Monday February 13 2017, Daily News Digest

middle east africa alternative finance

News Comments Today’s main news: American Banking Association endorses digital lending solution by Akouba. LendingTree announces top customer-rated lenders for Q3, Q4 2016. Chinese manager of 8 P2P lenders disappears. Today’s main analysis: UK housing whitepaper: Government could boost online lending. Today’s thought-provoking articles: Australian P2P economy now worth over $15B/year. A speculative report to be taken with […]

middle east africa alternative finance

News Comments

United States


  • The economics of P2P lending. GP:” Forecast is for Saudi Arabia to have the 2nd largest p2p market at $10.3bn ahead of UK’s $4.3bn. Surprising, isn’t it? What about India? China? Mexico? France? I also get confused when the author uses an expression as p2p money transfer and then p2p lending. They are very different things. And last but not least what is p2p? Is Avant a p2p company in this report? I would take this report with a grain of salt. ”  AT: “This is an interesting read simply for the country comparisons of P2P transaction value.”

United Kingdom


  • The P2P economy now worth over $15B a year. GP:” P2P goes beyond lending into all kind of sharing markets from Uber to Airbnb. The internet disintermediates AT: “This goes well beyond P2P lending and into the sharing economy as a whole. Nevertheless, Australians are participating in huge numbers.”



Africa, Middle East


United States

LendingTree Announces Top Customer-Rated Lenders for Q3 & Q4 2016 (Yahoo! Finance), Rated: AAA

LendingTree®, the nation’s leading online loan marketplace, released today its quarterly list of the top customer-rated network lenders for the third and fourth quarters of 2016. Winners are based on a five-star quality review system for overall customer experience as determined by LendingTree account holders. The list features the top lenders in LendingTree’s core financial marketplace categories: Home Lending, Personal Loans, Auto Loans, and Business Loans.

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

While it was officially launched last year, the Philadelphia Department of Commerce’s 29 member Capital Consortium appears to be up and running now.


If you’re having relationship troubles this Valentine’s Day, you may want to check your credit score. Nonprime Americans are 45 percent more likely to be divorced, according to new research by Elevate’s Center for the New Middle Class, a research institution that examines the everyday effects of being nonprime in America.

“This latest research raises an interesting question about cause and effect. Are people getting divorced because stressful finances put pressure on relationships, or are people becoming nonprime because divorce has negative financial consequences?” said Jonathan Walker, executive director of Elevate’s Center for the New Middle Class. “Regardless of the cause, it’s clear that financial pressures are greater in nonprime couples, and that people experiencing financial difficulties are more likely to be nonprime.”

The study also found that 1 in 5 married nonprime Americans feel they have little control over the things that happen to them in general, and more than 50 percent run out of money every 2-3 months or more often. Additional key findings about married nonprime people include:

  • 4 out of 5 say they cannot regularly save money

  • They are 2x more likely to carry a credit card balance

  • They are 2x as likely to have lost a job in the prior 5 years

  • They are 1.4x as likely to have had their pay or work hours reduced in the prior 5 years

  • They are almost 3x more likely to worry over their monthly expenses

  • They are 1.5x more likely to admit that their finances cause significant stress

In nonprime households, uncertainty compounds with marriage rather than dissipates. In fact, married nonprimes are much less likely to feel they have control in their lives compared to prime people and even when compared to their single nonprime counterparts.

ABA Endorses Digital Lending Solution by Akouba (Yahoo! Finance), Rated: A

The American Bankers Association – through its subsidiary the Corporation for American Banking – has endorsed the digital lending solution provided by Akouba, which provides community and regional banks with an origination and underwriting platform for small business loans. ABA members will receive preferred pricing.

Akouba is transforming the way banks help business owners through a cloud-based, white-labeled technology that provides business lending quickly, accurately and profitably. Akouba’s business lending platform provides banks with leading edge technology that integrates the bank’s own unique credit policies into a convenient, online process—from application to documentation— all the way to closing and funding. The bank uses its own credit policies, originates its own loans and owns the entire brand and customer relationship.

Crowdfunding puts the mojo in flipping (News-Press), Rated: A

For the Landings penthouse, the partners decided to finance the flip with Atlanta-based Groundfloor.

Groundfloor underwrote the project as any bank would, by looking at the partners’ financials and evaluation of the project, then sending a local broker to do an independent appraisal. It considered the cost and scope of work estimated by Helm’s contractors — he works with three contractor teams — and factored it with what the penthouse could be bought and re-sold for.

Here’s Groundfloor’s breakdown:

  • Groundfloor financing: $372,090
  • Partners’ skin in the game: $41,344
  • Project cost $413,434
  • Value after repairs: $610,000
  • Loan-to-after repair value: 61 percent

P2P lending growth attracting regulation (Fort Wayne Business Weekly), Rated: B

Indiana’s securities commissioner encourages investors in the state to do their homework on any peer-to-peer lending they consider as federal officials weigh how they might regulate the new financial technology companies.


The Economics Of Peer-to-peer Lending (The Market Mogul), Rated: AAA

This type of lending has been growing ever since, and last year, the total transaction value of peer-to-peer money transfers reached $50.7bn. According to estimations, it should grow to $75.3bn this year, with the US accounting for a $23bn chunk of the amount.

The forecasts put Saudi Arabia as the country with the second highest value worldwide, with $10.3bn and the UK in third with a $4.3bn chunk of the total.

By the end of last year, peer-to-peer lending platforms based in the UK had already lent a total of £7.3bn. Estimations are that this could equate to half of what the entire P2P lending market has already provided since it was established.

TrustBuddy, a lending platform, went bankrupt in October 2015 and until now none of the lenders has seen their money back at all.

Lending Club had a rough first quarter last year as its stock price had dropped 50% from December 2015 to March. The business volume largely increased, so why did it fall?

When peer-to-peer lending moved into the mortgage business, banks finally started taking it seriously.

But the biggest opportunities are probably related to the potential future market for peer-to-peer lending. PwC forecasts that the market now has the opportunity to reach “vast new segments of untapped market potential”.

United Kingdom

Housing Whitepaper: Government Actions May Boost Online Lenders (Crowdfund Insider), Rated: AAA

So what does the UK government do? How do you boost housing supply in a market that is struggling to meet demand? The white paper states that “since 1998, the ratio of average house prices to average earnings has more than doubled.”

In brief, the UK government plan is as follows:

  • For local authorities, the Government is offering higher fees and capacity funding. They want to make it easier for local authorities to move projects along
  • For private developers, the Government is offering a planning framework that is more supportive of development
  • For housing associations, the Government has announced funding of £7.1 billion
  • For utilities the government expects infrastructure providers to move things along
  • For lenders, the Government is offering a clear and stable long-term framework for investment, including products for rent. In return. they call upon lenders and investors to back developers and social landlords in building more homes.

Stuart Law, CEO and co-founder of Assetz Capital commented on the Housing white paper saying;

“Putting pressure on local authorities is a step in the right direction. It’s time for the alternative finance sector to step up.”

Law believes the role of funding many of these projects could end up being financed by the alternative lending sector.

LendInvest is another platform that may gain with added business.

While Property Partner may have been underwhelmed, the real estate platform stated;

“It is both fairer and wiser that the government has moved to a more balanced view of the property market, which must work for those renting, as well as those who aspire to homeownership. Encouragement of institutional investment is a recognition of the important role that investors can play in providing high quality accommodation and a quality experience for renters.”

Kuflink Aims to Be UK Market’s Leading P2P Brand (Crowdfund Insider), Rated: A

Crowdfund Insider had a chance to interview CEO of Kuflink Tarlochan Garcha to learn more about his company’s platform.

Chan Garcha: Our niche is that our sister company Kuflink Bridging retains 20% in every deal on Kuflink’s peer-to-peer platform. All deals are secured against UK property which means the maximum LTV for our lenders is 56% against an auction value of 90 days.

CG:  Investing 20% in every deal demonstrates to our lenders that we have full confidence in all our deals.

CG:  We have an independent credit committee of three independent non-executive directors. All deals are vetted by them before they go onto the platform. We also use credit reference agencies, independent professional valuations along with internal checks and verifications before a proposal goes to the credit committee.

CG:  We feel it is very important to work with the regulator. Unfortunately, they are under-resourced and the knowledge seems to be fairly low. The process takes much longer than it really needs to. We also feel that Treasury could do more to protect lenders. For example, allow the FSCS to cover peer-to-peer.

Meet Anil Stocker: Boss of peer-to-peer outfit MarketInvoice that’s taking on City lenders (IB Times), Rated: A

After overseeing his peer-to-peer finance outfit cap £1bn in lending over the last four years, Anil Stocker is a man in a hurry to get to his next billion mark “by the end of 2017”.

To the outside world, the Fintech sphere might appear cluttered and competitive, and all about going after big banks, but Stocker says that is an oversimplified interpretation of the market dynamic.

“We’re still the flies around the big elephant, so peers and competitors are on the same side. All of us are small compared to HSBC, Lloyds, Barclays, and other legacy finance players whose market and scope is very, very big. Our goal is trying to convince people looking for invoice finance not to just run to their bank for funding needs, but rather consider talking to us.”

MarketInvoice’s lending has increased four-fold over the last 12 months, providing on average £2,196 every minute to UK businesses.

Furthermore, the appetite for asset-based finance is roaring and MarketInvoice is busy carving its own niche in this £20bn industry, a billion at a time.


Peer to peer economy now worth over $ 15 billion a year (Mozo), Rated: AAA

The bi-annual Sharing Economy Trust Index, produced by peer-to-peer lender RateSetter, showed that trust in ride sharing platforms such as Uber and online marketplaces like eBay have grown the most.

With the sharing economy now worth over $15 billion a year, the study revealed that over two thirds of Australians actively participate in the market – whether by spending or earning.

Online marketplaces such as Ebay and Etsy remained by far the most popular way to make money through the sharing economy, while ride sharing, online outsourcing, peep-to-peer lending, and accommodation sharing also proved popular with Australians.

Aside from earning money, consumers can also use the sharing economy to save on goods and services. If we take peer to peer lending as an example, Mozo’s database shows a borrower with a good credit score could secure a rate of just 8.90% by taking out a personal loan with peer to peer lender RateSetter. That compares to the average 12.21% rate offered by the big banks.



Toronto-based Wave, which provides entrepreneurs with accounting, payroll, and invoice software to run their small businesses, has officially stepped into the lending space.

Wave is partnering with US-based OnDeck, which provides small business lending. Lending by Wave will use OnDeck’s platform to streamline and automate the lending process within Wave’s platform.


Manager of 8 P2P lenders disappears, $ 145m in investors funds locked up (Global Times), Rated: AAA

Eight peer-to-peer (P2P) lending platforms announced that their manager disappeared in January, leaving investors unable to withdraw at least 1 billion yuan ($145 million) in funds, domestic media has reported.

The platforms,,,,,,,,, simultaneously announced on January 18 that their manager Fang Fan’s mismanagement of funds had left investors unable to withdraw their money, according to a report on

The platforms are all controlled by Beijing Qiyuan Fortune Network Technology Co, according to the report. As of January, users had invested 170 million yuan on the platform. The figure was 350 million yuan for and 428 million yuan for In total, the three platforms controlled nearly 1 billion yuan in user funds.

At present, continues to operate. On Friday, the platform issued a statement that denied the incident was caused by inappropriate management. It also issued a plan that would allow investors to withdraw their money.

Africa, Middle East

Cambridge Centre for Alternative Finance Publishes Africa & Middle East Alternative Finance Report (Crowdfund Insider), Rated: AAA

The Cambridge Centre for Alternative Finance (CCAF) has published its first benchmarking report covering alternative finance in the African and Middle East markets. Growth was said to be at 59% during 2015 with a total pegged at $242 million. Much of the alternative finance came via equity crowdfunding and online microfinancing. This is in contrast to more developed markets where peer to peer lending (online lending) tends to dominate.

In Africa, the market was nearly $190 million between 2013-2015, and grew 36% in 2015 to $83 million. Most African activity was through online microfinance as well as donation and rewards-based crowdfunding. Investment-based equity and debt models are yet to really make their mark on the African market. CCAF said 2016 may be the year that investment crowdfunding emerges in these markets.

As for the Middle East, about $286 million was raised in 2013-15, including an increase of 75% in 2015 to $159 million. Equity-based crowdfunding accounted for two-thirds of market activity in the Middle East – with the vast majority occurring within Israel. Donation and reward-based crowdfunding, online microfinance, peer-to-peer business and consumer lending and real estate crowdfunding accounted for similar proportions of market activity of 5% to 6% in the Middle East.

Israel was by far the largest market across the surveyed regions, with a total of nearly $125 million in 2015, followed by the United Arab Emirates (UAE) with over $17 million, Kenya with more than $16 million and South Africa with $15 million.

Other findings of note from the CCAF report include:

  • In 2015, well over 75% of the total online alternative finance raised from Africa and the Middle East regions was funding for start-ups and SMEs, with $62 million raised across Africa and $132 million raised across the Middle East. 
  • In Africa, 90% of online alternative finance originated from platforms headquartered outside of the continent, while in the Middle East the reverse is true with 93% of online funding originating from home-grown platforms in the region.
  • Both the African and Middle Eastern online alternative finance markets are showing signs of decelerating growth, particularly in the Middle East. The Middle East experienced an annual growth rate of 152% from 2013-2014, but that rate fell to 75 per cent from 2014-2015. The African market grew 38 per cent from 2013-14 and 36 per cent between 2014-2015.



George Popescu
Allen Taylor

Wednesday September 28th 2016, Daily News Digest

Wednesday September 28th 2016, Daily News Digest

News Comments Today’s main news: LendUp fined $6.3mil; Able raises $100mil; Lending Club sells $300m in loans in private; Today’s main analysis: Speech by Jonathan Davidson, Director of Supervision at FCA; Bondora’s new pricing and its reasons. Today’s thought-provoking articles: Bundling and unbundling; Cognitive computing; United States LendUp gets fined $6.3 mil. This is interesting […]

Wednesday September 28th 2016, Daily News Digest

News Comments

United States

United Kingdom

European Union


United States

“Good guy” loan startup LendUp fined .3M for overcharging, (TechCrunch), Rated: AAA

You can read the full announcement from CDBO here.

You can read LendUp’s full statement here.

LendUp was supposed to be different than the payday loan sharks that rip off the poor when they need emergency cash. But in its early days, LendUp charged customers illegal fees, miscalculated interest rates, falsely advertised loans nationwide that weren’t available there and misled people that borrowing from LendUp would boost their credit score.

Now LendUp will have to pay $6.3 million for the violations. That includes a $3.6 million fine by the federal Consumer Financial Protection Bureau for failing to keep its promises, and a $2.7 million fine with the California Department of Business Oversight for the fees and interest rates.

LendUp CEO Sasha Orloff spoke to TechCrunch, admitting his company didn’t have a big enough compliance and legal team to review all of its promotions and features. To remedy the situation, LendUp proactively refunded any wrongly charged customers and ceased all problematic practices as soon as the investigation began. Now, Orloff says his 190-employee company has a 15-person-plus legal and compliance division — more people than the entire LendUp team at the time of the infractions.+

Additionally, Orloff tells me LendUp hired former regulators to come in and build out its compliance program.

The startup wasn’t allowed to discuss the ongoing investigations until they were recently completed.

The penalties might merely be a speed bump for LendUp, though. It raised a $47.5 million Series B round last month to bring itself to $111.5 million in equity funding, giving it plenty of cash to pay the fine and keep operating.

Able Lending Receives $ 100 Million To Fund Small Business Loans Despite Wider Industry Slowdown, (Forbes), Rated: AAA

Amidst a slackening in investor interest in alternative online loans, Austin-based Able Lending announces Tuesday that it has received $100 million to fund its online small business loans from Community Investment Management, the first impact investment firm focused on marketplace lending.

The two-year-old company uses a singular loan structure in a competitive space that has seen the growth of early leaders like OnDeck, CAN Capital and Kabbage plus a proliferation of startups over the last few years. Able has borrowers get “backers” or other friends, family or customers to fund part of the loan. The company says that, in addition to offering longer repayment periods, this enables it to charge lower APRs than its competitors because Able has found that having someone the borrower knows contribute to the loan increases their willingness to repay.

Including the 5% origination fee, Able’s average APR is 16%, compared to small business loan APRs that can be not only high but even abusive — 40% or 80% at competitors and 200% or even 4,000%among even less reputable lenders.

“Able’s unique loan structure, where friends and family contribute a portion of the loan, allows small businesses to access more capital at lower rates,”

So far, about 35% of backers are friends of the business owner, around a quarter of the backers are customers or fans of the business, another quarter is family and the final 14% are the owners themselves.

Able, which initially launched in Austin and is now in every state except for California, Delaware, Nevada, North Dakota, South Dakota, and Vermont, plans to use the new debt financing to lend to 500 new businesses, which need to have at least $100,000 in revenue and be a year old.

So far the company has zero defaults, but it’s only lent out $30 million to a tiny number of borrowers, especially compared to the giants of online business lending such as OnDeck, which in its latest earnings revealed it originated $590 million in loans in the second quarter of this year alone, reaching $5 billion over the company’s lifetime.

The Rise Of Peer-To-Peer (P2P) Lending, (Nasdaq), Rated: AAA

According to Reuters, “twenty of the world’s biggest banks have paid more than $235 billion in fines and compensation in the seven years period (2008-2015) for a litany of misdeeds, ranging from fines for manipulation of currency and interest rate markets to compensation to customers who were wrongly sold mortgages in the United States or insurance products in Britain.”

The market for alternate finance gained popularity in recent years. A finding by Transparency Market Research suggests that “the opportunity in the global peer-to-peer market will be worth $897.85 billion by the year 2024, from $26.16 billion in 2015. The market is anticipated to rise at a whopping CAGR [Compound Annual Growth Rate] of 48.2% between 2016 and 2024.”

One of the major challenges is managing fraudulent activities and malpractices as they result in loss of investor confidence and trust.

In Europe, several countries have introduced changes to alternative finance regulations as an attempt to regulate the activities of these emerging platforms. In the United Kingdom, Financial Conduct Authority (FCA) regulates loan-based and investment-based crowdfunding platforms.

In Australia, providers of marketplace lending products and related services need to hold an Australian financial services license and a credit license  They also need to comply with National Consumer Credit Protection Act (for consumer loans) or Australian Securities and Investments Commission Act 2001 (ASIC Act) for other loans.

Meanwhile, in the U.S., such platforms need to be in compliance with SEC regulations and further have to be in sync with the respective state laws.

In India, the Reserve Bank of India issued a consultation paper in April where it proposed to bring P2P lending platforms under the purview by defining them as NBFCs.

Realizing that trouble was brewing, in August 2016, regulators in China issued an aggressive set of measures to restrain the spread of problematic online lending platforms while ensuring that the sector is cleaned up by making such firms exit. Statistics by CRBC showed that out of the 4,127 P2P lending platforms (end of June 2016), 1,778 were suffering from problems such as poor management, capital constraints or were a Ponzi scheme.

While the peer-to-peer (P2P) platforms continue to face the risk of default, fraudulent practices or borrower’s turning to banks, the growth prospects of this segment remain strong, especially in times when the banking sector continues to struggle with lingering damages. Thus, a well-regulated and transparent peer-to-peer platforms offer great opportunities as an alternative investment for loan providers as well as for borrowers – both in retail and small businesses.

Yirendai Became an Inaugural Member of the Credit Information Sharing Platform of Internet Financial Industry, (PR Newswire), Rated: A

Yirendai Ltd. (NYSE: YRD) has been elected as one of the inaugural member companies of the Internet Financial Industry Information Sharing Platform (IFIISP) on September 9 in Beijing.

IFIISP was launched by China Internet Finance Association (CIFA) and aimed to track credit information in the industry, enabling member companies to cross-examine credit conditions of loan applicants from multiple angles, preventing “multiple loans”, reducing default rate and business risks, ensuring legal compliance and improving information verification processes.

36 member companies in the fields of internet banking and consumer finance etc. of the CIFA were selected into a training camp of the information sharing platform and filed trial applications onApril 14, 2016, while only 17 companies were admitted into the platform at its inauguration as the result.

Inside Wave’s bundled revenue model, (Tradestreaming), Rated: AAA

On the one hand, veteran fintech blogger Pascal Bouvier has written compellingly about the unbundling of incumbents as a result of emerging fintechs and about the different ways for banks to deal with the disbanding of their value chain.

On the other hand, Bernard Lunn and Chris Skinner have argued that the prevalent trend is actually one of rebundling, of banks integrating fintech into their own technologies to form one-stop-shops for customers.

There is, however, a third hand: plain old bundling. Bundling is happening within the fintech ecosystem and without the banks, with payment companies like Square and PayPal launching their own lending services for SMBs. In a sense, if banks are becoming or are trying to become more like fintechs, some fintechs are also becoming more like banks.

For Wave, a Canadian company offering cloud-based solutions for accounting, invoices, payments, and payroll, the decision to bundle up was largely based on the need to provide better customer experience.

“Wave holds all of your financial information. It knows your bank balances, we know who you have invoiced, how much, when they’re due, we know how long we take to pay, all of these insights finance and cashflow,” Maurin explained. “We can therefore do risk assessment and creditworthiness assessments far better than any other entity has been able to do before.”

The fact that Wave’s core accounting software is free has enabled Wave to overcome the costly microbusinesses acquisition process. In fact, all of their signups – between 50-55,000 new businesses each month – are organic. Bundling, however, is what helps microbusinesses get the cash they need and Wave makes a profit.

Fintech’s might be scalable but are they defensible?, (DailyFintech), Rated: AAA

Scaling a business is a challenging endeavor for a fintech provider up against the big old boys of banking. Unlike an incumbent, in the early days, many are single product shops, and often lack a decent loss leader. This can prove challenging on the pricing front, especially when you’re trying to get a foot in the door of a price-sensitive small business. Banks, on the other hand, have a number of cards up their sleeves – from bank accounts to payments – that can, in essence, be given away, priming them for a future up-selling opportunity.

Winning customers with a technically superior product plus a marginal cost saving is the ultimate sweet spot for supercharged acquisition.

As part of our research at Tyro into the current account market, we’ve noticed ING employing this type of ‘continuous ROI’ tactic. As part of theirAustralian cashback campaign, each month they’d let their customers know how much they’d earned.

But imagine if, for the very same account, how much more powerful this would be if you could state, with some degree of certainty, to what lengths you’d helped customers avoid paying late fees, dishonor fees and admin fees.

Any fintech could then generate a continuous ROI measurement on their product and deliver this on a regular basis.

Confidence In The Face Of Alt-Lending’s Potential Implosion, (Pymnts), Rated: A

Investors have cooled off to alternative lending in the U.S. Just look at the near-immediate struggle faced by Lending Club and OnDeck after their IPOs in 2014, or more recently, the knock-on effect Lending Club’s less-than-noble lending practices have had on investor confidence in other marketplace lenders.

Then, there’s the threat of regulation as the CFPB, the Federal Reserve, the Federal Trade Commission and the U.S. Treasury Department all take their turns to probe and poke at the alt-fin space. To some, that means a regulatory crackdown is inevitably close behind.

It’s in this context of stormy seas for the industry that one market player, Able Lending, announced it secured $100 million in debt financing from Community Investment Management (CIM), money that will be lent out to an estimated 500 SMEs in the country.

Alternative SME lending players have faced a problem of supply as of late.

The strength of the national economy means there isn’t a shortage of demand among small businesses for working capital to fuel their growth.

Pat Grady, a partner at investor Sequoia Capital, warned that “upside has been grossly overestimated” in this industry, adding that online lenders are likely headed towards a “culling of the herd.” Ron Suber of alt-lender Prosper, meanwhile, said he noticed many competitors are shopping themselves around.

Recent warnings over loan stacking are the latest scare for the market, with LoanDepot Chief Risk Officer Brian Biglin telling reporters in June that stacking “is causing problems with the whole industry.”

So, what convinces investors to, well, invest?

According to Davis, it’s twofold: transparency and competitive pricing.

Davis predicts that the CFPB, which has recently targeted consumer payday loans, will focus on the payday loan equivalent of the commercial lending space if and when it does turn its focus to corporate lending.

Again, Davis pointed to OnDeck, as well as CAN Capital, as likely initial targets of the CFPB.

“We basically think, ‘What would the CFPB or any other regulator most likely tell a lender to do in their regulation?’”

“Let’s use common sense,” Davis continued, “like transparency, low rates, no disruptive practices, clear contract, no prepayment penalties.”

Lending Club on the road with latest ABS Offering, (GlobalCapital), Rated: AAA

Lending Club is marketing a private unrated ABS offering after drumming up interest at ABS East in Miami last week, say sources speaking with GlobalCApital on the sidelines of the American Banker Marketplace Lending + Investing conference in NY Tuesday.

New York-based Prospect Capital has purchased the loans as is issuing the $300m deal, according to 2 people with knowledge of the deal. The arranger of the deal could not be immediately determined.

California Federal Court in LendingClub Class Action Requires Due Diligence by Lead Plaintiff Before Approving Lead Counsel, (National Law Review), Rated: A

In a recent decision in the now-consolidated LendingClub class action cases, Judge William Alsup of the Northern District of California appointed a lead plaintiff but unexpectedly declined to appoint lead counsel at the same time.  Instead, the judge ordered that candidates for lead counsel must submit applications to the newly appointed lead plaintiff, who will then move the court—via their current counsel, who is allowed to apply but not to receive special treatment—to approve the lead plaintiff’s choice.

While “[s]everal lead plaintiff candidates filed motions for an appointment,” all but the Water and Power Employees’ Retirement System, Disability and Death Plan of the City of Los Angeles (“WPERP”) either withdrew or failed to oppose WPERP’s motion.

The Court’s opinion is not clear as to whether WPERP’s motion for appointment of lead counsel will be filed publicly, although, unlike with the accompanying declarations, the motion itself “should be served on defense counsel.”

The decision to separate the appointments of lead plaintiff and lead counsel into separate processes is rare, but it is unclear whether it will have a significant impact.

WTF is cognitive banking?, (Trade Streaming), Rated: AAA

Based on machine learning, natural language processing, and human interface technologies, cognitive computing systems can learn as information changes and requirements evolve, and easily interact with users, other devices, and other data sources. In contrast to traditional computing models which tabulate and calculate based on preconfigured rules and programs, cognitive systems can handle situations that are dynamic and information rich.

Imagine banking was as simple as a Google search. Instead of surfing multiple pages on your bank’s app, you type or talk to a  single input box: “I lost my card.”  A quick chat with a rep you didn’t even realize was not human and the new card is on its way.

Generally speaking, banks are still testing the waters when it comes to cognitive banking. In a 2016 survey conducted by IBM, just 11 percent of bank executives reported they have adopted a cognitive technology. 58 percent named improving operational efficiency as their most important strategic priority right now, which might explain the low adoption rate. Banks are generally focused on cost reducing activities and do not make needed IT investments.

In the same survey, 49 percent cited [the rather superficial outcome of] operational efficiency as the main benefit of cognitive computing, indicating bankers are a bit aloof to the transformative potential of it.

United Kingdom

Comment: Speech by Jonathan Davidson, Director of Supervision – retail and authorisations at the FCA, at the Future of Lending Conference.

The FCA, as far as I know, is almost unique among financial regulators in the world,Malta being another, who have a top-line objective to promote competition.

We also see innovation as a particular imperative. So if you have innovative ideas – whether you are new to the industry or well established – please approach the FCA’s Innovation Hub.

Since we took responsibility for regulating consumer credit in 2014, we’ve handled some 39,000 applications. This was a lot more than we had anticipated.

Nevertheless, we have now dealt with 95% of them, and 99% of those we’ve processed to deadline.

There are a number of important reasons why I think we’ll keep seeing personal lenders coming through the doors.

One big factor is the hangover from the global financial crisis. So we expect innovative lenders to continue taking advantage of the current high margin, low-interest rate landscape.

The other major drivers, of course, are new platforms and technologies. So you can point to developments like real-time data sharing, predictive analytics, and mobile tech, as well as opportunities from the API Open Banking Standard.

At the moment, we see a number of risks in personal lending. I do not intend to go over them in exhaustive detail.

But I want to pinpoint two in particular: namely, affordability and the treatment of customers in financial difficulty.

Our authorisations process for interim permission firms has meant a tough and sometimes long journey for some of you.

I recently had a conversation with a non-exec director at a consumer credit firm who told me that the authorisations process had been, in his words, a ‘nightmare’.

We are very pleased with a large number of firms that have proactively engaged with us on our concerns and made radical changes. Naturally, this has caused delays for firms, but we believe it has had a positive outcome.

We currently have just under 1,700 cases remaining to be determined. The length of time we take to finalize those applications will be affected by lots of different factors. Complex cases from higher risk sectors, for example, tend to take longer. And this brings me to an important message to all firms, please be aware that we do not see authorisation as a one-off focus on performance, equivalent to cramming for an exam and then forgetting everything you’ve learned.

We see your responsibility as twofold. We certainly expect you to look out for your individual customers. But we also want you to be aware of your wider responsibility to the UK economy and society.

The FCA has a statutory responsibility to enhance market integrity, which means we take a direct interest in issues ranging from orderly resolution and market abuse, through to efficiency and transparency.The point I specifically want to address today though is related to issues around the transmission and distribution of risk.We fully understand debt and credit are integral to economic growth. Allowing consumption smoothing and investment. However, we also know that if credit grows too fast, affordability suffers.

From the regulator’s perspective, we’ve already authorized 12 firms who are operating P2P platforms and are assessing 85 additional applications, of which 39 are operating under interim permission. So there is clearly a lot of business interest.

I should immediately say this is not a surprise with yields on bonds at historically low levels. Investors earn as much as 10% on three to five-year P2P loans(link is external).

We will continue to pay close attention to personal lenders, and we will certainly not relax our standards. We want to see firms following our rules, but also the spirit of what we are trying to achieve.

Ultimately, we all want a landscape where the general public has confidence in you. And we all want a market in which you have confidence that your market is working well – with principled firms protected from unprincipled ones.

Zopa’s Janardana & P2P GI’s Champ Comment on Europe’s First Securitization of Unsecured Consumer Loans Originated Online, (Crowdfund Insider), Rated: B

Comment: I rated this B because our readers have been aware of this for a while, and while important it is just a secondary reminder now.

Last week, P2P Global Investments and Zopa teamed up to work on Europe’s first securitization of unsecured consumer loans originated online. dedicated to investing in loans originated via marketplace platforms, and was arranged by Deutsche Bank.

To recap: the £138M ($179 million) transaction is backed by 27,137 loans to individuals, according to Moody’s Investors Service, with a weighted average seasoning of 10 months and a maximum loan term of five years. Deutsche Bank AG arranged the deal, branded “Marketplace Originated Consumer Assets 2016-1.” A securitization of loans originated through financial innovator Zopa has received the highest debut rating globally for any issuance backed by peer-to-peer loans, with an AA- rating from Fitch and Aa3 rating from Moody’s on the most senior notes.

Kuflink partners with risk-scoring platform, (Bridging And Commercial), Rated: A

Peer-to-peer lending platform Kuflink has announced a partnership with Contego, the multi-source identity verification, and risk-scoring platform.

Kuflink has appointed the company to ensure compliance with anti-money laundering (AML) regulation at a time when peer-to-peer lending is under great scrutiny.

Contego’s identity verification and risk-scoring platform will allow Kuflink to verify the identity of its lenders and screen them against politically exposed person and sanction lists.


European Union

Estonian P2P lender Bondora hikes max return to 32.5% under new loan pricing scheme, (SMN Weekly), Rated: A

Bondora said on Tuesday it is updating its entire loan pricing system by incorporating a new method for calculation. As a result, аll new loan buyers will get a higher return of up to 32.5% of their investment. For comparison, under the current conditions, lenders can receive a return of no more than 20.2%.

With the move, the platform operator said it aims to increase the rewards for investors who buy higher risk loans. The news comes shortly after Bondora announced the launch of a Refer-A-Friend program, under which investors can earn 5% from the amount their referred friends lend in the first 30 days of signing up via the platform.

George Popescu