surpassed that aim.

China

Renaud Laplanche Shares His Vision for Online Lending 2.0 at Lang Di Fintech (Lend Academy), Rated: AAA

In his first public appearance in over a year Renaud Laplanche, the CEO of Upgrade, gave a presentation this past weekend at Lang Di Fintech, LendIt’s annual Chinese conference, in Shanghai. Titled Online Lending 2.0 he laid out his vision for where he thinks the online lending industry is going next.

He talked about how one of the big innovations in Online Lending 1.0 was the introduction of more data into the underwriting process. Ten years ago, which marked the beginning of Online Lending 1.0, this new data allowed more accurate underwriting of consumers. But in Online Lending 2.0 this has expanded dramatically with not just more data but new and better tools available to analyze this data.

The two key data points that are being added in Online Lending 2.0 are location data and free cash flow analysis. We need to adjust underwriting to take into account location because a consumer in New York City has a much higher than average cost of living while a consumer in Greenville, SC has a much lower than average cost of living for example. This is why Debt-to-Income (DTI) is less important than free cash flow today.

Alibaba Affiliate Ant Financial: World’s Largest Fintech Poised For More Growth (Seeking Alpha), Rated: AAA

Ant Financial, Alibaba’s (NYSE:BABA) financial affiliate, is the largest fintech in the world, and leads the pack of the world’s largest fintech unicorns, the top four of which are from China, the largest fintech market in the world: Ant Financial (US$60 billion), Lufax (US$18.5 billion), JD Finance (US$7 billion) (NASDAQ:JD), and Qufenqi (US$5.9 billion).

Alipay

Payments make up the biggest portion of fintech in China and this is expected to be the same going forward.

Mobile phones function as mobile wallets for about 425 million Chinese, or 65% of all mobile users. This is the highest penetration rate in the world. At 38 trillion yuan (US$ 5.5 trillion) last year according to data from iResearch, China is the world’s largest mobile payments market and is over 50 times bigger than the American market where mobile payments reached US$112 billion.

China’s e-commerce market is expected to continue its upward climb. Online sales represented 16.4% of China’s total retail sales in the first half of 2016 and this is expected to climb to 21.7% by 2020 which should benefit Alipaygoing forward.

Wealth Management

Wealth management is the largest area of fintech after payments.

There are about 325 million Chinese investors in Yu’e Bao, a number almost as big as the population of the United States and the fund has more assets than the rest of the top 10 Chinese peers combined.

The majority of Yu’e Bao users are millennials under the age of 30 and about 99.7% of its investors are individuals, according to its annual report, rather than companies or financial intermediaries as is usually the case at other Chinese money-market funds.

Credit scoring

Data from the World Bank’s Global Findex study revealed that the bank account ownership rate among individuals aged 15 and older is quite high in China (79% in 2014) yet credit usage is relatively low at 14% in 2014.

The People’s Bank of China covers credit profiles for just about 25% (around 350 million) of China’s 1.3 billion population and shares this data only with selected banks. This absence of reliable credit scoring is partly the reason individuals and small enterprises experience difficulty obtaining a loan from China’s state-controlled banking system which tends to favor large corporates and state-owned enterprises.

Lending

Credit data from the system will also be used to support lending activities at Ant Financial’s MYbank, an internet-only bank which provides loans to SMEs. Set up in mid-2015, the bank will extend loans up to US$800,000 as well as smaller loans that state banks usually don’t pay much attention to.

China has just 8.1 commercial bank branches and 55 ATMs per 100,000 people. This compares with US and Canada which have 28.2 branches and 222 ATMs per 100,000 people and in Europe where there are 28 branches and 81 ATMS per 100,000 people.

PBOC calls upon fintech firms to help fund system to monitor online transactions (SCMP), Rated: A

China’s central bank has urged financial technology (fintech) companies to help pay for a government-controlled monitoring system to watch over financial transactions on the internet.

Sun Guofeng, director general of the People’s Bank of China’s research institute, said the fast-growing fintech businesses have ratcheted up pressure on authorities to invest heavily in regulatory technology, or regtech, but he pointed out that it would be unfair to cover the costs by using taxpayers’ money.

Merger and acquisition may be the future trend for P2P lending sector (Xing Ping She), Rated: A

Recently, Dianrong announced that the company has purchased Quark Finance, Quark Credit Workshop and its related branches and teams. Before that, the merger has been spread for a long time. The merger seems indicate a direction for P2P lending platforms: small platforms might be realise the compliance requirements by being merged, and big platforms also could expand and increase their market share through the acquisition. Thus, mergers and acquisitions might become the next new wave of the P2P lending industry in China.

PwC: Fintech Survey China 2017 (Crowdfund Insider), Rated: A

There are three main areas of finance that are poised to be irreversibly changed, according to PwC. Consumer banking, investment & wealth management and transfers & payments are becoming pretty much all digital and data driven.

Some high level bullet points on China and Fintech include:

  • 68% of financial institutions expect to increase Fintech partnerships in the next three to five years
  • 85% believe mobile apps are the fastest growing customer channel
  • 71% regard price wars as one of the challenges of Fintech
  • Personal loans are at the top of the list for moving to Fintech over the next 5 years

Download the full report here.

European Union

German fintech factory FinLeap raises EUR39 million (Finextra), Rated: AAA

FinLeap, the startup platform behind Germany’s solarisBank, has secured EUR39 million in equity capital to support its ongoing fintech incubation programme.
Having launched twelve fintech ventures so far – including bank account switching platform FinReach, digital debt management outfit Pair Finance, insurance broker Clark, and Germany’s solarisBank – FinLeap is already active in ten European countries.

Regulating FinTech: the Way Forward (Fexco), Rated: A

On Friday 14th July Brian hosted an event at the European Parliament offices in Dublin entitled ‘Regulating FinTech: the Way Forward’. Speakers at the event were the Minister for Financial Services Michael D’Arcy TD, Neil Ryan, COO Quaternion Risk Management; Derek Butler, CEO Grid Finance; Camille Blackburn, Central Bank of Ireland, and Ruth McCarthy, Director of the FinTech and Payments Association of Ireland and CEO of FEXCO Corporate Payments.

The panel discussed regulatory responses to FinTech services at EU and domestic level, as well as examining opportunities within the FinTech ecosystem in Ireland.

Strong networks, good government supports and the presence of major innovators are enabling Ireland to stay at the cutting edge, and these factors will help Ireland to achieve its IFS2020 target for job creation in financial services.

Bricknode: Reporting To fFnancial Regulators With The XBLR Format Creates Confusion (Mondovisione), Rated: A

Financial institutions of various types are required to conduct periodic reporting to local regulators, like the Swedish Financial Inspection and EU-authorities like the European Banking Authority. Following the financial crisis of 2007/2008 numerous resolutions were past to increase regulations of the participants in financial markets. These initiatives are now being implemented regularly. Both MiFID II and MiFIR are scheduled to be implemented as of January 2018 with extensive reporting requirements and scarce information of how this should be implemented practically. During 2017, financial institutions and FinTech companies were impacted by EU-reporting in practice. One example is the reporting file format called XBLR were a lot of confusion exists.

International

Fintech Use Reaching ‘Mass Adoption’ Among Digital Consumers (The Financial Brand), Rated: AAA

Findings from the EY Fintech Adoption Index 2017, published by EY, indicate that fintech firms are approaching mass adoption among digitally active consumers. Leveraging digital technology, combined with personalized solutions, fintech firms are differentiating the customer banking experience. Simplicity, clean design, personalization, real-time insights and transparency are the defining components of these new solutions.

The four key themes that emerged from the 2017 EY Fintech Adoption Index were:

  1. Fintech services have reached mass adoption in most global markets
  2. New services and players are driving increased adoption
  3. Fintech users prefer digital channels and technologies
  4. Fintech adoption will continue to gain momentum

According to the EY report, some of the primary strategies used by fintech firms to gain traction include:

  • Offering a service for free or at a much lower cost that traditionally had a cost associated
  • Solve a problem an existing customer base
  • Provide an entirely new service
  • Create word-of-mouth advocates
  • Build a strong brand identity
  • Leverage highly targeted marketing

The most dramatic variance between fintech users and non-users is the ways consumers prefer to manage their lives. According to EY, “64% of FinTech users prefer managing their lives through digital channels, compared to 38% of non-FinTech users. FinTech users are also more likely to be users of non-fintech digital platforms, such as on-demand services (digital taxis, online food, etc.) and the sharing economy (bike and housing rentals).”

India

Alt Lending platform OxyLoans plans to raise Rs 200 cr debt (MoneyControl), Rated: AAA

The city-based alternative lending platform, OxyLoans, today said it is planning to raise a debt of Rs 200 crore to meet the requirements of borrowers.

He said they have over 240 asset-backed applications from borrowers, and expressed hope to complete the process (raising debt of Rs 200 crore) within six months.

Thatavarti further said that OxyLoans, which has set a loan disbursal target of Rs 156 crore in three years, has facilitated loans to the tune of Rs 64 crore in the last nine months.

This startup is an end-to-end digital platform for lenders and borrowers – TachyLoans (KnowStartup), Rated: A

TachyLoans is an online lending marketplace catering to both Individuals & Small and Medium Enterprises (SMEs). Their platform is based on Peer-to-Peer lending paradigm that uses the proprietary credit decision model designed with some of the best and innovative practices in the financial industry using the cutting edge technologies like Artificial Intelligence & Machine Learning and is built through state of the art technology.

Founded by Brahma, TachyLoans is based out of Bangalore and was established in the year 2016. Brahma brings to the table more than 20 years experience and expertise in Retail Banking, Sales, Marketing and Operations.

When airlines don’t have parachutes, why should P2P lending platforms have LPF? (India Times), Rated: A

The regulations will lay out the corporate structure that each of the platforms would need to follow and most importantly the DOS and Don’ts related to dealing with lenders and borrowers. However, of late, there has been an interesting trend of platforms coming up with a lender protection fund. What does it do? In case a lender loses the money he has extended to a borrower as a loan, the lender protection fund is expected to cover the losses for the investor. On the face of it, it sounds like a good idea, but if you dig deeper, there are several issues.

The flyer is aware of the risk, but he trusts the plane. You have a life vest under your seat for an emergency landing on water, but you do not have an escape pod that can be activated if a flight is about to crash. Similarly, the lender on a P2P site should be able to trust that the lending platform has built a system that can help Lender earn higher returns by mitigating risk. While a P2P platform cannot shirk its responsibilities when it comes to investor protection, having a fund to mitigate losses is not the answer. Proper systemic safeguards and strong ethics should alone suffice.

Launching LPF would in some ways signal that a platform does not have confidence in its own credit evaluation and risk-mitigation system.

Paytm invests in Mobiquest (e27), Rated: B

India’s leading digital payments and m-commerce company Paytm has made an investment in loyalty app developer Mobiquest. The funding amount was not disclosed.

Asia

Fintech non-profit launches database for financial technology startups in Singapore (Tech in Asia), Rated: AAA

The Singapore Fintech Association (SFA) announced today it has created an online directory for fintech companies based in the city-state. The database contains a short description of each company and information about its founding team, funding status, and business model.

Currently listing around 300 startups, the database is free to use and data is maintained by the companies themselves. The directory looks similar to Crunchbase and Tech in Asia’s own startup database, but it’s exclusive to fintech.

The SFA built the directory in collaboration with US data company Let’s Talk Payments and its Medici platform, which provides information and resources about the fintech industry.

South Korean FinTech Firms To Offer International Money Transfer Services (ETH News), Rated: A

According to The Korea Heraldofficials at South Korea’s Financial Supervisory Service (FSS) announced last week that they expect approximately 40 FinTech firms to provide international money transfer services starting August 15.

Per Yonhap News Agency, South Korea’s international money transfer market currently totals approximately 10 trillion won ($8.7 billion). Opening the market to FinTech firms will encourage competition and drive down costs to consumers since the companies can offer money transfer services at much lower prices than traditional banks.

Single transfers via FinTech firms will be capped at $3,000, and individual annual limits will be set at $20,000. For FinTech firms to qualify for the FSS permit, they must possess 2 billion won ($1.77 million) and a debt-equity ratiobelow 200 percent.

Authors:

George Popescu
Allen Taylor

Monday July 17 2017, Daily News Digest

FICO score

News Comments Today’s main news: CreditEase Wealth Management approved by SEC to be RIA. RateSetter sees decline in net lending volumes. Fluid expands into 32 states with no-interest student loans. Landbay loans achieve AAA rating. Funding Circle fund on track despite Brexit risks. BBVA rated best mobile banking service in the world. Today’s main analysis: Squaring all-time high credit scores […]

FICO score

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

Middle East

News Summary

United States

CreditEase Wealth Management Became an SEC Registered Investment Advisor (PR Newswire), Rated: AAA

CreditEase Wealth Management has recently been approved by U.S. Securities and Exchange Commission (SEC) as a registered investment advisor (RIA). At its first stop overseas, the firm can start providing advice to investors in the U.S., representing a globalization milestone to better serve especially Chinese investors around the world.

Squaring All-Time High Credit Scores With Higher Delinquencies (PeerIQ), Rated: AAA

Citigroup, J.P. Morgan and Wells Fargo reported Q2 bank earnings last week as earnings season kicked off. All three banks beat analyst expectations for earnings, but also posted declines in trading revenue:

 

Source: WSJ, PeerIQ

J.P. Morgan reported better than expected second quarter earnings, beating on the top and bottom line due to the company’s strong loan growth, partly due to the success of Chase Sapphire Reserve product.

In this week’s newsletter, we illustrate the flaw of FICO as a forward-looking credit score.

Below is a histogram showing the distribution of FICO credit scores for Avant’s 2017 deal:

Source: PeerIQ

The distribution is relatively similar across historical ABS deals suggesting the credit risk across deals is similar. However, Avant has substantially tightened and improve credit quality in recent vintages. The FICO credit score is not able to capture this. For instance, as compared to AVNT 2016-C, the collateral in the AVNT 2017-A contains loans made to borrowers with a much smaller balance ($5,348 vs $6,589) and a shorter weighted-average remaining term of 33 months vs. 40 months in AVNT 2016-C. Also, AVNT 2017-A has 93.9% of loans under 36 month term, a significantly different collateral pool mix than that of AVNT 2016-C, which has only 47% 36-month loans. Shorter term 36-month loans carry less credit risk than 60-month loans all things being equal.

PayPal Holdings Invests in LendUp — What Investors Need to Know (The Motley Fool), Rated: AAA

On LendUp’s website, the company states that more than half of the U.S. population has a credit score under 680, meaning they cannot be approved for credit at most financial institutions. The site explains that consumers in this segment will pay more than $250,000 over the course of their lifetimes for basic financial services. LendUp believes it can make a profit by offering affordable financial products to these consumers, which will simultaneously help them build their credit.

Regular users of PayPal probably know that PayPal offers credit to its customers through its PayPal Credit platform. PayPal normally offers credit to customers at checkout, offering account holders no-interest payments on purchases greater than $99 if the loan is paid off within six months. PayPal also offers credit to small- and medium-sized businesses through its PayPal Working Capital program, which is then paid back through small amounts from each transaction going back to PayPal. Schulman believes both services are important to PayPal’s future.

In its most recently reported quarter, PayPal CFO John Rainey stated that loan losses for its consumer and retailer credit programs totaled $129 million, or approximately 4.3% of revenue. The net charge-off rate was 6.9%.

Fluid Expands into 32 States Providing No Interest Credit to Students (Crowdfund Insider), Rated: AAA

Fluid, a Fintech and Adtech startup has expanded its service to US students into 32 different states. The App based lender is available on iTunes allowing up to $500 in credit without any additional interest payments.  The description on iTunes explains it is exclusively designed for 22 million college students in the United States.  Fluid not only allows for an interest free loan but it empowers uses to build a credit profile. Fluid’s target market is Generation Zs (Age 7 to 21 as of 2017. Fluid notes there are 75 million and 1.8 billion Generation Zs that will start shaping this world in the coming years.

How To Find The Best Student Loan Refinancing Options (Forbes), Rated: A

Student loan debt now stands at a whopping $1.3 trillion. There are more than 44 million borrowers. And we’re coming up on the season when many recent graduates start paying down their student loans.

1. SoFi – SoFi only refinances loans for graduates with at least a Bachelor’s degree from a Title IV accredited university or program. Its credit and income requirements are also fairly strict, putting SoFi refinancing out of reach for many recent graduates.

2. CommonBond – CommonBond offers somewhat broader refinancing services since it refinances student loans and Parent PLUS Loans. It also offers borrowing services, if you’re considering consolidating your undergraduate loans and then going to graduate school.

Like SoFi, CommonBond expects borrowers to have a fairly high credit score (here are ways to check your score for free). Borrowers have a median income in the low six figures, as well.

3. Earnest – Earnest has a unique way of qualifying borrowers. Instead of looking at your income and credit score solely, it looks at how easily you can afford your expenses, how regularly you save, and whether you have a retirement account. It also allows you to choose your own monthly payment, and then it builds your interest rate and terms around that.

6. Purefy – Purefy allows married couples to refinance their loans together, which may or may not be a good idea for you. But if you decide to go this route, it will use the higher of your two credit scores to determine the interest rate.

Laurence Kotlikoff: Conventional banking is not the only game in town (Denton Record-Chronicle), Rated: A

Where do we see LPB taking hold? For starters, consider Bitcoin and other electronic currency vaults. They are essentially LPB cash mutual funds — mutual funds that hold only cash. They provide a safe payment system that can never collapse, barring technical disasters. Next, consider peer-to-peer lending. These are closed-end mutual funds that purchase the loans of small- to medium-sized enterprises. The investors have equity stakes and they can go online and check out their investments in real time. That’s a form of disclosure you will never get from, say, JPMorgan Chase.

What about mortgage lending? LPB mortgage mutual funds could materialize overnight, via either peer-to-peer lending or by slightly transforming the centuries-old Northern European covered-bond market by forcing investors to take on the default risk of the mortgages that cover the bonds.

In the information age, we don’t need trust-me banks that take our money and give us no clue where it’s invested. In this Bitcoin era, we don’t need trust-me banks to guarantee our holdings of cash. In this block chain world, we don’t need trust-me banks to assure us they will square up our bets. And we don’t need an enormous army of government bureaucrats to watch over trust-me banks gambling at the taxpayer’s expense.

LendingTree announces senior appointment (Mortgage Professional America), Rated: B

LendingTree has announced Brad Wilson as its new chief marketing officer. He will oversee the company’s brand strategy, marketing operations and consumer engagement as LendingTree continues to expand into new financial service categories.

Hybrid Advice Priced at 25 to 50 Basis Points (Insurancenewsnet.com), Rated: A

Nearly half – 48 percent – of managed account sponsors price their hybrid advice at between 25 and 50 basis points, or between $250 and $500 on a $100,000 account, according to a recent survey conducted by Cerulli Associates.

Another 28 percent of sponsors believe an internet algorithm backed by a flesh-and-blood advisor should be priced at between 50 and 75 basis points, or between $500 and $750 on a $100,000 account, the survey found.

‘New York doesn’t allow that’: Maria Vullo stares down fintechs, OCC (American Banker), Rated: A

Maria Vullo, the head of the New York State Department of Financial Services, is a skeptic of the so-called fintech revolution.

While some policymakers are eager to accommodate online lenders with regulatory oversight that is looser than what applies to banks, Vullo believes the word “fintech” is misleading.

TOP 10 CONSIDERATIONS FOR INTERNATIONAL INVESTORS INVESTING IN U.S. MARKETPLACE LENDING (dv01), Rated: B

We are now starting to see large inflows and investments into the leading U.S. based marketplace lenders. This growth has been driven primarily by investors from Asia, Europe, and Middle East (primarily Israel) who have started to provide their clients with more options to invest in MPL assets outside their home countries.

What are best practices for investing in the MPL asset class in the U.S.?

Jeremy has compiled his answers into this free report.

United Kingdom

P2P lender RateSetter sees decline in net lending volumes (AltFi), Rated: AAA

Two of the UK’s “big three” peer-to-peer lenders are authorised, and will soon launch their Innovative Finance ISAs. The other, RateSetter, is not yet authorised, and has had to make a few changes to suit the requirements of the regulator in recent months. Mostly notably it has had to put a stop to its wholesale lending business.

Whether or not RateSetter continues to make changes at the behest of the regulator is unclear. But what is clear, using the latest figures from AltFi Data, is that its lending is slowing down significantly. RateSetter posted its first negative month of net lending (new loans net of repayments and defaults) in April, and continued in the same direction in May, with a net lending figure of around -£5m for the month. In June, its net lending fell to almost -£15m.

UK peer-to-peer loans score AAA securitization (AltFi), Rated: AAA

Landbay originated loans have been included in a highly rated pool of mortgages. 

More than £30m of loans originated by UK peer-to-peer platform Landbay have been included in a larger securitization of buy-to-let loans awarded an AAA rating.

UK fintech shrugging off Brexit in 3 charts (AltFi), Rated: AAA

While the unfolding Brexit process has added to a list of summer worries for UK investors, those with a stake in the disruptive end of financial services have more reasons to cheer.

The rapidly growing sector is seeing resilient growth, according to data provider Fintech Global, who has found that growth is robust.

The firm’s research found UK fintech had seen growth of CAGR of 18.1 per cent between 2014 and 2016. In 2017 this trend has continued with fintech firms receiving funding of £769m.

Funding Circle fund on track but warns of Brexit risks (P2P Finance News), Rated: AAA

FUNDING Circle’s listed fund performed in line with expectations in its first full year of operation, which saw its net asset value increase by 11 per cent to £164.8m.

The Funding Circle SME Income Fund, which is quoted on the main market of the London Stock Exchange, launched in November 2015 to give a wider range of investors access to the peer-to-peer platform’s loans.

In its annual report for the year to 31 March 2017, released on Friday, it said that investors received dividends of 6.5p per share over the last four quarters, in line with the target of 6-7p per share.

Why I’m backing peer-to-peer lending (RateSetter), Rated: A

In finance we tend to seek an edge, a marginal advantage that inches a company ahead of its competitors.

What attracts me to RateSetter is the simplicity of the business. The primary function of finance is to connect those who want to invest money with those who can put that money to productive use. The peer-to-peer sector is solving this age-old challenge in a refreshingly simple and innovative way. A good example of this innovation is the Provision Fund, which spreads risk across the entire portfolio and allows even the smallest investor to achieve diversification.

FundingKnight, Part of GLI Finance, Receives Full FCA Authorisation (Crowdfund Insider), Rated: A

GLI Finance (AIM: GLIF) has announced that FundingKnight has been granted full Authorisation from the Financial Conduct Authority (FCA). FundingKnight is an online / P2P Lender providing access to capital for UK SMEs. FundingKnight has been operating under interim permissions since 2014, when the FCA commenced the process of regulating the peer-to-peer lending industry.

A new altfin investment aggregator has launched (P2P Finance News), Rated: A

A NEW platform connecting investors with alternative finance opportunities from around the world has launched.

Amsterdam-based Yieldport acts as a community and search engine, crawling the web for new projects using a custom search algorithm. It currently offers more than 2,000 opportunities – such as business loans, mini-bonds and equity start-up investments – from 30 different countries.

UK Marketplace Lender Growth Street CEO Greg Carter Talks Transparency, Brexit and Fintech Innovation (Crowdfund Insider), Rated: A

Growth Street, an FCA-authorized UK business finance platform focusing on SME loans, has aimed to become a flexible working capital solution since launching in 2014. Greg Carter founded Growth Street while still working at Arts Alliance Ventures, a venture capital firm that was founded in 1996 and has since backed over 40 companies, including Growth Street, which it incubated. Carter recently became the CEO of the platform.

Erin: Could you please share Growth Street stats? Milestones?

Greg: I’m very proud of the fact that six months since launching our first product for individual investors, we now have over 1,000 lenders signed up to use our platform. This includes small businesses, who are also taking advantage of our platform to lend themselves. Another key milestone was attaining Appointed Representative status, allowing us to accept individual investors; the next goal for us is to be fully regulated ourselves.

Erin: Please talk about Growth Street’s How to Improve Cash Flow tool.  How is it addressing UK SME cash flow ‘pain points’? Which other tools set Growth Street apart from its peers?

Many businesses could optimise cash flow better, but the tactics and strategies often vary from business to business. So, our How to Improve Cash Flow tool asks a series of questions to diagnose any cash flow problems within the business: respondents then get a bespoke, tailored assessment of their position from Growth Street, for free. How to Improve Cash Flow is the first in a series of tools we’ll be launching in the coming months to give businesses more data about their cash flow, helping them make better decisions and hopefully improving their access to capital.

Erin: What are your thoughts on transparency in the sector?  How much is too little, too much? Or is there ever enough?

Greg: I believe the most important goal for the sector is to achieve clarity for our customers about the risks and returns of marketplace lending. Transparency is important, but the way information is presented matters a great deal. I don’t think it is enough, for example, to just publish loan book statistics; we also need to explain in plain language how we use this data to manage risk. As the industry matures and looks to grow beyond a base of early adopters, I believe a focus on clarity will best help us to attract new investors.

One to One: John Goodall, chief executive, Landbay (Mortgage Strategy), Rated: A

Is Landbay ready for the PRA underwriting standards coming in from October?

Yes, we are. We introduced our broker portal in Q4 2016. It was built with PRA changes in mind and was designed to capture the additional information this would require from day one.

The buy-to-let sector has been buffeted by significant regulatory winds recently. What are the prospects for the sector?What have been some of your biggest professional challenges?

We are seeing a big uptick in applications from limited companies and we expect this to grow further from 1 October.

What have been some of your biggest professional challenges?

For investors, one of the key things that we needed to do was build trust. As a start-up lender with no record, you cannot do that overnight, so getting the credit function right was crucial. Now that we have been lending for three years, I think we have reassured investors and built that trust.

Which one change would you like to see in the market overall?

A greater focus on technology to improve the service for brokers and borrowers.

Emotional intelligence needed to win over next generation of shoppers (Internet Retailing), Rated: A

Payment company Klarna questioned 2,000 UK consumers, in a survey carried out by Censuswide, and found that members of the millennial generation, aged between 16 and 34, were three times more likely to feel excitement while adding items to their online basket, compared to older shoppers. Millennials are also more likely (68%) than shoppers aged 55 and over (24%) to feel anxiety and guilt at the point of payment.

Klarna suggests that allowing shoppers to try before they buy would be an easy way to build brand loyalty. Deferred payment options would also reduce anxiety among 20% of millenials, making one in five more likely to finish their purchase.

The consumer research judges a myth the idea that items added to a basket show a clear intention to purchase. It found that a significant 89% of millennials used the basket as a tool to review costs, while more than three quarters used their basket as a wishlist, compared with only 29% of over-55s. Meanwhile, nearly three quarters (74%) admit to “buzz browsing” – adding items to a basket with no clear intention to buy.

Selling to silver surfers: how e-tailers can develop emotional intelligence to appeal to an older demographic (Net Imperative), Rated: A

Luke Griffiths, General Manager at Klarna UK, looks at the psychological factors that come into play when older consumers embark on the online shopping journey.

The flip side of this excitement is lows caused by anxiety and guilt, with 52% of millennials saying that they worry that they can’t afford the purchase during checkout. That’s compared to 16% of over 55s, who in many cases will have more disposable income than their younger counterparts – showing there’s a sizeable prize for retailers who get the customer experience for older generations right.

While the millennial customer journey is full of twists and pitfalls, baby boomers are patient, calm, and rational shoppers. They experience low emotional responses, with only 3% of those surveyed feeling guilty when adding things to their basket, and only 5% feeling impatient.

The over 55s buy things because they need them – only 21% are more likely to make a spontaneous purchase online because they deserve a treat – so tapping into necessity is key. And over half (52%) of those surveyed said they would reconsider an online purchase due to high delivery charge, so retailers with costly fees should reconsider their charges or face losing custom.

Just Eat and fintech startup Funding Circle are partnering on a recipe for takeaway success (City A.M.), Rated: A

The peer-to-peer lender will offer the nearly 30,000 restaurants which use Just Eat to get takeaways into people’s laps a deal on loans.

“Our partners Just Eat directed us to Funding Circle who arranged the loan for us in a matter of days. By not spending months speaking with the banks I was able to get the finance I needed and focus on running the business and planning for the future.”

Gas fires firm lost £300k to online hack before going bust (Leicester Mercury), Rated: B

Gas Superstore lost hundreds of thousands of pounds in an online hack prior to going into administration, new documents reveal.

The Leicestershire retailer – which sold electrical goods and gas fires to the public – collapsed in April with debts of about £2.7 million.

FRP said trade creditors were owed more than £1.2 million when the business went bust – including the Google Adwords service, which was owed almost £50,000, and peer-to-peer business loan company Funding Circle, which was owed £275,000.

China

Blockchain sharpens Dianrong’s edge in P2P lending to small businesses (SCMP), Rated: AAA

Blockchains, the distributed databases conceptualised in 2008 as core components of the digital currency bitcoin, are increasingly finding their way into financial technology and helping to redefine the boundaries of traditional banking. They can be used as open, distributed digital ledger systems that can record transactions efficiently.

Dianrong and Foxconn are currently working together to apply the Chained Platform for Foxconn’s suppliers.

Dianrong is expanding its team in preparation for the increase in supply chain finance loans through Chained Finance. The company has plans to hire 500 more staff in Shenzhen in addition to the 60 they already employ, Htite said.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

By 2020, 60% of systems in China’s banking industry will be deployed in the cloud, most with the approval of the China Banking Regulatory Commission. According to the report, China Banking Regulatory Commission (CBRC) has been seeking to partner with 19 Chinese banks to establish a Fintech cloud stack, and the investment amount of each bank should not be less than CNY 20 million.

Online Market Lender Dashu Finance Raises CNY 800 million for Series C Round

On July 7th, Dashu Finance, a Shenzhen-based provider of online small and micro loan services, received CNY 800 million (USD 118 million) for its Series C financing round.

China’s Central Bank Issues Report on Financial Stability

On July 4th, The People’s Bank of China (PBOC), the central bank of China, released a financial stability report, warning China should redouble its efforts to regulate key risk (such as Bitcoin) in the financial sector to ensure financial stability.

China’s P2P Lending Industry Financing Drastically Decreases in the First Half of 2017

Statistics show, by the end of June, only 15 P2P online lending platforms received financing in China, and the total amount was just about CNY 4 billion (USD 5,987.1 million). Tuandaiwang.com completed the largest round of financing with CNY 1.8 billion, followed by xiaoying.com’s CNY 1 billion.

Alipay Makes Tuition Payments Easier

Thanks to a new cooperative effort between Hangzhou-based Alipay and other 30 banking financial institutions, Chinese students enrolled in primary and secondary schools are now able to pay their tuition online.

China’s Online Insurance Company Zhong An Introduces Flight Delay Insurance

Last week, Zhong An Insurance launched a WeChat-based fight delay insurance. Passengers can just buy the insurance on the Wechat platform 15 minutes before fights take off, rather than one day before departure as termed by the traditional delay insurance. The insurance pays a traveler RMB 10 if a departing or connecting flight is delayed by half an hour, and the compensation is up to RMB 120.

2017 LendIt Summit China was Held in Shanghai  (Xing Ping She), Rated: A

On 15th July, LendIt, the world’s largest and most high-profile summit of fintech was held at Kerry Hotel in Pudong, Shanghai. Including keynote speech, seminar and group discussion, the summit covered all the frontier topics of internet finance. Fintech, online lending, block chain, bank & technology, inclusive finance, Asia-pacific and global vision are the fileds discussed.

LendIt is known as the largest fintech summit around the world. It was founded in 2013 by Bo Brustkern, Jason Jones and Peter Renton. The original intention of the summit was to provide social networking and communicating opportunities for the entire online lending and financial technology community. So far, the annual summit has been held for several times in the US, Europe and China, and it is the second time for LendIt held in China.

Over 2000 elites from global fintech and traditional finance participated in the summit, including decision makers, institutional investors, and regulators. It worth mentioning that both Dr. Yang Li, the CEO of Xeenho and CSO of Xing Ping She, and Sherry Yang, the vice president of Xeenho, were invited to attend LendIt China, discussing the development and trend of global internet finance. On April 2017, Xeenho and Xing Ping She have officially reached strategic cooperation with LendIt.

LendIt China July 9th 2017 – Journal Entry: AMTD + LendIt: Fintech, The 4th Industrial Revolution. (Crowdfund Insider), Rated: B

AMTD-LendIt Conference officially kicked off today in one of the most metropolitan cities in the world, Hong Kong, China.

The 2nd annual AMTD and LendIt FinTech Summit is well attended by heads of state from PwC, FuTu Securities (Wealth Management and Robo Advisor), AMTD and many of the leading industry heavyweights giving the audience a preview of what’s to come.

PwC Global FinTech Survey

PwC unveiled their latest Fintech survey from hundreds of financial institution’s CEO and found that more than 60% of the CEOs are making investments into Fintech and some have dedicated 15% of their top line revenue into Fintech R&D.

Futu Securities

I was most impressed with Futu Securities Robo advisor chatbot. Leveraging artificial intelligence, Futu’s clients can pose a question to the A.I. assistant on what’s causing a particular stock in their portfolio to fall. The A.I. algorithm then mines social media sites, news sites and the internet, in general, trying to establish whether there was a press release, news articles that may have caused the drop in stock price.

European Union

BBVA, the best mobile banking service in the world (BBVA Compass), Rated: AAA

BBVA has the best mobile banking app in the world, according to Forrester Research’s latest report “2017 Global Mobile Banking Benchmark.” The study, which was published today, analyzed 53 apps from large retail banks in 18 countries, including the U.S., the U.K., FranceBrazilTurkeyChina and Australia.

BBVA Spain’s mobile banking services received a final score of 87 out of 100 – the highest score since Forrester began the global rankings in 2013.

Digital banks must diversify or die (VentureBeat), Rated: AAA

Across Europe the 10 largest digital bank financings have totalled $500 million so far, with Atom alone raising more than half that amount.

However, look more closely and it’s clear the era of digital-only challenger banks may actually be coming to a close. Systemic difficulties in turning profits with pure digital-only banking will drive more businesses to adopt a broad-based approach focusing on digital financial services, of which banking is part.

Customer acquisition costs (CAC) for pure digital banking businesses are rising – fast. The fundamental problem, in Europe as well as in the U.S., is one of demographics: Dozens of fintechs are chasing a small, well-defined target customer base. These customers need to have enough disposable income, be digitally-savvy, and usually live in key urban areas. It can easily cost $100-250 to acquire customers in certain segments, and it takes an awful lot of $5-10 transaction fees for single-use services to generate a return on these customers. It boils down to a supply and demand issue: The number of high-value prospects is static, but there is a glut of well-funded and aggressive fintechs chasing them.

 

International

Study says women are better at crowdfunding (Reuters), Rated: A

Consultancy firm PwC, together with The Crowdfunding Center, analyzed 450,000 crowdfunding campaigns across the globe over the past two years and found that those led by women were 32 percent more successful at reaching their target than those carried out by men.

The results of the study, which were published on Thursday, also found that female-led projects are able to attract an average $87 pledge per funder, while men received $83 on average.

IFSB view on Islamic Crowdfunding (Islamic Finance), Rated: A

To identify relevant crowdfunding platforms with a focus on equity- and loan-based platforms located in the Muslim world, the database of Crowdsurfer was consulted. It lists in 32 of the 57 member states of the Organisation of Islamic Cooperation (OIC) a total of 108 crowdfunding platforms.

The findings were somewhat surprising:

  • The platform that was characterised in its Crowdsurfer profile as a “Sharīʻah-compliant equity platform for SMEs and start-ups in Malaysia” (AtaPlus) did not mention the Sharīʻah compliance on its website. The only hint of Sharīʻah compliance was the list of activities in which a fund-seeking entrepreneur must not be involved.
  • Only one loan-based crowdfunding platform – Liwwa (Lebanon) – outlines the importance of Sharīʻah compliance and gives a brief explanation of its business model (based primarily on murābaḥah) in the FAQ section of its website.
  • A loan-based platform in the UAE – Beehive – applies a dual approach: it offers both conventional as well as Sharīʻah-compliant lending techniques. The Islamic option is explained in a rather detailed manner on the website.
  • One of the oldest equity crowdfunding platforms in Egypt – Shekra – quotes several previous Islamic awards on its website. It does not explain how it assures Sharīʻah compliance, but the founders have propagated their approach in journals and conference papers. The platform operates as a “closed investors network”, which is quite unusual for a crowdfunding platform.
  • Finally, an Indonesian platform for student loans – Danadidik – applies a profit- (or income-) sharing model to calculate the returns for investors. Although this is vaguely reminiscent of Islamic financing techniques and the platform claims to adhere to Islamic principles, the Sharīʻah compliance is uncertain.
Australia/New Zealand

Rivalry between banks expected to ramp up after launch of new reforms (Mozo), Rated: AAA

Federal Treasurer Scott Morrison has today announced new banking reforms that will allow credit unions and building societies to legally call themselves banks, in a move aimed at increasing competition between home loan providers.

Morrison and MP Kelly O’Dwyer said in a joint statement that the government will axe the restrictions deposit-taking institutions currently face, which mean they can only attain “bank” status with $50 million or more worth in capital.

Nearmap hires VP of marketing to support rapid growth (CMO.com.au), Rated: A

Aussie aerial mapping business, Nearmap, has appointed a new VP of marketing among two senior executive hires aimed at driving its next phase of international growth.

Silvia Arrigoni will be Nearmap’s new VP of marketing and Shane Preston will be vice-president of sales.

Arrigoni, who previously held positions as head of brand marketing at online lender, SocietyOne, and as group business director for marketing agencies such as Havas and Arnold Furnace, brings decades of experience to Nearmap.

India

YES Bank hunts for global partnership to develop fintech landscape (The Hindu Business Line), Rated: AAA

YES Bank, which runs a start-up accelerator programme called Yes Fintech, is looking at exclusive global exchange programme partnerships to help Indian start-ups gain access to developed markets in terms of business and investments.

Towards this end, the bank has already tied up with MaGIC (Malaysian Global Innovation & Creativity Center), a Malaysian government initiative. It is also looking for similar partnerships with the US, Sweden, Norway, Singapore, the UK and Israel over the next few years.

Funding dreams: Get a collateral-free education loan with just a click of a button (The News Minute), Rated: B

The cost of education has skyrocketed over the past decade by 160%, be it colleges or even elementary and secondary school. This has become a major setback for middle class families in India to provide their children with quality education.

Quiklo offers collateral-free loans to students with relatively smaller ticket size. Its biggest USP is that the loan is approved in a day and the amount is disbursed in the next few days

It runs on both a B2B and B2C model.

Quiklo offers collateral-free loans to students with relatively smaller ticket size. Its biggest USP is that the loan is approved in a day and the amount is disbursed in the next few days

It runs on both a B2B and B2C model.

Under the B2C model, parents can go to its website or download the app, enter their details, the student’s details, their financial problems, the course fees and submit the application. There is an algorithm that runs to check their credit worthiness depending on a few parameters like salary, etc.

Under the B2B model, Quiklo ties up with colleges and test prep companies. When a student goes there for admission, the college pitches Quiklo to them in case they are in the need of financing.

How new age investors are opting for alternative investment (Daily News & Analysis), Rated: A

Fixed Deposits, investment in gold, and many other traditional options are losing grounds when trying to woo the new age investors.

Digital gold currencies are issued by a number of companies like now Paytm as well, each of which provides a system that enables users to pay each other in units that hold the same value as gold bullion.

Peer-to-peer (P2P) lending in India currently gives a net return of 18-22 percent to lenders.

Asia

Online-only Chinese retail investment platform to launch in Singapore in third quarter (The Straits Times), Rated: AAA

An online-only platform for retail investors will launch here in the third quarter, China’s Ping An Group announced on Monday (July 17).

Lu International (Singapore) Financial Asset Exchange, a spin-off from the Shanghai-based Lufax, has received an in-principle approval from the Monetary Authority of Singapore for its capital markets services (CMS) licence.

The company, which will offer investments via mobile devices with no face-to-face encounters, hopes to attract customers who may have less wealth than those served by private banks.

ANGIN’s startup-investor site Connector.id to launch full version soon (Deal Street Asia), Rated: A

Connector – powered by Indonesian angel investor network (ANGIN) and the UNDP – has garnered over 400 startup applications since its beta version was introduced two weeks ago.

The idea is to help startup founders find the right investors for their ventures. Often, founders waste resources chasing the wrong investors, or even don’t have the channels nor the experience to source funding.

So far, Connector team has received more than 420 applicants, of which 70 per cent are technology companies. About 50 per cent have requested further connection (eg. pitch deck, call or meeting). Most applicants (38 per cent) are looking for equity, while the rest are looking for grants (14 per cent), collateralised loan (13 per cent), bridge loan (9 per cent), non-collateral loan (7 per cent), trade financing (5 per cent), and invoice financing (3 per cent).

Read more at:

Modalku launches new app (Deal Street Asia), Rated: A

P2P lending platform Modalku has announced that it will launch a new app next week. The app will be a “new innovation for lenders and debtors alike”, and is hoped to further bolster Modalku’s mission to support the small and medium enterprises in Indonesia.

Africa

SA fintech startup Yoco announces it has hit 10 000 SMEs users milestone (Ventureburn), Rated: AAA

South African payments company Yoco today announced that it now has 10 000 small and medium-sized enterprises (SME) clients in South Africa using its point-of-sale payments platform to accept card payments.

Maphai said the company is adding over 1 000 new SMEs to its base every month. This makes it the largest independent mobile point-of-sale player in South Africa by number of merchants, he claimed.

Yoco has in the past two years of operation, raised $7-million in funding from international investors and employs over 70 people in Cape Town and Johannesburg.

Middle East

Central Bank to Finalize Fintech Regulations (Financial Tribune), Rated: AAA

In light of the importance of regulating fintech firms to prevent any problem in the monetary market, the Center for E-Commerce Development’s deputy has announced that the Central Bank of Iran will define the framework of fintech operations by the end of summer.

According to CBI regulations, innovative financial services are allowed to operate as long as they are not involved in money creation, currency exchange and offering payment tools (like cards) and attract deposits.

Payment aggregators allow sellers to quickly launch a payment gateway on their website, without getting involved in the demanding process imposed by banks and other PSPs.

According to Oskouei, currently 50 fintech firms have announced their commitment to continue their operations until CBI regulations are ready for implementation.

Authors:

George Popescu
Allen Taylor

Friday July 14 2017, Daily News Digest

Visa revenues

News Comments Today’s main news: DBRS assigns provisional ratings to SoFi Professional Loan Program 2017-D. IEG Holdings cites slim margins, weak underwriting as reasons for LendingClub offer. Bank execs say UK sets the standard for fintech regulation. Rocket Internet sells stake in Lendico. Today’s main analysis: Visa’s international expansion. Today’s thought-provoking articles: DBRS Student Loan ABS report (a […]

Visa revenues

News Comments

United States

United Kingdom

China

European Union

International

Israel

India

Latin America

Canada

News Summary

United States

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

DBRS, Inc. (DBRS) has today assigned provisional ratings to the following classes of notes issued by SoFi Professional Loan Program 2017-D (SoFi 2017-D):

— $245,000,000 Class A-1FX Notes at AAA (sf)
— $266,000,000 Class A-2FX Notes at AAA (sf)
— $40,000,000 Class B-FX Notes at AA (sf)

DBRS Student Loan ABS report (DBRS), Rated: AAA

In this commentary, DBRS provides the following:
— A review of Q1 2017 student loan ABS performance and H1 2017 student loan ABS issuance.
— An outlook for future student loan ABS issuance and the trends expected in H2 2017.
— Analysis and highlights of student loan collateral performance.

Download the full report here.

IEG Holdings Highlights the Urgency of LendingClub Correcting its Flawed, Slim Margin “Broker” Business Model and Weak Underwriting Standards (Sys-Con), Rated: AAA

IEG Holdings yesterday announced the commencement of a tender offer to exchange four shares of IEG Holdings’ common stock for each share of LendingClub common stock, up to an aggregate of 40,345,603 shares of LendingClub common stock, representing approximately 9.99% of LendingClub’s outstanding shares as of April 28, 2017, validly tendered and not properly withdrawn in the offer.

IEG Holdings Corporation (OTCQB: IEGH) (“IEG Holdings”) cautions shareholders of LendingClub Corporation (“LendingClub”) against dismissing IEG Holdings’ tender offer. IEG Holdings believes that the LendingClub board of directors should be held accountable by its shareholders for continuing to pursue a flawed, slim margin “broker” business model. IEG Holdings urges LendingClub to enter into negotiations with IEG Holdings, rather than simply dismissing the tender offer.

FLAWED, SLIM MARGIN, LOSS-MAKING BUSINESS MODEL

Despite brokering more than $26 billion of loans since inception, LendingClub still reported a loss of $29.8 million for Q1 2017 and loss of $146.0 million for the 2016 full year. Transitioning to a balance sheet lender likely would significantly increase gross margins, without a significant change in customer acquisition costs.

WEAK UNDERWRITING STANDARDS

A recent media report by Bloomberg indicates that:

  • LendingClub only verified income about a third of the time for one of the most popular loans it made in 2016, and
  • If LendingClub finds errors in a loan application, it may still approve the loan.

LACK OF COMPANY-OWNED STATE LENDING LICENSES

LendingClub doesn’t hold individual state lending licenses and instead utilizes the services of a Utah-based bank. This raises regulatory risks around issues such as the potential breaking of individual state interest rate caps and compliance.

POOR STOCK MARKET PERFORMANCE AND ZERO DIVIDENDS TO SHAREHOLDERS

LendingClub’s share price has decreased 79% since its initial public offering in December 2014, dropping from $25.74 in December 2014 to $5.39 yesterday, after reaching a low of $3.51 in May 2016. In addition, LendingClub has never paid, and has no reported intention to pay, a dividend to shareholders.

IEG Holdings’ Reasons for the Offer

IEG Holdings believes that changing LendingClub’s business model to a balance sheet lender model would enable the company to generate significantly higher gross margins, provide significantly higher long duration cash flow from customers, build increased customer goodwill with customers and enable increased customer refinancing. The longer duration cash flow would provide more flexibility in reducing lending volumes during periods when underwriting risk levels are rising, as the company would be less dependent on brokering new loan deals every day to provide revenue.

  • IEG Holdings intends to encourage LendingClub to undertake substantial costs cuts by terminating excess employees, achieving substantial cuts in advertising/marketing costs and other significant cost cutting measures;
  • IEG Holdings intends to encourage LendingClub to transform its broker business model with low gross margins and high volumes to focus on high gross margin unsecured loans to near prime clients with strong underwriting, company owned individual state licenses and retention of loans on its balance sheet to secure long duration cash flow from longer term loans; and
  • The acquisition of LendingClub shares would be substantially net asset per share accretive for IEG Holdings stockholders and substantially increase shareholder equity.

New partnership turns PayPal into Apple App Store payment option (Banking Tech), Rated: A

This week the company announced a partnership with Apple to allow shoppers pay for their purchases at the App Store using PayPal. The feature will be available for users of a variety of Apple devices including iPhone, iPad, Apple TV, Apple Watch, and iPod.In addition to the App Store, PayPal will be a payment option for a variety of Apple services including Apple Music, iTunes, and iBooks.

Finicity and JP Morgan Chase pair for data share (Banking Tech), Rated: A

Data aggregation provider Finicity has signed an agreement with JP Morgan Chase to let the bank’s customers choose data to share with apps.

The companies will use a direct API to allow Chase customers to share information with the apps and services that Finicity supports. According to the firms, this tokenised access will eliminate the need for customers to share their Chase credentials with third-party apps.

Paypal Holdings Inc (NASDAQ:PYPL): Beginning of Market Dominance (Library for Smart Investors), Rated: A

Paypal Holdings Inc (NASDAQ:PYPL) is getting investors attention after the stock touched fresh highs amid a new partnership with Apple.

The stock is up over 43% since the start of the year.

In the first quarter, PayPal saw a jump of 10.3% in monthly active users on year-over-year basis. The total number of transactions also increased by 22.5% in the period.

In the first quarter, Venmo processed $6.8 billion in total payments, a 100% growth on year-over-year basis. Venmo is slated to grow more as the company expands to small businesses.

WEALTHTECH — THE DIGITIZATION OF WEALTH MANAGEMENT (FT Partners), Rated: A

WealthTech companies are targeting inefficiencies that span the entire wealth management value chain, from client prospecting to investing to portfolio management and reporting. Benefits include more efficient workflows, improved client experiences and greater transparency. Regardless of their value proposition, WealthTech companies are seeking to improve overall wealth management and investing.

This report highlights a number of key trends within the broader WealthTech industry such as…

  • Growing number of advisors joining the independent channel
  • Incumbent financial institutions are entering the robo-advice space
  • Increased demand for alternative investments
  • Financial planning trending towards goal-based approaches
  • Higher levels of active risk management
  • Commoditization of portfolio management software is leading to expanded offerings
  • RIA custodians evolving into more holistic roles

Download the full report here.

Wells Fargo trims auto loans as market cools, risk overhaul kicks in (Reuters), Rated: A

Wells Fargo & Co (WFC.N) is scaling back and remolding its auto lending business in response to growing stress in the market, as well as a bank-wide push for more centralized risk controls.

Wells, which was the No. 2 U.S. provider of auto loans less than a year ago, has already cut quarterly originations by nearly 30 percent over the nine months leading into March 31, according to a May 11 company presentation. It has also begun consolidating the collections operation in a move that people familiar with the business say could eliminate hundreds of jobs, after a new head of auto finance took the reins in April.

5 Fintech Startups Under the Radar (Bank Innovation), Rated: A

Spotme

This New York City-based startup facilitates micro-loans between borrowers and lenders, allowing users to set up pretty much all the parameters of a loan themselves: users can control the amount, the interest rate, the payback period, and the way they are reimbursed for the loan themselves.

Ledger

Ledger might be able to help out there: this San Francisco-based startup allows users to “open tabs with friends,” boiling down a transaction to just 3 clicks. By connecting with a user’s financial accounts (protected by “military-grade” cybersecurity, according to the company), users are able to aggregate all of their transactions in one place, as well as receive notification about when transactions are due.

Wallio

More and more companies are striving to solve the main problem when it comes to personal finance management services: how do you make a user actually take the financial advice that is being offered?

Wallio starts off the week by giving a user an allocated amount of money they can spend for that week, on whatever the user wants (expenses and savings are already factored into this amount). If a user underspends, great: Wallio will allow that user to put that money towards a goal. If a user overspends, Wallio will simply allocate less money for the user to spend next week.

Samwise

This robo-investing startup allows users to turn their existing brokerage account into an autonomous investing account using machine learning algorithms.

OnePebble

Invest, and make a difference in the world at the same time: that’s the dream of OnePebble, an online investment broker/dealer that puts each investment toward companies “doing good in the world.”

3 Investing Trends to Keep on Your Radar (Morningstar), Rated: A

Trend: Passive products continue to gain assets.

This is the trend shaping the investment management industry today. Asset flows to passive products, both traditional index mutual funds and exchange-traded funds, began in earnest following disappointing active-fund performance during the financial crisis.

Trend: New ways to hire–and pay for–financial advice. 

Robo-advisors provide automated advice for a low annual fee as low as 0.25% or even less. Meanwhile, mutual fund companies and brokerage firms may provide advice for customers who have amassed sufficient assets at the firm. For example, Vanguard Personal Advisor Service charges 0.30% and is available to investors with at least $50,000 in assets at the firm. (The service combines human financial advisors with robo-advisor technology.)

What to watch out for: The profusion of different business models means that the business of selecting an advisor is more complicated than ever. Robo-advisor fees might look like a screaming buy relative to the fees that a full-service human advisor charges, but the robo won’t be able to give you advice on nonportfolio matters like whether to pay off your mortgage or purchase long-term care insurance.

Trend: An increased emphasis on behavioral factors that can affect investor outcomes.

What’s to like: Many robo-advisors have also embedded behaviorial research into their services.

What to watch out for: Behavioral finance is trendy right now, and with any trend comes the opportunity for gimmickry. Beware of advisors who are using behavioral finance as their main hook to snag clients; high-quality advisors have been employing behavioral finance into their practices for years.

US Tax Professionals Tackles the Tax implications of Crowdfunding (Digital Journal), Rated: A

It’s important to understand that all the income a person receives, regardless of the source, is considered taxable income in the eyes of the IRS. That includes crowdfunding dollars.

Even if the campaign only raised the projected $15,000 and no gifts were offered, the money would still be considered taxable income and need to be reported as such on a tax return.

Generally, crowdfunding revenues are included in income as long as they are not:

  • Loans that must be repaid;
  • Capital contributed to an entity in exchange for an equity interest in the entity; or
  • Gifts made out of detached generosity and without any “quid pro quo.” However, a voluntary transfer without a “quid pro quo” isn’t necessarily a gift for federal income tax purposes.

Morgan Stanley digital chief: AI to help advisers, not ‘cyborg bots’ (Financial-Planning), Rated: A

Advisers tasked with processing a “mountain of information” will get a reprieve through artificial intelligence, according to Morgan Stanley Wealth Management’s chief digital officer.

“What we want to do is, with one click of a button, they can take action on that research report to all their clients within minutes, not hours, not phone calls,” Hassan said. “That’s the promise of what we’re trying to build.”

Rival firms have shown they’re headed down a similar path. Like Morgan’s planned offering, the UBS-SigFig service will save advisers’ time through automated messaging to clients on important dates, according to Richard Steinmeier, the head of the UBS Wealth Advice Center.

Congress Should Use Congressional Review Act to Strike Down Ill-Advised Arbitration Rule (Daily Signal), Rated: B

Cutting through the hyperbole that the arbitration rule protects consumers from “unfairness” that would deny them “their day in court,” this rule is in fact highly anti-consumer and harmful to innovation.

This regulation could have particularly harmful effects on FinTech innovations, such as peer-to-peer lending.”

How much money do Arizonans spend playing the lottery? Less than most Americans (AZ Central), Rated: B

Arizonans on average shelled out $100.85 per capita on lottery tickets in 2015, according to the study by LendEDU, based on preliminary data for state government finances collected by the Census Bureau. For Americans overall, the per-capita figure was $206.69.

United Kingdom

UK setting the bar for fintech regulation, bank execs say (SNL.com), Rated: AAA

U.K. authorities have created a world-leading regulatory environment for the burgeoning fintech industry that is being emulated elsewhere, according to bankers.

The Financial Conduct Authority’s “sandbox,” a program launched in 2015 to let companies test innovative ideas under close regulatory supervision, has been particularly helpful, she said.

Meanwhile, initiatives such as FCA-organized hackathons — or “TechSprints” as it prefers to call them — have been particularly appreciated by the industry, according to Sophie Guibaud, vice president of European expansion at Fidor Bank AG, a German online lender that was bought by Groupe BPCE in 2016. These events invite market participants to come up with technological solutions to certain problems, such as financial issues faced by people with mental health problems.

The U.K. is home to more fintech companies valued at more than $1 billion than the rest of Europe put together, according to an April 2017 report by technology investment bank GP Bullhound. Three U.K.-based companies, Funding Circle, Paysafe and Transferwise, have crossed that threshold, and GP Bullhound said that it does not expect London to relinquish its lead, due to its prominence in international financial services.

Comparison site GoCompare invests in mortgage robo-adviser (AltFi), Rated: A

Financial comparison site GoCompare is hoping to transform the UK’s mortgage application process by investing in MortgageGym, a digital mortgage robo-adviser.

Users can complete a free application within 15 minutes on MortgageGym and receive matches within 60 seconds, as well as robo advice and access to live advisers. The website will use automated algorithms to match applicants with the best mortgage providers.

The House Crowd hits £50m via mix of P2P and crowdfunding (P2P Finance News), Rated: A

THE HOUSE CROWD has hit the £50m funding target it set out to achieve in October last year.

The Manchester-based property platform started targeting institutional money at the end of last year to achieve its first £50m of funds channelled to property and buy-to-let borrowers, through both its peer-to-peer side and its crowdfunding arm.

The firm raised over £15m in the six months to early 2017, while a loan it closed last month added another £600,000.

Fintech CurrencyCloud tapped up investors months before Google raise (Business Insider), Rated: A

CurrencyCloud, which provides a platform to process international payments, raised £9.5 million from its existing investors in December 2016. The company had £10.5 million in the bank at the end of the month, accounts show, suggesting the platform had around £1 million left at the time of the fundraising.

The volume of payments jumped by 110% to 1.5 million but net revenue from currency transactions increased by just 10% to £3.2 million. Meanwhile, administrative expenses rose by 54% to £13.9 million as CurrencyCloud invested in “recruiting staff, developing our technology infrastructure and operations services, and moving to new office premises.”

P2P fund share issues boost investment trust sector (P2P Finance News), Rated: A

FUNDRAISINGS by Honeycomb and the Funding Circle SME Income Fund (FCIF) helped push share issues to record levels in the investment trust sector for the first half of 2017.

Secondary issuances raised £3.3bn in the first six months of the year, trade body the Association of Investment Companies has revealed, up from £1.8bn at the same time in 2016.

FCIF raised £142m in conversion shares in April, the largest total in the specialist debt sector, while the Honeycomb investment trust raised £105m through a ordinary share issue.

Alternative Credit funds drive record cash raise (AltFi), Rated: A

Assets in investment trusts have hit an all time high thanks in part to a huge swathe of secondary issuance in closed-ended funds’ shares.

In the first half of 2017, the most poplar area of the investment trust market was Infrastructure – in terms secondary issuance – raising £1.2bn. This was followed by Alternative Credit at  £514m. Funding Circle SME Income raised the largest total in the sector securing £142m via its C share issue, followed by Honeycomb Investment Trust (£105m).

China

The number of Online Financial platforms in China Exceed 19,000, ranking the first place of the world. (Xing Ping She), Rated: AAA

According to data from National Institution of Internet Financial Risk Analysis &Technology,there are more than 19,000 online financial platforms across China, including over 6000 online lending platforms, nearly 3500 online assets managers, and 800 crowdfunding platforms. The total cumulative volume of internet loans, crowdfunding and internet payment have reached to 70 trillion RMB (US$ 10.33 trillion). Zhou Hongren, director of the National Committee of Internet Finance Professional Technology, claimed that, “No matter in terms of quantity or scale, China has already become the largest international finance marketplace around the world.”

European Union

Rocket Internet Sells Stake in Lendico Startup (Handelsblatt), Rated: AAA

Incubator firm Rocket Internet has sold its majority stake in peer-to-peer lender Lendico to Arrowgrass, Handelsblatt has learned, as the British hedge fund acquired complete ownership of the Berlin startup.

The partners to the transaction agreed to keep the purchase price confidential. Rocket Internet, which specializes in helping online startups get off the ground, most recently valued its 50-percent-plus stake in Lendico at €140 million ($159 million).

Funding Circle Germany Takes a Fresh Start (Crowdfund Insider), Rated: AAA

Germany is a huge SME and VSME (very small business) credit market. But it is not as mature a market for online marketplace lending as the UK, the US, or even the Netherlands. This partly explains why Funding Circle Germany’s early loan book underperformed. Now the platform is starting afresh to match its market’s reality.

With offices and business in Germany, the Netherlands and Spain, Zencap had originated €35 million in loans to 500 SMEs at the time of its acquisition. Its operations were very small in comparison with the more than $1.5 billion originated by Funding Circle in the US and the UK at the time (meanwhile Funding Circle passed the $3 billion mark).

The second reason for starting afresh, was a need to revisit the credit model. Since January, the new German team has been busy recalibrating and restarting the German operations.

Loan origination resumed at previous level in the first half of 2017 and is expected to grow again in the second half of this year.

Spanish Fintech Industry Comes into its Own (Finance Magnates), Rated: A

The Spanish fintech ecosystem has been a steadily growing force over the past few years, swelling from just fifty financial technology startups in 2013 to well over three hundred in 2017. This rapid surge is only going to continue with this number estimated to hit four hundred companies by 2018.

In terms of the value of the operations, this sector passed rose from just €35 million in 2014 to €206 million in 2016, justifying a 600 percent growth in just two years.

According to the Spanish Association for Fintech and Insurtech (Asociación Española de Fintech e Insurtech – Aefi), companies operating in this space in Spain are going to create a total of 10,000 jobs in 2017 alone.

While the value offintech operations in Spain is increasing, two areas that constitute the most focus are the crowdfactoring or invoice factoring crowdfunding platforms – these saw a total of €120 milion euros in 2016, that concentrate most of the operations domestically, followed by crowdfunding with €43.5 million and crowdlending or p2p lending with €42 million.

International

Visa Expands Its Footprint in Europe (Market Realist), Rated: AAA

In May 2017, Visa announced that in order to give consumers more control and make transactions transparent, the company will create digital card management experiences for its partners. Visa’s partners include financial institutions. Since the new offerings will lead to more transparency, Visa expects to see volume growth in fiscal 3Q17. Market analysts expect Visa to report revenues of $4.36 billion in fiscal 3Q17—a decline of 2.7%.

 

What Can Visa Expect from Russia, China, Japan, and India?

In fiscal 2Q17, there was growth in Visa’s cross-border business due to Russia’s developed economy. Visa implemented ~1,600 point-of-sale terminals. As a result, payment volumes are expected to grow in fiscal 3Q17.

Management thinks that obtaining a domestic license in China is a time-consuming process. Visa is expected to witness lower revenues and payment volumes from China due to discontinued dual branded cards.

Management has a positive outlook on Japan’s economy due to digitization. Japan’s government has become more inclined to use digital and electronic payments.

In fiscal 3Q17, India could be a major contributor to payment volume growth.

Visa has delivered a return on equity of 16.2% on trailing 12-months basis. Other consumer financial peers (XLF) have delivered the following return on equity on a trailing 12-month basis:

  • American Express (AXP) – 25.1%
  • MasterCard (MA) – 75%Discover Financial Services (DFS) – 21.10%

Visa Expects to Benefit from Its European Business

Visa’s (V) acquisition of Visa Europe allowed the company to enhance its global reach. The main agenda behind the acquisition was to bring innovation to the European market. Visa had been working closely with its partners and clients. The company also plans to create new services and products.

Israel

THE SURPRISING COUNTRY LEADING THE FINTECH REVOLUTION (Ozy.com), Rated: AAA

The country that gave the world smart drip irrigation and the Epilady has also been an early and enthusiastic adopter of financial technology, as in mobile banking apps, digital wallets, online lending and other services that manage moola. In fact, a survey of selected industrialized countries shows that:

As for the specifics, 50 percent of Israeli adults use mobile banking apps at least once a month. In the U.S., it was 38 percent; the U.K., 37 percent; in France, 35 percent; and in Germany, a surprisingly anemic 28 percent.

The five largest banks in Israel control more than 90 percent of the market, and as Sandra Octaviani, research lead for fintech at the University of Utah’s Center for Innovation in Banking and Financial Services, notes, traditional banks tend to serve low-risk, highly profitable clients, which creates an opportunity for nimbler fintech firms to swoop in and serve the underserved.

India

RBI wary of first loan default guarantee cover (India Times), Rated: AAA

The Reserve Bank of India is learnt to be wary of peerto-peer lending platforms offering any FLDG, or first loan default guarantee, cover to institutional lenders for any lending they do through these technology startups, said sources familiar with the discussions.

While various lending entities are keen on exploring this space as a cheap source of customers, they often look for a security cover against loans going bad. Experts say such guarantees or covers might go against the intentions of the central bank.

SME Lending Based on Payment History is the Next Big Wave in Fintech (BW Disrupt), Rated: A

ftCash aims to empower micro-merchants and entrepreneurs with the power of electronic payments and loans with zero upfront cost and no monthly rentals. Merchants are able to offer their customers multiple payment methods including credit cards, debit cards, net banking, mobile wallets, PayPal and more.

Nonethless, credit lending is the next big wave of Indian fintech. Lodha explains, “SME Lending based on payment history will be next big wave in fintech. On an active basis, it allows a lender to decide the paying ability of a merchant/business and the recollection of these loans can be done from the payment platform itself. The combination of the payments data along with GST data provides deeper insights into a business. We at ftcash are heavily invested in this idea and believe there is a great potential for scale here.”

Latin America

Venture fund for Latino entrepreneurs, fintech in Mexico  (ImpactAlpha), Rated: AAA

Financial technology, or fintech, startups offering digital payment, remittances and lending services, could capture 30% of Mexico’s banking market within 10 years, according to Finnovista, a fintech accelerator. Six in 10 Mexicans are unbanked. Financial exclusion is a problem but “also an opportunity,” Francisco Meré, the director of Bankaool, one of the first online-only banks in Mexico, told the Financial Times[paywall]. “The cost of engaging a customer through technology is a fraction of using a branch.” Clip has grown to become one of Mexico’s largest digital payment providers (Accion sold its stake in February). Kubo Financieroprovides peer-to-peer lending; Albo, mobile-based banking; and Kueski, a digital micro-lender — all have secured venture backing. More than 150 fintech, or financial technology, firms now operate in Mexico, giving Mexico 35% of fintech companies serving the under- and un-banked in Latin America.

AFLUENTA INCORPORATES THE MEXICAN INVESTMENT FUND IGNIA TO ITS PRESTIGIOUS LIST OF SHAREHOLDERS (AltFi), Rated: A

Afluenta (www.afluenta.com), a leading online credit platform for the people of Latin America, announced the addition of Mexican venture capital fund IGNIA to its group of shareholders. IGNIA is a venture capital fund specializing in investments in entrepreneurial companies with great potential for growth, whose services meet the needs of the emerging middle class.

In Mexico, where local credit to the private sector is below 35% of GDP, compared to 68% in Brazil, Afluenta aims to revolutionize the market with its human approach to credit and investment.

Afluenta connects borrowers with investors who can be individuals or companies, eliminating intermediaries such as traditional financial institutions. Its technology allows investors to receive competitive returns on their contributions in a simple, fast and efficient way, while applicants obtain loans faster, without bureaucracy and at a lower interest rate than in a bank.

Canada

Katipult CEO finalist for the prestigious EY Entrepreneur Of The Year 2017 (Digital Journal), Rated: A

Brock Murray, CEO of Katipult, a SaaS company that enables firms to design, setup, and manage an investment crowdfunding, Peer to Peer lending, or investor management platform, has been named a finalist in Ernst & Young’s Entrepreneur of the Year in the Emerging Technology category in Prairies.

Authors:

George Popescu
Allen Taylor

Friday July 14 2017, Daily News Digest

Visa revenues

News Comments Today’s main news: DBRS assigns provisional ratings to SoFi Professional Loan Program 2017-D. IEG Holdings cites slim margins, weak underwriting as reasons for LendingClub offer. Bank execs say UK sets the standard for fintech regulation. Rocket Internet sells stake in Lendico. Today’s main analysis: Visa’s international expansion. Today’s thought-provoking articles: DBRS Student Loan ABS report (a […]

Visa revenues

News Comments

United States

United Kingdom

China

European Union

International

Israel

India

Latin America

Canada

News Summary

United States

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

DBRS, Inc. (DBRS) has today assigned provisional ratings to the following classes of notes issued by SoFi Professional Loan Program 2017-D (SoFi 2017-D):

— $245,000,000 Class A-1FX Notes at AAA (sf)
— $266,000,000 Class A-2FX Notes at AAA (sf)
— $40,000,000 Class B-FX Notes at AA (sf)

DBRS Student Loan ABS report (DBRS), Rated: AAA

In this commentary, DBRS provides the following:
— A review of Q1 2017 student loan ABS performance and H1 2017 student loan ABS issuance.
— An outlook for future student loan ABS issuance and the trends expected in H2 2017.
— Analysis and highlights of student loan collateral performance.

Download the full report here.

IEG Holdings Highlights the Urgency of LendingClub Correcting its Flawed, Slim Margin “Broker” Business Model and Weak Underwriting Standards (Sys-Con), Rated: AAA

IEG Holdings yesterday announced the commencement of a tender offer to exchange four shares of IEG Holdings’ common stock for each share of LendingClub common stock, up to an aggregate of 40,345,603 shares of LendingClub common stock, representing approximately 9.99% of LendingClub’s outstanding shares as of April 28, 2017, validly tendered and not properly withdrawn in the offer.

IEG Holdings Corporation (OTCQB: IEGH) (“IEG Holdings”) cautions shareholders of LendingClub Corporation (“LendingClub”) against dismissing IEG Holdings’ tender offer. IEG Holdings believes that the LendingClub board of directors should be held accountable by its shareholders for continuing to pursue a flawed, slim margin “broker” business model. IEG Holdings urges LendingClub to enter into negotiations with IEG Holdings, rather than simply dismissing the tender offer.

FLAWED, SLIM MARGIN, LOSS-MAKING BUSINESS MODEL

Despite brokering more than $26 billion of loans since inception, LendingClub still reported a loss of $29.8 million for Q1 2017 and loss of $146.0 million for the 2016 full year. Transitioning to a balance sheet lender likely would significantly increase gross margins, without a significant change in customer acquisition costs.

WEAK UNDERWRITING STANDARDS

A recent media report by Bloomberg indicates that:

  • LendingClub only verified income about a third of the time for one of the most popular loans it made in 2016, and
  • If LendingClub finds errors in a loan application, it may still approve the loan.

LACK OF COMPANY-OWNED STATE LENDING LICENSES

LendingClub doesn’t hold individual state lending licenses and instead utilizes the services of a Utah-based bank. This raises regulatory risks around issues such as the potential breaking of individual state interest rate caps and compliance.

POOR STOCK MARKET PERFORMANCE AND ZERO DIVIDENDS TO SHAREHOLDERS

LendingClub’s share price has decreased 79% since its initial public offering in December 2014, dropping from $25.74 in December 2014 to $5.39 yesterday, after reaching a low of $3.51 in May 2016. In addition, LendingClub has never paid, and has no reported intention to pay, a dividend to shareholders.

IEG Holdings’ Reasons for the Offer

IEG Holdings believes that changing LendingClub’s business model to a balance sheet lender model would enable the company to generate significantly higher gross margins, provide significantly higher long duration cash flow from customers, build increased customer goodwill with customers and enable increased customer refinancing. The longer duration cash flow would provide more flexibility in reducing lending volumes during periods when underwriting risk levels are rising, as the company would be less dependent on brokering new loan deals every day to provide revenue.

  • IEG Holdings intends to encourage LendingClub to undertake substantial costs cuts by terminating excess employees, achieving substantial cuts in advertising/marketing costs and other significant cost cutting measures;
  • IEG Holdings intends to encourage LendingClub to transform its broker business model with low gross margins and high volumes to focus on high gross margin unsecured loans to near prime clients with strong underwriting, company owned individual state licenses and retention of loans on its balance sheet to secure long duration cash flow from longer term loans; and
  • The acquisition of LendingClub shares would be substantially net asset per share accretive for IEG Holdings stockholders and substantially increase shareholder equity.

New partnership turns PayPal into Apple App Store payment option (Banking Tech), Rated: A

This week the company announced a partnership with Apple to allow shoppers pay for their purchases at the App Store using PayPal. The feature will be available for users of a variety of Apple devices including iPhone, iPad, Apple TV, Apple Watch, and iPod.In addition to the App Store, PayPal will be a payment option for a variety of Apple services including Apple Music, iTunes, and iBooks.

Finicity and JP Morgan Chase pair for data share (Banking Tech), Rated: A

Data aggregation provider Finicity has signed an agreement with JP Morgan Chase to let the bank’s customers choose data to share with apps.

The companies will use a direct API to allow Chase customers to share information with the apps and services that Finicity supports. According to the firms, this tokenised access will eliminate the need for customers to share their Chase credentials with third-party apps.

Paypal Holdings Inc (NASDAQ:PYPL): Beginning of Market Dominance (Library for Smart Investors), Rated: A

Paypal Holdings Inc (NASDAQ:PYPL) is getting investors attention after the stock touched fresh highs amid a new partnership with Apple.

The stock is up over 43% since the start of the year.

In the first quarter, PayPal saw a jump of 10.3% in monthly active users on year-over-year basis. The total number of transactions also increased by 22.5% in the period.

In the first quarter, Venmo processed $6.8 billion in total payments, a 100% growth on year-over-year basis. Venmo is slated to grow more as the company expands to small businesses.

WEALTHTECH — THE DIGITIZATION OF WEALTH MANAGEMENT (FT Partners), Rated: A

WealthTech companies are targeting inefficiencies that span the entire wealth management value chain, from client prospecting to investing to portfolio management and reporting. Benefits include more efficient workflows, improved client experiences and greater transparency. Regardless of their value proposition, WealthTech companies are seeking to improve overall wealth management and investing.

This report highlights a number of key trends within the broader WealthTech industry such as…

  • Growing number of advisors joining the independent channel
  • Incumbent financial institutions are entering the robo-advice space
  • Increased demand for alternative investments
  • Financial planning trending towards goal-based approaches
  • Higher levels of active risk management
  • Commoditization of portfolio management software is leading to expanded offerings
  • RIA custodians evolving into more holistic roles

Download the full report here.

Wells Fargo trims auto loans as market cools, risk overhaul kicks in (Reuters), Rated: A

Wells Fargo & Co (WFC.N) is scaling back and remolding its auto lending business in response to growing stress in the market, as well as a bank-wide push for more centralized risk controls.

Wells, which was the No. 2 U.S. provider of auto loans less than a year ago, has already cut quarterly originations by nearly 30 percent over the nine months leading into March 31, according to a May 11 company presentation. It has also begun consolidating the collections operation in a move that people familiar with the business say could eliminate hundreds of jobs, after a new head of auto finance took the reins in April.

5 Fintech Startups Under the Radar (Bank Innovation), Rated: A

Spotme

This New York City-based startup facilitates micro-loans between borrowers and lenders, allowing users to set up pretty much all the parameters of a loan themselves: users can control the amount, the interest rate, the payback period, and the way they are reimbursed for the loan themselves.

Ledger

Ledger might be able to help out there: this San Francisco-based startup allows users to “open tabs with friends,” boiling down a transaction to just 3 clicks. By connecting with a user’s financial accounts (protected by “military-grade” cybersecurity, according to the company), users are able to aggregate all of their transactions in one place, as well as receive notification about when transactions are due.

Wallio

More and more companies are striving to solve the main problem when it comes to personal finance management services: how do you make a user actually take the financial advice that is being offered?

Wallio starts off the week by giving a user an allocated amount of money they can spend for that week, on whatever the user wants (expenses and savings are already factored into this amount). If a user underspends, great: Wallio will allow that user to put that money towards a goal. If a user overspends, Wallio will simply allocate less money for the user to spend next week.

Samwise

This robo-investing startup allows users to turn their existing brokerage account into an autonomous investing account using machine learning algorithms.

OnePebble

Invest, and make a difference in the world at the same time: that’s the dream of OnePebble, an online investment broker/dealer that puts each investment toward companies “doing good in the world.”

3 Investing Trends to Keep on Your Radar (Morningstar), Rated: A

Trend: Passive products continue to gain assets.

This is the trend shaping the investment management industry today. Asset flows to passive products, both traditional index mutual funds and exchange-traded funds, began in earnest following disappointing active-fund performance during the financial crisis.

Trend: New ways to hire–and pay for–financial advice. 

Robo-advisors provide automated advice for a low annual fee as low as 0.25% or even less. Meanwhile, mutual fund companies and brokerage firms may provide advice for customers who have amassed sufficient assets at the firm. For example, Vanguard Personal Advisor Service charges 0.30% and is available to investors with at least $50,000 in assets at the firm. (The service combines human financial advisors with robo-advisor technology.)

What to watch out for: The profusion of different business models means that the business of selecting an advisor is more complicated than ever. Robo-advisor fees might look like a screaming buy relative to the fees that a full-service human advisor charges, but the robo won’t be able to give you advice on nonportfolio matters like whether to pay off your mortgage or purchase long-term care insurance.

Trend: An increased emphasis on behavioral factors that can affect investor outcomes.

What’s to like: Many robo-advisors have also embedded behaviorial research into their services.

What to watch out for: Behavioral finance is trendy right now, and with any trend comes the opportunity for gimmickry. Beware of advisors who are using behavioral finance as their main hook to snag clients; high-quality advisors have been employing behavioral finance into their practices for years.

US Tax Professionals Tackles the Tax implications of Crowdfunding (Digital Journal), Rated: A

It’s important to understand that all the income a person receives, regardless of the source, is considered taxable income in the eyes of the IRS. That includes crowdfunding dollars.

Even if the campaign only raised the projected $15,000 and no gifts were offered, the money would still be considered taxable income and need to be reported as such on a tax return.

Generally, crowdfunding revenues are included in income as long as they are not:

  • Loans that must be repaid;
  • Capital contributed to an entity in exchange for an equity interest in the entity; or
  • Gifts made out of detached generosity and without any “quid pro quo.” However, a voluntary transfer without a “quid pro quo” isn’t necessarily a gift for federal income tax purposes.

Morgan Stanley digital chief: AI to help advisers, not ‘cyborg bots’ (Financial-Planning), Rated: A

Advisers tasked with processing a “mountain of information” will get a reprieve through artificial intelligence, according to Morgan Stanley Wealth Management’s chief digital officer.

“What we want to do is, with one click of a button, they can take action on that research report to all their clients within minutes, not hours, not phone calls,” Hassan said. “That’s the promise of what we’re trying to build.”

Rival firms have shown they’re headed down a similar path. Like Morgan’s planned offering, the UBS-SigFig service will save advisers’ time through automated messaging to clients on important dates, according to Richard Steinmeier, the head of the UBS Wealth Advice Center.

Congress Should Use Congressional Review Act to Strike Down Ill-Advised Arbitration Rule (Daily Signal), Rated: B

Cutting through the hyperbole that the arbitration rule protects consumers from “unfairness” that would deny them “their day in court,” this rule is in fact highly anti-consumer and harmful to innovation.

This regulation could have particularly harmful effects on FinTech innovations, such as peer-to-peer lending.”

How much money do Arizonans spend playing the lottery? Less than most Americans (AZ Central), Rated: B

Arizonans on average shelled out $100.85 per capita on lottery tickets in 2015, according to the study by LendEDU, based on preliminary data for state government finances collected by the Census Bureau. For Americans overall, the per-capita figure was $206.69.

United Kingdom

UK setting the bar for fintech regulation, bank execs say (SNL.com), Rated: AAA

U.K. authorities have created a world-leading regulatory environment for the burgeoning fintech industry that is being emulated elsewhere, according to bankers.

The Financial Conduct Authority’s “sandbox,” a program launched in 2015 to let companies test innovative ideas under close regulatory supervision, has been particularly helpful, she said.

Meanwhile, initiatives such as FCA-organized hackathons — or “TechSprints” as it prefers to call them — have been particularly appreciated by the industry, according to Sophie Guibaud, vice president of European expansion at Fidor Bank AG, a German online lender that was bought by Groupe BPCE in 2016. These events invite market participants to come up with technological solutions to certain problems, such as financial issues faced by people with mental health problems.

The U.K. is home to more fintech companies valued at more than $1 billion than the rest of Europe put together, according to an April 2017 report by technology investment bank GP Bullhound. Three U.K.-based companies, Funding Circle, Paysafe and Transferwise, have crossed that threshold, and GP Bullhound said that it does not expect London to relinquish its lead, due to its prominence in international financial services.

Comparison site GoCompare invests in mortgage robo-adviser (AltFi), Rated: A

Financial comparison site GoCompare is hoping to transform the UK’s mortgage application process by investing in MortgageGym, a digital mortgage robo-adviser.

Users can complete a free application within 15 minutes on MortgageGym and receive matches within 60 seconds, as well as robo advice and access to live advisers. The website will use automated algorithms to match applicants with the best mortgage providers.

The House Crowd hits £50m via mix of P2P and crowdfunding (P2P Finance News), Rated: A

THE HOUSE CROWD has hit the £50m funding target it set out to achieve in October last year.

The Manchester-based property platform started targeting institutional money at the end of last year to achieve its first £50m of funds channelled to property and buy-to-let borrowers, through both its peer-to-peer side and its crowdfunding arm.

The firm raised over £15m in the six months to early 2017, while a loan it closed last month added another £600,000.

Fintech CurrencyCloud tapped up investors months before Google raise (Business Insider), Rated: A

CurrencyCloud, which provides a platform to process international payments, raised £9.5 million from its existing investors in December 2016. The company had £10.5 million in the bank at the end of the month, accounts show, suggesting the platform had around £1 million left at the time of the fundraising.

The volume of payments jumped by 110% to 1.5 million but net revenue from currency transactions increased by just 10% to £3.2 million. Meanwhile, administrative expenses rose by 54% to £13.9 million as CurrencyCloud invested in “recruiting staff, developing our technology infrastructure and operations services, and moving to new office premises.”

P2P fund share issues boost investment trust sector (P2P Finance News), Rated: A

FUNDRAISINGS by Honeycomb and the Funding Circle SME Income Fund (FCIF) helped push share issues to record levels in the investment trust sector for the first half of 2017.

Secondary issuances raised £3.3bn in the first six months of the year, trade body the Association of Investment Companies has revealed, up from £1.8bn at the same time in 2016.

FCIF raised £142m in conversion shares in April, the largest total in the specialist debt sector, while the Honeycomb investment trust raised £105m through a ordinary share issue.

Alternative Credit funds drive record cash raise (AltFi), Rated: A

Assets in investment trusts have hit an all time high thanks in part to a huge swathe of secondary issuance in closed-ended funds’ shares.

In the first half of 2017, the most poplar area of the investment trust market was Infrastructure – in terms secondary issuance – raising £1.2bn. This was followed by Alternative Credit at  £514m. Funding Circle SME Income raised the largest total in the sector securing £142m via its C share issue, followed by Honeycomb Investment Trust (£105m).

China

The number of Online Financial platforms in China Exceed 19,000, ranking the first place of the world. (Xing Ping She), Rated: AAA

According to data from National Institution of Internet Financial Risk Analysis &Technology,there are more than 19,000 online financial platforms across China, including over 6000 online lending platforms, nearly 3500 online assets managers, and 800 crowdfunding platforms. The total cumulative volume of internet loans, crowdfunding and internet payment have reached to 70 trillion RMB (US$ 10.33 trillion). Zhou Hongren, director of the National Committee of Internet Finance Professional Technology, claimed that, “No matter in terms of quantity or scale, China has already become the largest international finance marketplace around the world.”

European Union

Rocket Internet Sells Stake in Lendico Startup (Handelsblatt), Rated: AAA

Incubator firm Rocket Internet has sold its majority stake in peer-to-peer lender Lendico to Arrowgrass, Handelsblatt has learned, as the British hedge fund acquired complete ownership of the Berlin startup.

The partners to the transaction agreed to keep the purchase price confidential. Rocket Internet, which specializes in helping online startups get off the ground, most recently valued its 50-percent-plus stake in Lendico at €140 million ($159 million).

Funding Circle Germany Takes a Fresh Start (Crowdfund Insider), Rated: AAA

Germany is a huge SME and VSME (very small business) credit market. But it is not as mature a market for online marketplace lending as the UK, the US, or even the Netherlands. This partly explains why Funding Circle Germany’s early loan book underperformed. Now the platform is starting afresh to match its market’s reality.

With offices and business in Germany, the Netherlands and Spain, Zencap had originated €35 million in loans to 500 SMEs at the time of its acquisition. Its operations were very small in comparison with the more than $1.5 billion originated by Funding Circle in the US and the UK at the time (meanwhile Funding Circle passed the $3 billion mark).

The second reason for starting afresh, was a need to revisit the credit model. Since January, the new German team has been busy recalibrating and restarting the German operations.

Loan origination resumed at previous level in the first half of 2017 and is expected to grow again in the second half of this year.

Spanish Fintech Industry Comes into its Own (Finance Magnates), Rated: A

The Spanish fintech ecosystem has been a steadily growing force over the past few years, swelling from just fifty financial technology startups in 2013 to well over three hundred in 2017. This rapid surge is only going to continue with this number estimated to hit four hundred companies by 2018.

In terms of the value of the operations, this sector passed rose from just €35 million in 2014 to €206 million in 2016, justifying a 600 percent growth in just two years.

According to the Spanish Association for Fintech and Insurtech (Asociación Española de Fintech e Insurtech – Aefi), companies operating in this space in Spain are going to create a total of 10,000 jobs in 2017 alone.

While the value offintech operations in Spain is increasing, two areas that constitute the most focus are the crowdfactoring or invoice factoring crowdfunding platforms – these saw a total of €120 milion euros in 2016, that concentrate most of the operations domestically, followed by crowdfunding with €43.5 million and crowdlending or p2p lending with €42 million.

International

Visa Expands Its Footprint in Europe (Market Realist), Rated: AAA

In May 2017, Visa announced that in order to give consumers more control and make transactions transparent, the company will create digital card management experiences for its partners. Visa’s partners include financial institutions. Since the new offerings will lead to more transparency, Visa expects to see volume growth in fiscal 3Q17. Market analysts expect Visa to report revenues of $4.36 billion in fiscal 3Q17—a decline of 2.7%.

 

What Can Visa Expect from Russia, China, Japan, and India?

In fiscal 2Q17, there was growth in Visa’s cross-border business due to Russia’s developed economy. Visa implemented ~1,600 point-of-sale terminals. As a result, payment volumes are expected to grow in fiscal 3Q17.

Management thinks that obtaining a domestic license in China is a time-consuming process. Visa is expected to witness lower revenues and payment volumes from China due to discontinued dual branded cards.

Management has a positive outlook on Japan’s economy due to digitization. Japan’s government has become more inclined to use digital and electronic payments.

In fiscal 3Q17, India could be a major contributor to payment volume growth.

Visa has delivered a return on equity of 16.2% on trailing 12-months basis. Other consumer financial peers (XLF) have delivered the following return on equity on a trailing 12-month basis:

  • American Express (AXP) – 25.1%
  • MasterCard (MA) – 75%Discover Financial Services (DFS) – 21.10%

Visa Expects to Benefit from Its European Business

Visa’s (V) acquisition of Visa Europe allowed the company to enhance its global reach. The main agenda behind the acquisition was to bring innovation to the European market. Visa had been working closely with its partners and clients. The company also plans to create new services and products.

Israel

THE SURPRISING COUNTRY LEADING THE FINTECH REVOLUTION (Ozy.com), Rated: AAA

The country that gave the world smart drip irrigation and the Epilady has also been an early and enthusiastic adopter of financial technology, as in mobile banking apps, digital wallets, online lending and other services that manage moola. In fact, a survey of selected industrialized countries shows that:

As for the specifics, 50 percent of Israeli adults use mobile banking apps at least once a month. In the U.S., it was 38 percent; the U.K., 37 percent; in France, 35 percent; and in Germany, a surprisingly anemic 28 percent.

The five largest banks in Israel control more than 90 percent of the market, and as Sandra Octaviani, research lead for fintech at the University of Utah’s Center for Innovation in Banking and Financial Services, notes, traditional banks tend to serve low-risk, highly profitable clients, which creates an opportunity for nimbler fintech firms to swoop in and serve the underserved.

India

RBI wary of first loan default guarantee cover (India Times), Rated: AAA

The Reserve Bank of India is learnt to be wary of peerto-peer lending platforms offering any FLDG, or first loan default guarantee, cover to institutional lenders for any lending they do through these technology startups, said sources familiar with the discussions.

While various lending entities are keen on exploring this space as a cheap source of customers, they often look for a security cover against loans going bad. Experts say such guarantees or covers might go against the intentions of the central bank.

SME Lending Based on Payment History is the Next Big Wave in Fintech (BW Disrupt), Rated: A

ftCash aims to empower micro-merchants and entrepreneurs with the power of electronic payments and loans with zero upfront cost and no monthly rentals. Merchants are able to offer their customers multiple payment methods including credit cards, debit cards, net banking, mobile wallets, PayPal and more.

Nonethless, credit lending is the next big wave of Indian fintech. Lodha explains, “SME Lending based on payment history will be next big wave in fintech. On an active basis, it allows a lender to decide the paying ability of a merchant/business and the recollection of these loans can be done from the payment platform itself. The combination of the payments data along with GST data provides deeper insights into a business. We at ftcash are heavily invested in this idea and believe there is a great potential for scale here.”

Latin America

Venture fund for Latino entrepreneurs, fintech in Mexico  (ImpactAlpha), Rated: AAA

Financial technology, or fintech, startups offering digital payment, remittances and lending services, could capture 30% of Mexico’s banking market within 10 years, according to Finnovista, a fintech accelerator. Six in 10 Mexicans are unbanked. Financial exclusion is a problem but “also an opportunity,” Francisco Meré, the director of Bankaool, one of the first online-only banks in Mexico, told the Financial Times[paywall]. “The cost of engaging a customer through technology is a fraction of using a branch.” Clip has grown to become one of Mexico’s largest digital payment providers (Accion sold its stake in February). Kubo Financieroprovides peer-to-peer lending; Albo, mobile-based banking; and Kueski, a digital micro-lender — all have secured venture backing. More than 150 fintech, or financial technology, firms now operate in Mexico, giving Mexico 35% of fintech companies serving the under- and un-banked in Latin America.

AFLUENTA INCORPORATES THE MEXICAN INVESTMENT FUND IGNIA TO ITS PRESTIGIOUS LIST OF SHAREHOLDERS (AltFi), Rated: A

Afluenta (www.afluenta.com), a leading online credit platform for the people of Latin America, announced the addition of Mexican venture capital fund IGNIA to its group of shareholders. IGNIA is a venture capital fund specializing in investments in entrepreneurial companies with great potential for growth, whose services meet the needs of the emerging middle class.

In Mexico, where local credit to the private sector is below 35% of GDP, compared to 68% in Brazil, Afluenta aims to revolutionize the market with its human approach to credit and investment.

Afluenta connects borrowers with investors who can be individuals or companies, eliminating intermediaries such as traditional financial institutions. Its technology allows investors to receive competitive returns on their contributions in a simple, fast and efficient way, while applicants obtain loans faster, without bureaucracy and at a lower interest rate than in a bank.

Canada

Katipult CEO finalist for the prestigious EY Entrepreneur Of The Year 2017 (Digital Journal), Rated: A

Brock Murray, CEO of Katipult, a SaaS company that enables firms to design, setup, and manage an investment crowdfunding, Peer to Peer lending, or investor management platform, has been named a finalist in Ernst & Young’s Entrepreneur of the Year in the Emerging Technology category in Prairies.

Authors:

George Popescu
Allen Taylor