Digital Lending: How Artificial Intelligence, Machine Learning Are Making a Difference

machine learning digital lending

Artificial intelligence (AI) and machine learning (ML) are ubiquitous in today’s workplace conversations. Turn on any business news channel and you’ll hear them repeated over and over. Ask any venture capitalist and they are sure to brag about several investments in these areas. Google artificial intelligence and machine learning, and you’ll find 213,000,000 hits, and […]

The post Digital Lending: How Artificial Intelligence, Machine Learning Are Making a Difference appeared first on Lending Times.

machine learning digital lending

Artificial intelligence (AI) and machine learning (ML) are ubiquitous in today’s workplace conversations. Turn on any business news channel and you’ll hear them repeated over and over. Ask any venture capitalist and they are sure to brag about several investments in these areas. Google artificial intelligence and machine learning, and you’ll find 213,000,000 hits, and rising. Overhyped? We don’t think so.

Accenture boldly claimed that AI could boost average profitability rates by 38% and lead to an economic benefit of $14 trillion by 2035. That is no small statement. Even more astonishing is the general alignment among analysts on this issue. It’s widely agreed that AI and ML hold great promise across all industries, and, specifically, in finance.

In 2019, IDC projected that banking would be the second largest global industry to invest in AI, with $5.6 billion going toward AI-enabled solutions (trailing only retail). Why? The anticipated effect on business. According to the research firm, Autonomous, the financial industry’s slice of the global AI pie represents upwards of $1 trillion in projected cost savings.

Fintech Disruptors and Underwriting

Fintech disruptors, characterized as fast-moving companies, often start-ups, focus on a particular web-based innovative financial technology or process, spanning mobile payments to lending. Fintech disruptors initially found an entry point in finance through the use of AI/ML in underwriting.

In the U.S., if the customer consents, you can gain almost unlimited data about their credit profile: how many loans they have, whether they have a mortgage, if they’re delinquent, and whether they requested credit recently. According to the Brookings Institution, “AI coupled with ML and big data, allows for far larger types of data to be factored into a credit calculation. Examples range from social media profiles, to what type of computer you are using, to what you wear, and where you buy your clothes.” Access to this type of data gave rise to the development of sophisticated algorithms to underwrite consumer credit risk. We’ve seen this across a variety of lending companies offering unsecured consumer, student, or even small business loans, particularly focused on digital lending.

Importantly, though, those employing AI must be hyperaware of data collection practices, model design, and the potential for misuse. There is an inherent obligation when using these powerful tools to avoid profit at any cost. When used responsibly, AI can promote growth and better serve consumers. To meet this goal, companies must focus on creating ecosystems that are exponentially more just and equitable than what we have today.

On the surface, the digital lending numbers seem incredible. Digital lenders have grown to $50 billion in originations per year, not including incumbents. And, the research firm Autonomous notes that the digital lender model continues to raise $5 billion in annual venture capital investment, dominated by investments in the U.S.

And, yet, that same report shows that an AI/ML-driven digitization of the lending process is not headed to zero cost. To date, the cost advantages of onboarding and ongoing servicing (up to 70% reductions) have not been able to overcome the relatively high marketing costs that have yet to effectively scale lower than $250 per loan. Moreover, capital costs can reduce efficacy relative to traditional bank competition, and, then, there are the unplanned expenses, such as legal fees or elevated product development costs, the firm reports.

So, if digital lending driven by AI/ML-powered underwriting cannot deliver a material cost advantage, is further AI/ML advancement possible? And, will it improve outcomes for the consumer? Yes, absolutely. It all boils down to operations. As the use of AI shifts beyond obvious use cases and is deployed cross-functionally across entire companies to address various operational inefficiencies, the real promise emerges.

AI/ML 2.0: Improving Outcomes for Everyone

According to Deloitte, the top 30% of financial services firms who are frontrunners are more adept at integrating AI into the core strategic business of their firms, delivering revenue and cost gains quicker than competitors. In our opinion, this is clearly the case with fintech disruptors. Those that are focused on AI integration throughout the organization will quickly pull ahead of those who limit AI deployments to chatbots, underwriting, and other AI/ML 1.0 use cases.

Fintech disruptors can offer the market’s most cost-effective solutions by dramatically curtailing operation costs. Harnessing large-scale, multi-functional AI systems across organizations, instead of simply deploying in underwriting, presents fintech disruptors the opportunity to control costs at each stage and offer quality outcomes for their customers at reduced costs – with lean workforces.

So, while these systems may not face the end customer in any way – in fact, that may not be visible at all – they are the true future of AI/ML for fintech disruptors.

Fintech disruptor leaders who understand the opportunity to use an interconnected system of AI models across their organizations will likely drive the greatest overall efficiencies, both reducing costs and boosting revenues. This enhanced efficiency can be used to drive competitive position and ultimately higher profits.

AI/ML 2.0 at Work

AI can be used to help allocate resources across a variety of functions. For instance, a lender could create an AI model used to predict which of its retail partners would see the greatest increase in usage as a result of a field visit by a partner support representative. Generally, these visits don’t have uniform outcomes. Therefore, using a model-driven approach could help to allocate resources in the most effective manner. Increasing usage obviously drives overall revenue, but also helps to amortize cost over a greater number of transactions, driving better unit economics. Further, with time, the usefulness of such a system can grow. The more data collected from previous visits, the better the algorithm can be at predicting which visits will yield increasing usage.

Or, a lender could deploy AI in the call center to optimize the efficiency of the collections support team. Outbound reach to delinquent customers could be prioritized based on an ML algorithm that evaluates the potential for a successful call and the expected dollar collection. This may sound simple, but making the “good” calls and avoiding the “bad” ones offers all the obvious advantages of more precise resource allocation.

What is less obvious, though, is how these models are interconnected. The model used in the call center complements the underwriting model. If the collections team performs better, then the underwriting model can be recalibrated to maintain the overall risk of the loan portfolio. If the model prioritizing field visits is working, then it increases usage and reduces the average costs to originate a loan. This further enables a recalibration of both the underwriting model and the collections model. The combination of these models, ultimately, increases both expected and realized returns on the loan portfolio, reducing expenses and allowing the company to pass this savings back to customers in the form of lower rates. This is a win for everyone.

Optimizing the AI/ML Ecosystem

This is the true promise of AI/ML – a robust ecosystem of interdependent models utilized to enhance cross-functional outcomes. This leads to a much broader point: inefficiencies exist in all aspects of business – including accounting, legal, operations, finance and customer experience – and negatively impact profits.

Responsibly managed AI/ML 2.0 promises to address many of these functional silos with great success, improving outcomes for everyone involved.

Author:

Dr. Tamir Hazan is a co-founder and head of Analytics at Digital Lending: How Artificial Intelligence, Machine Learning Are Making a Difference appeared first on Lending Times.

Thursday September 12 2019, Weekly News Digest

bank technology

News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2019-4 Trust. Stripe debuts corporate credit cards. College Ave completes $300M securitization of private student loans. Yirendai issues earnings results. Today’s main analysis: Deregulating Fannie and Freddie (A MUST-READ REPORT FROM THE U.S. TREASURY). Today’s thought-provoking articles: Average FICO scores hit […]

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bank technology

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2019-4 Trust (Yahoo! Finance), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2019-4 Trust (“SCLP 2019-4”). This is a $465 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2019-4

Class

Preliminary Rating

Class Principal

A

AAA (sf)

$360,000,000

B

AA+ (sf)

$29,500,000

C

A+ (sf)

$47,500,000

D

BBB+ (sf)

$28,000,000

OnDeck CEO Noah Breslow to Deliver Keynote Address at 2019 LEND360 Conference (GuruFocus), Rated: A

OnDeck today announced that Chairman and CEO Noah Breslow will be a keynote speaker at the LEND360 Conference in Dallas, Texas on Thursday, September 26, 2019. Mr. Breslow will discuss industry trends in alternative data and how they are improving many aspects of online lending to small businesses.

Case activity for On Deck Capital, Inc. vs Beautyshea, LLC on Sept. 9 (Pennsylvania Record), Rated: B

‘Judgment Entered For $6,593.50 On 09-09-2019 236 Notice Of Judgment Sent 09-09-2019’

Payments giant Stripe debuts a credit card in its latest step into the financing fray (TechCrunch), Rated: AAA

Last week, when the popular payments startup Stripe made some waves with its first move into money lending through the launch of Stripe Capital, we reported that the company was also soon going to be launching a credit card. Now, that news is official. Today, the company is doubling down on financing with the launch of corporate cards for business customers.

College Ave Student Loans Completes $ 300 Million Securitization of Private Student Loans (Crowdfund Insider), Rated: AAA

Student loan marketplace, College Ave Student Loans, announced on Tuesday it has completed a $300 million securitization of private student loans, its third securitization and largest to date. According to College Ave, the transaction was oversubscribed attracting a broad and diverse group of repeat investors and new participants. Barclays and Goldman Sachs were joint lead underwriters on the transaction with Barclays serving as structuring agent and sole bookrunner.

The Deregulation of Fannie and Freddie; Rate Cuts; “Full Stack” Banks (PeerIQ), Rated: AAA

This week, the Trump administration released their long awaited housing finance plan that will privatize Fannie Mae and Freddie Mac.

The plan would require a significant recapitalization – up to $180 Bn.

Read the full report here.

Source: Federal Reserve, PeerIQ

Average FICO score hits all-time high (CNBC), Rated: AAA

For the first time, the average national credit score has reached 706, according to FICO, the developer of one of the most commonly used scores by lenders.

Source: CNBC

U.S. Consumer Debt Surges on Jump in Credit-Card Balances (Bloomberg), Rated: A

U.S. consumer borrowing swelled in July by the most since late 2017 as Americans carried larger credit-card balances to fund both everyday and online purchases.

Total credit rose by $23.3 billion from the prior month, exceeding all estimates in a Bloomberg survey of economists, Federal Reserve figures showed Monday. Revolving debt outstanding increased by $10 billion, also the most since November 2017, while the growth of non-revolving credit was little changed from a month earlier.

Kabbage Launches New Small Business Revenue Index (Crowdfund Insider), Rated: A

Global financial service platform Kabbage announced this week the launch of its new Small Business Revenue Index. According to Kabbage, the index has two million live data connections the platform maintains across its customer base of more than 200,000 small businesses.

The Current State of the Small Business Lending Sector (Lend Academy), Rated: AAA

The companies that I view as pioneers in this space are Kabbage and OnDeck.

Although Kabbage and OnDeck were early to small business lending there are many other names in this space with varying models and scale including Funding CircleStreetsharesFundboxBlueVineBiz2CreditFundation and Credibly to name a few. LendingClub also has a small business lending operation but they primarily work with partners Funding Circle and Opportunity Fund today to originate these loans.

The Challengers of Small Business Lending

Probably the most recognizable name is PayPal and the Working Capital product which, according to deBanked, has surpassed OnDeck in small business lending volume.

Patriot Financial leads $ 15 million round for Numerated (American Banker), Rated: A

Numerated, the loan technology company that incubated inside Eastern Bank and spun off on its own in May 2017, has raised $15 million from bank investment fund Patriot Financial Partners. Existing investors Venrock, Fintop Capital and Hyperplane also joined the round.

TBF Financial Buys $ 60 Million in Commercial Debt from Major Online Lender (PR Newswire), Rated: A

TBF Financial purchased nearly $60 million in non-performing loans from a major online small business lender in recent transactions, CEO Brett Boehm announced today.

TBF bought the pools of post-charge-off loans as the highest bidder in transactions arranged through multiple brokers. In most cases, the company purchases directly from alternative lenders, equipment leasing companies and banks.

LendingTree Ranks the 50 Most Expensive Towns in America (NewKerala), Rated: A

No. 1 Vineyard Haven, Mass.

Total population 17,321
Median individual income $39,045
Median home value $674,600
Affordable housing costs for a median income earner $911
Calculated mortgage payment for a median priced home $2,767
Median rent payment $1,441
Home affordability deficit -$1,856
Rent affordability deficit -$530

The DeFi trend is accelerating and gaining acceptance, with Coinbase joining the fray. The leading brokerage has created the Coinbase Bootstrap Fund, to boost DeFi projects. Coinbase will invest in two projects, the Compound crypto lending scheme, and the dy/dx crypto derivative exchange.

The 30-somethings guide to creating passive income (Ladders), Rated: A

You might not have $30,000 saved up to buy a rental property right now, but do you have $500? The beauty of REITs like DiversyFund is you can start investing for the amount of money you might drop on a new pair of shoes.

There are public and private REITS as well as funds classified as real estate crowdfunding. Compare your options and find the best one that works for you.

PeerStreet Named CRETech 2019 Real Estate Tech Award Winner (Crowdfund Insider), Rated: B

Real estate investment platform PeerStreet announced on Tuesday it won first place in CRETech’s 2019 Real Estate Tech Awards (RETAs for the Information & Intelligence – Crowdfunding category.

Zillow chooses Impac Mortgage COO Rian Furey to lead mortgage expansion (Housingwire), Rated: B

Zillow announced Monday that it is naming Rian Furey president of Zillow Home Loans.

Balboa Capital Continues Accelerated Growth, Adds 125 New Employees in First Half of 2019 (Yahoo! Finance), Raated: A

Balboa Capital, an online lender that specializes in equipment financing and small business loans, hired 125 new employees during the first six months of 2019 to accommodate the company’s rapid increase in new business and acquisition of several new strategic partners.

United Kingdom

Why crowdfunding may not be the great democratising force in investment after all (The Conversation), Rated: AAA

The digital revolution has had a huge impact on the way new and small companies are financed – and crowdfunding has been at the forefront.

Initially, crowdfunding brought great optimism that it would have a “democratising effect” on finance. On the one hand it would enable entrepreneurs excluded from traditional sources of finance to attract funding. And, on the other, it would provide new opportunities for people with even relatively modest amounts of money to invest. For example, private investors looking for higher returns than those available with high street banks have been attracted to various lending platforms – also known as peer-to-peer (P2P) platforms.

Sonovate raises £110m to drive invoice finance (Fintech Futures), Rated: A

Finance tech provider Sonovate is looking to expand internationally and deploy more working capital to SMEs and mid-market businesses after raising £110 million, reports Jane Connolly.

Spotcap find 77% of SME brokers are upbeat about Brexit (AltFi), Rated: A

Over three-quarters of commercial finance intermediaries in the UK expect the number of loans they broker to increase after Brexit, with more than half saying the number will rise “by a lot”.

In July Berlin-based online lender Spotcap asked 132 UK brokers, accountants and advisers about the future of SME finance in the UK, the results of which it published today as part of a report entitled The State of Commercial Finance in the UK.

FCA urges firms to prepare for no-deal Brexit and launches helpline (P2P Finance News), Rated: A

FIRMS should prepare for the possibility of a no-deal Brexit, says the Financial Conduct Authority (FCA), as it launches a dedicated helpline for businesses.

The City watchdog, which oversees the peer-to-peer lending market as well as the rest of the financial servcies sector, says firms who have not prepared appropriately for the UK leaving the EU without a deal may see an impact on their business.

Foreign firms eyeing P2P market entry (P2P Finance News), Rated: A

REGULATORY consultancy Bovill has reported a steady stream of interest from new entrants to the peer-to-peer lending market, particularly from overseas firms.

Brown attributed the slowdown to the fact that P2P is a more mature market, meaning there was “less of a gold rush” for new players.

H&M extends Klarna ‘buy now, pay later’ service to the UK (Fashion United), Rated: B

Swedish fast-fashion giant H&M has extended its partnership with payment provider Klarna to the UK market, offering Brit shoppers the option to ‘buy now, pay later’.

New SME services added to Starling Bank’s marketplace (AltFi), Rated: B

Digital Risks is an insurance provider for small and medium-sized digital businesses, including cover for specific threats like commercial legal protection, cyber security, management liability, employers liability, public liability and professional indemnity.

While CyberSmart is a platform for SMEs to identify digital weaknesses and achieve their Cyber Essentials Certification, the government-backed accreditation for companies looking to protect against cyber threats.

China

Yirendai (NYSE:YRD) Issues Earnings Results (Mayfield Recorder), Rated: AAA

Yirendai posted its earnings results on Tuesday, September 3rd. The technology company reported $0.24 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.48 by ($0.24), Morningstar.com reports. Yirendai had a return on equity of 32.93% and a net margin of 15.30%. The firm had revenue of $322.89 million for the quarter.

LexinFintech Secures $ 300 Million Private Placement of Convertible Notes with PAG (Crowdfund Insider), Rated: A

Chinese consumer financing platform LexinFintech announced on Wednesday it has entered into a convertible note purchase agreement with PAG issue and sell convertible notes in an aggregate principal amount of $300 million through a private placement. 

IceKredit Raises $ 47M in Pre-Series C Funding (FINSMES), Rated: A

IceKredit, Inc., a Los Angeles, CA and China-based credit risk and credit management company, raised $47m in pre-Series C funding.

These Chinese Online Lenders Are Not For the Weak at Heart (GuruFocus), Rated: A

Beijing-based online lender Yirendai (NYSE:YRD) and Shanghai-based Paipaidai, or PPDAI Group (NYSE:PPDF), shares have been pummeled down to their lowest levels in the past year. Yet aside from receiving credit lines from large Chinese institutions amid China’s crackdown on fraud lending in their industry, both lenders appear to remain in a healthy state.

PPDAI — the older and bigger of the two lenders — came out strong in its recent quarter, beating earnings expectations. The $1.2 billion online lender reported it had 29% year-over-year growth in loan origination volume to $3 billion, compared to just 1.6% growth a year earlier.

Hexindai Announces Support For Regulators’ Decision to Include P2P Platforms in Central Bank’s Credit System (Crowdfund Insider), Rated: B

Chinese peer-to-peer lending platform Hexindai (NASDAQ: HX) announced on Tuesday its support for the decision by industry regulators to include the country’s P2P platforms in the central bank’s credit system. The online lender reported that it believes this as a positive move for the P2P industry.

Sequoia-Backed P2P Lender Huobank Collapses As Beijing Mops Up Online Finance Risks (China Money Network), Rated: A

European Union

Banks raise concerns ahead of ECB meeting (Irish Examiner), Rated: A

The president of Germany’s powerful savings banks association, community lenders that dominate the country’s shopping streets, joined Dutch bank ING yesterday in criticising the ECB’s loose monetary policy.

Its 50 million customers have increased their savings by almost 5% since last year to €965bn which is roughly the size of the Dutch economy. With lending amounting to about €860bn, the banks are left with a chunky unused surplus.

Fintech Europe Selects Eight Startups for its Fourth Batch (Yahoo! Finance), Rated: B

Fintech Europe, Plug and Play’s fintech-focused innovation platform based out of Frankfurt, Germany, announced today the eight startups selected for its fourth batch. The platform has grown its partner base to 11 Financial Institutions since its inception in May 2018. Together with Deutsche Bank, TechQuartier, BNP Paribas, Nets Group, UniCredit, Aareal Bank, Abanca, Danske Bank, DZ Bank, Elo, and Finablr, it runs two 12-week innovation programs a year.

CashDirector 

CashDirector SA is a technology company providing SMEs and banks with a Digital CFO integrated with on-line banking, helping with SMEs manage cash flow and accessing financing.

Credit Kudos

Credit Kudos is a credit bureau that uses financial behaviour to measure creditworthiness.

International

Technology Is Banks’ New Battleground (WSJ), Rated: AAA

European banks are spending vast sums on technology—but it may not be enough to defend against the incursions of bigger, richer American rivals.

U.S. lenders already dominate investment banking in Europe. The big risk for the continent’s banks is that slicker tech could give their American rivals a platform to make gains in lending to companies—the Europeans’ traditional stronghold.

This year, Europe’s banks plan to make technology investments worth in aggregate $77 billion, according to consulting firm Celent. That compares with $105 billion for their U.S. rivals. Faster, more seamless trading systems have long been a priority, but tech spending has shifted across business lines and from back office to front office. It can cover everything from maintaining decades-old systems to cutting-edge artificial intelligence.

Source: Celent

Wirecard Teams Up With Credibly to Digitalize Funding Disbursements (Crowdfund Insider), Rated: A

Germany-based global provider of digital payments and commerce solutions Wirecard announced on Wednesday it is partnering with U.S. business funding fintech Credibly to digitalize funding disbursement. Wirecard claims to be one of the largest issuers of payout cards in the U.S. and is now offering fully digitalize solutions.

PwC to AM industry: disrupt yourself or face extinction (City Wire Selector), Rated: A

The European financial services industry is facing an ‘Amazonisation’ moment, in which those offering consumer-first solutions underpinned by sustainable finance will survive and the others will cease to compete.

That is the headline finding of 52-page report co-authored by PwC Luxembourg and Luxembourg for Finance, which investigated underlying industry trends and indicated that the European market is losing ground on its US and Asian peers when it comes to innovation and assets.

State of the Chain: Five Winning Use Cases for Blockchain in 2019 (U.today), Rated: A

Predictably it was Binance that stole the limelight, with the surprise launch of its eponymous lending platform, which was unveiled on Monday, August 26, and then proceeded to fill its initial lending quota of 200,000 BNB and 10 million USDT in a matter of seconds two days later.

Dharma and Compound have announced new products, while Coinbase has hinted that this will be the next vertical it expands into.

Lenders can enjoy annualized interest of up to 15%, which is significantly better than the negative rates they are currently offered on fiat savings and on negatively yielding government bonds.

Australia

Hopes fintech inquiry will ‘validate’ bank competitors (The Sydney Morning Herald), Rated: A

On Wednesday New South Wales senator Andrew Bragg successfully moved to secure a senate committee inquiry into the fintech and regulatory technology spaces, paving the way for a year-long review into how competitive Australia is in these sectors.

Chief executive of small business lender Lumi, Yanir Yakutiel, said the inquiry should focus on expanding the regulatory sandbox program, which is designed to help early stage fintechs test their ideas.

India

Five Ways Artificial Intelligence Is Instigating Paradigm Shift In Online Lending Space (Via.news), Rated: AAA

Currently, digital lending accounts for around 15% to 20% of the total lending market and could surpass 50% in coming years.

Asia

Chinese P2P Lending Companies Ventures to Vietnam (LearnBonds), Rated: AAA

This business model boomed in China, but following a regulatory clampdown by authorities on risky financial practices, the number of fintech and peer-to-peer (P2P) lending platforms in the country dropped from about 1,900 a year ago to just 900 in May.

It now appears that some of these Chinese P2P lending companies have not necessarily disappeared. They simple ventured into new markets and in particular Vietnam.

According to the State Bank of Vietnam (SBV), there were 40 peer-to-peer lending companies operating in Vietnam as of March. Of these, 10 companies are from China.

MENA

The opportunity of peer-to-peer lending in Lebanon (Executive Magazine), Rated: AAA

Through conversations with Lebanese entrepreneurs, business owners, bankers, and politicians, I have had a number of eye-opening discussions into the challenges and opportunities faced by Lebanon’s SME ecosystem. Given the country’s long-standing tradition in financial services and its large banking sector, I believe fintech—with solutions such as peer-to-peer lending, machine learning to personalize insurance solutions, and the use of artificial intelligence for wealth management—stands as a serious contender to unlock the funding challenges faced by Lebanon’s SMEs.

Latin America

SoftBank in talks to invest in Latam venture capital funds (Reuters), Rated: AAA

Japan’s SoftBank Group Corp (9984.T) is in talks with venture capital firms in Latin America to invest hundreds of millions of dollars in their funds, a move likely to speed up spending of a $5 billion regional venture capital fund, three sources with knowledge of the matter said.

So far, SoftBank has only announced direct investments using the fund’s resources, injecting capital into Colombian delivery app Rappi, Brazilian lender Creditas, gym membership app Gympass and Mexican payments firm Clip, for instance.

Proptech Flat raises US$ 4.5 million pre-seed round led by ALLVP (Contxto), Rated: A

Contxto – Not only is the Mexican real estate industry huge but also outdated with many inefficient processes. Counteracting this, a new Mexican startup, Flat, recently raised US$4.5 million in one of Mexico’s largest pre-seed rounds ever.

Africa

Nigerian online-only bank startup Kuda raises $ 1.6M (TechCrunch), Rated: AAA

Nigerian fintech startup Kuda — a digital-only retail bank — has raised $1.6 million in pre-seed funding.

Canada

Peer to Peer Lender Lending Loop Tops $ 50 Million in Loans (Crowdfund Insider), Rated: AAA

Canada’s first peer to peer lending platform for SMEs, Lending Loop, has topped CDN $50 million in loans, according to a post by Brendon Vlaar, co-founder and CTO of the company. Lending Loop provides investment opportunities in debt-based securities to both accredited and non-accredited investors.

PayBright Raises $ 34M in Growth Equity Financing (FINSMES), Rated: A

PayBright, a Toronto, Canada-based fintech company, received a $34m equity investment from goeasy.

Authors:

George Popescu
Allen Taylor

The post Thursday September 12 2019, Weekly News Digest appeared first on Lending Times.

Thursday July 25 2019, Weekly News Digest

marketplace lending

News Comments Today’s main news: Equifax to pay up to $700M in data breach settlement. MoneyLion raises $160M. Monzo, Starling win top rankings among banking apps. Harmoney makes maiden profit. Today’s main analysis: Peter Renton’s quarterly MPL results – Q1 2019 (A MUST-READ). Today’s thought-provoking articles: Metro areas with the biggest jump in private million-dollar […]

The post Thursday July 25 2019, Weekly News Digest appeared first on Lending Times.

marketplace lending

News Comments

United States

United Kingdom

Internationnal

European Union

Other

News Summary

United States

Equifax will pay up to $ 700 million to settle data breach lawsuits (CBS News), Rated: AAA

Equifax will pay up to $700 million to settle with the Federal Trade Commission and others over the massive 2017 data breach that exposed the private data of nearly 150 million people. Consumers are eligible to claim as much as $20,000 in cash payments, the FTC said.

The proposed settlement with the Consumer Financial Protection Bureau, if approved by the federal district court Northern District of Georgia, will provide up to $425 million in monetary relief to consumers, a $100 million civil money penalty, and other relief.

MoneyLion Announces $ 160M in Funding  (Finanzen), Rated: AAA

MoneyLion today announced $160 million in funding — $60 million in previously unannounced financing and a $100 million Series C funding round.

The round was co-led by Edison Partners and Greenspring Associates and included strategic investment from Capital One, a diversified bank that offers a broad array of financial products and services to over 45 million consumers. The round also included investment from MetaBank and FinTech Collective. Upon completion of the Series C round, the company will have raised over $200 million in equity financing.

OnDeck Taps Bank Veteran to Lead ODX Sales and Strategy (OnDeck), Rated: A

OnDeck today announced the appointment of Lonnie Hayes as the Head of Sales and Strategy for ODX, a wholly owned subsidiary of OnDeck that assists banks with streamlining and digitizing small business credit origination.

My Quarterly Marketplace Lending Results – Q1 2019 (Lend Academy), Rated: AAA

My overall returns for the twelve months ending March 31, 2019 was 6.09%. This is up from 5.35% that I reported in Q4 and 4.77% in Q3. My original six LendingClub and Prosper accounts had another full percentage point jump. Last quarter I reported the returns on those six accounts had jumped from 3.19% in Q3 to 4.16% in Q4. We see this quarter they are at 5.18%. This is quite a remarkable turnaround and while I still think 5% is not a high enough return for unsecured consumer lending, it is certainly moving in the right direction.

Source: Lend Academy

Metros With the Biggest Jump in Private Million-Dollar Businesses (LendingTree), Rated: AAA

  • Austin, Texas topped the list with a 15.1% increase in privately held companies surpassing $1 million in revenue between 2014 and 2016. The number of Austin firms in that category rose by 1,857.
  • Jacksonville, Fla. and Riverside, Calif. came in a nose behind, with an increase just under 15%. The number of firms rose by 963 and 2,359, respectively.
  • Buffalo, N.Y. was the only metro on our list to lose businesses with seven figure revenues: The city in upstate New York was down by four such firms, a reduction of 0.1%.
  • Baltimore and Oklahoma City made the smallest gains, at just over 1%, or 187 and 117 businesses, respectively.
  • Los Angeles had the largest number of firms to pass the million-dollar mark – 6,664 – followed closely by New York at 6,568. Those large numbers represent increases of almost 8% and 5.2%, respectively, leaving them in the 16th and 29th spots on the list.

Lendio Marries SMB Loan Management With Accounting (PYMNTS), Rated: A

Small business loan marketplace Lendio has announced the acquisition of bookkeeping software provider Billy.

press release Tuesday (July 23) said Lendio is rebranding Billy to Sunrise, a small business bookkeeping solution that integrates accounting, cash flow management, loan management and credit data into a single solution.

How AI can advance the cause of fair lending (American Banker), Rated: A

The rightful prohibition of ZIP codes in underwriting is one example of how financial regulators ensure fairness by protecting against discriminatory lending. But the increasing reliance on artificial intelligence and machine learning, or “automated insights” as I prefer to call it, has made testing a wide variety of inputs for specific outcomes a sophisticated, scientific process carried out by companies. Lawmakers should consider these varied new data options when they evaluate machine learning during a hearing later this week.

Aura Closes $ 28.7 Million Expansion Loan from Angel Island Capital (Business Wire), Rated: A

Aura, a mission-driven financial technology company that offers affordable loans to hard-working families, today announced it has closed $28.7 million in residual debt financing from Angel Island Capital (“AIC”) to help the company grow and keep pace with the demand for its loans.

Drip Capital raises $ 25 mn from Accel, Sequoia (IBS Intelligence), Rated:
A

Drip Capital, a technology-enabled cross border trade financier, has raised $25 million in Series B funding from investors led by Accel Partners. Existing investors Sequoia Capital, Wing VC and Y Combinator also participated in the round.

More options to save on student loans at Credible (Credible), Rated: A

With Ascent and MEFA on board, Credible’s student loan marketplace now provides access to eight lenders, including traditional banks, online lenders, and state student loan authorities.

This is how fintech solutions are speeding up mortgage closing times (Housingwire), Rated: A

Financial technology is transforming the mortgage industry by making the origination process more convenient and secure for borrowers.

In 2018, BOK began leveraging Roostify’s digital platform to provide its customers a secure way to upload, send and receive loan documents remotely.

Financial services newcomer Cross River blurs line between fintech, banking (ROI), Rated: A

Few would expect it was a good idea to start a bank right as the recession raged a decade ago.

Fewer still would say any bankers eager to do that, as Cross River Bank did, would go on to become one of the state’s most impressive growth stories.

Fitch Ratings: Questions Increase Around Fringe Players in U.S. ABS (ABL Advisor), Rated: A

While U.S. core ABS performance remains strong due largely to low unemployment, many investors are zeroing in their questions on some of the sector’s non-core assets, according to Fitch Ratings in its 2019 Virtual Investor Video Series for structured finance.

Should fintechs be regulated like banks? (BAI.org), Rated: A

According to the U.S. Treasury report, more than 3,330 new technology-based financial services industry were founded from 2010 to the third quarter of 2017, creating industry investment worth more than $22 billion: a thirteen-fold increase since 2010. Lending by these firms now makes up more than 36 percent of all U.S. personal loans, up from less than 1 percent in 2010.

Examples of Financial Services Business Ideas (Entrepreneur), Rated: A

If you’re financially savvy, you can start your own peer-to-peer lending business. This is when you give small amounts of money to a business or private person, while collecting interest on the returns. Before you start lending out money, here is a successful business you can learn some strategies from:

Business Name: RainFin

Website: 

Established date: 2012

About the business:

RainFin offers an online marketplace that enables borrowers to access affordable debt capital and investors to access new asset classes. RainFin is a registered credit provider and aims to remove traditional costs and barriers for borrowers and investors through innovative technology, designed to create a transparent and fair marketplace.

NASAA Warning on Initial Loan Procurements: “Crowdfunding Meets Blockchain” (Crowdfund Insider), Rated: A

NASAA describes initial loan procurements as a crowdfunding method that allows borrowers and creditors to enter into loan agreements through legally binding smart contracts stored on the blockchain.

To quote NASAA:

“Companies using blockchain technology need to raise capital just like any other company. One way these companies accomplish that is through initial coin offerings (ICOs), which require the new company to create tokens that can be sold to investors and used for the development of new projects. An alternative fundraising method is catching the interest of investors. Initial loan procurements allow companies to raise capital without the added burden of creating tokens.”

Examples of Online Business Ideas (Entrepreneur), Rated: A

Online real estate investing platforms now exist, and they enable anyone to invest a percentage into a property instead of the whole amount. If you have the right skills, you can start your own online business.

Before you launch your business, learn a few strategies from this example of an online business:

Business Name: Real Estate Crowdfunding

Website: 

About the business:

Real Estate Crowdfunding offers its clients lower fees, the option to invest in a development nearby and transparency, which enables their customers to find out more about projects before investing.

Mynd Property Management Acquires HomeUnion, a Real Estate Investing Portal (Yahoo! Finance), Rated: B

Mynd Property Management, a modern property management company powered by on-the-ground experts and technology, has acquired HomeUnion, a company that enables investing in small residential properties in 20 U.S. markets. The acquisition comes on the heels of Mynd’s recent merger with RentVest, which doubled Mynd’s property management footprint to more than 8,000 small residential rental units in a total of 16 markets.

Pennsylvania Attorney General Josh Shapiro announced a settlement with Think Finance, a payday lender that has targeted nearly 80,000 Pennsylvanians.
United Kingdom

Monzo and Starling took first and second place in a ranking of banking apps (Business Insider), Rated: AAA

UK-based Monzo has taken the top spot in a ranking of bank apps by MoneySavingExpert.com, beating out both peers and incumbents, The Irish News reports. Seventy-eight percent of the consumers surveyed said the neobank’s app had plenty of features and strong usability.

Competing neobank Starling picked up second place, with 70% of consumers approving of its app’s features and usability. The rest of the top five was rounded out by Barclays (57%), Lloyds Bank (49%), and NatWest (47%).

Source: Business Insider

Lord Myners heaps further pressure on FCA over Lendy failings (P2P Finance News), Rated: A

FORMER City minister Lord Myners is keeping the pressure on the Financial Conduct Authority over its decision to authorise now-collapsed peer-to-peer lending platform Lendy.

A series of written parliamentary questions show Lord Myners is seeking answers on whether better regulation is needed and the creditor status of Lendy investors.

Lessons from Lendy (Brismo), Rated: A

– History of troubled lender shows the importance of independent verification of credit performance
– This is not a function the regulator can reasonably be expected to undertake
– Marketplace lending will fail to access deep pools of funding until these lessons are learned

Innovate Finance expands national network with three regions added (ComputerWeekly), Rated: A

Last week Innovate Finance announced the addition of Fintech Northern Ireland, Fintech Wales and Fintech West to the national network.

Growth Street pledges £75m overdraft funding for East Anglia (P2P Finance News), Rated: A

GROWTH Street has pledged to commit £75m of overdraft-style financing to small- and medium-sized enterprises (SMEs) in East Anglia.

The peer-to-peer business lender, which provides a revolving credit facility for borrowers, said it is already 10 per cent towards its target having lent £7.5m in the region.

Is Short-Term Financing Right For Your Business? (Nav), Rated: A

If you need a short-term capital boost, there are a number of options available to you. Here are a few short-term financing examples that you may want to consider.

Superdry collaborating with Klarna (Fibre2Fashion), Rated: B

British contemporary fashion brand Superdry and leading payments provider Klarna have entered into a collaboration, enabled by Adyen. Superdry customers can now use the Pay later or Pay in 3 in the UK, and later this month will be able to Pay in 4 in the US. This will make everything from jackets to jeans more accessible to Superdry customers globally.

OakNorth completes £11.4m loan to Ocea for major new residential development in Redhill, Surrey (Fintech Finance), Rated: B

LendInvest boosts business development team with new hires (P2P Finance News), Rated: B

Nigel Robbins has joined LendInvest from specialist mortgage lender Magellan to source deals across the South West of England.

European Union

In-house marketing at Klarna: Interview with Elin Svahn (BannerFlow), Rated: AAA

In-house marketing is transforming the industry. It is a movement rising in popularity year on year, with over 91% of European decision-makers moving operations in-house.

How do you structure your in-house marketing at Klarna?

When I started, Klarna was in the process of a complete restructuring of their in-house operations. The brand was divided into many separate domains, with different teams having different priorities, and ‘issues’ to solve.

Today, we have four marketing domains: Branding, Merchant Aquisition and Growth, Communications and PR, Consumer Growth and Loyalty. Within each of these domains, we have different competencies. So for example, within the Branding domain, we have a mix of marketers, designers, and copywriters.

AdviceRobo has launched an open banking capability for lenders (Business Insider), Rated: A

AdviceRobo focuses on offering credit risk management solutions, and its latest API product enables lenders to categorize transactional data and predict defaults to make sound credit decisions.

The Netherlands-based fintech’s new API, dubbed CatRobo, is powered by PSD2 — a regulation that came into effect in January 2018 forcing banks to open up their data to third-parties.

Here’s what it means: The API will help lenders make better use of their data, better compete with alt lenders, and lend out more cash to underserved consumers.

Source: Business Insider
International

Justin Sun denied reports that he had postponed a charity lunch with the investing guru after attracting regulatory scrutiny. In China, where executives sometimes vanish, such reports are not unusual.

Embedded finance, or why fintech mega VC rounds have become so common (TechCrunch), Rated: A

This morning, it was personalized banking app MoneyLion,  which raised $100 million at a near unicorn valuation. Last week, it was N26, which raised another $170 million on top of its $300 million round earlier this yearBrex raised another $100 million last month on top of its $125 million Series C from late last year. Meanwhile, companies like payments platform Stripesavings and investment platform Raisintraveler lender Uplift, mortgage backers Blend and Better, and savings depositor Acorns have also raised massive new rounds this year.

Cryptocurrency loan site YouHodler exposed unencrypted user credit cards and transactions (TechCrunch), Rated: A

A cryptocurrency loan startup exposed reams of customer credit cards and user transactions for almost a month — because it forgot to protect the server with a password.

Security researchers Noam Rotem and Ran Locar found the database belonging to YouHodler, a lending platform designed for cryptocurrency, which claims to have processed $10 million in loans to more than 3,500 customers.

The database contained 86 million lines of daily updating records of the lending platform, containing streams of logs and computer commands based on users’ interactions on the front-end website. That also included sensitive information such as every time a transaction or a loan went through.

Source: TechCrunch

Crypto Lending Market ‘Continues to Experience Sustained Growth’ (CryptoGlobe), Rated: A

In the Q2 2019 edition of its quarterly ‘Digital Asset Lending Snapshot’ report, Genesis Capital made several interesting observations:

  • At the end of Q2 2019, the total value of “active loans outstanding” was $452 million versus $181 million in Q1 2019, i.e. a quarter-over-quarter (QoQ) increase of 149%.
  • Originations went up 48% QoQ, which means that Genesis Capital has just experienced its fifth straight quarter of “strong growth.”
  • Genesis Capital has originated over $2.3 billion in “loans and borrows” since the business was launched in March 2018.
Source: CryptoGlobe

What Is DeFi? (Bitcoin Market Journal), Rated: A

DeFi platforms leverage smart contract technology to provide decentralized financial solutions, such as digital currency-based peer-to-peer lending, dollar-pegged stablecoins, or investable tokenized asset baskets. The existing DeFi market is still at an early stage so we can expect more decentralized financial services that operate on a permissionless, transparent, and efficient manner on the blockchain to materialize soon.

Decentralised Finance in a centralised world (Business Times), Rated: A

THE growth of global financial markets has created enormous wealth, especially benefitting a few players who are closely connected to the world’s main financial centres.

The centralised nature of the industry has enabled these powerful intermediaries to position themselves in the middle of the system and thus extract rents from other participants.

This oligopolistic structure has stifled competition and decreased efficiency, while increasing the cost of financial services.

Time for a rethink? (Securities Lending Times), Rated: A

David Lewis of FIS discusses the dip in the securities finance industry’s global revenues and explains the factors changing the dynamics of the industry

Finacity Facilitates the Addition of UK Entities to USD $ 115 Million Receivables Securitization (Virtual Strategy Magazine), Rated: A

Finacity Corporation (“Finacity”), a member of the Greensill family of companies, and DZ Bank AG Deutsche Zentral-Genossenschaftsbank (“DZ Bank”) announces the addition of Volt Information Sciences, Inc. (“Volt”) United Kingdom subsidiaries as sellers of receivables to Volt’s existing trade receivables securitization. The 2-year facility supported by Volt’s US and UK receivables allows for up to USD $115 million in funding with a $35 million sublimit for letters of credit.

Australia

Harmoney makes maiden profit (MSN), Rated: AAA

The company, which is partly owned by Heartland Bank (17 percent share) and Trade Me (15 percent), made a net profit of $7.2 million in the year ended in March, compared with a loss of $1.8m the year earlier.

Its revenue was up 25 percent to $32.9m, with net interest income of $728,000 – nearly 10 times more than the year before.

Why bank hybrids are far too expensive (Cuffelinks), Rated: AAA

Yield chasing has spilled into nearly every asset class, with Australian listed bank hybrids no exception. The current average margin of bank bills at +2.40% is close to the lowest level for at least seven years.

Source: Cuffelinks

Alternatives to bank hybrids

2. Marketplace lending

Institutional and retail investors can both access marketplace lending (also known as peer-to-peer lending) via a growing number of online platforms. There’s a mixture of residential and commercial property secured loans available, as well as unsecured business and personal loans. For more conservative investors, loans backed by residential property with an LVR of 60% or less typically yield 5-7%. Commercial property loans, business loans and personal loans usually come with higher yields. Investors in riskier loans should be expecting to lose a portion of their total return when some of the borrowers default and should set their return expectations accordingly.

India

India’s FinTech Cube Wealth expands asset management biz in UK, Hong Kong (IBS Intelligence), Rated: AAA

Cube Wealth, an Indian FinTech start-up for financial planning and wealth management, is entering the global markets in this quarter (July-September) of 2019. The plan is to set up a tech-enabled asset management company in the UK, Hong Kong and Switzerland to start with so that customers in those markets can get an access to some leading fund managers in the emerging markets, including India.

Southeast Asia

Hedge Funds Help Fuel Southeast Asia Consumer Lending Boom (Bloomberg), Rated: AAA

A small but rising number of hedge funds are being established to help finance the boom in online and peer-to-peer lending across Southeast Asia.

Pilgrim Asia Consumer Finance Fund, founded by Brian Yonghui Tan and Paul Sheng, aims to raise up to $20 million in its first year and generate a return for investors of around 8% per annum. It will charge a 2% management fee.

OJK Condemns Fintech Lender over Indecent Post of Debtor (Tempo), Rated: A

The Financial Services Authority (OJK) condemns fintech lender Incash for posting a photo of one of its debtors online, with captions saying she was willing to have sex for money so she could pay her debts to the online lender.

Authors:

George Popescu
Allen Taylor

The post Thursday July 25 2019, Weekly News Digest appeared first on Lending Times.

Thursday March 28 2019, Weekly News Digest

structured debt

News Comments Today’s main news: Klarna launches open banking platform. SoFi re-engineers home loans. Apple’s new credit card. OakNorth secures guarantee of $133M. Qupital raises $15M to bumrush China. Today’s main analysis: Arbuthnot Banking Group audited final results for 2018. Today’s thought-provoking articles: U.S. yield curve, new fintech products. Cities with most overleveraged mortgage debtors. Household debt. Expanding access to credit […]

The post Thursday March 28 2019, Weekly News Digest appeared first on Lending Times.

structured debt

News Comments

United States

United Kingdom

International

Other

News Summary

United States

SoFi Refreshes Home Loans, Making Home Buying Painless and Paperless (PR Newswire), Rated: AAA

Today, SoFi announced the refresh of its mortgage offering as SoFi Home Loans, complete with a reengineered process that helps people buy or refinance a home with an online application, no hidden fees, or prepayment penalties.

SoFi Home Loans offer competitive rates including affordable down payments, with as little as 10% down on loans up to $3MM, with no hidden fees or prepayment penalties. SoFi allows applicants to choose between four different loan terms and fixed or adjustable rates. Those interested in refinancing can choose between traditional mortgage refinancing, cash-out refinancing, and student loan cash-out refinancing. If SoFi Home Loans isn’t able to handle a loan request, SoFi provides an easy option to digitally transfer member information to its affiliate partner who may be able to help.

Apple’s new credit card keeps advisors guessing (Financial Planning), Rated: AAA

The Apple credit card is the latest offering by a Silicon Valley tech giant looking for a ready-made avenue into the financial services’ sector. While the new card mostly benefits loyal users of Apple products, it’s also an unwelcome reminder of an ever present question on the minds of wealth managers: Will the FAANG companies like Facebook, Amazon, Apple, Netflix and Alphabet continue their land grab of services historically provided by the financial services industry — and at what cost to traditional RIAs?

Ominously, a majority of investors considering switching financial services providers said they would consider banking with a tech company like Facebook, Google or Amazon if they could, according to a recent survey by Novantis.

US Yield Curve Inverts; New Products from FinTechs (PeerIQ), Rated: AAA

For the first time in 3,000 days, and with much anticipation, the 3-month and 10-year treasury curve inverted. The median time to a recession after this curve inverts is between 1 to 1.5 years. However, unprecedented interventions such as QE (and higher central bank holdings globally) make it difficult to draw hard and fast conclusions. Market participants are pricing in a 41% probability of an interest rate cut in the September meeting.

Source: PeerIQ; Bianco Research

New Products from FinTechs

FinTech innovation continues with new products from PeerStreet and Figure. PeerStreet has launched a 30-year loan to enable private investors to buy rental properties. Residential for Rent loans are targeted towards rental home operators. The rental market in the US has grown exponentially post-crisis people struggle to buy homes. The number of rental homes has grown from 36 Mn in 2006 to 43 Mn in 2017.

Source: FactTank, PeerIQ

2019’s Cities with the Most Overleveraged Mortgage Debtors (WalletHub), Rated: AAA

Buying a home represents an important milestone for most consumers. But for those who dive in to the deep end of real estate without a financial safety net, the decision could lead to buyer’s remorse in the long run. Mortgage rates are slowly falling after reaching their latest peak in November 2018, and are close to the lowest they’ve been in the past 3 decades. This makes 2019 a tempting time to buy a home. Some industry experts believe 2019 is friendlier toward buyers than sellers because of the lower rates.

Source: WalletHub

Household Debt – Mixed Signals (DBRS), Rated: AAA

The most recent Quarterly Report on Household Debt and Credit issued by the Federal Reserve Bank of New York (the Fed) and Equifax Inc. (Equifax) showed that household debt rose for the 18th consecutive period during Q4 2018 to $13.5 trillion, $869 billion higher than the peak reached in 2008. This represented the third-smallest increase (0.24%) over the 18 consecutive periods of growth, partly because of decreasing mortgage loan debt during Q4 2018 to $9.2 trillion from $9.4 trillion at the end of Q3 2018 and flat levels of auto loan debt at $1.3 trillion for both Q3 and Q4 2018.

Expanding Access to Credit in the Land of New “Halves” (Lend Academy), Rated: AAA

Credit is one of the largest, most powerful, lucrative and important industries in the world. It also is one of the best tools for wealth creation – home ownership, small business ownership and growth, and, leveraged investing.  This is readily accessible for prime consumers with more options now than ever before. But for the other half of the country that is non-prime, options are still limited and in many cases non-existent.

Early pioneers of securitizations like SoFi, the scaling of marketplace lending like Lending ClubProsper and Best Egg, and new distribution models like Greensky and Affirm have contributed towards increasing comfort of these “new asset classes” that were mostly locked up in bank’s balance sheets.

There are a lot of new “halves” in today’s world.

Amount Delivers Seamless Digital and Mobile Lending Platform to TD Bank (PR Newswire), Rated: A

Amount, a technology provider for financial institutions, today announced a strategic partnership with TD Bank. TD Bank, a top ten U.S. bank, is leveraging Amount’s platform to power the bank’s TD Fit Loan, which launched in August 2018. This initial offering allows consumers to consolidate higher-interest debt, while helping TD meet growing consumer demand for a seamless digital and mobile lending experience. Through this partnership, TD and Amount will roll out additional offerings, as well as standalone tools addressing fraud, verifications and decisioning.

5 Freebies With Your Student Loans (NerdWallet), Rated: A

1. Career coaching

Who offers it: SoFi.

SoFi members have received over 15,000 coaching sessions to date.

4. Referral bonuses

Who offers it: Multiple refinance lenders.

  • Education Loan Finance offers $400 for each successful referral, as well as $100 for the loan applicant.
  • Laurel Road lets you split its $400 bonus however you and your referral see fit.
  • Splash Financial provides $250 apiece for both parties.

5. Charitable work

Who offers it: CommonBond.

If you prefer freebies that help others, CommonBond has a one-for-one social impact mission. For each loan the lender issues, it donates an amount based on a formula that funds a child’s education in a developing country through the nonprofit Pencils of Promise. Those donations have totaled over $1 million to date.

CNote Launches Wisdom Fund to Close Lending Gap for Women (PR Newswire), Rated: A

Women are the fastest-growing group of entrepreneurs in the U.S. Yet less than 5 percent of small business lending—only $1 in $23—goes to women. CNote aims to fix this disparity with the Wisdom Fund, a new impact investment opportunity launching today.

Investors in the Wisdom Fund will earn an estimated 4 percent annual return, over a 60-month term, on a loan portfolio that’s diversified across established CDFIs. Email wisdomfund@mycnote.com to learn how you can help fund more women-owned businesses today.

Women seeking loans should contact a participating CDFI. Partners in the Wisdom Fund’s first phase include:

  • Carolina Small Business Development Fund, which provides small business loans and financial training to startups, existing businesses and community organizations in North Carolina.
  • LiftFund, a Texas-based organization that empowers underserved entrepreneurs with capital and support services in 13 states.
  • TruFund, a national nonprofit organization that provides affordable capital to small businesses and nonprofits in AlabamaLouisiana and New York.

Study Finds 70% of Americans Would Share More Personal Data for Fairer Credit Decisions (PR Newswire), Rated: A

More than half (54%) of loan applicants don’t even have a clear understanding of why they receive the interest rate they do from a lender, while a majority (70%) say it is difficult finding lenders who will look at them as something other than their credit score.

  • 7 in 10 American adults (71%) wish there was another way to prove themselves to credit lenders outside of the standard credit score.
    • Hispanics (82%) and African Americans (81%) are more likely than Whites (67%) to want lenders to look at additional factors in lending decisions.
  • 77% believe more data is better when evaluating potential borrowers’ credit.
  • 71% would be willing to share more personal data with a lender if it resulted in a fairer credit decision. The motivation is even higher among middle-class earners. 79% of people making $50,000 to $75,000 would share more personal data to prove their creditworthiness, compared to 66% of people making over $100,000.
  • 84% think their bank should use modern technology to assess their creditworthiness.
    • Specifically, about half of loan applicants (53%) would like their ideal lender to use machine learning to make fairer credit decisions.
    • More than 2 in 5 (42%) would like their ideal lender to use machine learning to make the credit for homeownership more accessible to everyone.
    • Surprisingly, older generations want newer technology even more. Baby boomers and seniors (83% and 87%, respectively) wanted their banks to use new technologies to score them, compared to 79% for Millennials and Gen Zers.

Survey: Alternative Data Sharing (Urjanet), Rated: B

Urjanet surveyed more than 300 U.S.-based adults to assess consumer sentiment around alternative data sharing in the lending process. Key findings include:

  • A majority of consumers have multiple alternative sources of payment history
  • Alternative data sharing represents a huge opportunity for lenders to drive financial inclusion
  • Most consumers (59%) are willing to share utility and telecom data to boost chances of approval

SigFig launches platform to help retail banks sell financial products (Investment News), Rated: A

SigFig, the financial technology firm that developed digital advice platforms for several large financial institutions, wants to help banks automate more than investment management.

Technology to Play Crucial Role in Preparing ABS Professionals for Next Economic Cycle (ABL Advisor), Rated: A

An overwhelming majority (90 percent) of asset-backed securities (ABS) professionals feel that adopting new technologies will be important to preparing their businesses for the next economic cycle, according to Capital One’s sixth annual survey at SFIG Vegas 2019.

The survey also revealed that ABS professionals believe the biggest risks to their businesses are uncertainty around regulatory risk and increased credit risk, both at 29 percent. However, despite regulatory risk being a top concern, the industry’s apprehension has nearly cut in half over the last two years. In 2018, 48 percent noted regulations were the biggest risk to their businesses while 58 percent thought so in 2017. Additional top-of-mind concerns for 2019 include increases in interest rates (18 percent) and increased competition (17 percent).

TrustToken’s Stablecoin Now Available On Cred’s Crypto Earning Platform (BlockTribune), Rated: A

Asset tokenization platform TrustToken has announced a strategic partnership with crypto lending platform Cred.

Founded by former PayPal financial technology veterans, Cred is a decentralized global lending and borrowing platform that allows stablecoin issuers, exchanges and wallets to provide valuable earn and lending services worldwide.

Fintech in Brief: Update on Legal Challenges to OCC Fintech Charter (JDSupra), Rated: A

On March 19, 2019, the New York State Department of Financial Services (“NYDFS”) filed a brief in opposition to the Office of the Comptroller of the Currency’s (“OCC”) motion to dismiss the NYDFS’ lawsuit challenging the OCC’s statutory authority to grant special purpose national bank charters to Fintechs (the “Fintech Charter”). The brief in opposition signals that the NYDFS will continue its opposition to the Fintech Charter under the leadership of Acting Superintendent Linda Lacewell, who replaced outgoing Superintendent Mari Vullo in February. In opposing the OCC’s motion to dismiss, the NYDFS argued that it has standing to challenge the Fintech Charter, the matter is ripe for judicial review, and its claims are not time-barred. The NYDFS also argued that the OCC’s interpretation of the “business of banking” is not entitled to Chevron deference and “should be invalidated in its entirety.”

Mortech Partners with Roostify for Enhanced Online Mortgage Experience (Business Wire), Rated: A

Today, Mortech, a Zillow Group business providing mortgage technology solutions for mortgage lenders and secondary market teams, announced a new partnership between Mortech’s product and pricing engine (PPE) and Roostify, a digital lending platform that gives customers more control of their home buying process while allowing loan officers to utilize the latest technology to more easily process loans. The strategic partnership will integrate two proven mortgage technology solutions to improve the digital mortgage experience for many industry-leading lenders.

Finastra brings community banking services outside the branch with the launch of Fusion Digital Front Office (Finastra), Rated: A

Finastra has launched Fusion Digital Front Office, an innovative tablet-based banking platform that enables community banks and credit unions to take services directly to the consumer, outside of the branch. The solution provides a simple gateway to manage account origination, sales and service, and transaction processing from any remote location.

Huobi’s US Arm Launches Institutional Group for OTC Crypto Trading (CoinDesk), Rated: A

“We’re entering the market now with a real institutional offering, we’re definitely going to be offering some new products and services,” such as token lending and over-the-counter (OTC) trading, in the coming months, he added.

Elevate Named as a Finalist for LendIt Fintech 2019’s Financial Inclusion Award (AP News), Rated: B

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, has been named as one of six finalists in the “Excellence in Financial Inclusion” category for the LendIt Fintech Industry Awards 2019. This award is given to the company that has made the biggest impact in expanding access to financial services in new and innovative ways.

J.D. Power ranks Regions among top alternative lenders for personal loans (Biz Journals), Rated: B

Birmingham’s largest bank has ranked among the top alternative lenders in the U.S. for providing personal loan satisfaction through digital applications.

United Kingdom

ARBUTHNOT BANKING GROUP (“Arbuthnot”, “the Group” or “ABG”) Audited Final Results for the year to 31 December 2018 (Morningstar), Rated: AAA

FINANCIAL HIGHLIGHTS

·      Profit Before Tax £6.8m (2017: £2.5m)

·      Underlying profit before tax £7.4m (2017: £3.2m)

·      Operating income increased by 24% to £67.9m (2017: £54.6m)

·      Negative earnings per share 134.5p (2017: positive 43.9p)*

·      Continuing earnings per share 38.0p (2017: 14.0p)

·      Underlying earnings per share 40.3p (2017: 17.6p)

·      Final dividend per share 20p (2017: 19p), an increase of 5%

·      Total full year dividend per share 35p (2017: 33p)

·      Bonus share issue to create new class of non-voting shares

·      Net assets £196m (2017: £236m)

·      Net assets per share 1283p (2017: 1547p)

·      Underlying return on deployed equity 5.6% (2017: 4.2%)

Consolidated statement of financial position

 

At 31 December

2018

2017

Note

£000

£000

ASSETS

Cash and balances at central banks

17

405,325

313,101

Loans and advances to banks

18

54,173

70,679

Debt securities at amortised cost / held-to-maturity

19

342,691

227,019

Assets classified as held for sale

20

8,002

2,915

Derivative financial instruments

21

1,846

2,551

Loans and advances to customers

22

1,224,656

1,049,269

Other assets

24

12,716

20,624

Financial investments

25

35,351

2,347

Deferred tax asset

26

1,490

1,527

Interests in associates

27

– 

83,804

Intangible assets

28

16,538

15,995

Property, plant and equipment

30

5,304

3,962

Investment property

31

67,081

59,439

Total assets

2,175,173

1,853,232

EQUITY AND LIABILITIES

Equity attributable to owners of the parent

Share capital

37

153

153

Retained earnings

38

209,083

237,171

Other reserves

38

(13,280)

(949)

Total equity

195,956

236,375

LIABILITIES

Deposits from banks

32

232,675

195,097

Derivative financial instruments

21

188

931

Deposits from customers

33

1,714,286

1,390,781

Current tax liability

236

705

Other liabilities

34

18,549

16,239

Debt securities in issue

35

13,283

13,104

Total liabilities

1,979,217

1,616,857

Total equity and liabilities

2,175,173

1,853,232

Read the full report here.

Tech Nation Lists 10 Fintech Pioneers In Future Fifty 2019 Cohort (Forbes), Rated: AAA

Revolut, Monzo, Starling Bank, Currencycloud, Aire, Blockchain, MarketInvoice, Quantexa, Nested and Salary Finance were revealed to be among the 24 most dynamic and fast-growing late-stage technology companies to be chosen to join Future Fifty’s 2019 cohort.

Tech Nation and Dealroom data has also revealed that the U.K. has attracted a whopping $7.9 billion in funding in 2018 and closed the gap for exits of venture-backed companies with the U.S. As well as this U.K. sales, IPOs and mergers were worth $40 billion – ahead of every other European country – which points to the success of the tech sector as a whole in the country.

OAKNORTH ANNOUNCES BRITISH BUSINESS BANK ENABLE GUARANTEE OF £133M (Business Leader), Rated: AAA

OakNorth has today announced its participation in the ENABLE Guarantee programme, securing a guarantee of £133m from the British Business Bank, the UK government’s economic development bank. OakNorth will use the guarantee to strengthen further its lending support to fast-growth businesses and established property developers and investors.

The ENABLE Guarantee programme is designed to encourage banks to increase their lending to smaller businesses by reducing the amount of capital required to be held against such lending. Under an ENABLE Guarantee, the UK Government takes on a portion of the lender’s risk on a portfolio of loans to smaller businesses, in return for a fee.

Inside OakNorth’s plan to take its lending technology global (Tearsheet), Rated: A

As a challenger bank, OakNorth charts a different course. While Revolut, Monzo, and N26 focus on putting their digital current accounts in the hands of millions, OakNorth doesn’t even offer a current account. While other challengers are racing to acquire banking licenses all over the world, OakNorth is happy with just a UK license.

OakNorth is also posting profits while other challengers aren’t.  The bank announced a £33.9m profit for 2018, up 220 percent from 2017.

OakNorth provides debt financing to entrepreneurs in growing businesses, lending £0.5M to £40M to profitable, scale-up, British businesses. To fund its underwriting, OakNorth offers digital savings accounts. It currently has 40,000 customers with digital savings accounts and has lend £3 billion in under four years.

Successful UK Payday Lender Western Circle Limited Begins Offering Personal Loans Online (Finger Lakes Times), Rated: A

Western Circle Limited has made a name for itself by offering responsible payday loans online. Their decision to branch out into the personal loans market through the new brand PersonalLoansNow.co.uk was well received by their customers.

Five last-minute IFISA ideas (P2P Finance News), Rated: A

THE END of the tax year is fast approaching, so if you haven’t yet taken full advantage of your £20,000 ISA allowance to make tax-free returns, now is the time. The peer-to-peer lending industry is expecting to see an uptick in inflows into Innovative Finance ISAs (IFISA) this year now that there is a much wider choice of products available and the potential for higher returns than cash with lower volatility than the stock market.

FINTECH LAUNCHES AI LOAN COMPARISON SERVICE (Business Cloud), Rated: A

Loan marketplace Monevo has launched a new platform to give consumers comparisons of pre-approved loans.

Based in Macclesfield, the business is a licensed credit broker for personal and business loans and is Europe’s largest personal loan marketplace.

An Alternative Approach (IFA Magazine), Rated: A

When it comes to asset allocation, advisers constantly face the challenge of finding real diversification in client portfolios. Sue Whitbread met with Matthew Ardron and Benedict Yung of Basset & Gold Group, to talk about their approach of offering fixed rate bonds that invest in alternative lending.

Half of Brits running out of cash before payday – pushing them to rogue lenders (Mirror), Rated: A

Exclusive research for Mirror Money shows by the end of this month, those turning to payday loans will have shelled out more than £214million – that works out at £28 per second

P2P to have strong presence at Innovate Finance Global Summit (P2P Finance News), Rated: B

FOUNDERS of the ‘big three’ peer-to-peer lenders are among the confirmed speakers at Innovate Finance Global Summit (IFGS), which takes place next month at London’s Guildhall.

Giles Andrews of Zopa, Samir Desai of Funding Circle and Rhydian Lewis of RateSetter are all participating in various sessions at the fintech industry trade body’s flagship conference on 29-30 April 2019, which marks the start of UK Fintech Week.

Other confirmed speakers from the P2P world include Zopa chief executive Jaidev Janardana, ArchOver’s Angus Dent, Ali Celiker from British Pearl and Roxana Mohammadian-Molina from Blend Network.

China/Hong Kong

Hong Kong SME financing platform raises $ 15m for China push (Finextra), Rated: AAA

Hong Kong-based online SME trade financing platform Qupital is targeting the mainland after closing a $15 million Series A funding round led by CreditEase FinTech Investment Fund.

Consumers hunger for loans, lenders popping up everywhere (Shine), Rated: AAA

Qin Shuifeng, 30, who lives in the suburban district of Jiading, went to a branch of the Postal Savings Bank of China in 2016 to seek a loan for home improvements.

The lender granted her and her husband a credit line of 1 million yuan (US$148,600), of which they drew 600,000 yuan, with an interest rate 10 percent higher than the benchmark rate.

Competition 

The central government has issued a series of policies favorable to consumer lending since the second half of 2018.

Still, risks remain. To realize sustainable development, players need to build strong operational and risk control capabilities, either by themselves or in partnership with financial technologies firms.

European Union

Klarna Launches Open Banking Platform (PR Newswire), Rated: AAA

Today, Klarna, one of Europe’s leading payment providers and the global market leader in payment initiation services, announces the launch of its own Open Banking Platform. This platform will enable access to more than 4,300 European banks through a single Access to Account (XS2A) API in line with Payment Services Directive (PSD2). Klarna’s XS2A API is the most established and proven solution that has been developed at scale across markets for almost 15 years through the Klarna Group company Sofort.

This platform provides a fully proven and mature infrastructure, superior market coverage and connectivity, with access to 99% of online banking consumers currently across 14 European markets. By opening up its own advanced technology and capabilities, Klarna is simplifying and democratising access to APIs securely. Both established and newer banks and fintechs as well as other licensed businesses, will be able to build smart and personalised offerings that meet the evolving needs of consumers across Europe. Klarna has been one of the leading proponents of the PSD2 legislation and believes high-quality APIs will drive innovation and competition but most importantly will empower consumers across Europe with increased choice, control and clarity on their finances, and ability to access better products.

International

Has Alternative Lending Seen Its VC Peak? (PYMNTS), Rated: AAA

U.S. FinTech funding reached its highest level in five years in 2018, according to CB Insights data published last month, hitting $11.89 billion. Yet at a time when analysts say VCs are focusing more on late-stage investment, alternative lenders are having a tougher time securing funding, particularly market newcomers in a crowded market.

But there is evidence that investors’ appetite for alternative lending startups is on the wane, even as overall FinTech funding continues to climb — and as the success of the alternative lending market grows, too.

eToro buys blockchain company Firmo (Fintech Futures), Rated: A

Just weeks after launching in the US, trading and investment platform eToro announced plans to purchase Copenhagen-based blockchain firm Firmo, reports Julie Muhn  at Finovate

Founded in 2017, Firmo offers a programming language called FirmoLang that runs on a sidechain. Exchanges can leverage FirmoLang to create financial instruments such as P2P lending platforms or cryptocurrency derivatives with tokens. And Firmo is versatile, allowing the tokens to be run on any blockchain.

Battlestar Capital Earns 30% Returns For Holding Crypto (ChainBits), Rated: B

Battlestar Capital, which is a blockchain staking-as-a-service company, revealed that customers could potentially earn up to 30 percent on a yearly basis when it comes to their idle crypto holdings. Here is everything about the startup’s claims in a nutshell.

In an interview, the company said that it has teamed up with crypto lending startup called Celsius Network in an attempt to launch a large-scale service capable of offering potentially high returns.

Australia

APRA Proposes Stricter Credit Risk Management Standards (Regulation Asia), Rated: AAA

The revised prudential standard enhances board oversight of credit risk and requires more intensive credit checks on borrowers. APRA also highlights the risks of P2P originated loans.

India

New modes of lending, fund raising on cards (The Asian), Rated: AAA

In a bid to change the market dynamics of the banking and financial sectors, the Reserve Bank of India (RBI) will soon come up with alternative models of lending and capital raising for the sectors.

Asia

Bukalapak partners three P2P lenders to provide loans for offline businesses (Tech in Asia), Rated: AAA

Bukalapak is teaming up with Indonesian P2P lending startups Amartha, Modalku, and PohonDana to provide loan facilities in a program called Modal Mitra. The loans are available to offline vendors who are part of the company’s Mitra Bukalapak program.

The financing offered through Modal Mitra ranges between US$70 and US$700 and can be paid back in up to six months, with weekly installments starting from US$6. It can only be used for purchases in the Mitra Bukalapak app.

Eurasia

Russian fintech launches digital bank 131 (Finextra), Rated: AAA

Bank 131, a new digital bank focused on Russian companies and entrepreneurs that work for global internet companies and/or buy from global ecommerce companies with a Russia presence, announced today they have received their banking license from authorities – the first and only new bank to do so in four years.

Canada

Shadow banking has grown, but risks to financial systems are modest (Advisor’s Edge), Rated: AAA

Canada’s shadow banking sector has grown substantially in recent years, but the overall financial system has grown even faster, keeping risks in check, suggests a new report from the Bank of Canada.

In the report, the central bank details the results of its monitoring of so-called “non-bank financial intermediation” (NBFI), also known as shadow banking. Among other things, the report finds the Canadian NBFI sector has grown by 1.7 times since 2006, driven by strong growth in investment funds, securities financing transactions and private lending.

Authors:

George Popescu
Allen Taylor

The post Thursday March 28 2019, Weekly News Digest appeared first on Lending Times.

The Rise Of The Class System In Healthcare; Risks & Opportunities In Finance

health care finance

James Peyer, a venture capitalist, has invested between $2 to $5 million in each of four companies for anti-aging solutions. And he is not alone. Delaying death (indefinitely!) has been one of the biggest fantasies of mankind. But with billions of dollars being spent by VCs and philanthropists in decoding the human body, extending human […]

The post The Rise Of The Class System In Healthcare; Risks & Opportunities In Finance appeared first on Lending Times.

health care finance

James Peyer, a venture capitalist, has invested between $2 to $5 million in each of four companies for anti-aging solutions. And he is not alone. Delaying death (indefinitely!) has been one of the biggest fantasies of mankind. But with billions of dollars being spent by VCs and philanthropists in decoding the human body, extending human lifespan by a meaningful amount seems plausible in the very near future. Whatever the outcome, it is easy to bet that life extension treatments are not going to be cheap. Want proof? Gilead is selling a Hepatitis C Virus at $95,000 for a 12-week treatment. The drug has an over 90% cure rate, but the insurers want to ration the drug for early-stage patients. This brings out the stark difference between those who can manage to pay for any medical treatment and those who cannot. Our healthcare is broken, and it is difficult to say if money is the solution or the problem.

Live Case: How Braja’s family is suffering from lack of funds to treat neurofibromatosis

Braja is a 14-year-old boy from Bali, Indonesia with two tumors (one got treated in January). The total treatment cost is $10,000 (which would be easily $100,000 or more in the United States), but the insurance company refused to cover the cost of surgery. The family does not have the $10,000 and, with no option left, the family is now raising funds through GoFundMe.

The family was lucky that it has raised 50% of that amount. But would it be lucky enough to afford the next surgery? And what about millions of Brajas in the developed and developing world who don’t have a GoFundMe page? Charity is not a permanent solution for the healthcare affordability mess.

Two facets of Healthcare: Opportunity & Risk

Wealth has indirectly produced a class system. With such expensive treatments, wealth directly translates into health and has led to the re-emergence of the haves and have-nots. If you can afford a treatment, you deserve to live. Otherwise, you are left to fend for yourself. But people are obviously willing to pay anything to ensure a healthy life for themselves and their family. This indicates an opportunity for a financial solution. There needs to be a structured lending solution for medical treatments, which can alleviate the financial stress and delay the payment of the treatment, spreading it over a longer time period, like a typical loan. Some reports estimate that medical bills are the root cause for over 60% of the bankruptcies in the US. Even if we believe that the number is political rhetoric, there is a massive business and humanitarian opportunity to solve a problem plaguing millions of people around the world.

If the health issues are not addressed timely or in a proper manner, there is a risk of mass protests and violence. If people are not able to save their families from certain death because they are not able to pay up the huge medical charges, you can expect them to resort to crime to ensure they get their money.

Numerous articles have been written, and movies have been made, on this subject, but the societal dysfunction remains. This risk is further exacerbated by the fact that billionaires are investing millions into their health so that they can live forever. This ever-widening gap will certainly manifest into class warfare. Movies like Altered Carbon (where the rich can “resleeve” their consciousness by buying replacement bodies) and Soylent Garden (where a Corporation makes food from human remains) depict a scary future.

How healthcare and its financing impacts us

It is important to understand how healthcare operates in different nations, and even more importantly, how it is funded. Healthcare is usually funded in three ways-

  • By Employer
  • By Government
  • By Individual

These divergent approaches to healthcare help us gain insight into different healthcare models and what can be done to fix them.

Source:

US Healthcare

There is no universal healthcare system in the United States (like the UK). Obamacare at least made health insurance compulsory (sort of!) for all, but even that is under fire from President Trump. Either employer covers the healthcare costs via insurance and offers them as a fringe benefit or the individual himself buys a health insurance policy. The US government funds two types of health plans:

  • Medicare
  • Medicaid

But if you are not on any insurance plan, which millions of Americans are not, you risk having to pay hundreds of thousands of dollars in medical bills. Over 12% of Americans do not have any health insurance. There is an increase of 3.2 million uninsured people under President Trump.

Europe Healthcare

The European healthcare style is considered to be the most humane system. Healthcare in Europe is designed with the goal to provide basic health service to all. There are different tweaks as per individual countries. UK has the NHS (National Health Service), where medical treatment is free and the government owns the hospitals and employs the doctors. There are private hospitals and practices for treatments not covered by NHS or for the super rich who don’t want to wait. Germany has a different model where it is the main health insurer in the country and insurance is compulsory.

Japan Healthcare

Healthcare in Japan is free for citizens, emigrants, and foreigners. A universal healthcare system is followed and all the hospitals are run as nonprofit organizations. For-profit organizations are strictly prohibited from owning medical services companies (hospitals, doctors, etc.)

Under its healthcare system, the government offers to pay 70% of treatment and leaves only a 30% burden on the patients.

Conclusion

Health is top on the wish list of families today. Being rich does not make sense if you can’t enjoy your wealth. A stable, healthy society is necessary to evolve, and there is an urgent requirement to address healthcare. There are multiple models to support healthcare, but it is critical that we first consider humanity and not the financial cost for solving this healthcare crisis.

Author:

Written by Heena Dhir.

The post The Rise Of The Class System In Healthcare; Risks & Opportunities In Finance appeared first on Lending Times.

Thursday February 7 2019, Weekly News Digest

origination costs

News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2019-1 Trust. LendingPoint increases mezzanine financing. UK publishes Open Banking operational guidelines. Raisin raises $114M. Today’s main analysis: International P2P lending volumes for January 2019. Today’s thought-provoking articles: Where are we in the credit cycle? Marketplace lending associations respond to FDIC small dollar lending rule request. […]

The post Thursday February 7 2019, Weekly News Digest appeared first on Lending Times.

origination costs

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2019-1 Trust (Business Wire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2019-1 (“SCLP 2019-1”). This is a $480.7 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2019-1

Class Preliminary Rating Class Principal
A AAA (sf) $351,800,000
B AA+ (sf) $39,400,000
C A+ (sf) $51,500,000
D BBB (sf) $38,000,000

Where Are We in the Credit Cycle? (PeerIQ), Rated: AAA

This week’s big funding news was that digital savings and investing platform Acorns raised $105 million in its Series E round, bringing its total valuation to $860 million.

The US economy generated 304 k jobs in January, marking a record 100 months of job growth. Average hourly earnings rose by 3.2% and the unemployment rate rose slightly to 4%.

Marlette CEO Jeff Meiler discussed profitability and loan performance with Peter Renton (transcript and podcast here).  Marlette announced another year of profitability in 2018.

Prosper’s December Performance Update showed that Prosper is focusing on making higher grade loans with 62% of December originations rated AA-B.

Overall, lenders view the US consumer as healthy and the US economic growth as solid.

The Industry Responds to FDIC Small Dollar Lending Rule Request (Lend Academy), Rated: AAA

So, back in November the FDIC issued a Request for Information on Small Dollar Lending. They received more than 60 responses from banks, industry associations, non-profit groups, fintech companies and individuals. While the FDIC did not define exactly what they meant by a small dollar loan the respondents, for the most part, took it to mean loans of less than $5,000.

There are many mainstream online lenders offering personal loans down to $1,000 and there are also many fintech companies offering loans under $1,000. Companies like Oportun, Insikt, LendUp, Elevate, Opploans and many others offer these sub-$1,000 loans using the latest technology tools to make this process more efficient.

The Marketplace Lending Association (MLA) provided a detailed 10-page response where they urged the FDIC (and other regulators) to do more to support banks and foster closer working relationships with fintech providers:

The Online Lenders Alliance is a trade group that contains many small dollar lenders who operate online. Not surprisingly they are against the 36% rate cap but they also have a lot in common with their sub-36% brethren such as promoting partnerships between banks and fintech companies.

Source: Online Lenders Alliance

The Center for Responsible Lending gave one of the most detailed responses to the RFI, a full 38 pages.

Read the full Online Lenders Alliance response here.

LendingPoint Again Upsizes Its Mezzanine Financing, Bringing It to More Than $ 67.5 Million (Business Wire), Rated: AAA

LendingPoint, the consumer lending platform, announced it closed an increase of its mezzanine financing, bringing the total of the facility to $67.5 million. A Paragon co-investor joined the facility as a lender.

Today’s announcement is the latest in a string of financing transactions LendingPoint has closed in the past 15 months. The company secured an up to $500 million Senior Credit Facility in August 2017 and an up to $600 million Senior Credit Facilityin May 2018, both arranged by Guggenheim Securities.

Eight Challenger Banks Traditional Institutions Should Worry About (The Financial Brand), Rated: AAA

1. BankMobile — Hooked Up With T-Mobile

Parent Company: Customers Bank
Websitewww.bankmobile.com
Launched: 2015
Category: Mobile bank

The creation of father-daughter team of Jay and Luvleen Sidhu (CEO and President respectively), BankMobile is an evolving banking-as-a-service platform.

2. Chime — Super Slick App

Websitewww.chimebank.com
Launched: 2013
Category: Mobile banking and money management app (in partnership with the The Bancorp Bank)
Notable Milestone: 2 million account relationships

3. Finn — Chase Bank’s Millennial Play

Parent Company: JPMorgan Chase
Websitewww.chase.com/personal/finnbank
Launched: 2017
Category: Mobile bank

Chase is offering a $100 for opening a new Finn account (as long as you make ten qualifying transactions in the first 60 days).

4. Marcus — Sucking Up Your Customers

Parent Company: Goldman Sachs
Websitewww.marcus.com
Launched: 2016
Category: Online bank
Notable Milestones: 2+ million customers and $35 billion in deposits.

Marcus’ loans range from $3,500 to $40,000 at rates of 6.99% to 25%. The average loan in 2018 was $15,000 over four years with a 12% interest rate, according to Bloomberg BusinessWeek. That leaves plenty of margin room even with its online savings rate up at 2.25% (as of January 2019).

5. N26 — Platform Maestro

Websiten26.com
Launched: 2015
Category: Mobile bank
Notable Milestones: 2.3 million users and $1 billion in deposits.

6. Revolut — The Amazon of Banking

Website:www.revolut.com:
Launched: 2015
Category: Mobile financial provider

Notable Milestones: 3 million customers — both consumers and businesses. Opening about 8,000 accounts per day. 1.2 million monthly active users. Monthly transaction volume $3 billion. Received European banking license in December 2018. More than 60,000 U.S. customers on Revolut’s waiting list.

7. SoFi Money — Join The ‘Waitlist’

Parent Company: Social Finance, Inc.
Websitewww.sofi.com
Founded: 2011 (Sofi Money Beta Launch, June 2018)
Category: No-fee Mobile banking account

8. Varo Money — Almost OCC Approved

Websitewww.varomoney.com
Founded: 2015
Category: Mobile banking/money management app in partnership with the The Bancorp Bank.
Notable Milestones: First mobile-only bank to get preliminary approval for a national bank charter.

Walsh feels Varo Money is particularly suitable for the 70% of the people they initially surveyed who are “hands-off creditworthy Millennials.”

P2P Global sells US loans and chases ‘less volatile returns’ (AltFi), Rated: A

It said its net asset value (NAV) rose by 0.78 per cent in the final month of the year, amounting to a total 5.2 per cent return in 2018, as the fund sold off a number of poorly performing loans, according to its December newsletter published today.

15 Minute Mortgages? Meet Molo – The New Fintech Aiming To Shake Up The Market (Forbes), Rated: A

Francesca Carlesi is the Co-Founder and CEO of Molo, a new, super exciting fintech start-up, aiming to reimagine how people get mortgages forever. She was originally a University professor, envisioning pursuing an academic career, before quickly joining McKinsey & Co., immediately after finishing her Ph.D. Molo is her first experience as a start-up entrepreneur after a long career in the finance and banking world. Here she discusses how she made the transition and found the journey so far.

Building a bank designed for freelancers and solopreneurs with Joust’s George Kurtyka (Tearsheet), Rated: A

57 million people in the US freelance and 30 million or so of those are micro and small businesses. Small businesses use approximately a dozen apps and pieces of software to manage their finances. From a bank account to payments to QuickBooks to factoring, microbusinesses spend 365 hours a year reconciling the data between all their financial tools.

1 IN 4 SAYS MONEY IS THE BIGGEST HURDLE TO RUNNING A BUSINESS (Valpak), Rated: A

Key Findings

  • 1 in 4 Americans considers funding to be the biggest obstacle.
  • More women say not knowing how to run a business is a challenge than men.
  • Millennials ages 25 to 34 are the most afraid of failure.
  • 1 in 3 Americans lacks a strong business idea to begin with.
Source: Valpak

Plaid And Quovo Just Scratching The Surface With Data Aggregation (Forbes), Rated: A

The fintech consolidation is starting, at least in the financial data side of the business, with Plaid recently announcing an 

Meet the start-up bank with millions of customers trying to disrupt the ‘adversarial’ American banking system (Business Insider), Rated: A

United Kingdom

Due diligence on P2P platforms (FT Adviser), Rated: AAA

In the immediate aftermath of the credit crunch, politicians enthused about the new crop of peer-to-peer providers and even created the Innovative Finance Isa.

UK financial institutions will receive more clarity on Open Banking (Business Insider), Rated: AAA

The Open Banking Implementation Entity (OBIE) has published its Operational Guidelines and accompanying checklist to help financial institutions (FIs) better navigate Open Banking, per a press release.

With the guidelines, the OBIE aims to clarify the regulatory requirements for a dedicated interface, as set out in the revised Payment Services Directive (PSD2), RTS, EBA Guidelines, and Financial Conduct Authority (FCA) Approach documents.

Source: Business Insider Intelligence

Read the full report here.

Starling launches euro account as UK prepares for Brexit (AltFi), Rated: A

The digital-only bank, which expects to top one million customers this year, said the new account is a simple was to ‘send and receive euros for free’.

Alt Credit Scorer Aire Scoops Up $ 11 Million in Growth Funding (Finovate), Rated: A

Alternative credit assessment innovator Aire has picked up $11 million in new funding. The London-based company, which demonstrated its Aire Credit API at FinovateEurope 2015, said the new capital will support the continued development of its credit insight engine, as well as support expansion in the U.S.

AccountScore uses Open Banking to offer real-time debt advice with Insolvency Panel (AltFi), Rated: A

A new service has been set up for people in debt, giving them the power to let advisors see their bank accounts in order to offer quick and accurate advice.

The service is a tie-up between fintech bank transactions firm AccountScore and The Insolvency Panel launched this month.

Why are SMEs declining external investment, and is it a barrier to scale? (Vox Markets), Rated: A

Small businesses accounted for 22 per cent of the UK’s economic growth in 2017 according to Octopus Investments High Growth Small Business Report. These SMEs, which comprise less than one per cent of UK companies, created one in five jobs in 2017 and hold a wealth of potential for our economy. When it comes to the future of the UK business landscape, it seems that the best things do come in smaller packages.

SME finance app ANNA gets £8.5m funding (Fintech Futures), Rated: A

SME business account Anna has received an investment of £8.5 million from Kinetik as it prepares to launch new tools and products.

What Winter? Crypto Lending Firm Has Issued over $ 630M in Just Six Months (NullTx), Rated: A

The cryptocurrency winter has been one of many contrasts. While some firms have gone out of business and shut down, some have thrived. Celsius Networks belongs to the latter.

Based in London, the firm launched just six months ago, but it has grown by leaps and bounds. It has lent over $630 million in loans, predominantly in cryptocurrencies.

Aave Launches Bitcoin on Its Ethereum-based Crypto Lending Marketplace ETHLend (PR Newswire), Rated: A

AAVE, a UK-based FinTech Startup, today announced a new release for its crypto lending marketplace ETHLend. The release introduces the capability for the ETHLend users to use their Bitcoin holdings as a collateral to borrow funds for spending.

Exclusive: P2P firm shuts platform (AltFi), Rated: B

The UK Bond Network, a p2p platform for corporate bonds, is closing as of today Monday 4 February 2019, according to the firm.

China

From private bank client to farmer: a Chinese model of social lending (Euromoney), Rated: AAA

Financial services group CreditEase runs an app through which its private banking clients can be connected to needy women farmers in China’s rural interior. It’s a remarkable initiative taken up by 200,000 farmers and shows what can be done with low-level credit. But how does the risk management work?

European Union

PayPal backed fintech Raisin raises $ 114m (Financial Times), Rated: AAA

German financial technology group Raisin has raised $114m in new funding from high-profile backers including Index Ventures and PayPal, in one of the largest fundraisings to date in Europe’s emerging “wealth tech” space.

ING Bridges Dutch SMBs To Funding Options (PYMNTS), Rated: A

Dutch bank ING is linking its small business (SMB) customers to alternative lending marketplace Funding Options, the firms said on Monday (Feb. 4).

The partnership means Funding Options has launched services in the Netherlands, expanding beyond the U.K. for the first time, said reports in Crowdfund Insider. Approximately 1.8 million SMBs in the Netherlands will gain access to Funding Options via ING Bank.

The Irish fintech startups disrupting their industries (Irish Times), Rated: A

Also based at NOVA is Initiative Ireland which aims to give cautious investors lower-risk access to the Irish property market. With poor interest rates, investors face the perennial problem of what to do with their money. Risk takers will always have options, cautious investors less so, and this is Initiative Ireland’s sweet spot. It is offering returns in the order of six to eight per cent to those investing in its novel peer-to-peer lending platform for developers building social and affordable housing.

Banco BNI Europa, NDGIT accelerate PSD2 and Open Banking in Europe (The Paypers), Rated: A

The European challenger bank in Portugal, Banco BNI Europa, has become a customer of NDGIT, provider of the API platform for banking and insurance in Europe.

BNI Europa implements “PSD2 Ready”, NDGIT’s smart standardized software solution following the Berlin Group RTS standard, to fulfil all PSD2 requirements. This cooperation is a milestone for the future development of Open Banking in Europe and for BNI Europa the next step in their company’s development.

International

International P2P Lending Volumes January 2019 (P2P-Banking), Rated: AAA

Milestones achieved this month (total volume since launch):

Source: P2P-Banking

Global regulators are struggling to define fintech credit (Business Insider), Rated: AAA

While many jurisdictions have highlighted fintech credit as a key development in the nonbank financial space over the last year, they struggle to define exactly what fintech credit is, per findings of the Financial Stability Board’s (FSB’s) Global Monitoring Report on Non-Bank Financial Intermediation 2018.

Source: Business Insider Intelligence

Why VC Is The Answer To Falling Returns (Forbes), Rated: A

In uncertain times, VC offers the advantage that its performance is completely uncorrelated with public equity markets. Last year, both the US and Europe saw record VC investment, reaching over 

Technology has opened up access to banking but can it stop the unbanked from falling through the cracks? (Tearsheet), Rated: A

Those of us who work in finance can’t imagine life without a bank account. But for the world’s 1.7 billion unbanked adults, this is a reality. In the U.S., 33.5 million households are either unbanked or underbanked and lack the ability, criteria, or financial literacy to access banking services. Without access to savings and credit, these people often live — and remain — in a cycle of poverty.

In the U.S., nearly 95 percent of adults have a mobile phone and 80 percent of those are smartphones. And since they’re not tied to traditional banking norms such as branches, ATMs, and credit cards, the unbanked are more likely to adopt digital banking via their phones.

TymeBank in South Africa uses AI to help people learn about their money and how to save. It teaches people about credit scores and rewards them for good financial behavior — TymeBank offers an amazing 10 percent interest rate on savings accounts for customers who can define specific financial goals they want to hit, and then contribute to them.

Sancus to start accepting euros and dollars to fund loans (P2P Finance News), Rated: A

SANCUS will start accepting euro-denominated loans within the next few months, to help it expand its investor base.

The alternative business finance provider is also planning to establish a new base in the Cayman Islands by the end of 2019, a move which would allow it to accept dollar-denominated investments as well.

Revolut team ups with WeWork (AltFi), Rated: B

The new partnership will provide Revolut for Business customers with 3 months free of hot-desk space at a WeWork co-working space.

Australia

Australia’s getting wiser says Wisr in new campaign targeting disillusioned big bank customers (Mumbrella), Rated: A

Peer to peer lending service provider Wisr has targeted disillusioned big bank customers in its new ad campaign.

APAC

Diversify investments in P2P lending, youths urged (The Star), Rated: AAA

Technology-driven peer-to-peer (P2P) lending is becoming a popular investment choice among young investors, but the anticipated slowdown in the economy this year also raises the risk of losing money.

To protect their investment, a P2P financing platform operator said that investors should spread their investment into as many deals as possible.

Africa

DexAge – A Versatile Crypto-Trading Solution (Blockmanity), Rated: AAA

The P2P Crypto loan services allow users to retain their assets in case they predict the concerned cryptocurrency value might appreciate in the future. DexAge enables users to stake their crypto assets as collateral and acquire a loan of the same value to expand their investment profile.

Canada

Vancouver’s First P2P OTC Digital Trading Platform Officially Launched and Supported by Huobi Cloud Technology (Digital Journal), Rated: AAA

iBank Digital Asset L.P. (“iBank Digital”, “iBankEx” or the “Company”) has officially launched Vancouver’s first peer-to-peer (P2P) OTC digital currency trading platform on iBankEx. (www.ibankex.io) This launch is supported by Huobi Cloud (“Huobi Cloud”) technology, which has officially entered the Canadian market in 2019 with 120 exchanges around the world.

iBank Products & Services:

Fiat Lending – A decentralized global lending network connecting financial institutions worldwide by offering crypto backed loan business.

Crypto Lending – iBank provides crypto loans collateralized by your crypto assets in BTC/USDT with security and confidentiality.

Authors:

George Popescu
Allen Taylor

The post Thursday February 7 2019, Weekly News Digest appeared first on Lending Times.

The Rise of Unregistered Securities

crowdcheck

The SEC issued a white paper titled “Capital Raising in the USA: An Analysis of the Market for Unregistered Securities Offerings, 2009‐2017.” This white paper presents some pretty interesting numbers. Capital formation through unregistered securities exceeds that from registered securities; 2017 saw unregistered securities raise over $3 trillion versus registered offerings’ $1.5 trillion. Also, according to […]

The post The Rise of Unregistered Securities appeared first on Lending Times.

crowdcheck

The SEC issued a white paper titled “Capital Raising in the USA: An Analysis of the Market for
Unregistered Securities Offerings, 2009‐2017
.” This white paper presents some pretty interesting numbers. Capital formation through unregistered securities exceeds that from registered securities; 2017 saw unregistered securities raise over $3 trillion versus registered offerings’ $1.5 trillion. Also, according to the report, the JOBS Act has had a booster effect on the ecosystem. This is evident by the hundreds of crowdfunding websites launched since its passing. Regulations CF, A+, and D have unshackled entrepreneurs and democratized fundraising. But a critical part of investing in unregistered securities is the due diligence behind whether the companies seeking the funding are genuine or not. CrowdCheck, incorporated in 2012, aims to verify the credibility of companies seeking such investments.

In a chat with CEO and Founder Sara Hanks, we uncovered how CrowdCheck has become the go-to player for due-diligence, compliance, and disclosure.

The Problem With Unregistered Securities

Hanks understood the need for building the trust layer between online investor and issuer since investors will buy shares in unknown companies online. Moreover, there is a list of legal requirements that a capital raising company and an investor need to meet to ensure everything is above board and handled according to these regulations.

CrowdCheck specializes in online capital raising. It serves the entrepreneur, the crowdfunding platform, and the investor in ensuring that the transaction is handled according to current laws and all necessary approvals are in place. From handling drafting and disclosures for Reg D, A+, and CF to filing the relevant notices, CrowdCheck is a one-stop shop. The company has executed 40 Reg A+, 50 Reg D, and about 450 Reg CF offerings.

The Relevant Regulations

Regulation A+

This regulation allows companies to generate income under two tiers representing two different types of investments.

  • Tier 1 – A company is permitted to offer a maximum of $20 million in any one year. The issuing company must also provide an offering circular, which must be filed with the SEC and subject to a vetting process by the commission and securities regulators relevant to the offering. Companies issuing under Tier 1 are not required to produce reports frequently. Instead, they are only required to issue a report on the final status of the offering.
  • Tier 2 – A company can offer up to $50 million in any one-year period. Though an offering circular is required and is subject to review and vetting by the SEC, it doesn’t have to be qualified by any state securities regulators. Companies issuing under Tier 2 must produce continual reports on the offering as well as its final status.

The offering can be marketed to both accredited and non-accredited investors.

Regulation CF Crowdfunding

The company must be incorporated in the US.

  • Allows only $1 million in fundraising.
  • An investor is limited in the amount to be invested in crowdfunding securities in any one-year period. If either the annual income or net worth of the investor is less than $100,000, the investor is limited to the greater of $2,000 or 5% of the lesser of the annual income or net worth. If greater, limited to 10% of the lesser of annual income or net worth, to a maximum of $100,000.

Regulation D

Rules under 506(b)

  • The company cannot use advertising to market securities.
  • No maximum fundraising limit.
  • Securities can be sold to an unlimited number of accredited investors and up to 35 non-accredited investors.

Rules under 506(c)

A company can generally advertise the offering and still be deemed to be in compliance with the exemption requirements if:

  • All the investors are accredited investors.
  • The company should review various documents like tax returns, W-2s, bank and brokerage statements, credit reports, etc. to verify that investors are accredited investors.
  • Companies that comply with the above requirements do not have to register their securities offering with the SEC.

Insights from CrowdCheck

Suitability

  • Reg CF is most suitable for complete startups. It is a cost effective way of raising capital due to the low threshold and regulatory requirements for fund raising. CrowdCheck offers complete services for this segment for just $5000.
  • The investee company needs to decide if it is happy with hundreds of shareholders or would just like to focus on a few accredited investors. Reg A+ is thus suited for companies looking to IPO in a few years.
  • Reg A+ is slightly more expensive than Reg D due to the requirement of SEC compliance. CrowdCheck offers a complete Reg A+ package for $60,000 whereas Reg D fees range from $25,000 to $40,000.

Platforms

There are multiple platforms available in the market, but the entrepreneur needs to choose carefully. Some specialize in a particular industry or particular regulation funding. Hanks believes StartEngine, Wefunder, Seed Invest, Next Seed, Micro Ventures, and Net Capital are the market leaders in the space.

Crowdfunding success is difficult to measure as startups usually have a low minimum threshold. Sites like Kickstarter are different from Wefunder as they do not provide any financial interest in the company being funded.

Numbers (as of Mid- 2018)

  • Reg CF has seen 960 offerings with 390 completed. Many of them are still under process.
  • The average amount raised via Reg CF is $236,000.
  • Reg A+ has seen 325 filings and 232 have qualified to raise funding.
  • Reg A+ has helped companies raise $1.1 billion, and 108 fundraisings are completed with the average fundraising around $10 million.

Conclusion

Hanks has 30 years in the corporate and securities field. Prior to CrowdCheck, she was general counsel of the bipartisan congressional oversight panel for TARP. The company has a core team of 19 people out of which six are full-time employees in core management, and others are paid consultants having backgrounds in securities law and finance.

As investors become more comfortable with online crowdfunding, the quality of companies looking to raise capital has improved. Many startups are skipping VC money to test crowdfunding. CrowdCheck acts as an important “check” to ensure the sanctity of the process. The entire ecosystem, from entrepreneurs to investors to platforms, depend on their validation for making online capital raising work.

Author:

Written by Heena Dhir.

The post The Rise of Unregistered Securities appeared first on Lending Times.

Thurday December 7 2018, Daily News Digest

equity sector analysis

News Comments Today’s main news: Google gets EU eMoney license. JD launches online P2P lending service in China. Hexindai partners with Kunming Aotous. Today’s main analysis: Equity sector analysis. Today’s thought-provoking articles: Internet finance in a state of flux in China. P2P lending looking for a fresh start. Wonga collapse clears way for US payday lenders in UK. United […]

The post Thurday December 7 2018, Daily News Digest appeared first on Lending Times.

equity sector analysis

United States

Fed Raises Rates; Sector Analysis; Loan Performance (PeerIQ), Rated: AAA

In regulatory news, Square will refile its Industrial Loan Charter application with the FDIC.

Credit card master trust data showed that net charge-offs dropped by 8 bps YoY, decreasing for the second month in a row.

Source: Bloomberg, PeerIQ

Affirm – Launch pitch at Phocuswright 2018 (PhocusWire), Rated: A

We have identified a $377 billion addressable U.S. online travel market. Millennials, the largest consumer group in the U.S., are shifting their spending from products to experiences.

We’ve also found that 55% of people are avoiding credit cards at checkout when paying for travel. 67% are looking for options to pay over time.

5 Business Trends That Will Continue to Rise in 2019 (Entrepreneur), Rated: A

1. Consumers will demand more control over their data.

2. Alternative lending will continue to grow.

Given that around 80 percent of small business loan applications are rejected, startup founders are increasingly looking to nontraditional financiers for capital.

Since 2006, P2P lending has skyrocketed by 110 percent per year.

United Kingdom

Wonga collapse clears decks for US payday loan firms in UK market (The Guardian), Rated: AAA

Chicago-based Enova, which also operates Pounds to Pocket and On Stride, saw UK revenue jump 20% to $36.6m (£29m). Texas-headquartered Elevate Credit operates in the UK under the Sunny loans brand, and saw its own UK revenue jump 23% to $32m, as new customer loans for Sunny rose 45% to $26,671.

Curo, which is behind WageDayAdvance, saw UK revenue jump 27.1% to $13.5m, while underlying earnings nearly halved from $8.1m to $4.2m. It was helped by a “high percentage of new customers”.

Collapse of ethical lenders stokes fears over access to credit (Financial Times), Rated: A

Ethical lenders that have been touted as alternatives to high-cost firms such as Wonga and BrightHouse are going out of business at the fastest rate in years, fuelling concerns that less well-off customers are in danger of losing access to credit.

The figures mark the worst year since at least 2010, as the sector battles against rising regulatory and technology costs.

Eight UK Credit Unions Went Out Of Business In 2018 (PYMNTS), Rated: A

Eight credit unions closed in 2018, and they affected an estimated 14,000 people with a collective £25 million in savings. Even some of the more successful CUs have had to curtail lending. Credit unions cap rates at 3 percent a month.

Despite initial reports of the feature’s disappearance, Hefeng Online Lending was still available until 4 p.m. on Wednesday. Previously, all products were labeled as being “sold out” after it was removed from the app’s main page. It has subsequently been completely removed.

China

JD launches P2P online lending products (en.ce.cn), Rated: AAA

E-commerce giant JD.com has become the first Chinese tech tycoon to launch peer-to-peer online lending products, CHNFUND.com reported on Sunday.

“Hefeng online lending” or literally “Hefeng Wangdai”, a platform providing information service on P2P online lending under JD.com, sold out all the products within seconds after it started operation on Sunday.

JD Finance removes second P2P lending feature from its app (Technode), Rated: A

JD Finance has removed its second peer-to-peer (P2P) lending feature from its app after it had been online for less than 10 days, highlighting difficulties in China’s P2P loans sector.

Chinese P2P Lender Hexindai Announces Funding Sources Partnership With Kunming Aotous (Crowdfund Insider), Rated: AAA

Chinese peer-to-peer lending platform Hexindai (NASDAQ: HX) announced on Wednesday it has formed a funding sources partnership with Kunming Aotou Economic Information Consulting Co., Ltd. (Kunming Aotou). 

Hexindai reported that through this agreement it will assess borrowers that are using its risk management and credit assessment capabilities before referring them to Kunming Aotou which will facilitate the loans through a trust fund. 

Internet finance in a state of flux with regulators stepping in to bring some stability and direction (Global Times), Rated: AAA

Recently, the Beijing-based Chang An Property Casualty Insurance Co was reported to have compensated nearly 2 billion yuan ($290 million) for its joint business with a number of domestic peer-to-peer (P2P) online lending platforms, according to a report of the Time Weekly.

The Lengjing reported that so far 220 P2P platforms had submitted their self-investigation reports to the government.

European Union

Google Gets EU eMoney License (PYMNTS), Rated: AAA

Google Payment Lithuania, a unit of Alphabet’s Google, was granted an electronic money institution license by The Board of the Bank of Lithuania.

The Lithuanian FinTech initiative now covers more than 100 licensed companies, with most of them involved in payments, electronic money and peer-to-peer lending and crowdfunding.

International

Peer-to-peer lending looks for fresh start as interest wanes (Financial Times), Rated: AAA

But even P2P Global Investments, the first investment fund dedicated to the sector when it launched in 2014, admits the initial “frenzy” of interest has died down.

It is considering changing its name because it no longer accurately reflects the fund’s interests.

Mike Bristow, chief executive of property lender CrowdProperty, suggested that some companies have tried to take advantage of the hype around peer-to-peer without making effective business plans.

Top ten banking tech case studies in 2018 (Fintech Futures), Rated: A

Micro-lending: Mynt
Philippine fintech, Mynt, talks about the business case and technology behind its current micro-lending efforts and where it is planning to head with other financial services, leveraging the customers and data of its majority shareholder, the country’s largest Telco.

Robocash – fintech crossing the borders
In 2017, peer-to-peer (P2P) platform Robocash started its operations in the European Union (EU). Since then, it attracted more than €4 million

Live Oak Bank and Finxact – riding the second wave
The US, in particular, is in urgent need of new core offerings to support next generation digital banking.

Home Credit – to its credit
In an exclusive tour of Home Credit’s (HC) operations in Prague, we met seven staff members and learned about its retail challenger Air Bank, P2P lender Zonky and Home Credit Venture Capital (HCVC).

Mobile banking: RBC – farewell friction
Royal Bank of Canada (RBC) has been proactive with its digitisation strategy.

Australia

Mums and Dads turn to commercial real estate as resi slows in Australia (The Investor), Rated: A

They are also navigating their way around banks’ lending restrictions through peer-to-peer lending, further boosting their investment prospects.

India

Various fees charged by P2P platforms (India Times), Rated: A

Every loan involves a cost. From the time of signing up to delay in repaying the loan, here’s a list of charges a borrower needs to pay while taking a loan from a peer-to-peer (P2P) lending platform.

Asia

UMG Idealab has started its venture journey in Indonesia with 11 portfolios to date.

UMG Idealab  is looking for startups in IoT, Big Data, Voice Recognition (VR), and Artificial Intelligent (AI). He aims to invest in 20 startups next year.

Central bank warns of P2P lending (Vietnam News), Rated: B

The State Bank of Việt Nam (SBV) has warned local people and firms to consider carefully and be cautious before taking part in peer-to-peer (P2P) lending as there are many potential risks related to the service.

Authors:

George Popescu
Allen Taylor

The post Thurday December 7 2018, Daily News Digest appeared first on Lending Times.

Tuesday November 27 2018, Daily News Digest

Reliable Consumers for JP morgan, Citigroup, wells fargo and Bank of America

News Comments Today’s main news: LendingClub hits $1B in CLUB certificate issuance. Zopa boosts Augmentum Fintech fund returns. Monzo breaks record on crowdfunding round. Yirendai’s critical stage to regain growth. Judo gets $350M in funding. Today’s main analysis: How late-cycle expansions turn into recessions. Today’s thought-provoking articles: LendingClub does more lending during holidays. Turning LendingClub into a financial health club. Why […]

Reliable Consumers for JP morgan, Citigroup, wells fargo and Bank of America

News Comments

United States

United Kingdom

India

Other

News Summary

United States

LendingClub Reaches $ 1bn in CLUB Certificate Issuance (Lend Academy) Rated: AAA

LendingClub has seen issuance of their new CLUB Certificate reach $1bn in less than a year after first announcing the pass-through security product last December at their investor day. The CLUB Certificate was created to make it easier for institutions to invest in LendingClub originated loans.

Loan for the holidays: Lending Club loans out more during holiday shopping months (Thinknum Media) Rated: AAA

This year was a record-breaking season for holiday shopping, as online spending surged 23.6% according to Adobe Analytics.

But where is all that money coming from? While some consumers saved up for the season, others might have turned to loans, such as ones offered at Lending Club ($NYSE:LC), to pay down huge gifts or refinance debt from credit card spending.

Outside of March 2016 — a month during an unusual stretch of time right before its chief executive Renaud Laplanche stepped down and a federal subpoena came in — Lending Club typically has the most loans issued by dollar amount in the months before the holiday season, according to data tracked since 2013.

Source: Thinknum

LendingClub CEO Working to Turn It Into a Financial Health Club (Web Pro News) Rated: AAA

The CEO of LendingClub, Scott Sanborn, says that they are really looking to make membership in the club mean something and are working to take Lending Club and turn it into a ‘financial health club’ that will help people successfully manage expenses. He says that LendingClub helps by shining a spotlight on credit card debt which is the first step to doing something about it.

A Looming Crisis in People’s Overall Financial Health

We are seeing really an epidemic happening which is incomes have been stagnant for more than 20 years. All of people’s major expenses, healthcare, college, housing, is going up and it’s creating a real looming crisis in people’s overall financial health and it’s something that people just aren’t talking about. Close to half of Americans have credit card debts and they are more than twice as likely to talk about spousal infidelity than they are about the fact that they have credit card debt that they need to manage. We believe that by shining a spotlight on the problem it’s the first step to helping people do something about it.

Top fintech VCs explain how PayPal missed a golden opportunity and why they wouldn’t invest in LendingClub today (Business Insider) Rated: AAA

PayPal is arguably one of the biggest success stories to come out of Silicon Valley in the last 20 years. It launched the careers of Peter Thiel, Elon Musk, and Max Levchin and paved the way for other members of the “PayPal mafia” to make seed investments in a next generation of startups.

“OnDeck and LendingClub have scaled, strong businesses now, but you’d never invest in those companies as startups today,” Harris said. “I don’t think you would look at unsecured personal lending or small-business lending, where you have to go out and acquire customers in the wild, with no special sauce. That’s 10-year-old thinking.”

The current model many VCs advocate is for companies to find ways to offer additional services, like loans, to existing customers. Acquiring new customers can be expensive, and there’s a competitive advantage when you underwrite or target new services to existing customers, because they know more about them.

PeerIQ’s Lender Earnings Webinar; Bank Exec Comments on the Credit Cycle (Peer IQ) Rated: AAA

One of the main themes that we explored in the LEI was how late we are in the credit cycle. Most C-level executives were extremely are sanguine on the economy but are nonetheless taking precautions. PeerIQ’s view is “The good news — and the bad news — is that conditions don’t get better than they are now.” We recommend reviewing Bloomberg Julie Verhage’s “US Banks See Good Times Ahead Even as Many Prep for Downturn” for more.

Source: Peer IQ

How Late-Cycle Expansions Turn into Recessions

The current US expansion that started in June 2009 is the longest on record at over 113 months. Late expansions are characterized by low unemployment, high consumer confidence, high asset values. We currently observe a near 50-year low unemployment rate, near record high consumer confidence, and the highest level of consumer credit outstanding (although well below peak per-capita debt levels).

Ironically, it is these solid economic indicators that are responsible for the party coming to an end. In a simplified model, credit availability expands to the marginal borrower (e.g., new entrants, cov-lite corporate loans, thin-file credits, etc.) just until the marginal consumer or corporate loans creates more losses than expected. Lenders feel the pinch on credit performance and on funding due to rising rates. Lenders individually tighten lending leading to a reduction in the supply of credit on an aggregate basis.

PeerIQ’s Q4 2018 Lending Earnings Insights Report (Lend Academy) Rated: A

PeerIQ released their Q4 2018 Lending Earnings Insights Report which points to a number of themes showing the economy is strong but CEOs are striking a cautious tone. Delinquencies and defaults continue to be low as consumers have seen their wages rise and taxes drop. Lenders are increasing reserves as they anticipate credit to renormalize in the near future, saying the economy right now was too good to be true.

Read the Full Report here.

Excerpts:

Regulators are increasingly focusing on the greater role of non-banks in consumer lending.Large money center banks continue to pull-back from riskier loans such as small business and consumer lending. Large banks instead have increased their credit facility volume 6x since 2010. FDIC Chair Jelena McWilliams cites the significant role of non-banks in origination as potential for systemic risk. The FDIC is contemplating granting ILC charters to non-banks – a major shift.

Delinquencies and charge-offs in FinTech asset classes are near all-time lows, although charge-offs on prime credit are increasing. Enova (Subprime) and OnDeck (Small Biz) are seeing near cycle-low charge-offs, while LendingClub (Prime) is seeing higher delinquencies on newer vintages. The change in LendingClub’s charge-off estimates across loan grades was mixed. Charge-offs on grades B and C are estimated to be higher by 28 bps and 16 bps respectively QoQ.

Small Businesses Are Poised for Growth, but Are Lenders Ready? (Business Wire) Rated: AAA

Source Business Wire

Betterment, Merrill Edge, Fidelity’s Go Lead the Pack in Digital Advice Branding, Claims Cerulli (Financial Advisor IQ) Rated: A

Robo-advice pioneer Betterment is the pack leader in digital platform awareness among investors, a new Cerulli Associates study reveals. But Merrill Lynch and Fidelity aren’t far behind, the study shows.

Among the more than 5,500 people polled, the Betterment brand was known by 15% of respondents, Merrill Lynch’s Merrill EDGE by 13%, and Fidelity’s Go by 12%. Trailing the three frontrunners was Charles Schwab’s Intelligent Portfolios and Vanguard’s Personal Advisor Services, which were each recognized by 10% of respondents, the study reveals.

For its digital platform marketing awareness study, Cerulli polled investors under the age of 45 earning more than $125,000 annually and with more than $250,000 in investable assets.

5 Business Loans You Can Get Without Being Profitable (NAV) Rated: A

With the Bureau of Labor Statistics reporting over 415,226 startup firms less than 1 year old in 2017, it’s apparent that this category of business will need funding like never before. However, business loans are tricky. On hand, they tend to offer a larger line of credit to companies than personal loans or lines of credit. On the other hand, qualifying can be difficult and often requires you to provide at least two years of documentation that you are profitable.

For the brand new business that hasn’t managed to turn a profit (yet), what is left? How can you get a cash infusion into your business in time to expand, add employees, support a product launch, or refinance existing debt? The following loans are a bit non-traditional, but just might be exactly what you are looking for in your quest for funding during your startup years.

TD Bank Launches New Digital Mortgage Experience Powered by Roostify (Business Wire) Rated: A

Roostify, a digital lending platform provider, announced that TD Bank, America’s Most Convenient Bank®, has leveraged Roostify’s technology to provide customers with a digital mortgage offering. This digital experience combines the latest in lending technology with a human-centric approach that gives TD Bank’s customers an accelerated, low-stress path to home ownership.

The deployment now provides prospective homebuyers with useful tools to assist them in finding a loan that fits their needs and budget. Leveraging Roostify’s proprietary DecisionBuilder lead tool, TD Bank’s Digital Mortgage allows consumers to explore which loan products they qualify for, right from a simple-to-use web page. Consumers can then move on to apply for their chosen loan in minutes, and follow a streamlined, all-digital process for moving their loan through closing. With easy access to TD Bank’s expert loan team, homebuyers can enjoy both the convenience of a digital solution and reassurance of expert guidance as they navigate one of the most significant transactions of their lives.

The Lending Alternatives Hopeful Investors Should Know Inside And Out (Forbes) Rated: A

People buy real estate for many reasons — generating cash flow, a tax write-off, appreciation value. Some of the greatest profits are made when buying real estate in a down market. Seasoned investors and fortunate newcomers who purchased coastal residential property from 2012-2017 are sitting on healthy equity appreciation as well as competitive interest rates in the 3.5-5% range.

The traditional path to buy a property is to obtain financing through banks, credit unions or a mortgage company. Following the 2008 housing crisis, traditional lenders implemented more strict guidelines: Stellar credit scores from 740 and above, stable employment, a low debt-to-income ratio, six months or more of liquid reserves.

For hopeful investors unable to meet these demands, alternatives are to pay all cash or to finance the purchase using hard money financing or a private lender. By utilizing one of these two methods, buyers also do not have to be concerned with the mounds of paperwork lenders requested. There are some advantages and disadvantages by using either type of alternative financing.

How Marcus by Goldman Sachs took to the streets of New York to market its high yield savings account (Tearsheet) Rated: A

Marcus, the online consumer bank by Goldman Sachs, has been running a man-on-the-street ad campaign about recent research the company conducted. According to the survey, 60 percent of Americans with savings accounts don’t know the interest rate on their savings account, and *more than half* of Americans with savings accounts (56 percent) opened theirs without exploring other options.

Dustin Cohn, head of brand and marketing communications at Marcus, joins the podcast to talk about the survey and why Marcus chose interest rates as a differentiator. We unpack the recent advertising campaign and explore the recent acquisition and integration of personal finance app, Clarity Money.

Ross: Easy money and the rise of ‘neo banking’ (My NorthWest) Rated: A

Banks are entering a whole new era. It’s called neo banking. Because it’s so “neo.”

You just sign over your paycheck, and suddenly you can buy things with a wave of the phone. As far as I can tell, you just look romantically at what you want to buy – and it’s yours!

You can even get loans. But it’s friendlier because neo banks don’t have loan officers who look at your income statement and say “Ha ha ha, you’re kidding!”

United Kingdom

Zopa helps boost Augmentum Fintech fund returns (Peer2Peer Finance) Rated: AAA

ZOPA’S latest funding round has boosted the value of Augmentum Fintech’s portfolio, helping the fintech investment fund report net asset value growth of 5.1 per cent in its maiden financial results.

UK-listed Augmentum Fintech unveiled its first financial results on Monday since launching in December 2017. It reported that a recent £60m private fundraise by Zopa had boosted the value of its stake in the lender by £3.5m to £22m.

Augmentum Fintech Sees Portfolio Rise In First Interims Since IPO (Morning Star) Rated: A

Augmentum Fintech PLC reported its first interim results Monday since listing on the London Main Market in March.

In the period from incorporation on December 19 last year to September 30, the fintech venture capital investor had a net asset value total return of 5.1%.

At September 30, Augmentum Fintech’s NAV per share was 104p. The company’s net assets at September 30 totalled GBP97.8 million.

The company’s portfolio fair value increased 62% since the company listed in March to GBP53.9 million on September 30 from GBP33.3 million on March 13.

Monzo confirms record-breaking UK fintech crowdfunding round (City AM) Rated: AAA

Digital bank Monzo has today announced it will be heading back to the crowd for the last chunk of its series E fundraising round, with a target of up to £20m.

The raise, first reported exclusively by City A.M. in August, will be the largest fintech crowdfunding round in the UK to date.

Going live on Exeter-based platform Crowdcube, existing Monzo investors will get early access to the round from 3 December. The round will then be opened up to other Monzo customers, who can invest up to £2,000.

Banking app Monzo explores expansion into high-cost loan products (The Telegraph) Rated: A

Monzo, the financial technology start-up,  is considering launching loans aimed at “the Wonga segment” of the market, its chief executive Tom Blomfield said.

Mr Blomfield said he hopes in future to offer loans to people with poor credit scores who may not be able to access more traditional loan products.

UK Competition and Markets Authority Questions PayPal Acquisition of iZettle (Crowdfund Insider) Rated: A

The UK Competition and Markets Authority (CMA) has issued a statement on the PayPal acquisition of iZettle – an event that was announced in early 2018 and closed in September. PayPal purchased Sweden based iZettle for $2.2 billion as the company seeks to gain access to iZettle’s point of purchase credit platform.

The CMA stated:

“… the CMA has found that PayPal could face insufficient competition in the UK after acquiring its market-leading rival. The finding raises concerns that the merger could result in customers, which include small and medium-sized businesses, paying higher prices or receiving a lower quality service.”

The CMA added that iZettle could have provided strong competition for PayPal if the company had not moved to take over the Fintech.

NatWest digital loan ceiling lifted to £700K (FinExtra) Rated: A

NatWest has today announced the launch of a new digital platform which will be available to all NatWest business and commercial customers allowing them to apply online for secured and unsecured loans of up to £750,000 – the largest digitally available loans in the industry.

The new platform, available to all business and commercial banking customers who use online banking, will allow applicants to complete the process in a matter of minutes, with a decision being communicated to customers usually within 24 hours, sometimes immediately. This fully digitised application process streamlines the customer experience and reinforces NatWest’s position as the UK’s leading commercial lender.

NatWest’s development underlines the bank’s commitment to further improving its digital offering and builds on the success of its ESME Loans platform, which provides loans of up to £150,000, Mettle – the standalone digital business current account, and LenderComm, the first production use of blockchain in the syndicated loan marketplace.

Arbuthnot Commercial Asset Based Lending supports acquisition of Euxton Tile Supplies Ltd (Bridging Loan Directory) Rated: B

Arbuthnot Commercial Asset Based Lending (ABL) has supported the acquisition of Euxton Tile Supplies Ltd (Euxton) by Earle Group with a £2m asset based lending facility, comprising a £1,250,000 confidential invoice discounting line and a £750,000 cash flow strip to provide the desired level of headroom in the transaction.

Wonga to automate compensation claims (TNT Magazine) Rated: A

Wonga, the payday lender that went into administration this August, plans to automate its compensation claims process – sparking fears that customers will lose out. Accounting firm Grant Thornton is in the process of winding up Wonga and is legally obliged to assess the claims of all customers who believe that they have been mis-sold loans.

The Guardian reports that in a bid to cut costs the administrators are creating an automated ‘adjudication tool’ that will decide which claims to pay out on, rather than processing each claim manually.

In its October letter to creditors, Wonga said that it had been receiving roughly 200 to 500 compensation claims every day after it went into administration on 30 August. Before that date the company had received 24,000 complaints from customers and a further 9,500 had been escalated to the Financial Ombudsman Service.

Proplend Milestone: Surpasses £50 Million in Online Lending (Crowdfund Insider) Rated: A

Less than six months after surpassing £40 million in online lending, UK based peer to peer lender in the property space, Proplend, announced on Monday it has now reached £50 million in online lending. According to the lender, all loans are commercial property backed, comprising a mix of bridging and mortgage lending risk-adjusted returns, which were funded by the lending platform’s growing band of Classic account, Pension account, and ISA “Lenders.” Proplend also revealed:

“By circumventing the traditional banking system, our Lenders have access to secured, inflation-beating fixed income returns whilst providing creditworthy commercial borrowers with an invaluable source of fast, flexible, interest only alternative funding. Having facilitated its first loan in 2014, Proplend has since accommodated over 50 commercial facilities, each loan typically funded within 24 hours by more than 100 participating Lenders. With a maximum loan term of 5 years, 20 loans have fully repaid to date with more than £15m capital returned and over £4m interest earned across the book – much of it tax-free.”

China

Yirendai Is At A Critical Stage To Regain Growth (Seeking Alpha) Rated: AAA

Yirendai Ltd (NYSE: YRD) released the third quarter 2018 earnings on November 12, with diluted Earnings per ADS of RMB2.43 (USD$0.35), decreased from USD 0.5 from second quarter. Considering the application of ASC 606, the adjusted earnings per ADS (if ASC were not adopted) is RMB 5.89 (USD 0.86), increased from RMB 4.91 in the same period from last year.

  1. The volume of newly originated loans has been decreasing, more than the loan volume decrease of the industry. We can compare YRD’s loan volume with the industry, as well as some competitors, as below.
    Source: Seeking Alpha

WeiyangX Fintech Review (Crowdfund Insider) Rated: A

Ping An Invests $47 million in Berlin-based Fintech Startup Finleap

The Ping An Insurance Group’s Global Voyager Investment Fund led a €41.5 million ($47 million) investment towards Berlin-based Fintech company Finleap.

Internet Finance Association of Jiangxi Province Issues P2P Exit Guidelines

On November 16, the Internet Finance Association of Jiangxi Province issued the “Guidelines for the Exit of Online Lending Intermediary Organizations in Jiangxi Province (Trial)”, stating that online lending institutions should put the rights of protecting lenders at the top of their exit work and minimize the loss of lenders. The guidelines specifically mention that when a P2P institution exit, it needs to take eight steps, namely:

(1) to file an application for withdrawal;

(2) to set up an exit work leading group;

(3) to issue an exit notice and close some platform functions;

(4) to prepare a business list of circumstances and formulate an exit plan;

(5) submit an exit plan and other related materials;

(6) publish relevant information such as the exit plan;

(7) implement the lender’s funds as planned, and steadily settle the stock items;

(8) completion of the exit.

European Union

Lendingblock Receives In-Principle Licence as DLT Provider in Gibraltar (Crowdfun Insider) Rated: AAA

Securities lending platform for digital assets Lendingblock has issued a statement indicating that the Gibraltar Financial Services Commission (GFSC) has made an in-principle decision to grant the firm authorization as a Distributed Ledger Technology (DLT) provider. Lendingblock adds that it continues to work closely with the GFSC as it seeks the full DLT licence.

Lendingblock says that following this decision, and the successful testing period, the Lendingblock platform is open for institutional onboarding in preparation for launch.

Market participants are now able to sign up for access and will be able to commence borrowing and lending  BTC, ETC, BCH, and LTC beginning early next year.

Digital lenders ‘must keep investing to grow’ (IBS Intelligence) Rated: A

Research from digital ID specialist Mitek has concluded that there is a huge opportunity for digital lenders to grow, if they continue to invest in digitisation.

The findings have been published as a whitepaper, authored by fintech research practice Autonomous NEXT. Titled European Digital Lenders, it looks into the state of the digital lending market in Europe.

He said the report found that venture capital investment is still flowing into the space and is set to hit $800m in Europe: “The UK alone has originations of over $6bn, and Europe-wide, the addressable market is $150bn – with current digital lender revenues estimated at $400m,” he added. “Moreover, the market shows impressive originations growth, with a 60% CAGR since 2013.”

Australia/New Zealand

Australian challenger bank Judo gets $ 350m funding boost (Fintech Futures) Rated: A

Melbourne-based challenger bank Judo Capital is edging towards a bank licence with a $350 million debt facility agreement with firm Credit Suisse.

The bank shared the news with Business Insider. David Hornery, co-founder and co-CEO of Judo, says the facility will provide further depth to Judo’s funding for Australian SMEs.

Short-term loan, long-term debt: Superloans under investigation after slew of complaints (Stuff) Rated: A

Short-term money lender Superloans has come under attack from people who say they target poor and vulnerable consumers, charge extremely high interest rates, and resort to illegal means for recouping their money.

The Commerce Commission has launched an investigation into Superloans after it received more than 20 complaints against the company since 2013 – several from financial advisors.

Copies of the complaints, obtained under the Official Information Act, reveal one complainant alleged Superloans threatened to take repayments out of a person’s pay cheque, illegally.

Another woman complained that a Superloans’ employee only looked at her bank statements before approving her loan application, and did not check her credit.

India

IvyCap Ventures makes first investment in P2P lending through Lendbox (The Ecomonic Times) Rated: AAA

Credit marketplace LendBox has secured the first investment by a large institutional investor in India’s peer-to-peer lending space, raising Rs 6 crore in a pre-series A financing round.

Major Trends Witnessed this year in Fintech (Entrepreneur) Rated: A

Online lending platforms have been quite phenomenal in filling in the credit void within our country. But how accomplished are they in doing so? MSME loans are considered as the trickiest element of lending given the sheer opacity that exists within the sector. This opacity has decreased the share of scheduled commercial banks in MSME credit from 95% to 90% between December 2015 and March 2018. The credit growth turned negative post-demonetization. During the same period, the share of loans by NBFCs (which are essentially used by online lending platforms) nearly doubled growing with an annual average of 35 per cent, largely because of cutting-edge technologies such as Artificial Intelligence and Big Data.

5 ways to reduce risk in P2P lending (The Economic Times) Rated: A

Lending money is a risky affair. However, there are ways to minimize the risk. Since peer-to-peer (P2P) lending is a relatively new concept and the RBI regulations for the P2P sector are barely about a year old, here are five effective ways in which you can reduce the risk to ensure getting your money back. Of course, with interest.

Understand the platform
You should try to understand how the online P2P model works before lending money on it. An investor should be aware how the money is lent on the platform and what are the risks involved in lending money on the platform.

Do not hesitate to ask the P2P player about the overall volume, defaults, recovery process and likely returns. You can do your own research or simply contact the P2P company through emails, chats or phone calls.

Do not go overboard
Sure, P2P platforms can offer your higher double-digit returns. But that doesn’t mean you should lend your entire in P2P lending. Choose the amount you wish to invest and then diversify,” says Raghavendra Pratap Singh, Co-Founder, i2ifunding.

Ex-Infosys CFO & Director V. Balakrishnan Joins Association of NBFC P2P Platforms as Patron Member (Indian Web) Rated: B

Within a month after the formation of NBFC-P2P industry bodyAssociation of NBFC P2P Platforms, the association today announced the joining of finance industry veteran & Former Infosys Chief Financial Officer V Balakrishnan as Patron Member.

P2P lending industry players have formed association to represent the Indian NBFC-P2P industry at various national as well as at international forums. The P2P operators participating in the operations are OML P2P, Monexo, PaisaDukan, Finzy, Cashkumar, Liquiloans, Micrograam, Lendsmartp2p, Peerlend and Indiamoneymart. The association aims to establish formal lines of communication between various government and regulatory authorities on matter of compliance and to create awareness about the industry and to work towards enhancement of public trust in this sector.

Asia

HonestFund Raises $ 12.2 million (USD) in our Series B round (Honestfund Email) Rated: AAA

HonestFund is one of the largest peer-to-peer lending players in South Korea. We were founded in 2015 and currently have about USD 300 million in cumulative originated loans. We have recently raised USD 12.2 million in our Series B round from the top VC firms, IT giants, and the largest financial institutions (i.e. Shinhan Bank and Hanwha Life Insurance) in South Korea.

Canada

Unlicensed online payday lenders are operating in New Brunswick (Global Newswire) Rated: A

Unlicensed online payday lenders are targeting New Brunswickers, warns the Financial and Consumer Services Commission.

FCNB has been receiving complaints from consumers about inappropriate collection practices by payday lending businesses not licensed to operate in the province.

“We are hearing that these businesses are contacting consumers who have fallen behind in their payments at their place of employment and in some cases, threatening to seek repayment from their employer. Sometimes they are contacting them up to 50 times a day,” said Alaina Nicholson, director of Consumer Affairs at FCNB. “It is against the law for a payday lender in the province to contact you at your place of work, or to contact your employers or coworkers to collect a payday loan that is late.”

Subscribe Technologies Upgrading Lendertech With Peer To Peer Lending Service And Integrating Platform Into Gingerly Marketplace (Stockhouse) Rated: A

Subscribe Technologies Inc. is pleased to announce it is upgrading the Company’s Lendertech financial technology platform with financial service auction and matchmaking features and has begun the initial phase of integrating the technology with the Company’s flagship Gingerly small business software application marketplace.

LenderTech facilitates greater and broader access to capital for those in need, including across a number of traditional and emerging areas such as mortgages, commercial lending, auto loans, student loans, and small business loans, among others.

As intended, our development team is now integrating this money lending service into the Gingerly software application marketplace and dashboard, with the addition of new Peer-to-Peer matchmaking features, designed for SMEs to have greater and faster access to lenders in one clean and simple to use interface.

IOU Financial Inc. Joins the FINSYNC Lending Network  (PR Newswire) Rated: B

 IOU FINANCIAL INC., a leading online lender to small businesses (IOUFinancial.com), is pleased to announce its strategic partnership with FINSYNC, Inc. (“FINSYNC”).

Small businesses of all types rely on FINSYNC to visualize, manage and project cash flow and analyze loan options.  IOU’s non-collateralized financing product has been assimilated by FINSYNC, enabling users who apply for financing through FINSYNC to quickly access IOU’s affordable, flexible financing for working capital and expansion.

Africa

Nigeria’s mixed signals on fintech (Euromoney) Rated: AAA

Earlier this year, the country’s central bank and the Nigeria Inter-Bank Settlement System opened a regulatory sandbox to enable budding fintech companies to develop new products freely and securely, becoming one of the first African countries to do so.

Even before that launch, Nigeria was frequently touted as the continent’s next big fintech hub, set to compete with South Africa and Kenya.

Bitcoin exchange NairaEx, online lender KiaKia and invoicing platform Payant are just three of the firms that have made a name for themselves in short order.

Authors:

George Popescu
Allen Taylor

Tuesday October 16 2018, Daily News Digest

Dow Jones VC Report Q3 2018

News Comments Today’s main news: OnDeck creates subsidiary for bank partnerships. Lendio hits $1B in business loans. Blend Network on track to exceed 5M GBP in lending. Hexindai completes P2P compliance self-inspection report. Today’s main analysis: Bank earnings for JPMorgan, Wells Fargo, and Citigroup. Today’s thought-provoking articles: Why Google and Amazon are not a threat to small banks. Cities […]

Dow Jones VC Report Q3 2018

News Comments

United States

United Kingdom

Southeast Asia

Other

News Summary

United States

OnDeck creates new subsidiary for bank partnerships (American Banker) Rated: AAA

OnDeck Capital, an online lender that also provides the technology to JPMorgan Chase’s digital small-business lending platform, is creating a new subsidiary to pursue partnerships with other banks.

The wholly owned subsidiary will be called ODX, according to New York-based OnDeck.

OnDeck, which specializes in online small-business loans, has been working to build its bank partnership business since announcing its deal with JPMorgan Chase in 2015. The nation’s largest bank launched its QuickCapital platform in 2016.

Lendio Tops $ 1B in Business Loans Facilitated Through Its Online Marketplace (PRWeb), Rated: AAA

Lendio today announced it has facilitated $1 billion in financing to more than 51,000 small businesses across the U.S. Since its inception in 2011, Lendio has been bridging the financing gap for small business owners. As a result of access to growth capital, Lendio’s small business clients have burgeoned, generating an estimated $3.8 billion in economic output and creating more than 25,000 jobs in communities nationwide.

Rocky Week for Equities, Strong Bank Earnings (Peer IQ) Rated: AAA

JP Morgan Q3 Earnings

Revenues at JPM grew by 5% YoY to $27.8 Bn, and earnings grew by 24% YoY to $8.4 Bn. Earnings growth was driven by record NII of $14.1 Bn, up by 7% YoY, while fixed income trading revenues dropped by 10% YoY. JPM saw a small increase of 2% YoY in its consumer loan book. Net charge-offs declined by 11% YoY to $1.1 Bn and the provision for loan losses declined by 35% YoY to $0.9 Bn. The bank saw healthy growth of 11% YoY in its digital banking customers to 32.5 Mn. JPM’s ROE for this quarter was 14%, up by 3% points YoY.

Wells Fargo Q3 Earnings

WFC’s revenues were flat YoY at $21.9 Bn, but earnings grew by 33% YoY to $6 Bn. Earnings growth was driven by 1% YoY increase in NII to $12.6 Bn. The consumer loan book continues to decline with a drop of 3% YoY to $440 Bn driven by auto loans. Net charge-offs declined by 13% YoY to $0.5 Bn and the provision for loan losses declined by 19% YoY to $0.6 Bn. Digital banking customers grew by 4% YoY to 29 Mn. WFC’s ROE for this quarter was 12%, up by 3% points YoY.

Citigroup Q3 Earnings

Citi’s revenues were flat YoY at $18.4 Bn, but earnings grew by 12% YoY to $4.6 Bn. Earnings growth was driven by 9% YoY increase in fixed income trading revenue, the first increase since 2017. Citi’s outstanding consumer loans grew by 3% YoY to $309 Bn. Net charge-offs increased slightly by 1% YoY to $1.7 Bn but the provision for loan losses declined by 13% YoY to $1.9 Bn. Digital banking customers grew by 5% YoY to 18 Mn. Citi’s ROE for this quarter was 9.6%, up by 2% points YoY.

Source Peer IQ

Here’s why Google, Amazon aren’t a threat to small banks (American Banker) Rated: AAA

It’s a logical theory that sounds reasonable on its face: Since most small businesses already use Google, Amazon and Facebook for marketing, it will be easy for these tech giants to market loans to small businesses that they already have as customers.

One CNBC headline sums up the sentiment: “Another industry Amazon plans to crush is small-business lending.” The story notes that Amazon has already made billions of small-business loans to thousands of merchants and suggests that the online giant could come to dominate lending. In addition, there are countless fintech startups also seeking to disrupt small-business lending.

That’s because the theory misses a crucial detail: When tech giants and fintech startups target a business segment, they take a programmatic approach of catering to the most common use cases. That’s the opposite of what community banks do.

LendingTree Reveals the Cities with the Most Foreign-born Homeowners (Lending Tree) Rated: AAA

In data for 2017, the Census Bureau found that 13.7% of the U.S. population was foreign-born.

  • Key findings
    Cities with larger foreign-born populations and homeowners have higher home prices. Prices for the top 10 cities average $491,750 compared with $167,560 for the bottom 10.
  • But the lead city has modest home prices. Miami is top of the list with 26% of homes owned by foreign-born residents, but has a median price of just $278,700.
  • Immigrants love the coasts. The rest of the top five are also coastal cities, all in California with 17% and higher foreign-born homeownership rates and home prices above $300,000.
  • Some bargains are available. In addition to Miami, more affordable cities with high immigrant populations include Houston at No. 6 and Las Vegas at No. 7.
  • Cheaper cities are mostly shunned. Immigrants show little interest in bargain hunting in the cities towards the bottom of the list. The percentage of foreign-born homeowners in the bottom five cities is below 3%, despite home prices averaging about $160,000.
Source: Lending Tree

Anju Patwardhan of CreditEase Fintech Fund (Lend Academy) Rated: A

There are many VC firms investing in fintech today but most are based in the US or Europe. Our next guest on the Lend Academy Podcast runs a different type of fund that has its origins in China.

Anju Patwardhan is a Managing Director of the CreditEase Fintech Fund, which has quietly become one of the leading VC firms globally focused on fintech. They only launched in March 2016 and already they have made 45 investments into many of the leading fintech names such as Upgrade, Marqeta, Funding Circle, Ellevest, NAV, Figure, Onfido, DV01 and True Accord just to name a few.

Barclays to challenge Goldman’s Marcus in US retail banking (Financial Times) Rated: A

Barclays is launching a US current account in a move that will put them in a head to head battle with Marcus; the account will be added to their current digital offering in the U.S. which currently includes credit cards, savings and loans to about 13 million customers; “We’re going to launch checking, we’re in the process of doing the build and we’re doing some testing .

We expect to have that in the market next year,” explained Barry Rodrigues, head of cards and payments at Barclays International, to the FT; the company does believe their knowledge in the U.S. market with credit cards can help to position them as they make this push into checking accounts; the company has not released targets for how many accounts they look to attract.

Why Did This Fintech Startup Sponsor A NASCAR Driver? (Benzinga) Rated: A

So how can a fintech startup stand out in an increasingly crowded fintech space? For personal finance and lending startup MoneyLion, the answer is to go where the audience goes—and go around in a loop with them 500 times.

Pedal To The Metal Scaling

That’s why MoneyLion recently announced it was partnering with Penske Automotive Group, Inc. PAG‘s Team Penske to sponsor NASCAR driver Austin Cindric’s Ford Motor Company FMustang for four races this season. It’s an unexpected move from a fintech startup, whose primary marketing channels to date have generally been social media and TV commercials.

6 reasons to invest in your 20s (when all you want to do is spend) (The Next Web) Rated: A

1. Startups, job-hopping, and the gig economy come at a price

Unlike previous generations, we have much more freedom to job-hop. On average we’ll go through at least four different jobs by the time we’re 32.

By 2020, self-employment is likely to triple to 42 million workers with millennials making up 42 percent. This means we can now have our flan and eat it too.

2. Don’t count on social security either

With the number of retirement age citizens (65+) set to increase from 48 million today to 79 million, if reforms aren’t made, social security will start running out by 2035.

4. If you start investing now, you could be a millionaire later

If you want to start off small you can try investing in peer-to-peer lending with a minimum of $25. Instead of going through banks, peer-to-peer lending connects borrowers to lenders. Lenders can finance all or part (along with other investors) of a borrower’s loan at an interest rate of roughly between 5-36 percent.

United Kingdom

Blend Network on track to exceed £5m of lending (Development Finance Today) Rated: AAA

Speaking exclusively to Development Finance Today, Yann Murciano, CEO, and Roxana Mohammadian-Molina, chief strategy officer (left), both of Blend Network, highlighted the company’s significant growth and future plans for the platform.

“We had a target of £5m, which it looks like we are going to exceed, because we will be at more than £4.2m in the next 10 days.

“In the first four months, we provided one facility of £1.3m and one for £1.4m, so this is how quickly we are growing.

Abundance Set To Unveil Fund Raising (Forbes) Rated: A

Green and social infrastructure crowdfunding platform Abundance is set to announce a fund-raising of its own. The platform will this week unveil plans to raise a seven-figure sum to fund its next stage of growth, with an equity issue that will be hosted on its fellow crowdfunding service Seedrs.

New To The UK, Royalty Finance Seeks To Reach The SMEs That VCs And Lenders Pass By (Forbes) Rated: A

But there is perhaps one small corner of the alternative finance universe in which the UK has been behind the curve – namely royalty finance.  Originally developed to service the mining and commodities industries, the concept of royalty finance has been adapted to the needs of SMEs and mid sized companies. US businesses have been able to access this form of funding since the early  1990s, when a fund called Cypress Growth Capital was established to provide an alternative to venture capital,  but to date the idea has  failed to gain much traction in the UK.

But things are changing. Corporate finance companies  offering variations on the royalty finance theme are emerging – including 

FCA sounds redress warning over high cost credit (Peer2Peer Finance) Rated: A

The Financial Conduct Authority has written a “Dear CEO” letter to platforms providing high-cost short-term credit – which includes some peer-to-peer lending firms – to check on their creditworthiness assessments, particularly for repeat borrowers, and to assess whether customers are being treated fairly.

It warns that firms must be able to fund any remediation costs from complaints and should inform the FCA if they are unable to.

The letter follows the collapse of payday lender Wonga in August.

China

Hexindai Completes Submission of P2P Compliance Self-Inspection Report (PR Newswire) Rated: AAA

Hexindai Inc. (NASDAQ: HX) (“Hexindai” or the “Company”), a fast-growing consumer lending marketplace in China, today announced it has completed the submission of its P2P Compliance Self-Inspection Report to the Beijing Municipal Bureau of Financial Work, completing one of three key steps for compliance with industry reforms from the National P2P Rectification Office.

Hexindai is actively supporting and participating in this compliance process, which aims to foster the stable growth of the P2P lending industry in China. The result of this process will be a set of standards and best practices across the whole industry to protect the interests of both borrowers and lenders.

Now, Hexindai will focus on the next two steps in the process, including an inspection conducted by Beijing Internet Finance Industry Association. This will be followed by verification of inspection results by the Beijing Municipal Bureau of Financial Work with field inspection and possible final check by higher level government organizations.

China’s Financial Regulators Issue Anti-Money Laundering Anti-Terrorism Financing Regulations for Fintech Industry (Crowdfund Insider) Rated: A

On October 10th, People’s Bank of China, China Banking & Insurance Regulatory Commission and the China Securities Regulatory Commission jointly issued the “Administrative Measures on Anti-Money Laundering and Anti-Terrorism Financing for Internet Finance Institutions (Trial)” (hereinafter referred to as the “Administrative Measures”).  The purpose of this document is to regulate the possible anti-money laundering and anti-terrorist financing of Internet finance institutions, and to effectively prevent money laundering and terrorist financing activities.

The “Administrative Measures” will be implemented from January 1, 2019, and require deeper compliance requirements for Internet finance institutions. At the same time, NIFA should coordinate with other industry self-regulatory organizations to formulate industry rules to achieve effective linkage between supervision and self-discipline management.

European Union

European VC Funding Rises in Q3 but Deal Flow Declines (Crowdfund Insider) Rated: AAA

Source Crowdfund Insider

Dow Jones VentureSource is out with their quarterly report on VC activity for Q3 of 2018. According to their numbers, European VC fundraising increased during Q3 but investment in European companies “showed a notable decline in deal flow activity and investment levels.”

The report states that VC investment for the quarter totaled €3.51 billion across 24 European VC funds. This is a significant increase of 50% versus Q2 of 2018. Additionally, when comparing to Q3 of 2017 both capital and fund closings increased by 90% and 14% – respectively.

Australia

New digital ‘banking alternative’ launches (The Advisor) Rated: AAA

A new digital platform, run in partnership with Bendigo and Adelaide Bank, has launched to give Australians a “radically different banking alternative”.

The new digital app, called Up, was created by Melbourne-based technology developer Ferocia and operates under Bendigo and Adelaide Bank’s banking licence.

The smartphone banking app was officially launched last week and enables customers to track their money in real time, predict upcoming bill charges automatically and pay them on time, and also offers multiple saver accounts, round-ups on purchases, digital payments (such as Apple Pay and Google Pay) and no international transaction fees.

India

Funding the wanderer (DNA) Rated: AAA

Start-ups in fintech and peer-to-peer (P2P) lending platforms are devising strategies of attracting more millennials towards small-ticket loans ranging from Rs 10,000 – 200,000, which are being mainly utilised towards experiential travel. Entrepreneurs say small ticket loans generally go towards home renovation, home decoration, home repairs, purchase of second cars/bikes, etc.. “But off late, the trend is tilting more towards utilisation of such loans for fulfilling travel ambitions,’’ say entrepreneurs.

“There is no doubt this segment (travel) is rising and more people are opting for this loan. Any customer would love a packaged deal which comes with financial support to go on a vacation, and this will also help them enjoy their vacation well,” says Bhavin Patel, co-founder and CEO, LenDenClub.

Although people going for longer vacations or to expensive destinations take loans that are in lakhs, during long weekends, the frequency of very small loans ranging from Rs 3,000 – 10,000 increases significantly, observes Bala Parthasarathy, co-founder and CEO, MoneyTap. The idea is to supplement their existing cash coffers, without causing any imbalance in their daily lifestyles, say experts.

Making FinTech Model Work for India (Entrepreneur) Rated: A

It’s 2018. We’re facing the impending risk of climate change, rampant wealth inequality, and increasing populism around the world. We need to think beyond quarter-to-quarter profits to survive this. Companies must think about the long-term effects of their work—beyond their bottom dollar.

Find a purpose for your company that will help you soar during the good times, and persevere during the tough. What’s helped me fight fires every day—and get through the hardest challenges—is our mission of powering a new, more equal digital economy in India. A true mission serves a massive need in our society, especially for SMBs navigating the post-GST economy, and has the potential to create millions of jobs for companies looking to digitize and become compliant.

What’s my business model? How does it relate to my mission? What vulnerabilities does it have?

A mission should be more than words on your website’s ‘About’ page. It should lie at the core of everything you do, including your business model. You’re destined to fail—or at least be gravely disappointed—if your mission and business model do not align.

One of India’s fastest growing P2P lending platforms, ATL facilitates instant unsecured loans (personal, education and business loans) to eligible borrowers by connecting them with investors or lenders across India through a 100% digital ecosystem.

With this certification, ATL joins a select group of fintech startups who hold the NBFC-P2P accreditation. RBI follows a very stringent due diligence process while granting this license, which involves eligibility criteria like financial stability, business continuity plan, and how the business will aid in RBI’s larger vision of financial inclusion. The startup says that recognition from RBI is a strong validation of the startup’s sharp business model, processes and compliance with the RBI guidelines.

Africa

How internet is helping revitalise agriculture sector in Africa’s most populous nation (Devdiscourse) Rated: AAA

It looked like the end had arrived for Adewale Fatai’s chicken farm. Money was running out. Built to house 30,000 chickens, the farm was producing fewer than 2,000 chicks. His family had no funds to lend, and Nigeria’s banks weren’t interested.

Instead, he went online.

Two years later, Fatai now has 20,000 chickens. Flanked by thousands of chirping birds at his farm in Nigeria’s southwestern Ogun state, Fatai says his operation was saved by Farmcrowdy, one of a breed of new peer-to-peer lending companies aiming to match farmers with small investors.

Equity of Kenya Sees $ 22 Million FinTech Income This Year (Bloomberg) Rated: A

Equity Group Holdings Ltd., Kenya’s biggest bank by market value, expects its financial-technology unit to bring in as much as 2.2 billion shillings ($22 million) of revenue in its first year of independent operations, according to Chief Executive Officer James Mwangi. The bank “has resolved to make Finserve an independent commercial subsidiary,” Mwangi said in a statement published in the Nairobi-based Sunday Nation newspaper. The unit serves 1.96 million subscribers on its mobile-banking platform, Equitel, he said.

The unit, Finserve Africa Ltd., became an independent entity this year and facilitates cross-border transactions in seven Eastern African nations worth 2 billion shillings each month, according to the statement. It has a startup capital base of 1 billion shillings and its assets are valued at 1.98 billion shillings, Mwangi said.

Asia

SoftBank is the new form of IPO (Krasia) Rated: AAA

With a walloping around US$100 billion check, SoftBank’s Vision Fund is the world’s largest venture capital vehicle, and it’s also considered too big to be a conventional one. The Vision Fund is known for throwing gigantic amount at startups, urging them to compete for more market share at costly expenses.

Online lender Social Finance’s ex-CEO Mike Cagney, after investments from SoftBank in 2015, said that the funding “takes the pressing need of an IPO off the table,” and allow the company to put off an IPO indefinitely.

It seems that, receiving SoftBank investment is the new form of doing an IPO.

The firm in Southeast Asia invested in Grab and is encouraging the ride-hailer to form joint ventures with its portfolio companies to help them enter the region.

Shady online lenders still active in Indonesia despite blacklists (Krasia) Rated: A

Unethical debt collection practices are part of the reason Indonesia’s financial services authority, OJK, has been strictly monitoring the sector. It recently blacklisted 407 online lenders for not registering with the authority. Raja Uang was one of them.

OJK cracks down on all firms who operate without being registered with OJK, but in practice, it’s difficult to ensure they do shut down for good.

Indonesia’s CROWDE raises funding from GREE Ventures (E27) Rated: A

Indonesian agritech startup CROWDE today announced that it has raised an undisclosed seed funding round from Tokyo-based venture capital firm GREE Ventures.

Crevisse Ventures also participated in the funding round.

In a press statement, CROWDE CEO Yohanes Sugihtononugroho explained that the funding will be used to increase the number of farmers that the company aims to help by giving them capital boost.

Authors:

George Popescu
Allen Taylor