Friday December 15 2017, Daily News Digest

mortgage tech

News Comments Today’s main news: Walmart partners with Even, PayActiv on employee financial wellness. Moody’s says some consumer ABS sectors will be weaker next year. LendInvest has $1B in funds under management. Yirendai’s investment in Lion Rock amounts to $50M. LexinFintech kicked off IPO yesterday. Crowd Genie to launch ICO. Today’s main analysis: Why mortgage tech is finally taking off. Australian […]

mortgage tech

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News Summary

United States

Walmart Teams Up With Fintech Startups Even & PayActiv to Launch Financial Wellness Services For Associates (Crowdfund Insider), Rated: AAA

On Wednesday, retail giant Walmart announced it has teamed up with fintech startups Even and PayActiv to provide a suite of new financial wellness services for its more than 1.4 million associates nationwide.

Goldman Sachs’ and Morgan Stanley’s Big Growth Opportunities (The Motley Fool), Rated: AAA

Goldman Sachs (NYSE:GS) and Morgan Stanley(NYSE:MS) are both trying to expand their businesses into more traditional areas of consumer banking, such as consumer loans and mortgages.

Matt Frankel: Out of all the major unsecured lending platforms — Lending Club, things like that — Marcus was the quickest one to get to $1 billion in loan volume.

The interest rates people have gotten are more competitive than the others, because they can afford to run it at slightly more compressed margins than, say, a Lending Club.

Frankel: Morgan Stanley’s robo-advisory platform just launched. So that’s one way they’re trying to branch out into more traditional areas of banking and investing.

Just to throw a couple of figures out there, Morgan Stanley’s wealth management business, which is not the highest-margin business, which is why they’re not as efficient as Goldman, their wealth management business, they’re margin has gone from 9% to 22% since 2010.

Morgan Stanley estimates that their clients still have about over $2 trillion worth of assets with other asset managers, and they’re trying to bring some of that in.

Nearly 5 Million Americans in Default on Student Loans (WSJ), Rated: AAA

The number of Americans severely behind on payments on federal student loans reached roughly 4.6 million in the third quarter, a doubling from four years ago, despite a historically long stretch of U.S. job creation and steady economic growth.

In the third quarter alone, the count of such defaulted borrowers—defined by the government as those who haven’t made a payment in at least a year—grew by nearly 274,000, according to Education Department data released Tuesday.

The total number of defaulted borrowers represents about 22% of the Americans who were required to be paying down their federal student loans as of Sept. 30. That figure has increased from 17% four years earlier.

 

Mortgage Tech 101: What It Is & Why It’s Taking Off Now (CB Insights), Rated: AAA

By the end of 2017, nearly $1.8T worth of mortgages will have been originated in the United States this year, according to government-backed mortgage lender Freddie Mac.

Yet, despite the size of the mortgage industry, the space still hasn’t digitized. Originating, processing, and underwriting a home loan with a large bank lender still requires faxes and snail mail and take almost as long as it did 20 years.

Source: CB Insights

Driver 1: New lenders increase the competition

Non-bank lenders are becoming much bigger players in mortgages. In 2011, three banks accounted for half of new mortgage loans, according to the Washington Post. As of September 2016, that share dropped to 21%.

In 2011, just two of the top 10 biggest lenders were non-bank lenders. In 2016, non-bank lenders like Quicken Loans accounted for six of the top 10.

Driver 2: Incumbents are looking to improve their technology

At an average cost of $7,000, originating and processing a loan takes over 400 pages and more than 25 humans working hundreds of hours across 50 days. Of the total, approximately $5,000 can be attributed to human processing costs.

Driver 3: Individuals’ debt burden forces them to find alternative lenders

Eighty percent of millennial renters want to buy a single-family home or apartment, but 72% cannot afford to, according to survey data from Apartment List.

Source: CB Insights

Although total US homeownership has risen to 64% as of Q3’17, when examined by age group, the percentage of homeowners under 35 years old is only 36%. This is down from 44% in 2004.

Some consumer ABS sectors to have weaker collateral performance due to pockets of borrower stress and weaker underwriting (Moody’s), Rated: AAA

The anticipated continued expansion of the US economy into 2018 will support overall collateral performance of consumer asset-backed securities (ABS), according to Moody’s Investors Service. However, growing financial strains among some pockets of borrowers and loosening of underwriting by lenders will result in slightly weaker collateral performance for several categories of consumer ABS, including transactions backed by auto loans, credit cards and unsecured personal loans.

Amid further declines in automobile sales and used vehicle prices, Moody’s says issuers will generally maintain the steady collateral quality in their 2018 auto loan and lease deals, with incremental weakening in certain collateral attributes such as loan terms. New private student loan ABS, meanwhile, will likely continue to have strong credit quality and performance.

An Open Internet is Essential for Financial Inclusion (Huffington Post), Rated: AAA

The Federal Communications Commission (FCC) voted today to dismantle internet “net” neutrality: a vote that determined whether the internet should be treated like a public good or service or whether it should be treated like a product.

Another consequence of dismantling net neutrality has to do with undermining financial inclusion and the impending technological revolution of financial services. An array of financial technologies—online and mobile technologies referred to by their shorthand “fintech”—is heralded with the potential to expand access to financial services to underserved households and in underserved communities.

Internet connectivity is required for online and mobile transactions and many lower-income households alreadycannot afford internet service capable of making these transactions.

Online and mobile banking could become less reliable if internet service companies adjust connectivity speeds. Banks are increasingly shifting their products and services online and the number of bank branches is projected to decline by 20% over the next decade.

Prosper brings on JPM Chase veteran as board member (GlobalCapital), Rated: A

Online lender Prosper announced the appointment of Claire Huang as a board member this week as the company looks to enhance its product offerings in 2018.

Huang’s appointment was effective as of Tuesday, according to a company statement. Prior to joining the San Francisco-based lender’s board of directors, Huang was the first ever chief marketing officer at JP Morgan Chase.

INSIKT raises $ 50 million to lend to low-income communities (TechCrunch), Rated: A

An estimated 45 million Americans don’t have a credit score and others have trouble bringing up their scores, even if they are in a better financial position than in years past.

And after facilitating 125,000 loans in three years, INSIKT is raising $50 million to expand. The round is led by Grupo Coppel, with participation from FirstMark Capital, Revolution Ventures and Colchis Capital. INSIKT has raised $100 million to date.

INSIKT has built what they believe is a better alternative to payday loans, breaking up payments into smaller installments. Its white-label loan processing service is used in over 600 banks and credit union locations across California, Texas, Illinois and Arizona.

Kasisto Raises $ 17M in Series B Funding (Finsmes), Rated: A

Kasisto, the NYC-based creator of a conversational AI platform for finance, raised $17m in Series B funding.

The round was led by Oak HC/FT with participation from existing investors Propel Venture Partners, Two Sigma Ventures, Commerce Ventures, Mastercard and Partnership Fund for New York City.

Consumer lending 2017: Bold bets and strategic exits (American Banker), Rated: A

With the economy continuing to improve and household wealth growing, total consumer debt has increased in 12 consecutive quarters and hit a record $12.8 trillion in the second quarter, according to the Federal Reserve Bank of New York. And, for the most part, consumers are staying on top of their bills. The American Bankers Association said recently that the midyear consumer delinquency rate held steady around 1.56%, which is below the 15-year average of 2.16%.

Banks searching for growth pushed and pulled on a variety of consumer lending levers this year. Personal loans, particularly those offered through digital channels, were especially popular as banks aimed to emulate online lenders’ speed and efficiency.

How Twine, John Hancock’s robo-adviser tool, keeps a startup feel (Tearsheet), Rated: A

John Hancock wants to change that narrative with Twine, its robo-adviser and personal finance tool it released last month.  Twine emphasizes simplicity in its look and feel — a user interface similar to many startup-developed apps out there.

John Hancock looked outside, buying San Francisco-based financial services AI startup Guide Financial in 2015.

Twine operates as a separate organizational unit based in San Francisco, while most of John Hancock’s offices are in Boston. The team of around 25 employees includes engineers, product managers, user experience designers and marketing staff. But despite being organizationally separate, Goose said the team stays in contact with the mother ship through travel and video conferencing.

41% of households mix digital, human financial advice (InvestmentNews), Rated: A

But this isn’t a return to the way things used to be, said Hearts & Wallets, the Rye, N.Y.-based research firm that conducted the study of 40,000 individuals.

Today’s investors are what the firm calls “hybrids,” who use a mix of paid and free live professional advice, digital advice and their own insights. They now account for 41% of all U.S. households, the firm said.

Blenders of digital and live advice include 68% of consumers ages 35 to 44 with investable assets between $100,000 and $250,000, and 85% of consumers under age 35 who have over $1 million in assets. In all, over 75% of consumers under age 45 with assets of over $250,000 are “hybrids,” the firm said.

USAA’s Heather Cox is blurring the lines between business and technology (Tearsheet), Rated: A

In hiring Cox, the San Antonio bank, which has a longstanding reputation for being innovative, effectively agreed to restructure the entire company. She has plans to “levelize” the business and technology teams and morph them into “business technologists,” who are empathetic and understand that technology is the enabling function of their entire business — not the checking account or the insurance policy.

The new model will make USAA look more like one of the technology “greats” — the usual suspects like Apple, Amazon, Facebook and Google — instead of an old bank or insurance company, Cox said.

 

Despite court win, OCC still faces legal ‘landmine’ over fintech charter (American Banker), Rated: A

Comptroller of the Currency Joseph Otting has not weighed in on the fate of a fintech charter yet, but the ball is now squarely in his court.

The agency that Otting was just appointed to run scored a victory earlier week when a judge dismissed a lawsuit from the New York Department of Financial Services, which had challenged the Office of the Comptroller of the Currency’s authority to create a charter for fintech firms.

Jax small businesses turn to site to find lenders (Jacksonville Business Journal), Rated: B

New York-based Fundera has made a splash in Jacksonville with companies looking to find lenders.

Regions Bank Increases Prime Lending Rate (BusinessWire), Rated: B

Regions Bank today announced it is increasing its prime lending rate to 4.50 percent from 4.25 percent, effective Thursday, Dec. 14.

United Kingdom

LendInvest hits $ 1bn in funds under management (AltFi), Rated: AAA

Cutting out retail P2P investors doesn’t seem to have slowed LendInvest down. The UK’s leading fintech property lender now holds £765m (approximately $1bn) under management. Its capital base has more than doubled in 2017, up 104 per cent since the start of the year.

Manchester tops the buy to let index for England and Wales (PropertyWire), Rated: A

The highest yields for landlords are in Manchester at 5.55% and the city is also top in terms of rental growth at 5.76% and has a reasonable capital gains growth at 8.34%, the buy to let index from specialist lender LendInvest.

When it comes to capital gains the top city is Colchester at 11.96%, followed by Southall at 11.09%, Hemel Hempstead at 10.27%, Slough at 10.19%, Harrow at 9.89% and Ipswich at 9.44%.

Millennials will spend £1.1MILLION on rent over their lifetimes if they don’t get onto the property ladder (DailyMail), Rated: AAA

Millennials who began renting at 21-years-old and live in an average-sized property outside of London will spend an average of £110,830 in household rent before buying their first home – typically at an age of 32, according to research by peer-to-peer lending platform Landbay.

For those living in the capital – where property prices and rents are significantly higher – the amount increases to £273,210.

Source: DailyMail

Mortgage write-offs fall 79% in one year (Bridging&Commercial), Rated: A

The value of residential mortgages written off by banks and building societies has dropped by 79% in the past year, according to the latest research.
Data from the Bank of England revealed that UK lenders wrote off £72m of residential loans in the year end 30th September 2017, 79% lower than the same period in 2015/2016 – when £348m was written off – and even lower than pre-credit crunch levels.

Developer secures £1.9m from P2P platform for Merseyside projects (Development Finance), Rated: B

Mitty Group has secured £1.98m worth of funding from Assetz Capital to develop two new residential and leisure sites in Merseyside.

UK consumers ditching banks for digital loan alternatives (Finextra), Rated: A

UK consumers looking for personal loans are increasingly shifting away from traditional banks towards digital loan providers according to Zopa, the pioneering financial services company.

Research on the price comparison sector* shows loan sales obtained via price comparison sites have doubled in the last two years.
The data highlighted by Zopa shows that over 113,000 loans were sold through price comparison sites in the 6 months to April 30 2017, representing a 139% increase compared to the same period in 2015, whereas the overall unsecured personal loan market grew only by approximately 20% in the same period.

Gibraltar launches world’s first licence for fintech firms using blockchain (Independent), Rated: A

Gibraltar’s financial services watchdog will introduce the world’s first bespoke licence for “fintech” firms using blockchain distributed ledger technology from next month in a bid to attract start-ups to the British overseas territory as it prepares for Brexit.

Twenty-two of the world’s biggest banks and fintech firm R3 have just developed an international payments system using blockchain.

Gibraltar expects firms numbering well into “double digits” to seek authorisation after the new rules come into force on January 1, Gomez said.

China

Yirendai Makes $ 50 Million Strategic Investment in Finance Services Platform Lion Rock (Crowdfund Insider), Rated: AAA

China-based fintech Yirendai announced on Wednesday it has made a $50 million strategic investment in Lion Rock through the financial service platform’s Series A funding round.

LexinFintech starts IPO amid sector crackdown (Finance Asia), Rated: AAA

The Shenzhen-headquartered online micro lender, which launched the deal on Thursday, joins a flurry of other Chinese internet finance companies, including Qudian, PPDai and Hexindai, in their rush to  raise capital with a New York listing…with a US share sale worth up to $132 million.

Chinese fintech company PPDAI Group inks partnership deal with Sun Hung Kai (SNL.com), Rated: B

The move comes after Sun Hung Kai became a strategic investor in PPDAI Group through a private placement concurrent with the latter’s U.S. IPO.

European Union

Belgian crowdlending company expands in Europe (The Brussels Times), Rated: AAA

Look & Fin, the largest Belgian player in the field of crowdlending, plans to expand again in Europe.

On average, more than one million euros is invested monthly via Look & Fin. Loans vary between €50,000 euros and €1 million, with an average term of 38 months. Individuals invest on average €2,400 and can count on an average return of 7.6%.

Can a BBVA spinoff crack the digital ID code? (American Banker), Rated: A

Governments, banks and startups have been trying for years to solve the problems associated with identifying people in a digital world. The challenges are only getting harder thanks to identity thieves, data breaches that have exposed the personal information of hundreds of millions of consumers, and the fact that some folks want to avoid having to register face-to-face.

The latest entrant, a recent BBVA spinoff called Covault, is a bit different.

Its app lets consumers store their digital identity documents, passwords and (potentially) digital currency in a secure cloud, and then share pieces of that information with others as they see fit.

Regtech insights from Suade CEO, Diana Parades (Holland Fintech), Rated: A

Diana is the CEO and co-founder of Suade, a software platform which allows financial institutions to better understand and meet their regulatory requirements.

At SIBOS2017, Paredes encouraged financial institutions to think of regulation as being at the centre of their business. More education and research for implementation is needed, suggested Paredes in our interview. Smaller companies like startups offer more agile  implementation as they are technology driven companies. Meanwhile, the big machine of a bank is becoming better at agile acceptance of new technology.

‘Regtech will prevent the next financial crisis.’

Paredes explained this quote saying that while regulation is trying to prevent another crisis, it has no implementation guide. As such, regtech will be needed to give effect to the regulation.

Saxo Payments Banking Circle Nabs Prestigious Award (Holland Fintech), Rated: B

The Banking Technology Awards 2017 has named the organisation’s Banking Circle Virtual IBAN as the Best Corporate Payments Initiative.

International

Exclusive Interview with Celsius CEO Alex Mashinsky (ChipIn), Rated: A

Celsius is a peer-to-peer (P2P) and blockchain-powered global lending and borrowing network designed to enable coin holders to earn interest.

First off, why did you decide to use the blockchain to build Celsius?

The blockchain is the first real technology threat that the large banks have faced for the past 100 years. It has the potential to spur a new financial revolution from which they cannot adjust. We decided to build Celsius using blockchain to leverage the technology’s global presence and decentralized design to extract the bank’s profits and distribute them to our members.

What was your thought process behind it?

We want to find the best way to add the next 100M crypto users to the market, and we came to the conclusion that offering coin holders 5-7% in interest on their coins would be the best way to get there.

Did you face a problem within the consumer credit industry or do you think there is a gap in the market for Celsius to fill?

Unfortunately, the continued concentration in the banking sector has allowed banks to pay people less than 2% interest but charge our credit cards 25% interest when lending us the same dollars.

THE TRANSFORMATION OF THE GLOBAL REINSURANCE INDUSTRY (All About Alpha), Rated: A

A new paper from Milliman, a consultant to the insurance and financial services industries, discusses the ongoing transformation in and of the global reinsurance industry that alternative investment has created.

By the end of 2016, Milliman says, alternative capital in the catastrophe space consisted of around $76 billion, which breaks down as follows:

  • Collateralized reinsurance $39 billion
  • CAT bonds, $25 billion
  • Sidecars $8 billion, and
  • Industry loss warranties $4 billion.

As a proportion of the whole: alternative capital now represents roughly 13% of the available capital in global reinsurance.

Since 2011 the percentage of bonds with indemnity triggers has increased from 30% to roughly 70%.

Australia

Behind the 500% increase in small businesses using marketplace lending (SmartCompany), Rated: AAA

The number of small business customers signing onto loans through marketplace lenders has increased more than 500% over the past year, but experts say scrutiny must be put on the alternative finance sector now to ensure smaller operators get the best deal.

In 2015-16, ASIC’s survey of the sector put the total value of loans through this kind of model at $156 million, but that figure has doubled over the past year to now sit at $300 million. Total borrowers for the year jumped from 7,448 last year to 18,746 this year.

Australian Securities & Investment Commission Publishes Report on Marketplace Lending, Shows Double the Loans (Crowdfund Insider), Rated: AAA

Earlier today, the Australian Securities and Investments Commission (ASIC) published a report on the marketplace lending industry (peer to peer lending).  ASIC believes that by monitoring Fintech they are better positioned to assess any risk as the industry develops.

The survey covers marketplace lending activities of 12 platforms that are regulated by ASIC – so it is not comprehensive of the entire online lending sector.

In summary, there were 353 incidents or suspected incidents of fraud , compared to 126 incidents or suspected incidents of fraud during the 2015 – 16 survey. There was one cyber security incident, compared to zero during the 2015– 16 survey. There were reports of some borrower complaints but most appeared to be minor. The average default rate was 2.2%.

Source: Australian Securities and Investments Commission
Source: Australian Securities and Investments Commission

Read the full report here.

India

Impanix Fuels Loans Marketplace Finbucket With $ 1.87 Mn Funding (Inc42), Rated: AAA

New Delhi-based online loans and investments marketplace FinBucket has raised $1.87 Mn (INR 12 Cr) from Impanix Capital.

As evident from her statement, the online loans marketplace aims to use the newly raised funds in the growth of business and infuse new technology to scale further.

Asia

CROWD GENIE ASSET EXCHANGE TO HOLD ICO (Bitcoinist), Rated: AAA

Crowd Genie, a fully operational Singapore-based peer-to-peer digital lending platform licensed by the Monetary Authority of Singapore (MAS), has been selected by the token holders of the ICOS platform as the latest promising project to hold its own ICO.

Unlike most projects contemplating an ICO, Crowd Genie is not a startup but rather a debt-based lending platform that has been in operation for more than 12 months. It is one of only four P2P lending platforms licensed by the MAS. The project’s vision is to build a tokenized Pan-Asian lending exchange based on smart contracts, to ensure cost-effective, safe and efficient cashflows between lenders and borrowers.

The public ICO will begin on January 15, 2018, and will run until February 15, 2018. On offer will be 50,000,000 CGCOINs, a utility token which can be used to trade on the Crowd Genie platform.

Credit Suisse Snaps Up Fintech Stake (FiNews), Rated: A

Singapore-based fintech Canopy announced it has raised fresh funding of $3.4 million from investors including Switzerland’s second-largest bank Credit Suisse as well as Lionrock Capital.

Canopy, formerly known as Mesitis, is a Singapore-based anonymous account aggregation and analytics platform for financial institutions, wealth management professionals, and high net worth individuals.

Authors:

George Popescu
Allen Taylor

Friday August 4 2017, Daily News Digest

immediate payments

News Comments Today’s main news: SoftBank invests $250M in Kabbage. SoFi begins search for IPO-focused CFO. MarketInvoice has record trading day. George Banco acquired by Non-Standard Finance. Yirendai made $40M net profits in Q2. ID Finance partners with Da Vinci Capital on $200M fintech fund launch. Lendingkart Group raises $10M in debt funding. Today’s main analysis: Square Q2 shareholder letter. Immediate payments […]

immediate payments

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Australia/New Zealand

India

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Israel

News Summary

United States

SoftBank invests in US online lender to small business (Financial Times), Rated: AAA

SoftBank is investing $250m in Kabbage, one of the biggest US online lenders to small businesses, in a deal that could provide the firepower for a potential takeover of OnDeck Capital, a rival digital lender.

Kathryn Petralia, co-founder of Kabbage, told the Financial Times that the deal would finance growth in the company’s direct lending operation, which has provided nearly $3.5bn of funding to more than 100,000 small businesses in the US.

There has been speculation that Kabbage is planning to make a bid for OnDeck, a rival online lender that went public in 2014 and has since suffered an 80 per cent fall in its share price, hit by growing losses, rising defaults and higher funding costs.

SoFi Hints at IPO, Reports Record Results (WSJ), Rated: AAA

Social Finance Inc. posted record earnings and loan volume in the second quarter, as the privately held company’s chief executive hinted that it is moving closer to an initial public offering.

In a letter to investors reviewed by The Wall Street Journal, SoFi Chief Executive Mike Cagney sounded more optimistic about a potential public offering, as opposed to previous forums in which he said no deal would be coming in the foreseeable future.

(LT Editor: Here’s the letter again–in case you missed it yesterday).

Source: SoFi

Goldman Sachs is Going Big on Lending (Lend Academy), Rated: AAA

The firm created GS Select to reach clients of nearly 4,000 independent investment advisors from Fidelity Investments. Clients will be able to borrow from $75,000 to $25 million backed by their investment portfolios.

What’s interesting about this move is that it could be expanded to other RIAs and financial advisors not just through Fidelity. We’ve seen this type of model before with self described “Lending as a Service” fintech companies, but this time it’s a big bank that has built this technology.

Source: Lend Academy

Square  Q2 2017 Shareholder Letter (LendIt), Rated: AAA

In the second quarter, our top-line results reflect our continued ability to attract larger sellers and increase product usage through cross-selling. Total GPV grew 32% year over year, and GPV from larger sellers grew 45% year over year. Transaction-based revenue increased 32% year over year—the same rate as GPV, which is a result of our ability to maintain transaction revenue margin. Subscription and services-based revenue nearly doubled year over year. Strong top-line growth, lower risk loss rates, and ongoing operating expense leverage drove another quarter of significant EBITDA and margin improvement.

We grew Square Capital loan volume 68% year over year and further diversified our investor base.

 

Source: Square Q2 2017 Shareholder Letter

Read the full report here.

An Australian Entrepreneur And Ron Suber Want To Fix America’s Student Debt Crisis With A Fintech Solution (Benzinga), Rated: A

A trillion-dollar black cloud of student debt hangs over multiple generations of Americans. Student debt is delaying marriages, major purchases, home ownership and general enjoyment of life for millions of people. There’s more student debt than even credit card debt.

Enter Credible CEO Stephen Dash. The Australian entrepreneur is taking inspiration from his home country’s approach to offer student borrowers a marketplace of easier options to get and refinance loans. Australia has an income-based debt repayment system, and Credible’s tech helps borrowers refinance to make affordable payments.

loanDepot’s Groundbreaking Tech Spurs Demand for New Innovation Lab (PR Newswire), Rated: A

loanDepot, America’s lender, today announced details of its new standalone tech campus, the mello ™ Innovation Lab. At this unique facility, the LD tech team will continue to innovate and expand mello, the company’s proprietary digital-lending technology.

With loanDepot’s goal to transform the lending industry, its mello ecosystem is shaping lending’s future as it expands its online and offline consumer relationship model. mello’s technology includes an intuitive web-based consumer portal, a state-of-the-art, mobile point-of-sale system, and a fully-digital mortgage loan application experience. The company has invested $80 million to date on its digital-first technology strategy.

loanDepot’s mello exists within a larger next-gen lending ecosystem that is boosted with the integration of digital-marketing tools and by third-party data enrichment that ensure greater accuracy, speed and certainty throughout the origination experience. On a massive scale, mello is changing the loan origination process into a digital consumer experience, making it faster, easier, and more accurate.

USAA lets members bare their financial souls to Alexa (American Banker), Rated: A

USAA went live Wednesday morning with a virtual assistant that works with Amazon’s Alexa voice interaction device and its corresponding shopping app. Now, USAA members — at least the first 400 that sign up at USAA Labs — can ask Alexa a range of questions about their accounts, balances, spending and transactions, and the bot will answer with specific details from the member’s USAA card and bank accounts.

In so doing, USAA is joining a small group of financial institutions — including Capital One, American Express and several credit unions — that have created Alexa Skills, as the chatbots that work with Alexa are called.

US CFTC Launches Initiatives to Promote Fintech in the Futures and Swaps Markets (Lexology), Rated: A

First, the CFTC announced Project KISS—“Keep It Simple, Stupid”—as a forum to examine how its existing rules might be applied in less costly and burdensome ways. Second, the CFTC launched LabCFTC as a way to promote responsible fintech and regulatory technology (“regtech”) innovation. Together, these initiatives appear to be a significant part of the CFTC’s response to calls for streamlined regulation from the industry, the White House and some members of Congress.

Project KISS

The CFTC website specifically invites public input on the following five “KISS Initiatives”:5

  1. Registration—the process of becoming regulated by the CFTC as any of the several entity types that the agency regulates
  2. Reporting—all reporting obligations, including swap data and recordkeeping
  3. Clearing—clearing services in connection with various contracts and transactions
  4. Executing—the execution of futures and swaps transactions
  5. Miscellaneous—any topics not specifically enumerated above

LabCFTC

This initiative is intended to enhance the agency’s involvement in fintech and regtech7 solutions and to support the goals of (1) providing regulatory certainty for fintech innovators and (2) enabling more efficient regulation through the use of emerging technologies. LabCFTC contemplates a variety of means to accomplish these objectives, including:

  1. Proactive outreach to and collaboration with the fintech industry to better understand the strengths and weaknesses of the CFTC’s current regulatory framework as applied to new technologies
  2. Participation in research and engagement with academia and professionals to harness and promote the advantages of fintech/regtech for the CFTC and the markets it regulates
  3. Collaboration with other financial regulators at home and abroad and the sharing of information about promising fintech applications and their potential risks
  4. The tracking of fintech developments to ensure that CFTC regulation supports rather than impedes innovation

Money360’s just getting started (Bankless Times), Rated: A

The company closed $143 million in loans in Q2, bringing its total to more than $350 million. It is on pace to top the $500 million mark before the end of 2017.

Many D.C.-area homeowners are guilty of this financial no-no — financing renovations on credit cards (The Washington Post), Rated: A

A May study by Hearth, a financial technology start-up that provides support for homeowners making renovation decisions, found that 12 percent of Americans planned to finance their renovation with a credit card, which is one of the most expensive ways to finance the cost.

The Hearth Home Renovation Survey, which asked 2,000 homeowners about their remodeling plans for the coming year, found the number of people planning to use a credit card to pay for their renovation is even higher in the Washington region at 16 percent.

In this region, 52 percent of homeowners prefer to pay with savings or cash, compared with 62 percent nationally. D.C.-area residents are also more likely to finance their project with a loan — 32 percent — compared with 26 percent nationally.

Computer says no: robo-advice is growing but we still don’t trust it (The Conversation), Rated: B

People are open to receiving financial advice from robots, our studiesshow, but there might be a way to go to in convincing people to trust them over a human.

We surveyed 138 people about their attitudes to, and preferences for, superannuation advice from a human or a computer. Unsurprisingly, most stated they would prefer to deal with a human across a broad range of financial decisions.

Some did prefer the computer – these tended to be younger people, and those on higher incomes.

Ideas to Help Cash-Strapped or Underbanked Consumers (Southeast Missourian), Rated: B

With the inception of new types of loans, cash-strapped customers can borrow a certain amount from alternative lenders. These loans entail borrowing money against your next paycheck. Unlike traditional payday loans, these lenders allow their customers a fair grace period to make their repayment, making it easier for borrowers to repay and meet their other financial needs. The traditional lenders, on the other hand, require borrowers to repay their full loan amount with their next paycheck.

Peer-to-peer funding is an alternative to acquiring financial aid. This entails letting other businesses invest in your business venture. Finding willing investors is not a hard process itself as you can acquire them by applying online. Small businesses can source one to five-year loans. The loans are available from widely known businesses like Lending Club.

Private Lenders to Gain Insight from Industry Experts (Benzinga), Rated: B

American Association of Private Lenders (AAPL) will hold its eighth annual conference Sunday, November 12 through Tuesday, November 14 at Caesars Palace in Las Vegas. The keynote speaker will be Daren Blomquist, Senior Vice President of Communications at ATTOM Data Solutions, formerly RealtyTrac, curator of the nation’s largest fused property database. The AAPL annual conference is one of the largest national events for private lenders and will include a full slate of speakers, resources, education and networking. More information can be found at .

First Associates Loan Servicing Opens a New 1000-Seat Operations Center in Baja California (Benzinga), Rated: B

First Associates Loan Servicing announced today the opening of their new 1000-seat capacity operations center in Baja California, Mexico. This state-of-the-art center will support the continued global expansion of First Associates and enable the company to continue delivering first-class service and security for their clients.

United Kingdom

RateSetter Milestone: Investors Fund £2 Billion of Loans & Have Earned More Than £76 Million in Interest (Crowdfund Insider), Rated: AAA

RateSetter recently announced its lenders have now delivered more than £2 billion in loans to people and businesses across the UK and in doing so have earned over £76 million in interest. According to the online lender, 94% of its lenders are individuals looking for a decent return on their money by investing, and accepting some degree of risk, rather than settling for the pitiful interest rates offered on bank deposits.

P2P business platform MarketInvoice marks record trading day (AltFi), Rated: AAA

The company had more invoice advances on 1 August than any other day.

The trading platform saw £4.1m  in invoice advances to UK businesses on Monday, a record setting day for the firm.

Usually £3.2m is the average amount that is advanced in a day. The increase in trading is largely do to MarketInvoice Pro, an invoice discounting facility.

RateSetter-backed lender acquired by Non-Standard Finance (P2P Finance News), Rated: AAA

RATESETTER investors are likely to get repaid early by George Banco following the acquisition of the guarantor loans provider by Non-Standard Finance.

Approximately £30m of RateSetter lending is currently outstanding to George Banco and many lenders will be repaid early as a result of the refinancing.

Blend Network launches with vow to be the “Goldman Sachs of P2P” (P2P Finance News), Rated: A

Blend Network will offer asset-backed property loans to retail and high-net-worth individuals, as well as hedge funds and other institutional investors. P2P specialist F&P will act as introducer for all of its loans, although Blend Network’s chief executive Yann Murciano said that he would be open to further partnerships in the future, as the business scales up.

P2P lending looks less than attractive on a forward-looking basis (AltFi), Rated: A

But, and yes, there is an important caveat, I am beginning to sense an important tipping point. Returns of between 4 and 6% pa from the big platforms – with an emphasis on the lower range of that spectrum – haven’t changed too much (in fact they’ve slightly fallen back). But I’m increasingly thinking that these returns are now inadequate for the potential of increased risk.

If one comes from a lending POV (point of view) then I would argue that the current returns are woefully inadequate, given where we are in the lending cycle.

  • The big banks are starting to increase their provisioning for bad debts
  • Here in the UK we’ve probably reached Peak Unsecured Lending with the BoE bearing down on all lenders about risk, worried senseless about a downturn in consumer spending as Brexit grinds on
  • The car lending market is quite clearly close to a systemic meltdown
  • ‘challenges’ are already appearing within the P2P space, most recently at Ratesetter where its wholesale lending capacity is being wound down
  • The housing market looks more vulnerable than ever before, with the very real possibility that we’ll see a steady drip feed of small price declines
China

Yirendai Made $ 40M Net Profits in Q2 and Dividend for the First Time (Xing Ping She), Rated: AAA

Yirendai, the first US-listed Chinese internet finance company, has recently issued its financial report for the Q2, 2017. In the second quarter of 2017, Yirendai has reached the loans volume of $1.22bn, increasing by 18 percent from the last quarter, especially increased 80 percent from the same period in 2016. By the end of second quarter, the accumulated loans transaction of Yirendai was up to $7.1bn.

Yirendai’s main revenue was charged for service fee from borrowers and lenders. As a result, its income scale is increasing rapidly with the fast growth of loans volume. In the period, Yirendai has made net income of $176 million, increasing by 16 percent from the last quarter and 61 percent from the same period of last year.

Tencent and national development banks to practice the national “Internet +” strategy (163.com), Rated: A

(Hereinafter referred to as “National Bank”) and Tencent (hereinafter referred to as “Tencent”) in Shenzhen Tencent headquarters signed the “Internet +” development of financial strategic cooperation agreement. “.. In the future, the two sides will be in the Internet + precision poverty alleviation, Internet financial innovation, domestic and international credit financing, Kechuang enterprise cultivation, information technology applications and many other areas of long-term, stable, in-depth and sustainable strategic cooperation. Chairman of the State Development Bank Party Committee, Vice President Zhang Xuguang, Director of the China Development Bank Shenzhen Branch Wu Liangdong, Vice President of Tencent Xie Qinghua, Tencent Internet + Strategic Cooperation General Manager Zhang Wei attended the signing ceremony of strategic cooperation.

European Union

ID Finance Teams Up With Da Vinci Capital to Launch $ 200 Million Fintech Fund (Crowdfund Insider), Rated: AAA

Marketing fintech firm ID Finance announced on Wednesday it has joined forces with former Elbrus Capital fund manager, Yuri Popov, and asset management Da Vinci Capital to launch FinTech Credit Fund, which is described as a $200 million debt finance fund aimed towards fintech companies with a focus in alternative lending.

ID Finance also reported that the Fund will initially focus on projects within the CIS and European markets. Funding will be provided to companies involved in consumer/SME lending, with balance sheet and marketplace lenders being eligible.  Projects offering analytical solutions for credit scoring based on Big Data, AI and machine learning, as well as SaaS and PaaS solutions and payment services are of particular interest to the Fund and align with the investors’ areas of expertise.

International

GIC to invest in US talent agency (Straits Times), Rated: A

Singapore sovereign wealth fund GIC, along with Canada’s largest pension fund manager, will invest US$1 billion (S$1.4 billion) in American talent management agency WME-IMG.

Canada Pension Plan Investment Board, in a separate statement, said it would invest about US$400 million for an 8 per cent stake in WME-IMG, which owns brands like Ultimate Fighting Championship and the Miss Universe Organisation.

The US firm also counts the SoftBank Group, Silver Lake Partners and Fidelity Investments among its investors. Terms of the transaction were not disclosed.

Australia/New Zealand

Harmoney’s loss is really a gain (AltFi), Rated: AAA

New Zealand peer-to-peer lender Harmoney’s revenue climbed 63 percent this year, edging the company closer to profitability.  While still loss-making, Harmoney has halved its losses from $NZ14 million last year to $7 million this year.

As well as climbing revenue, its financials were helped by a 15 percent drop in marketing costs, suggesting the company has grown out its brand recognition to a point where it feels comfortable paying less for advertising.

To date, Harmoney has lent more money than any other Kiwi P2P platform.

A new whitepaper by CoreData and HUB24 titled ‘The modern face of advice’, argues that while technological tools were reshaping the wealth management industry, the role of advisers remained critical and the relationship they built with their clients remained more relevant than ever.

The paper, which is based on interviews with advisers, said technology used in advice practices continued to mature and costs, including platform fees and management expense ratios were decreasing to boost bottom line results of firms.

Robo-advice could play a role in tapping into the estimated $2 trillion worth of unadvised savings in Australia but awareness was still in its infancy. However, the Australian Securities and Investments Commission’s (ASIC’s) ‘RG255: Providing digital financial product advice to retail clients’suggested robo-advice was here to stay.

India

Lendingkart Group raises $ 10 million in debt funding (Medianama), Rated: AAA

Lendingkart Finance Limited has raised $10 million in debt funding from Kotak Mahindra Bank, Aditya Birla Financial Services, and other financial institutions. The funds will be used to expand its operations to 700 cities and restock its loan book.

Retail banking may lose 55% of business to fintech (livemint), Rated: AAA

The retail banking sector could lose up to 55% of its business to fintech firms if it does not up the ante in terms of investment in digital transformation, according to a new study titled ‘Enterprise Digital Transformation: Evaluating Indian Enterprises’, brought out jointly by research firm Frost & Sullivan and software lobby body, Nasscom.

 

Havas Media bags integrated media mandate of Faircent.com (Exchange 4 Media), Rated: A

Havas Media Group, India has bagged the integrated media duties of Faircent.com, India’s largest peer to peer lending platform. The account will be handled out of the agency’s Gurgaon office.

Digital Disruption: Lending Trends Turn the Next Leaf! (DQ India), Rated: A

Lending in India is hard as only a fraction of people have access to organized credit. Less than 50% of SMEs get access to bank  finance. The lack of access to credit is forcing people to depend on money lenders at high rates of interest. In India, of the over 1.3 bn population, 600 mn is working class, out of which 150 million has access to credit and 20 million have scores acceptable  to banks.

P2P lending provides investors higher returns than investing in mutual funds/ stock markets, which are linked to the stock market and come with a risk of losing money due to their inherent volatile nature. With the lower interest rates, traditional investment tools like FDs and RDs look less attractive to customers.

Peer-to-Peer loans give regular monthly income to the investors in the form of EMIs.

Now own a piece of prime real estate investing a few thousands (India Times), Rated: A

RealX, a pune-based fintech start-up, has completed India’s “first fractional ownership” deal in real estate sector. The platform has bought a commercial property in Karad (Maharashtra) by pooling in investments from about 19 investors, RealX officials claimed.

RealX is an ecommerce platform which will allow property sellers and agents post their saleable property. Registered buyers, on the other side of the platform, could invest in these projects. The minimum investment threshold, currently, is Rs 5 lakh per investor.

Asia

Immediate payments key driver of banking revenue (The Asset), Rated: AAA

Sixty-six percent of banks with live IP systems in place see it as a revenue driver for their institution, which compares to less than 50% for companies without IP systems in place. Moreover, for all banks 53% say that IP will drive revenue growth for their organization, 61% believe that IP will enhance their level of customer service and 60% expect IP to reduce costs.

While 65% of surveyed institutions stated that open APIs would benefit their customer-facing proposition banks differed in their implementation strategy. The majority (55%) of banks opted for immediately creating open APIs and interfaces for developers, while a minority (45%) took a ‘wait and see’ approach.

Source: The Asset

Mastercard and PayPal expand Partnership in Asia (The Asset), Rated: A

The deal will expand PayPal’s presence at the point of sale and enable Masterpass for Braintree merchants in the region. Additionally, both companies will collaborate to create opportunities to leverage Mastercard’s new payment flow technologies, providing increased value to Mastercard cardholders, financial institutions, and PayPal customers. PayPal will also have the opportunity to give consumers and small businesses across Asia-Pacific the ability to cash out funds held in their PayPal accounts to a Mastercard debit card.

Israel

All of Israel’s FinTech innovation geniuses have left the country and taken their brilliant ideas with them (Finance Feeds), Rated: AAA

Israel was never a center of actual trading, but was always synonymous with the brilliant minds that invented every ancillary service from digital marketing and conversion funnels that have brought tremendous efficiency to retail brokerages, Plus500 being a case in point, to social trading networks that have prospered on a gigantic scale across China – read eToro’s efforts with PingAn as very much an example where other social trading ventures wilted and disappeared.

Mr Mandelzis secured $40 million in venture capital from Sequoia Capital and sold the company to ICAP in 2007 for $250 million which became the subject of a Kellog Business School case study.

Where is Mr Mandelzis now? New York.

Optimove consolidates, mines and models customer data, dynamically grouping customers into micro-segments, and forecasting their future behavior and value.

Optimove is headquartered in New York, and is a completely American company.

Social trading has died a death. There is very little evidence of the large firms that used to dominate, and most of that technology came from Israel.

The only one in existence is eToro, which is a social investment platform.

Authors:

George Popescu
Allen Taylor